Kevin Cavanah : So first thing, I think we’ll see pretty good growth in both Storage and the Utility segments. For Process and Industrial Facilities, we’ve got a number of things that are impacting the top line for that segment. We completed some work that previously have been trying to get done, but that was pretty significant for the company, an important step. We did sell a noncore business that in the fourth quarter of last year that impacts that segment. But we’ve also had some good bookings in that segment. If you go back to — I think it was the third quarter of fiscal 2023, we booked a large capital project, that project is a little unique. It’s got a — there’s a longer runway before we really start seeing revenues on that project. It won’t really start benefiting until the first quarter of fiscal ’25 so we have visibility to seeing these revenues increase, but most of that will happen in the very first part of fiscal 2025.
John Franzreb : And in regards to your long-term financial targets, I’m most interested in the 4.5% operating margin target. What kind of revenue profile and gross margin profile are you using to get that 4.5% op margin target? It’s certainly better than what I was expecting by the end of next year.
Kevin Cavanah : There’s a number of things that are going to — that will go into us getting to that target. So we need to get revenue volume up. And we’ve talked previously that to get to where we’re fully recovering our construction overheads, we probably need at least $250 million of quarterly revenue to get there. But we also want to get the SG&A percentage down to 6.5% or lower. So in order for that to happen, we probably need that revenue to be even higher than that, getting it up to $275 million or so in a quarter. So those are two big drivers. And then the third one is just what’s the margin opportunity in the full backlog of the business between the capital projects and the repair and maintenance projects, and that needs to be north of 10%.
So the combination of those three things are what’s going to get us to the 4.5%. And as I said in my comments, all three of those areas are going to improve and be helping us move toward that make a significant step for those financial targets as we complete the fiscal year.
John Franzreb : And I guess one last pesky question, regarding the tax rate, you mentioned that you expect it to be approaching zero this year. How does that look in 2025, what’s the step function up?
Kevin Cavanah : So I think it will be near zero this year. I mean there’s always unique tax issues that could adjust that. So it could be zero to 5% somewhere this year. Next year, we’ll still be utilizing a lot of reserved tax assets. So I currently back the envelope projecting that to be somewhere around 10% next year. That’s my best guess at this point.
Operator: I would now like to turn the call over to John Hewitt for any closing remarks.
John Hewitt: Couple of things real quickly. First of all, I want to thank all of our employees for your hard work for your dedication to quality and the teamwork that’s gone into delivering on the — not only on the strong awards but also to our execution strategy and improvement in the business overall. I certainly want to thank our shareholders for your support through this period. And would leave everybody, again, with a reminder on your personal safety awareness to ask those three questions: What am I about to do? How can I get hurt? What am I going to do about it? And to remember for our employees that you do have the authority to stop work and you have the obligation to do that as well, if you see something or feel something that is unsafe. Other than that, I’m glad to spend time with everybody today and look forward to seeing you in future conferences and calls.
Operator: Thank you. This concludes today’s conference call. We thank you for your participation. You may now disconnect.
