Rich Manson: Sam, it’s Rich. Yes. I think using the historical financials from the 8-K that was filed in March is a good starting point. I think the two biggest things that you won’t see in the second quarter are the two onetime charges that we identified in the earnings release. So you want to have that $2.1 million write-up of the inventory that resulted in higher cost of goods sold, and you want to have that $2.6 million of deal-related expenses. And just to be clear, the $2.1 million affected the Carbon segment, the $2.6 million affected the Zoot cost center. So I think as we said in the comments, second quarter is going to look a lot like the first quarter, you’re just not going to have those onetime charges.
Rick Marabito: And then I think, Sam, in the back half of the year, we commented a couple of times, we’re pretty excited about some of the synergies we bring on the carbon supply side. And we think by beginning of third quarter, we’re going to start to see those. So that will be a little power boost in the back half in terms of metal fabs performance.
Samuel McKinney: Okay. That’s it for me. Thanks, guys. Good luck.
Rick Marabito: Thank you.
Operator: Our next question is from the line of Dave Storms with Stonegate Capital. Please proceed with your question.
Dave Storms: Morning.
Rick Marabito: Good morning, Dave.
Dave Storms: First one, a quick one. Just with the Iowa groundbreak in May because that’s an expansion, there won’t be any downtime associated with that, correct?
Rick Marabito: That’s correct. That is just purely expansion, 30,000 additional square feet, and we expect to see that effect more in 2024. It should be operational by year-end, but it would probably have more of an effect in 2024 than 2023.
Rich Manson: Right. But no, we don’t anticipate any disruption in the back half while we construct and expand the building.
Dave Storms: That’s perfect. Okay. Thank you. And then just on kind of the per tonnage cost for warehousing and distribution, that number just kind of seems to keep on climbing. Is there any green shoots on repreve there? Or is this the new normal that we live in?
Rich Manson: Dave, it’s Rich. So really, that is kind of the effect of the businesses we’ve acquired in recent years don’t report tons sold. They’re more on the manufacturing side. And so what happens if you’re using the same denominator of tons, you’re going to have a higher operating expense number that you’re dividing those tons into. And so it looks like it’s rising. So as we pointed out in the comments, we were up roughly – I can’t remember the exact number. I think it was around $14 million of expenses first quarter of 2023 versus first quarter of 2022. That’s accounted for in Metal Fab, the $2.6 million of deal-related expenses and then the absence of that $2.1 million gain on the sale of the Mylan Iowa warehouse that occurred in 2022, which reduced operating expenses.
Those are the three items that explain the entire increase in the operating expenses. And so we’re comfortable where the operating expenses are. We’re actually seeing inflation kind of come down quarter-over-quarter as we’ve seen through the last 9 months or so. So I think that’s the issue that you’re comparing higher operating expenses that reflect manufacturing businesses that don’t reflect tons sold.
