"It is always a very difficult decision to reduce staffing and separate from valued colleagues," said Peter Wells, CEO of Smart Wires. "Our business has been affected by supply chain challenges that have delayed backlog execution, making it difficult for us to balance our cost structure with current revenue and cash generation. This decision is part of broader re-structuring efforts, business model re-framing and the ongoing pursuit of strategic and financial alternatives. We expect to deliver the current backlog of $67 million from Q4 2022 through Q2 2023.

The reduction in force is part of a broader strategy to reduce operational expense and costs of goods sold, focus on three core geographic markets, and re-assess the current business model with the goal of capturing more of the value created by the SmartValve technology and improving project economics. The annual impact of the cost reduction initiatives including the reduction in force is expected to be in the range of $10 million to $12 million dollars.  Savings in Q4 2022 will be offset by severance related expenses and therefore we expect the positive cash impact to be realized starting in Q1 2023. More details will be shared in the upcoming earnings release in November.