Sam Yellen: Hi, this is Sam Yellen on for Steve Tusa. I was just wondering what the overproduction loaded was into Q4. I don’t recall hearing this through Q3, just as a follow-up to the last one.
Stephen Nolan: So, I went to clarity €“ sorry, it went a little fuzzy in the moment there. You’re asking for the overproduction
Sam Yellen: Yes, the overproduction. Was there overproduction at all in Q4?
Stephen Nolan: Sorry. Look, as we mentioned on LEAP for the year overall, we probably €“ and as we €“ as Bill mentioned, we effectively level load quarter-to-quarter. So it’s not that there was necessarily overproduction in Q4. For the year overall, the rate was probably higher chosen by our customers Saffron in consultation with us. Then they might have chosen had we known the profile from Boeing and Airbus production profile. But I wouldn’t look at Q4 and think that was some big overproduction quarter. We certainly did not intentionally pull additional production into Q4 from future periods. But just given the nature of program, if you take a LEAP, if we produced more collectively over 2022 than our customer might have decided they have perfect insight into the future that means we’ll produce less than 2023 than we otherwise might have done.
So in some ways, there has been a shift of revenue from 2023 to 2022. But I don’t want you to look Q4 and think it’s materially higher because of that. This was over the full year.
Sam Yellen: All right. Got it. And then on the LEAP inventory, does that sit at the CFM JV or at Safran?
Stephen Nolan: It’s a combination. So we certainly recognize revenue as we produce parts, and when we ship them, we invoice for them. Prior to us producing €“ or sorry, after we produced them prior to us shipping, they sit in contract assets in our book. We have recognized revenue on them, and they’re sitting in our books in contract assets. When we deliver them, which entails shipping them across a yellow line in the middle of the factory floor, they flip over to be an accounts receivable until we collect the money for them. But so, right now some of that is in our books, but not a huge amount of inventory. It’s not sort of situation we’re in a couple of years ago where we talked about having 250 ship sets, I think in the factory of excess inventory. But Safran does hold some excess inventory, I think of our product as well, we have to burn through.
Bill Higgins: And just as part of our arrangement with them, we will always hold some. So that if things happen €“ if the business were to pick up, we have inventory in the system, that’s part of the arrangement that we ship to, but it’s not at an unusual level.
Sam Yellen: All right. Got it. And then just one last one for me. It looks like in ASC Q1 seasonality typically calls for a high-single-digit sequential step up. How should we think about the seasonality this year? Any reason Q1 should be different than normal?
Stephen Nolan: Yes. And look, I understand it looks like seasonality. The nature of our ASC businesses, it really isn’t seasonable. It’s more that when it’s growing and the fact that we level load, for example, on LEAP, when LEAP sees a lot of growth one year to the next that appears in Q1 because we step up all of the quarters. And so there’s a big jump from Q4 in the prior year to Q1 in the current year, and it’s not really seasonality, it’s more effects like that. I wouldn’t expect to see some big jump up in Q1 of this year. In fact, look, if you look at Q4 what we delivered revenue of in last year quite high. I would expect this year €“ I’m not saying the quarters will be identical, but you’d get close by just taking our annual guidance and dividing by four.
