Don Newman: Right. Yes. Fair question. So the short answer is, when you hear about some of our [Audio Gap] and Defense, we’re pretty confident we are not lagging at all in that regard. We are picking up our share. And as Bob said, we’re typically not seen as a low cost option but a critical option in the industry. In terms of how to think about it going forward, Phil, it’s pretty clear to us. We’ve seen our A&D share percentage increasing. We at 61%. We see continued growth in 2024, 2025 and beyond 2025 when it comes to that strong aerospace growth. And then we’ve got some other end markets that we serve that have similar growth trajectories. So yes, the short answer is we expect that 2024 and beyond, we all expect to continue to see improving mix which should be a tailwind to our margins and our bottom line profits.
Phil Gibbs: Is it just the mix shift? Or is there a real underlying pricing improvement as well?
Don Newman: There is, to be clear, there’s real underlying pricing as well. And we saw that — we see that each period, especially when you look at HPMC and the A&D exposure that AA&S has. When it comes to that space, we have — there’s high demand, right? And that demand is not at all — and so we’ve been pretty purposeful when it comes to ensuring that we’re getting price where the opportunities are there. So it’s not just mix. It is — we are seeing price as well, and we’ll continue to.
Phil Gibbs: And then secondly, you do have some near-term headwinds within energy. That was really strong for you the last couple of years. It seems to be sliding down a little bit. Are there any signs that, that’s leveling out? And then also regarding the Stall business, and it’s sort of been stuck in neutral here for a while. Any thoughts on if and when that turns the corner as well. That’s it for me.
Bob Wetherbee: Thanks, Phil. I’d say 2 questions in there. I would say on oil and gas, our day-to-day presence there is in the subsea umbilicals, flow lines kind of space and the feedback we get from our customers is that we’re seeing the bottom of that here in Q3, Q4. I would say Q1 will be kind of an uptick, but not where we want it to be yet. But by Q2 of next year, we should be back to pretty good strength in the core part of our oil and gas. There’s always projects, the big cloud pipelines. There’s some kind of in the queue there that could also hit about the same time. So I think we believe we’re at the bottom with our customers as they destock. That’s really the issue they’re destocking here in and then start to ramp back up after the first of the year.
When it comes to Stall, I would say we have definitely hit the bottom, and we’re starting to actually see a few signs. Don and I have talked a lot about not projecting great uptick until we actually deliver a quarter of uptick. But I think we got to get through the Chinese New Year, but the signs are starting to be positive. It’s not going to be a huge fast ramp back, but I think the signs are there that there’s some positive economic signs in the markets electronics, that in particular, and those kinds of things in Asia. So more to come, but I would say by Q2 next year, we should see some meaningful improvement in China, in particular in our Precision Rollstrip business.
Operator: Our next question comes from Seth Seifman of JPMorgan. Your line is open. Please go ahead.
Seth Seifman: I wanted to ask a little bit I wanted to ask a little bit about the engine end market. So that I think the sales were down a touch sequentially. I don’t think anybody questions the direction of where this is going over the next few years. But as we think about the next few quarters, I think GE lowered the LEAP delivery guide for this year. Pratt obviously has to make some decisions about allocating resources between new engine builds and the shops. Do you get signals from the OEMs regarding the trajectory of that ramp and how steep it is? And has that changed at all over the past several months?
Bob Wetherbee: Good question. It’s like 3 or 4 in there. Seth, I’ll try to get to them let. So I agree with you, the strength in engines is very positive. If you look year-to-date ’23 versus year-to-date ’22 were up 30% remember, a lot of these orders got put on 10, 12, 14 months ago. So they didn’t all get placed nice evenly, those kinds of things. I would say the indications we’re getting are twofold. Number 1 is that the spares demand historically has been a kind of a 25% adder to our OEM demand. It’s going to be 40%, 50% higher — or 40% to 50% of our business for 2 to 3 years to come based on the availability of new planes and certainly the wear and tear in the hours in those I think the second issue, which Don alluded to a little bit earlier was when we talk about mix, one thing that’s going to help us is the shift to wide-body the engine manufacturers in Europe are definitely moving in the right direction there on the widebody side, and that’s going to be a very positive for us.
These are all nickel-based alloys, and we obviously had a little nickel fall off here. The price of nickel and the surcharges went down a little bit in Q3, and that will definitely come back. But to your point, long-term trends I think, are very positive. We’ve done our part to increase our titanium capacity. And I think nickel alloys will be tight going into 2024, 2025. But that’s based on that forward demand signal. So we feel pretty good about where we are and well positioned across the industry.
Seth Seifman: And maybe as a follow-up, you touched on the wide-body question in Engine. As we think about it on the airframe side, are you starting to see that ramp up kind of in earnest year? We’ve had — Boeing talked about another 737 rate increase to roughly 5 a month, getting to the point where 777X production is going to start to pick up anticipation of entry into service. What are you seeing on the airframe side for wide-bodies?
Bob Wetherbee: Yes. I think from an airframe perspective, it’s very strong. I would say we’re — on the mill product side, through the COVID period, we actually expanded our presence on both sides of the Atlantic. So we’re well positioned for both widebodies wherever they’re made in the world. And we are seeing definite strength. I would say the 787 issue, we probably are seeing the raw material by equal to what they’re talking about in terms of the uptick. It’s pretty strong. It’s not just double digits, it’s 30%, 40%, 50%, depending on the product type. So I would say we’re 12 months ahead of when they’re going to use it in many cases. And we’re seeing it. And we only produce to orders we don’t produce to the build forecast, as you know.
You’ve heard us say that many times. But — and we’re not seeing a lot of cancellations, reschedules, that kind of stuff, a lot of emergent demand by who we need a right away kind of stuff. So positive and we are well connected with, obviously, the OEMs, but a very positive trend.
Operator: Thank you. Our next question comes from Timna Tanners of Wolfe Research. Your line is open. Please go ahead.
