Operator: Our next question comes from Gautam Khanna from Cowen.
Gautam Khanna: I wanted to ask you about lead times right now. How far out are you guys quoting on your various aerospace products, so airframe jet engines? And how has that changed over the last 6 months?
Bob Wetherbee: Yes. So the last six months, good question, so one thing that’s kind of gone on for us during the COVID pandemic was a shift from distributors as a key part, they’re still important distributors, are a key part, but the team has done an excellent job of aligning more closely with OEM demand. So we are getting a few more direct signals than as a percentage of our mix in aerospace and defence. So that’s been positive. I would say, today, depending on the part and the flow path, customers are willing to commit orders and some products into Q1 of 2025, believe it or not, so we do have a fairly controlled order entry program against those commitments. They have that kind of visibility, and they want to make sure they get their pipeline.
Now I would say more of the milk products type things flat you could probably still get some titanium in Q4 of 2023. But those slots are going fast. So I’ll let around. But — and then the general more specialized alloy mill products that come out of our North Carolina melting probably into 2024, early 2024 if not Q2 of 2024. So where were we 6 months ago? I know where we were 8 quarters ago, and 8 quarters ago, you could place an order in the quarter and bid it, right? So that was 8 — 6 to 8 weeks, and that was obviously in 2020, 2021, and those days are gone. So yes, really I would say the average lead time is 50, 60, 70 weeks depending on the product.
Gautam Khanna: Wow. Okay. And do you guys have any long-term contracts coming up for renewal over the next year? And I’m just curious like how pricing — it sounds like this is a good environment for pricing to move higher, even on LTAs as they come for renewal. Is that meaningful in any way?
Bob Wetherbee: We don’t have any — yes, I don’t believe we have any major ones in 2023. They are kind of layered in. So 2024, 2025, probably 2025 will be the first major transition year to other contracts. Most of the big OEMs are out, we have quite a few that go to 2030, 2035, those kinds of numbers and most of those have inflationary or pricing pass-throughs. I would say for people who don’t have contractual commitments or don’t have long-term relationships, spot pricing is up significantly in the market. And it’s the market price. So we’re taking advantage of that opportunity. So I think there are pricing opportunities both on the raw material pass-through as well as just fundamental demand.
Gautam Khanna: Yes. Okay. And last one, just on the VSMPO opportunity. Where — has Boeing moved a little more urgently? Have you heard from other OEMs besides Airbus who want to go ahead and lock up supply with you guys?
Bob Wetherbee: Yes. I was in Seattle earlier this week enjoying a great celebration of final 747 being delivered. It was a great moment in history and proud to have been part of that. I think — I do think all the OEMs are moving with urgency. I think the widebody recovery across the board is driving that. I think it’s a complex issue. It’s not as simple as just redirecting, Oh, yes, we’ll buy this stuff over here and everything is going to be fine. It’s a complex supply chain, complex and very important specifications. But I do think over the last 6 months, I think they have started. There’s a lot of urgency everywhere I go. Anytime I get a phone call from a customer there’s a reason for it, but we’re in a great position to be able to take advantage of it.
