Thomas J. Hook: Yes, from an Aerospace side, we have addressed very nicely in the aftermarket. Our Aerospace aftermarket facility productivity issues. So on the aftermarket side now — not only are we adding capacity in the Americas and Asia, we have also corrected the operational productivity issues we had in that aftermarket facility. On the OEM side, we have a mix of both supply chain challenges, supply chain inputs, which are not symmetrical. They are jumpy, as well as we have some labor productivity in the plants with lower tenured employees and efficiencies. On the good side is we have each of those facilities identified. We have made leadership changes. We put in additional resources. We brought in external resources now that are helping that corrective action journey to get that resolved in those situations and we are expecting good progress over the course of 2024 to directly address those more aggressively.
And we are our second half of the year – we are projecting that we’ll be able to work our way out of those challenges just like we did the aftermarket facility. We can’t control the supply chain asymmetries, but we are expecting relief over the course of the second half of the year on some of that supply chain and consistency that hurts OEM production flow, and we are expecting that also to be a positive Sam as well. I didn’t quite catch your question on MB, the second part of your question. Could you just repeat that?
Sam Struhsaker: Yes, no problem. Just if you guys have any idea in terms of kind of what we might think about for a sales trajectory like looking forward within MB Aerospace? And then I guess also kind of building on that, there have been some other operators in the aftermarket that talked about increased visibility to 18 months to 24 months, especially at the aftermarket show. And I was just curious if you guys kind of have a similar level of visibility or what you’re seeing in terms of that?
Thomas J. Hook: Certainly. Well, we’re expecting from an MB standpoint, we wouldn’t break it down to an individual facility, but overall, we’re on the projections of the combined deal model between Barnes Aerospace and MB. There is a little bit of a shift towards a healthier aftermarket, as you know. And we can confirm that really, given the slower pace of OEMs delivering a particular aircraft from Boeing, it is shifting more workload into the aftermarket on the CFM56 platform, which is favorable to us. We also see that favorable tilt on the MB product lines that we acquired in the aftermarket. So we’re expecting that robust environment continue. It has tempered a little bit by availability in the supply chain of how much growth can be supported.
But we also feel that putting on additional capacity to continue that growth trajectory for many years to come. So we feel confident in our deal model than the Aerospace. And there are puts and takes as we decide how to rebalance the portfolio across Barnes and MB facilities, as we do some of the transformation efforts, but overall on a consolidated basis, we have a very robust and healthy view of the rest of ’24 heading into the future years.
Sam Struhsaker: Great. Thank you.
Thomas J. Hook: Welcome.
Operator: Your next question comes from the line of Greg Dahlberg with Wolfe Research. Please go ahead.
Greg Dahlberg: Hi, good morning Tom and Julie. I’m on for Myles Walton. I just had one quick question. So kind of taking into account everything we’ve talked about so far in Aerospace guide getting picked up at the bottom end. Can you just talk about the moving pieces of your latest 2024 sales outlook for OE, aftermarket, RSP. Any major changes to talk through there?
Thomas J. Hook: I’ll give a little macro and then Julie can chime in, is we expect obviously with some of the changes on the new deliveries of aircraft, while Boeing will obviously be adjusting their output rate. It won’t necessarily equate to increases at Airbus. So we are expecting stronger risk transfer of that type of compression in the aftermarket growth for us, which we actually think is more favorable in the overall mix of our Aerospace business from a profitability perspective. From a trajectory of the broader industry, we’ll see overall travel, very strong heading into the year and into next year. So we see strength across really all platforms. For us, there is — with the combination of MB, we feel very geographically balanced.
Very balanced across all the engine OEM manufacturers, both on the OEM side, as well as in the aftermarket side. So even though there may be in an aerospace perspective, shifts within the market, we feel we are quite balanced across it to be able to pick up those shifts, and we are consciously making sure we are ahead of capacity and also making sure that we are addressing the operational challenges proactively, so that we can win that business and keep the trajectory growing on a profitable basis. If you want the Xs and Os of the guidance, we get into that a little bit more. But we think all of that macro picture is digested into our prospective view on guidance as well.
Greg Dahlberg: Perfect. Thank you so much.
Thomas J. Hook: Welcome.
Operator: Your next question comes from the line of Christopher Glynn with Oppenheimer. Please go ahead.
Christopher Glynn: Thanks and misplaced my other question, the first try. I was curious about the — if you quantify the MB related amortization, and where you are in terms of thoughts to potentially exclude that in the future from adjusted EPS?
Julie K. Streich: Sure, thanks for the question Chris. So there is a significant impact, obviously from the amortization that I will talk to in a second. And because we are now also guiding to adjusted EBITDA that is our way of giving a metric that neutralizes that. So when we model and when we talk about the business and think about the business, we can think about it on a clean perspective. In the quarter, there was about $6-ish million, of amortization related to the deal. But if we think about it on an adjusted EBITDA margin perspective, the overall portfolio from the legacy business would have had margins that were up a couple of hundred basis points year-over-year. That was offset by about 400 basis points of dilutive impact from MB netting to the 190 basis points that we spoke about in our earnings.
I’ll remind you though, and it is really important we do always keep this in mind, MB has a very rich mix of OE and aftermarket business. They have healthy margins and it is a business that is performing well for us. The single differential is that the legacy business benefits from RSPs, which as you know, have an additionally higher level of margin and it’s just the law of averages when you blend the two portfolios. So strategically a great deal, strategically the right thing for the business long-term and the margins that we delivered this year are in-line with expectations. So I hope that answers your question and provides a little bit more color perspective as well.
Christopher Glynn: Thank you.
Operator: Your next question comes from the line of Matt Summerville with D.A. Davidson. Please go ahead.
Matt Summerville: Thanks. And I apologize if you mentioned this in the prepared remarks, but can you give us a feel for how the go-forward quarterly earnings cadence, adjusted EPS cadence sort of plays out for Barnes for the remainder of the year?
