James Ricchiuti: Thanks Lynn for pointing that out. And then just in terms of that some of the business that you deemphasized, have you put a number to that through the nine months?
Farouq Tuweiq: So I mean we talked about in the last quarter there was kind of a slug of roughly $9 million that we talked about. Right away I would also tend to think about it though Jim it’s really at a SKU at an order level right. So when the orders come in we kind of or when we quote stuff we’re going to put our price that that works for Bel Fuse right. But maybe we’d ultimately not get there, so we could walk away. So I tend to think of that as regular way SKU maintenance as opposed to kind of big grandiose walking away. I think we’re — I’d say we’re largely probably behind some of these kind of grandiose things and it’s going to become an order driven event. And remember orders could be small as cost $1000 or smaller and up to hundreds of thousands of dollars. So it’s really going to be done at that kind of line level.
James Ricchiuti: Now that’s clear Farouq. Thanks for that. And you too Lynn, I just want to make sure I’m clear on one other thing on commercial air, you gave up bookings number and I just — did you see say what the commercial air revenues were in the quarter? I think my recollection is the revenues from commercial air were $15.9 million in Q2 or was that a bookings number?
Lynn Hutkin: No, you’re correct. So the commercial air sales in Q2 were $15.9 million, for Q3 they were down a bit, they were $11.3 million for the quarter.
James Ricchiuti: Okay. But generally it sounds like you’re still seeing pretty healthy demand in that market.
Lynn Hutkin: That’s right. So as we mentioned earlier, we did have a record bookings quarter for that end market in Q3, so the bookings for Q3 was $15.7 million.
Farouq Tuweiq: And I think Jim, the way I kind of think about these end markets kind of defense, kind of it just the ordering patterns and shipping patterns kind of are little bit maybe more and more lumpy. So I think that’s why I threw — as Lynn noted with the bookings and kind of as and obviously the conversations we’re having with our various customers, is kind of what gives us that sentiment of positivity on outlook.
James Ricchiuti: Got it. Thanks very much. Congrats on the quarter by the way.
Farouq Tuweiq: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from Hendi Susanto with Gabelli Funds. Please proceed.
Hendi Susanto: Good morning, Dan, Farouq and Lynn.
Dan Bernstein: Good morning, Hendi.
Hendi Susanto: So Dan I would like to hear your insight into inventory at the customer and distribution across various businesses. Like we have heard like some many companies reported broadening weaknesses in industrials and I’m wondering like how much we should factor that in going forward? And then if you look at Magnetic, can we assume that inventory correction or digestion is at the bottom of the half of market? And then I’m also wondering, like when we may see a growth recovery in Power Solution and Protection?
Dan Bernstein: Okay, I think we talked more Power Solution and Protection a lot of it, again it is coming from the Circuit Protection area and that’s a very heavily distribution period business where most customers buy circuits, fuses, circuits through distribution because of the low price. From everything we understand, people like Arrow and Avnet, Digikey and Mouser that they still have to work through their inventory. They really brought away too much inventory and that’s their highest level. We hope and believe and most of it should be flushed out by the 1st or the middle of the second quarter and we should get back to normal ordering at that point in time. So I would say middle of second quarter next year everybody’s predicting that line from an order process will go back. And then sorry, what was the next question?
Farouq Tuweiq: I think that answered because your collaborators about return to growth, right, Hendi?
Hendi Susanto: Yes, yes, yes.
Farouq Tuweiq: Yes and then may be just to also kind of supplement that Dan kind of triggered my memory here. So as a reminder generally Q2 and Q3 are strongest quarters, Q1 historically is our weakest quarter and then Q4 somewhere in the middle. So the way we kind of look at just kind of the guidance we gave out is kind of the normal cadence of Q4 with some of the holiday patterns and you know goal that we can in [indiscernible] and so on. So I wanted to kind of throw that out there.
Hendi Susanto: Yes. And then Farouq, how sustainable is the gross margin at 35% level now?
Farouq Tuweiq: Yes, I mean, so I mean if you look at it right, we see, we do know that there is more cost improvements to be done within the business. Magnetics, while sequentially up on sales is still down on low margins. So we do expect improvements in the Magnetics side of the house. And so as I think about those two things coupled with weakness that we do see a little bit of power as Dan mentioned and also a little bit of connectivity. So we’ve yet to hit on all cylinders, right. So our expectation is, we can kind of do this in some pockets of weakness. Our expectation is between cost and a little bit of recovery and across the business we do think it’s sustainable. Now it doesn’t mean that we may be impacted here and there, sure, but at the end of the day I think our expectation is at the gross margin level we’re — at a consolidated level we’re kind of in the zip code of where we should be.
But at the same time we are working through a lot of things internally and externally here.
Hendi Susanto: And then the press release also called out rail application. Would you refresh our memory? Like where the opportunity and then where your products are in rail applications?
Farouq Tuweiq: First of all, so maybe it’s on the rail business, the rail business is really quality business, but as we know rail I kind of think of it as a step or move from kind of Defense in the sense of ordering patterns. The complexity and demanding nature of rail is a business that we’ve been in for I think over for 40 years. So this is a great business for us. We’ve seen more investment coming just quite frankly globally, but predominantly out of Europe and Asia I would say as they invest in their rail applications. So we’re seeing increased orders there. also some of the new kind of products and quite frankly we reassigned some more resources to focus on that market. So we’re seeing the benefits of that here. I think we started doing that in 2021 or perhaps early 2022 to kind of really focus on that side.
