Tony Thene: Well, all contracts renewing at a higher price, that’s something that’s significant, that’s consistent across the industry, you can, you can take, you can take that with a high level of confidence that all contract renewals, will be at a much higher price.
Chris Olin: Okay. Just last one of the shift quickly back to at Dynamet and guess, I’m thinking a bit about the Boeing 707 and the A350 build rate increases kind of the peak outlook and I can’t recall if Dynamet is levered to one platform more than the other. And you know, would you benefit kind of significantly from a doubling of the production targets? And I just lastly, do you have enough capacity to satisfy that if you do?
Tony Thene: Well, to answer your last piece of your question first. No, there’s not enough capacity in the system across multiple sub-markets. For us, we sell to every one of the fastener company. So, whether it’s Boeing or Airbus it’s on top of demand environment when demand is so much higher than supply. That’s just not, that’s just not a factor. We’re oversubscribed and we anticipate that being like that for several years to come regardless of the split between widebody and single-aisle and Boeing or Airbus.
Chris Olin: Would a, would a capital investment be on the horizon for that to address?
Tony Thene: Possibly, I mean Dynamet, just like SAO is working to get up to rate as well. We’re not running in Dynamet at the level we need to run at. And I want to, previous question from Cowen. I said that in fact we have a couple of pieces of equipment that are coming in here in the near term into Dynamet that will increase our finishing capacity. So, that will help as well.
Chris Olin: Okay. Great, thanks so much.
Tony Thene: Yes. Thank you, sir.
Operator: The next question comes from Michael Leshock with KeyBanc Capital Markets. Please go ahead.
Michael Leshock: Hi, good morning. I just wanted to ask here on volumes that we saw a decline in the quarter given the less shipping days. But looking forward, how do you see volumes increasing relative to price and mix? So, if your long-term guidance incorporates a 15% to 20% increase in volumes above fiscal ’19, do you expect that volume uptick to be largely in fiscal ’24 or is the big step up this year more so, a function of price and the volume piece is more linear over the course of your long-term guidance?
Tony Thene: Well, the volume is going to follow our productivity for the most part, I mean, as you’ve seen now in this quarter into next, a big part of our strategic mix management is, is moving that volume around, because some of the products as we moved to different types of products, they take longer to process through the system. Right? Especially, like in a primary mill product, it could be noted three times that just takes longer to go through the system much higher margins on that, but it takes longer. But as you see our productivity continue to increase as we’ve talked about as some of these other pieces come online certainly volume will be higher in the second half than the first half.
Michael Leshock: And then, on maintenance, were you able to get all your normal seasonal maintenance spending done just given the lower CapEx spend sequentially and maybe running your assets above normal seasonal utilization levels? Or do you see any spilling into the second quarter?
Tony Thene: Well, we’re in perpetual preventive maintenance. The days of shutting your plant down for three weeks and turning everything off and sending everyone home and doing all your preventive maintenance all over, right, that just doesn’t, that’s not the most efficient way. We are always in a cycle of preventative maintenance. And you know, what, I think, I’ve been asked why do I talk about this and you know, when you’re in a situation where supply can meet demand, you know certainly no one really talks about preventive maintenance but when you’re in a sold-out environment, where any amount of downtime, any amount of downtime will translate to customer impact. As a matter of product you could ship within that, that’s why it makes it important.
That’s why it’s important to say at any point in time, we’re going to be doing that. Secondly, I would say it’s really important to remember Mike, we have really exclusive highly sought after assets and it’s our job as skilled operators to protect that equipment, obviously, over the long term. So, we’re aiming for a 40% CAGR, annual CAGR over the next four years. That’s our goal. Our goal is not to run, you know, run the equipment to failure simply to earn a couple more million dollars on top of already a record quarter. Right? So, I mean that that would be unprofessional. So, it’s not about trying to — let’s run it more to try to get out another couple of million. We’re in for the long haul. We’re going to, you know, double operating income versus FY ’19 over four years.
So, we got to protect our equipment and treat it the right way.
Michael Leshock: Got it. Appreciate all the detail.
Tony Thene: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to John Huyette for any closing remarks.
John Huyette: Thank you, operator. And thank you everyone for joining us today for our fiscal year 2024 first quarter conference call. Have a great rest of your day.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
