Milton Childress: Well, Steve, we have a comment as what you saw in the third quarter when you look at AST margins when you lose the kind of year-over-year volume drop that we had is most of that is just deleveraging. And we have — we took some additional actions, but I’ll use the word surgical because we wanted to be prepared for the uptick when it comes. And as Eric said, the conversations with customers have really moved from an uncertainty to — we need to be prepared even though they’re still in a certain environment, we need to be prepared for the uptick. And so those conversations are very constructive. So it’s now really what we need in the business is volume. And also, we’ve had some unfavorable mix, as we’ve talked about throughout the year as a result of — some of the more severe drops in volume we’ve had have been in areas where we’ve had a very strong profitable margins for certain product lines.
And some of that is tied to the big drop in memory as we’ve mentioned before. So that will change. That will rebound. And the volume will come back, and we will leverage on the upside as much as we’ve delevered on the downside. And our focus is really — we’re doing what we need to do in this environment, but our focus is really on the excitement about the long-term. And we continue to feel — and the long-term is not five years out. The long-term is — we expect to see some uptick in 2024 based on conversations with customers, just uncertain of when we’re going to see the start of that.
Eric Vaillancourt: And some customers have started to talk about memory showing a little bit of life as well recently. So that would be exciting if that actually happens.
Steve Ferazani: Great. And then flipping and you addressed this a little bit. On the Sealing margins where you would also have expected to see some deleveraging because I assume — but I’m assuming it’s getting more than offset by price. Is that a fair way to look at this that your volume is down year-over-year more than offset by price, giving you that little bit of revenue uptick?
Eric Vaillancourt: Our volume is off, but our backlog return to more, what I’ll call traditional levels, still robust for us. And so we’re able to have — still able to have operational efficiencies. And I do think it’s fair to say we’ve captured more price. But overall, our volume is still pretty strong in Sealing historically.
Steve Ferazani: Okay. And then you think about — obviously, you’re starting to see that weakness in heavy truck, commercial truck OEM, but that would typically be lower margin, right? So based on trends, your mix should be better entering 2024 and you get more pricing, right? So even if volume doesn’t come back substantially in other areas, you still get some margin as long as volume holds up, right?
Eric Vaillancourt: Yes, that’s absolutely correct. And we could see it in this quarter’s results as well.
Milton Childress: And Steve, you know that I’ll just remind you, as you know, our commercial vehicle business is much more heavily weighted toward aftermarket than it is on OEM.
James Gentile: Yes. And just a just another thought on the volume declines as we exited the supply chain situation as a result of COVID. It seems like some of the industrial distributors are removing kind of that cost of safety stock. And that’s just the normal core. So as you look forward, there are definitely some opportunities for growth — for mix and growth in the future.
Steve Ferazani: Okay. And just get one last one in on — obviously, a very strong cash flow quarter, good strong receivables collection. Meaningful debt reduction this year, what do you think about the cash is growing, your net debt way down? How are you thinking about capital allocation at this point? Any shift in priorities?
