Daniel Maudlin: And keep in mind too, it’s higher shipment levels. We expect higher shipment levels volume-wise in FY ’24 versus ’23 to get back over into the 5 million pounds a month or better. That’s going to be helpful for absorption-related costs as well. And some of that’s production, although we are planning to reduce inventory levels, but also just some of those fixed costs that are in the cost of goods sold area. We’re going to get better absorption of those fixed costs, that will be hopeful.
Michael Shor: And one more thing I want to add, Steve. You talked about the CPI business, we really look at that as three separate businesses. We’ve got some of the more commoditized alloys. That’s where we look at can we positively substitute some of our aero and power gen in for that. But we are full steam ahead on the more unique CPI alloys that go into what we call special projects and continuing to find new applications with our new alloys for that.
Steve Ferazani: When we think about working down the revolver, and part of that’s working down backlog I assume, and bringing down working capital a bit, that means either you continue to shift your mix by playing down the commoditized products. Obviously, the tailwind in aerospace does not seem to be slowing. So I’m just sort of trying to put all the pieces together to how you get there and how you’re thinking about it versus how I sort of just laid it out?
Michael Shor: The most fun I have talking about cash flow is looking at how we increase earnings in this company, okay? That certainly is a part of that. The other thing that has happened though is we have been able now to balance out what we are melting versus what we are shifting. We’ve been melting especially in VIM at capacity, but our shipping levels have just been coming up. So as they come up, that will more even out, which will allow us to do that. In addition, we have a significant amount of inventory. That inventory is positioned right. And that we’ll be able to ship in the short-term since significant portion of that is finished inventory.
Steve Ferazani: Thanks, Mike. Thanks, Dan.
Michael Shor: Thank you.
Operator: Your next question is coming from Michael Leshock with KeyBanc Capital Markets.
Michael Leshock: Hey, Mike, and Dan, good morning.
Michael Shor: Good morning, Mike.
Daniel Maudlin: Hey, Michael.
Michael Leshock: I wanted to start off just following up on the unplanned outage at Kokomo. You hit that as the critical piece of equipment there that was down. Could you give any details on which asset it was and when did it occur?
Michael Shor: Sure. We have — first of all, we have hundreds of pieces of equipment. So we — reality is, we’re dealing with outages on a regular basis and we normally don’t talk about those. However, in September, we had a piece of equipment, Mike, you’ve heard of before, it’s called the drever furnace. It is a key piece of our cold finish flat business. And we had really two significant issues with the drever in September. And it’s not only fixing it, it’s — when you have to get in that furnace, you have to take it down very slowly to temperature or to room temperature, address it and then bring it back up. So we had a significant amount of issues with that furnace in September. The good news is it’s running very well right now.
Michael Leshock: Got it. And then following up on that cold finish flats opportunity, could you talk about maybe the magnitude of what that could be as it relates to volumes and margins? And where do you think you can get from there? And maybe in what time period can you get that business to where you think it could be?
Michael Shor: As we have those issues in September, it affected absorption. So that will affect what we have in the upcoming quarter as far as absorption and some margin hits. The other side of that is, is we’ll be able to ship more cold finish flats, which is a good thing. Obviously, the first quarter, as Dan pointed out and as I’ve pointed out in my script, nickel continuing to drop is a concern obviously. I’ve already said it once, I’ll say it again, the 21% gross margin for six quarters in a row that’s raw material neutral. So as raw materials begin to create even additional headwinds, that’s going to be off the top as far as margin.
Daniel Maudlin: And one thing about the upgrade that we’re talking about in Q1 to the A&K line, that’s part of kind of what feeds into cold finish flats as well. That’s going to provide some better reliability. And that’s kind of a key component of when we talk about getting back to that 5 million pound plus shipments per quarter. That’s kind of a key component of that.
Michael Leshock: And on the 777X program, I know there are some proprietary Haynes alloys on there. Have you started to see activity there ahead of Boeing starting to produce? And should we expect that to benefit overall A&D pricing next year?
Daniel Maudlin: It’s a slow start. If I depend it on what I’ve heard about that engine and that plane the last couple of years, I would have told years ago it was going to start to benefit us. So it’s a good news for us. It is two proprietary alloys, which we’re very proud of. There’s not going to be that many engines built, but it gives us great exposure to the engine manufacturers for a future generation of engines also.
Michael Leshock: Then just lastly for me. I wanted to ask on other markets’ pricing momentum that you’re seeing there. I know it’s a smaller part of the business, but it was up meaningfully again. I know the pricing can swing quarter-to-quarter. But is there any level of sustainability to that strong pricing there?
