Victor Mendelson: I would expect that to be the case. I think it’s improved dramatically, but there is still room to go. Lead times have improved. Of course, there are some products. There are some components particularly when the realm one would think of as “Chips”, that’s still elevated and a little complicated. And I would say even in ordinary times, as I reflect on it, I would expect that there will always be products and vendors that are delayed, but we wouldn’t categorize it as a supply chain crunch like the world experienced before. And so I think it will return to normal at some time, I would expect within calendar 2024.
Unidentified Analyst: Perfect. Thank you. Thanks, and happy holidays and congrats on a good quarter. I will jump back.
Laurans Mendelson: Thank you.
Operator: And we will take our next question from Louis Raffetto with Wolfe Research. Please go ahead.
Louis Raffetto: Thank you, and good morning guys.
Laurans Mendelson: Good morning.
Louis Raffetto: Victor, so it’s great to see defense up again. I guess have we lapped year-over-year growth yet? I know it was down high-single digits last year or last quarter for defense. I guess, was it up this quarter?
Carlos Macau: Yes, it was up this quarter.
Louis Raffetto: Okay. Great. Thank you. And then, Eric, just can you help baseline $186 million of sales for Wencor between sort of the sub-segments within FSC? Any way you could help us out there?
Eric Mendelson: I can’t. I don’t have that actually in front of me right now. But it would fall broadly into parts and into MRO in terms of the disaggregation of revenue. But I don’t have that information in front of me at the moment. But I would say that we are doing very well in both of those areas.
Louis Raffetto: Alright. Great. Appreciate it. And then Carlos, just to make sure we are all based on, I guess on the interest cost in the quarter. Was there anything one-time, or should we think of this $40 million level as sort of going into fiscal year ‘24 as the right level?
Carlos Macau: And Louis, that’s a good question. So, within the interest line this quarter, we had a $3.8 million worth of one-time costs in there related to the commitment letter to fund the Wencor deal. So, going into there, we basically had to pay about $3.8 million to get a bank to write a letter to say that we are good for the purchase price. That’s the one-timer, that won’t repeat. So, as you are looking forward next year, if you pull that out, you are looking at roughly $38 million and then decreasing as we de-lever.
Louis Raffetto: Okay. And then I guess, just taxes, any way to think about taxes for next year?
Carlos Macau: Yes. I hope they remain. I am planning on them to remain similar to what they were this year. I always kind of count on a 20% to 21% rate, this year, we have did a little better. It’s because, frankly, we have that leadership compensation plan where we have some tax deferred earnings that has a positive impact on our rate and because the market was generally up through ‘23 for our fiscal year, that did help us as opposed to hurting us last year. So, I think if you are in the 20% to 21% range, you are going to be in good shape.
Louis Raffetto: Okay. And then just last clean-up on the intangible amortization, was there no sort of one-time step-ups or anything like that, that $11.8 million was, to your point, sort of the go-forward rate?
Carlos Macau: Yes, it was. The one thing about, Wencor doesn’t have what I will call a manufacturing base like we do. They outsource a lot of their manufacturing. So, there wasn’t any manufacturing profit to pull out of the purchase accounting to pull out of the numbers. I mean maybe a little bit on the repair side, but it wasn’t anything notable, Louis. So, I would say that $11.8 million is a pretty good run rate number.
Louis Raffetto: Alright. Thank you very much.
Carlos Macau: You bet.
Operator: And we will take our next question from Colin Ducharme with Sterling Capital. Please go ahead.
Colin Ducharme: Hi. Good morning and thanks for taking my question. I had actually one clarification for Eric and then one question for Carlos, if I may. Eric, on the GTF question earlier, could you just please clarify your impression of the materiality of that potential demand driver for 2024. Do you view that as an incremental needle mover for you all? And then do you have any additional certifications, etcetera, that your subsidiaries perhaps need to attain to win that work and then you have the capacity to kind of take that on? And then for Carlos, just stepping back and thinking of the post Wencor and Exxelia balance sheet that you are sitting on now, you are facing one of the most significant de-levering processes in recent memory for HEICO.
And we have just witnessed a significant and favorable change to financial market conditions in the last month or so. And while I am no macroeconomist, things could continue to favorably develop here in 2024. So, I just wanted to ask about your thinking and has it changed at all regarding the cost or pace of this de-levering journey that you are on. Any change to your thinking and/or steps as you kind of prosecute that playbook? Thanks again.
Eric Mendelson: Yes. Colin, so I will start out. What I was referring to in response to the prior question, concerning the GTF was that as a result of the GTF-powered aircraft being taken out of service in order to have their engines overhauled, that would create additional demand for legacy aircraft. So, I don’t want to call that out as anything more than a tailwind. But clearly, it’s going to be good for the use of the utilization of non-GTF powered aircraft. With regard to HEICO’s involvement in the GTF campaign, I would say that it is not material. We are not supplying PMAs on the GTF in any material quantity. And frankly, the service that’s being done now is being paid by the manufacturer. So, that would not be a revenue opportunity for us. If we have got businesses that are supplying parts into the OEM, then there could be a little bit of increased demand for that. But no, I would not call it out as a special one-time item.
