Nick Stanage: Yes. So having worked with Boeing for many years at Hexcel and other companies, I have the utmost respect for the talent, their processes, their capabilities. And it’s very unfortunate on what’s happened and what they’re going through, but it is making them stronger, much stronger from a continuous improvement on productivity, throughput, on safety, on all the elements. So I’m a huge believer that what they’re going through right now is just going to pay great dividends down the road. Now are they making progress daily? I have no doubt they’re making significant strides every single day, with a changing workforce and new people and training and different processes. Remember, what they do is quite different from our continuous flow 7/24 processing material lines.
Regardless, I’m sure they’re well on track, and I’m really not going to be the one to talk about their timing and how quickly they’re going to be able to ramp up and improve their productivity and efficiency. Personally, I’m optimistic on what I see. I’m optimistic on the poll. I’m optimistic on the communication and the alignment we have with Boeing.
Noah Poponak: Okay. Nick, that’s super helpful. I appreciate that. Yes. I mean, I guess the pool alone being in the low 30s, GE just a few hours ago, had similar comments on the engines. I would guess that Boeing would not keep pulling if they thought this was a much longer process, but is there just a risk that they didn’t know and they’re going to learn, it’s a longer process, and then that puts a divot in the middle of your year in 2024 at some point?
Nick Stanage: Yes. We’re obviously going to be on the call tomorrow listening. We’re obviously going to very close to Boeing. They’re very transparent on what they’re looking at and what their plans are for the near term and the midterm. So I think we’ll know as soon as they know what they’re going to do. And I think your perspective on if they’re pulling at 30, they must have confidence, which I think that’s a very good assumption.
Noah Poponak: Okay. And Patrick, just one more on the margins. I think you had last quarter talked about the back half better than the first half, and that was driven by the pace of volume and your investments and some costs. You normally have the 3Q seasonality. So that was going to look kind of different than a normal year. This first quarter looks better than — is better than consensus, maybe a little better than you had. I guess just does the year now look a little more even quarter-to-quarter through the year, back half versus first half than you previously thought?
Patrick Winterlich: Well, I mean, again, with the provider of the stock comp impact on Q1. Yes, we’re still confident we’re going to see an improvement. It is slightly flatter than we said before. I don’t think we’re going to get into that kind of quarter-by-quarter analysis. We see steady margin progress. Volume leverage driving steady margin progress as we go through the year. We’re standing by our annual guidance. You can kind of back into that, as I know you do well, Noah. And yes, we’re positive, and we see a strong second half of ’24 still.
Operator: Our next question comes from David Strauss from Barclays. Please go ahead.
Joshua Korn: Hi, good morning. This is Josh Korn on for David. I know the guidance this year implies like mid-20% incremental. I just wanted to ask kind of what sustainable incrementals could be — could look like going forward in the medium term? Thanks.
Patrick Winterlich: Yes. I mean, as you know, Josh, we’re not going to give out an incremental target. We backed off that some time ago, depending on growth in quarter-to-quarter, it just becomes a minefield because you can’t have consistent incrementals. We’re always going to take any incremental sales we have, any upside and try and leverage it as strongly as we can. Our goal is clearly to drive our operating — adjusted operating income margin to mid-teens and then beyond mid-teens, back to the 17%, 18% where we were before and ultimately look to go beyond that. But the target right now is getting back to the mid-teens and pushing as hard as we can. And within that, whenever we get the opportunity, we will drive incremental as strongly as we can.
Operator: Our last question today comes from the line of Pete Skibitski from Alembic Global. Please go ahead.
Peter Skibitski: Yeah. Thank you and good morning, everyone. Best of luck, Nick. You went on a nice quarter. That’s good.
Nick Stanage: Thanks, Pete.
Peter Skibitski: Only question for me just on Space & Defense after the nice quarter there following a strong 2023, can you remind us your split in Space & Defense between the U.S. and Europe I couldn’t remember which geography was bigger for you. And are you seeing outsized growth in Europe right now just because of the threat level over there and so many of the NATO nations increasing their defense budgets. That’s it for me.
Patrick Winterlich: Yes. Pete, I mean we have seen a little bit of a realignment over the last 12, 18 months. I mean, the U.S. is by far the biggest. It’s still 70%, perhaps a little bit more. But Europe has grown. It used to be sort of 20% a little bit under. It’s now well over that, pushing towards more 70-30 or around that bracket. So the U.S. is definitely the biggest. It’s the strongest, and I would expect that to continue. But Europe, exactly to the point you’re making with the geopolitical situation, budgets have got stronger, more of the governments in Europe have put more money into the military, and we’ve seen that boost a bit, so 70-30 more broadly.
Operator: That does conclude our question-and-answer session. And with that, that does conclude today’s conference call. Thank you for your participation, and you may now disconnect.
