Myles Walton: Yes, no guarantees from me, John. And just one clarification. The…
John Plant: I realize that that’s why I put it that way. That’s why I try to not to put my head in that noose because I had no plan.
Myles Walton: I’ll keep lining it up for you.
John Plant: Questions that knows that sort of stuff.
Myles Walton: One clarification. Are you saying that the commercial airfoils are now close to $550 million in 2024? Is that what the math gets to?
John Plant: I actually don’t think I quoted a number. You talked about the spares on commercial now?
Myles Walton: Yes, exactly.
John Plant: Yes, I think it’s about right. I’d have to go back to my notes to guide what a more precise number. I think its well above the $400 million that we saw in 2019. So I think $550 million is probably a best approximation, and Ken can jump in if he wants to correct me on that number. The defense spares for last year, we’re already growing from like 400 to 600 [ph], and that’s continued. So it’s all good on that front.
Myles Walton: Okay. Thank you.
John Plant: Thank you.
Operator: The next question is from Sheila Kahyaoglu with Jefferies. Please go ahead.
Sheila Kahyaoglu: Good morning, guys. Thanks, John and Ken. Maybe can you talk about margins? You raised margins by 100 basis points at the midpoint. And we don’t typically think about you guys having a different economic value on OE versus spares. So you’re still hiring to have to flex on – to match rates. And so I guess, what got better on the profit line? And how do you think about that trending throughout the year?
John Plant: Inevitably, if you look at our rate of hiring, and we’re also coming off a bigger base of experienced labor. So part of that is improved labor efficiency, Sheila. And notwithstanding, I’ll say, the Boeing volatility, I’m hoping we can plan our way around because the overall revenue with that, obviously it will be a different mix and different plants. But I’m hopeful we can manage our way through to keep that the overall operating efficiency that we have had in Q1, and that’s what we’ve guided to. You can see we’ve guided to a 24% EBITDA margin. So even though, let’s say we look to see that go down a little bit in the second half, and that’s a – let’s say, a 28% plus business. And therefore, we’ll need to work the other harder just to keep it right 24% in terms of EBITDA margin percentage, which we believe we can, and we’ll do otherwise, we wouldn’t have guided there.
But I think it’s been one where nothing ever moves in an absolute straight line. Like on a graph, you make little steps this quarter. It was a significant step for us we’ve made I’ll call it, a reasonable half a step in the second half of last year. And then we saw a lot of the things that we’ve been doing come to fruition and achieve that margin rate assisted by the, I’d say the step-up in demand and essentially, we’ve also been able to achieve a lot of that without taking labor on. So for example, all of the $400 million effectively were in our engine business because the way we see that going forward. And the net – even though we have a net increase in revenue across fastener structures and wheels is that essentially, where is a [indiscernible] in terms of labor.
So all of that came out of productivity, and so we think that we’re going to be able to maintain that productivity during the second half and then improve ourselves in Engine a bit to offset the – I’ll say, the revenue volatility that we’re going to get, which is basically up in aerospace, up in defense, still net up in commercial despite the Boeing [ph] assumption to put down in commercial wheels.
Sheila Kahyaoglu: You did mention price in that, John. Can you sustain the Q4 net price drop through? Or does it actually get better?
John Plant: What I’ve said previously is that we thought that we were going to be able to essentially hold and match what we did in 2023 into 2024. I think where we are today is that we’re absolutely clear that we’re going to – we’re going to be able to hold much and maybe improve a little bit over 2023 levels on that front as well. So again, if you put, I’ll say a fairly good price assumption with good mix with good spares and then offset the negative from Wheels. We just got that high margin rate. That’s why we sort of balance it all out, given you the guide we have at a 24% margin.
Sheila Kahyaoglu: Thank you.
John Plant: Thank you.
Operator: The next question is from Gautam Khanna with TD Cowen. Please go ahead.
Gautam Khanna: Hey, thanks. Good morning and great job.
John Plant: Thank you.
Gautam Khanna: I had two questions, John. One follow-up clarification from what was just asked. On just the fungibility of production within your operations, i.e., if in a quarter or a month, Boeing asks, or GE [ph] asks for a destock; I’m talking about the subcontract manufacturers to Boeing. Just – how able you guys are to respond. It sounds like you’re able to just move and navigate from one program to the next, and so it is pretty fungible? And then my second question is, just longer term, John, you’ve done a great job. I’m just curious what your longer-term plans are at the company. I hope you plan to stick around, but just wanted to get you to opine on your future plans? Thanks.
John Plant: Okay. Thank you. So we don’t have, what I call customer dedicated plants, more product focused. So we deliver to multiple customers from most of our plants. In the case of fasteners, some are a little bit more wide-body narrow-body focused. And so that mix can make a big difference. So if you wind the clock back, a year, 18 months, where the, I mean, essentially 787 was halted. I mean you could say, well, one a month, but I mean it wasn’t really one a month. And I remember I’ll say, I think Q4 2022, essentially or Q1 of 2023, we were only producing the metallic fasteners. As that was having a negative effect on us because we had two or three plants which were grossly underloaded because the equipment required to make the fasteners going a composite aircraft is different to those on the metallic aircraft.
