Keith Harvey: Yes, we can. Because let me tell you one of the reasons that the aero is going to wouldn’t perhaps be as high as the increment that we had last year. It’s back to my comment about general engineering beginning to recover in the second half. And so we’ve got a commitment to our service center customers, some large OEMs and other markets, that we’re not going to cut them out just because aerospace is returning. If you can recall, we had that conflict in 2019. And so, we made a commitment to those customers that we were going to not only service the growth for aero, but we’re going to be in a position to service their needs on general engineering. So that’s a reflection of moving part of that capacity to general engineering, most likely in the second half.
The other component there, Curt, is that, as you recall, a lot of the aerospace is contractual business. So there’s not going to be a lot of change on the pricing for a good portion of that business. Those contracts are generally multi-year that are in place. So, any additional capacity we’ve had in the past, we’ve applied to spot business, which has been pretty good for us as well. Well, the business in general engineering for spot business is as equal to the returns that we can get on aero almost. So we’re going to make sure that we cover all parties. But it’s back to the reasoning that we’ve launched Phase VII. To the point we need more capacity and we like the way we’re going to lay it in over multi-years, smaller increments, and it allows us to make sure that we grow with our customers.
Curt Woodworth: Okay. And then how should we think about CapEx for ’25? I know you talked about the majority of the roll coat spend will be finished this year, but then you may have a little bit incremental on Phase VII. Are there any other moving pieces or carryover CapEx to think about? Thank you.
Keith Harvey: Yes, not at this point and not at those levels. So, we have our sustaining CapEx we’ve talked about roughly $60 million, roughly. We’ll have smaller, we should have the roll coat line completed, the majority of that spending behind us. And so other than sustaining and some smaller growth potentials like I could envision for the second Phase VII or something of that magnitude, we expect that the spending will dramatically reduce in the out years — starting in ’25.
Curt Woodworth: Okay. All right. Makes sense. Thank you.
Keith Harvey: Thank you.
Operator: Our next question comes from Josh Sullivan with The Benchmark Company. Please proceed with your question.
Josh Sullivan: Hey, if you get an overlapping GE semiconductor cycle and an aerospace cycle, that commitment you just referenced to the GE market, is GE still going to be a spot-based market or I guess, how much of the current expansion that you’re talking about this year is speculative versus contracted?
Keith Harvey: Well, a change that’s taken place, Josh, for generally, general engineering has historically been a spot market, but for a lot of the large OEMs that are going to be requiring some of our product, they are interested in multi-year contractual agreements. And that’s a little bit because what they’ve experienced is what happened in the aerospace a number of years back. Their growth can be limited by the availability of existing capacity. And so as they look more strategically of securing their business and their growth, they are more interested in entering into multi-year agreements. And of course, we are going to take care of our service centers customers. But some of these large OEMs with reshoring that’s taking place provide really great opportunities for us. They love our Kaiser select products and they’re preferred. And again great growth opportunity for us. And again a reinforcement for Phase VII.
Josh Sullivan: Got it. And then maybe just what do lead times look like at those service distributor centers for aero/high strength right now?
Keith Harvey: Well it varies by supplier. I can tell you that Kaiser is and has been on allocation for a long time and we’re currently unallocated to customers. And another reason for Phase VII launch.
Josh Sullivan: Got it. Thank you for the time.
Keith Harvey: Thank you.
Operator: There are no further questions at this time. I would now like to turn the floor back over to Keith Harvey for closing comments.
Keith Harvey: Okay, thank you Maria. And thanks for everyone for being with us today. I look forward to updating you on our first quarter 2024 results in April. Thank you.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
