Because it actually lines up with the recovery timing of the semi cycle.
David Silver: Sorry. That was great color. One more maybe from a resources or budgeting perspective, but I always think a lot of — October is when a lot of companies do the budgeting for the coming year. And on this call and the previous ones, I mean, you’ve outlined a number of kind of incremental new initiatives. Today was space and defense, a little bit earlier, of course, there’s the multistep expansion in Electronic Materials. And I did notice a new project in Precision Optics. So, if I was a betting man, I would say that the $95 million CapEx for this year would have to rise for next year. And then even beyond just CapEx, I’m thinking of R&D resources, technical selling, which you cited as an aspect of your success in Performance Materials.
But just in terms of overall resourcing, what are you thinking about for, let’s say, 2024 and 2025? So dollars, people, I guess, R&D technological expertise, what’s on tap for the next year or two as you’re planning out things now?
Jugal Vijayvargiya: Yes. Well, first of all, you’re right on the timing. We are starting to think about that and starting to put that together. And as you know, we’ll be talking about that to you and to everybody in mid-February, when we come out with our guide and our plan for 2024. So, I’m very much looking forward to that because I think it’s going to be another exciting year for us, along with ’25 and so on. So all these opportunities that you’ve indicated, we expect to play out in ’24, ’25, ’26 timeframe. With regard to our investments, I mean, we’ve never been shy to invest, as you know. This is a is a fantastic opportunity for us to continue to invest in our business. And we’ve done that over the last number of years, and we’re going to continue to do that, whether it’s R&D resources, whether it’s CapEx resources or any type of M&A, that may come up that fits exactly the way we would like in our business.
So, we’re going to continue to look at that. Even when you look at, for example, R&D this year, even though the markets are significantly slower, I mean we’re not slowing down on R&D. We are still investing in R&D, and it’s our expectation that we’ll continue to do that, and we’ll continue to do that on the CapEx side as well. So I’m very much looking forward to sharing with you guys our plans as we put them together.
Operator: Our next question is coming from Dave Storms with Stonegate Capital Markets. Your line is live.
David Storms: So, just wanted to touch on one of your end markets. I know telecom is probably one of your smallest end markets, but it just seems to keep growing. I was wondering if you could just talk to us a little bit about what your customer acquisition environment looks like here? And if there’s going to be any meaningful impact from that going forward?
Jugal Vijayvargiya: Yes. Well, telecom and data center, you’re right. It is one of the smaller markets, but it is a market that has nine consecutive quarters of growth. And we’re very much looking forward to continued growth in this area. As you know, bandwidth requirements continue to increase, data center requirements, cloud services requirements continue to increase, and that’s where this end market for us is very important, and then we continue to supply material to this. So, we expect these areas to continue to increase over the next three to five to seven years. And I think we’re very well positioned with our materials. The undersea cable market is a key area for us, where we provide volume-based materials, and I think it’s going to continue to be a strong market for us.
David Storms: That’s very helpful. And then just one more for me, if I could. What are you seeing on the labor front? There’s been a lot of the news about the UAW labor negotiations. It sounds like your shops are running well now. But if you needed to scale up at any point, what is your confidence that you could get more labor in the door if you needed it?
Jugal Vijayvargiya: I think our teams did a fantastic job getting labor into our factories. On the ’21 timeframe as the ramp-up happened, and I would that they’re going to do a really good job again in ’24, as the semi recovery happens. I think one of the things that we’ve stay focused on is making sure we’re retaining as much of the labor as possible, so that we can support the uptick in the ’24 timeframe. And then, of course, if there is additional workforce that’s needed, we will rely on our HR department to bring in the folks just like they did in ’21 and ’22. So I’m very confident that we’re going to be able to support any type of an uptick.
Operator: Thank you. We have reached the end of our question-and-answer session. So I will now turn the call back over to Kyle Kelleher for his closing remarks.
Kyle Kelleher: Thank you. This concludes our third quarter 2023 earnings call. A recorded playback of this call will be available on the company’s website, materion.com. I’d like to thank you for participating on this call and your interest in Materion. I will be available for any follow-up questions. My number is 216-383-4931. Thank you again.
Operator: Thank you. This concludes today’s conference, and you may disconnect your lines at this time, and we thank you for your participation.
