You look at global airport expansion that’s continued to go on – projected to continue to go on for years into the future. That’s all – that all continues to bode well for our AeroTech business. So the dynamics in our vocational business are really, really solid.
Nicole DeBlase: Thanks, John. Definitely encouraging to hear all of that. And I guess just last question is capital allocation thoughts. You guys have been pretty active on the M&A front lately. How’s the pipeline? And should we expect maybe a bit more of a shift away from M&A since you’re integrating AeroTech this year? Thank you.
John Pfeifer: I would not say that there would be a shift away from M&A. We’ve got an always-on mentality. If you’re really truly an acquisitive company, you have to have an always-on mentality because good M&A is a process of patients, so to speak. You really have to know where you want to acquire, and you have to be very, very patient until the right opportunity comes. And if you don’t have an always on a constant mentality of paying attention to where do you want to be and what targets make sense in terms of a fit for our company, then you miss the opportunities when they arise. So it’s really hard to predict when that’s going to happen, but it will happen again. And our always-on pipeline will be in play for quite a while as we have a great balance sheet and we have the opportunity to continue to add value to this company by doing that.
Now having said that, we always expect to return 25% to 35% of our free cash flow to shareholders, we continue to increase our dividend that you saw today, and we’ll continue to do share buybacks and we kind of weigh that together with when we have opportunities to make acquisitions. So I think that’s the color that I’ll add on that.
Nicole DeBlase: That makes total sense. Thank you.
Operator: Thank you. Our final question comes from the line of Steve Barger with KeyBanc Capital Markets. Please proceed with your question.
Steve Barger: Thanks. John, to your comment on being capacity constrained this year, can you quantify the level of incremental capacity for 2025 that you expect relative to the $10.4 billion revenue guide this year?
Mike Pack: Certainly, there’s a step-up. I guess it’s kind of early to quantify it, Steve, but there’s a meaningful step-up if you think about the Murphysboro facility for vocational, which is an 800,000 square foot facility or 800,000 square foot plus we’re going to have post – coming online next year, which is going to be a meaningful contributor. The revenue contribution is pretty small. It’s going to be meaningful. And I think talking about 2025, that’s going to be a meaningful contributor to profitability. And of course, we’ve talked about access having – there’s a lot of capacity that becomes available that you’re not necessarily going to have year one sales on that, but we’re really investing for the long term. So we see step-up opportunities there as well. So as we look to next year, we just don’t see the same level of constraints that we’re facing today.
Steve Barger: I guess, does that suggest that organic growth ex price could be like 10%? Or should we be thinking mid-single digit just to help level set how people are expecting the profitable growth commentary that you talked about in the press release.
John Pfeifer: Yes, I don’t know that I’m comfortable to give you a number right now, but let’s just say, in 2025, we expect it to be a material number.
Steve Barger: Got it. And then just one quick one. John, going back to your comments on direct commercial sales for JLTV, are those predictable enough that you’re building some of that into your internal model for 2025 and beyond – or is that unpredictable, meaning some years will be zero and some years could have a material benefit?
John Pfeifer: I don’t think we’ll see years that will be zero. That’s for sure. Let me just suffice it to say that those are – that’s a really good business for us. It’s typically hundreds of units per year, not thousands, which would be for the DoD. But when I say that, I will say that it’s not going to be surprising to hear that it’s continuing to grow, that the international direct sales are continuing to grow. And I think, unfortunately, we all know why. There’s unfortunately conflict in the world, and that conflict creates a desire for many countries to continue to shore up their DoD budgets. And I think that, that’s why we’re seeing growth in those direct sales to international customers that we have.
Steve Barger: And just one quick follow-up on that. How long is the approval process? Or is there an approval process? Or can you basically take an order and ship.
Mike Pack: For direct commercial sales, it’s largely going to be direct commercial sales that there is an approval process that it goes through.
Steve Barger: Understood. But is that a quick – typically pretty quick? Or can there be months or quarters delay?
John Pfeifer: Normally it’s pretty straightforward. There could be certain customers where it’s a little bit more involved. But normally, there’s a process, but if we understand the process, we know how it works, and it’s pretty straightforward.
Mike Pack: Think months, not years.
Steve Barger: Got it. Okay. Thanks so much.
John Pfeifer: Thanks, Steve.
Operator: Mr. Davidson, I would now like to turn the floor back over to you.
Pat Davidson: Great. Thanks, Christine, and thanks for joining us today, everybody. We’re pleased to be entering 2024 with momentum and a strong outlook. We will be participating in several analyst conferences in February and March. Perhaps we’ll see you there. And please reach out to us if you have any follow-up questions. Have a great day.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
