Michael Hartnett: Yes, you will see industrial gross margins were about 45% this quarter, so we haven’t even seen the full benefit of what aerospace is going to bring to the table as those plans start to push even higher. So that is where we have some upward mobility.
Steve Barger: And on the industrial side, another bearing company this week took guidance down saying it is industrial distribution and it is off highway customers are destocking even though they think that underlying demand will stay positive. Are you seeing any similar issues across the Dodge portfolio? And do you expect the industrial segment will remain positive from a growth standpoint each quarter this year?
Michael Hartnett: How did I know you were going to ask that question. So, after reading through the transcripts of the other bearing companies, I thought that, we should investigate the destocking issue ourselves internally, because I haven’t heard very much about it. And normally I would hear, I would get at least one or two panic phone calls if that were occurring. So we don’t see that occurring. We do see what is happened was last year the supply chain was still fragile and people were worried about getting the product that they needed to run their plants. So there was a lot of panic buying. So we had a backlog of many tens of millions of dollars that were shipped. As soon as we took the order, it was late. So it was passed through the minute they take the order.
So, we didn’t have the product available because it wasn’t produced and yet we had this order that we could ship anytime. So because of the panic buying. So this year, the panic buying, I think people have more confidence in the performance of their supply chain. So we don’t see that at all. That level of panic buying and things are definitely back to normal. We suspect that is really what is going on.
Steve Barger: And so are you happy with your own inventory position relative to what you see for demand across both aerospace and industrial?
Michael Hartnett: Yes, we are. Actually I think we have a little bit too much inventory and we are going to, we are trying to bleed that down. And we got caught up in the supply chain problem too, where too much material came in because we had to go to several sources and then they all solved their problems and sent it in. So we will be bleeding inventory down for the most part, for much of the year, and particularly in the industrial businesses. The aircraft business is just maybe just the opposite, materials lead times are out to, from what is normal of 40-week material lead time to now it is 60 and maybe even more 70-weeks. So, we are taking sort of a more aggressive position to bring in safety stock of key materials to make sure that we don’t disappoint our customers.
Operator: Our next questions come from the line of Michael Ciarmoli with Truist. Please proceed with your questions.
Michael Ciarmoli: Good morning, guys. Nice results. I think, nice, gross margins. Before I try and dig into the gross margin a little bit more. Just I may have missed it. What was the year-over-year growth rate for industrial OEM and distribution if you guys have that?
Michael Hartnett: So industrial OEM was actually down 9.2% year-over-year, and industrial distribution was up 12.7%.
Michael Ciarmoli: Got it. Perfect. So just back to the margins, and I guess maybe to try and attack it another way, you talked about 41% to 41.5% this quarter, so sequentially, you made some really big improvements on down revenues. And you know, I know you talked about the aerospace volumes, but aero was down. Did anything changed quarter-to-quarter? Did you have a lot of contracts or pricing flow through or Mike, I think you mentioned kind of calling the portfolio and taking out some product lines, but it just seems to get this gross margin leverage on weaker sales sequentially seems pretty, pretty surprising too. So maybe anything kind of jump out recently here?
