Michael Hartnett: Sure. Well, just to kind of reframe this Specline. Specline produces lines, spherical plane bearings and rod ends for aerospace customers. That’s their business. They basically have the same customer base as RBC, very similar products, in some cases, identical. So, we’re comfortable with their markets, their manufacturing methods. We’re very aligned here with Specline and how they ran the business. So, the acquisition gave us more plant capacity in a very high demand environment. And it gave us a trained workforce and made our lines more important to our largest customers. So, this really hit all of the must haves for an acquisition for us. That’s our acquisition checklist right there. And so, the owners decided to retire, and were looking for a home for their business. We learned about it. And so, that’s sort of the background story behind the acquisition.
Unidentified Analyst: Gotcha. I appreciate that color. And you mentioned your net debt is now down to about 2.7 times. And I know you guys had a bent towards aerospace and defense, looking to bolster that business. Are you still — are you guys still looking? And what does the pipeline look like for you guys in terms of the acquisition pipeline?
Michael Hartnett: Well, we’re certainly still looking. We don’t have anything in the immediate crosshairs. We have concepts and ideas and theories. And we’re studying the current candidates, but we — there’s nothing immediately actionable.
Unidentified Analyst: Okay. Got you. And then just turning to aerospace and defense. You guys — the first quarter growth rates above 22%. And you guys mentioned the increased build rates. Are you expecting growth to accelerate in the back half of the year? Or should we kind of think about tapping the brakes here a little bit and not getting too overzealous.
Michael Hartnett: Well, I’ll tell you right now, we’re going through a process with all of the companies, but we’re particularly paying attention to the aerospace and defense companies on a five-year plan. And what their content is per ship and how many ships and so on and so forth. And do we have enough floor space? Because you just — if your business in aerospace is going to jump 25% next year, you can’t put everything in place to support that kind of a jump if you don’t have it already. And right now, we’re exceeding where we are — where we were in 2019 before the pandemic. And so we know we’re good to go in terms of what our current steady state demand is. But to tell you the truth, we’re standing on our tip — our tippy toes in terms of the capacity that we have, the number of people that we have, so on and so forth to support what we see coming into our order book.
So, yeah, I’d say that we’re going to be — next year looks like a very strong year for us in the Aerospace/Defense segment. There’s — unless some world event happens that grows the whole thing into a tailspin. We’re going to be substantially strong next year in those markets.
Unidentified Analyst: Okay, great. Really appreciate the call there, guys. Thanks.
Operator: Thank you. Our next question is from Joe Ritchie from Goldman Sachs. Please proceed with your question.
Vivek Srivastava: Hi. Thank you. This is Vivek Srivastava on for Joe. My first question is on your SG&A as a percentage of sales. It definitely came in much better than the previous guidance. Just curious what caused the upside surprise? And how much of it was driven by synergy specifically? And then just very quickly, the stock comp also stepped down. So, going forward, any indication on what should be a more reasonable stock comp expectation?
Robert Sullivan: Yeah. Absolutely. So, there was some favorability that we experienced in certain fringe costs and timing of different items that had come in Q1 that weren’t repeating in Q2. So that offered some improvement on the SG&A as a percentage of sales. There was the temporary reduction in stock comp expense. I expect Q3 stock comp to be $4.3 million compared to the $3.7 million we saw this quarter. So, we had favorability in some of the variable costs that came in, which really drove the nice quarter. But as we discussed — as we put out there in the release, as a percentage of sales next quarter, we’re thinking somewhere between 17% to 17.5%.
Vivek Srivastava: That’s helpful. And maybe just on the new plant, great to hear that you are freeing up more floor space. But just maybe in the medium term, as this new plant comes through, how should we think about maybe some productivity headwinds, or any elevated costs you would point out because of the plant coming up?
Daniel Bergeron: Yeah. For the Tecate plant that Dr. Hartnett was talking about, we don’t expect to see a real disruption there and our big cost impact to capitalize that plant and it’s — and the floor space over the next 12 to 24 months. So, it should fall in our normal CapEx and so.
Vivek Srivastava: Great. That’s helpful. And maybe just a bit more medium to long-term question. Just mega projects, we are seeing a lot of activity in the projects which are breaking ground right now. Just any color you can provide on what is your content as a percentage of total plant cost? When do you see some of the benefits start to flow in your orders, especially on the industrial side would be helpful?
Michael Hartnett: I’m sorry, can you clarify the question?
Vivek Srivastava: Yeah. Absolutely. So, the large projects like over $1 billion projects, we have about $900 billion of such projects being announced now. A lot of semiconductor production, a lot of EV battery LNG plants. Just curious if you can — you have some color you can provide on when you should start seeing orders from these projects start hitting your P&L?
