Alexander Shen: I would say it’s neither because Tom’s explanation was spot on. Some of it is legacy pricing that we haven’t been able to move up. So we need to build out those and get those shipped out. That’s one.
Ross Taylor: Okay. Now looking at…
Alexander Shen: Sorry, Ross. And then the other one is when our absorption improves with better throughput and higher throughput, that will also ease some of the pain. So I think the concentrating on those 2 pieces is essential in answering your question.
Ross Taylor: You’ve put a lot of money into CapEx in STADCO since you’ve acquired it. You are looking now at a significant ramp in business coming up. We have 2 recognized programs we know they’re involved with, the F-15EX and the CH-53K. Both of those programs are seeing a significant ramp up in production run rates. So one would assume that the components, and we’ll be seeing that this year and next year, next fiscal year, so that would be the year — fiscal year ending September 30 of this year and September 30 of next year. Have you — do you have the capacity to produce the projected run rate for both of those programs at STADCO’s facility at this point in time after the CapEx you put into it since you’ve acquired it?
Alexander Shen: I think as usual, I’m going to need to answer your question by rephrasing the question and answering what I can answer.
Ross Taylor: Okay.
Alexander Shen: So the — without delving into areas where I can’t talk about it, I can tell you that the requirements from the customer, the external customers at STADCO are being satisfied with what equipment we have in place now. And the CapEx is helping. I really can’t talk too much about the actual ramp-up numbers. What I can tell you without a doubt that our current CapEx is definitely helping and that we are able to currently meet the requirements of the external customers, 2 of which are named by you just now, F-15 and CH-53K.
Ross Taylor: And since it’s pretty clear what the ramp is going to be, I assume that you are comfortable with your ability to continue to satisfy your customer as the publicly stated ramp run rates occur.
Alexander Shen: I’m trying carefully not to talk about the publicly stated ramp rates as — what’s out there versus…
Ross Taylor: They are out today.
Alexander Shen: I understand.
Ross Taylor: Yes. I’m a little confused why you can’t talk to something that the Pentagon has said it’s going to happen and where you’re…
Alexander Shen: I’m not denying what the public information is, Ross.
Ross Taylor: Okay. I was just asking if you’re comfortable that you can continue to satisfy your customer, say, over the next 1.5 years, 2 years.
Alexander Shen: So far, I’ve been personally also speaking with them, and they continue to be satisfied.
Ross Taylor: Okay, cool. and they’re not worried at this point in time. They’re not pounding on you to do something different?
Alexander Shen: I think the pounding is mutual.
Ross Taylor: Okay. So — and looking at this also at this stage, you’re kind of running — you’re looking at — what kind of CapEx do you see putting into STADCO over the balance of this calendar year?
Alexander Shen: I don’t know yet.
Ross Taylor: Is it significant? Do you see it being at the same rate it’s been at since you guys have taken it over?
Alexander Shen: I will say that our concentration and our #1, #2 and #3 focus is on cash. So…
Ross Taylor: Go ahead.
Alexander Shen: So I think as far as what my prediction for CapEx is, that might be my #4 item. I don’t know yet.
Ross Taylor: Okay. Okay. And so at this point in time, also it seems that you’ve put into the NASDAQ. I know you can’t comment on anything, but have they given you an idea of how long it would take for them to review your request?
Alexander Shen: Ross, there’s nothing further that I can discuss on that.
Ross Taylor: Okay. I’ll pass it on. Let someone else — I’ll reserve the right to come back, recall the witness.
Operator: . That concludes our Q&A session. I will now hand the conference back to our host for closing remarks. Please go ahead.
Alexander Shen: Thank you, everyone. Have a great day.
Operator: Thank you, everyone. This concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
