So I think as we work through a transition from legacy production to a new EMD program, I think we can manage our way through that well. And obviously, long term, it’s going to be a great story for Bell.
George Shapiro: Okay. Thanks very much.
Scott Donnelly: Sure.
Operator: Next, we move to Pete Skibitski with Alembic Global. Please go ahead.
Pete Skibitski: Hi, good morning, guys. Scott, can you expand on your opening comments regarding Caltex and your expectations there in 2024? It sounds like you think you might be a little bit weak there. Just was wondering what the drivers were?
Scott Donnelly: Sure, Pete. Look, that’s one business where we really depend on sort of industry customer forecasts. So our guide reflects that. We don’t really apply a whole lot of our own judgment to that. We really go with where the industry tells us they’re going and we got to see how the year plays out. I think we feel good about the business. Some of the restructuring we did was reflective of where the volume growth is and where the volume growth isn’t. But the business is in a healthy place, and the margins have been doing better as we’ve come out of all the sort of the post-COVID world and the volumes will be obviously consistent with global auto OEM numbers.
Pete Skibitski: Okay. Got it. And then I had a couple of questions on Aviation. Are you expecting Caravan sales deliveries to be up in ’24? I know you delivered a lot of them to Asia, and we’re seeing some softness in China. So just wondering what you’re seeing there?
Scott Donnelly: Look, Peter, I mean we’re not going to get into model-by-model. But I would say net of everything, the turboprop market is doing really, really well. As you know, that does tend to be a little bit more international. I think we usually give the numbers, roughly 60% international versus the jet side is 80%. But I think our Turboprop business is in a really good place. I think Caravans will do well. I think King Airs are going to be strong. We continue the ramp on the SkyCourier. So we tend to get most of the questions around Jet. But look, I think the turboprop business is in a very good place, and we certainly net expect to see that business continue to grow in 2024.
Pete Skibitski: Okay, great. Thank you.
Operator: Next, we go to the question from Cai von Rumohr with TD Cowen. Please go ahead.
Cai von Rumohr: Yes. Thanks so much. So, Scott, at Bell, are you looking for — is part of the profit strength this year ’24 coming from closeouts on the V-22 and the H1? And secondly, is there any risk to FLRAA volume from an extended CRR?
Scott Donnelly: So, Cai, look, I think the 2024 — obviously, we’ll see some contracts come to an end, and there will be some MR release when you do that. But look, I think we can execute well on that pro forma. I mean, I think Q4 is a good example, Cai. We had about $8 million total in the company of EACs that’s not a particularly material number and it’s flat on a year-over-year basis. So do I think we’ll have some reserve release next year? Sure, we will. I mean, we normally do as we perform through these programs. But I think the cost-out activity that we’ve been driving, the absorption and growth on both the commercial revenue side as well as the FLRAA revenue side will all help to contribute to preserving and getting a good margin rate for 2024.
And in terms of the — I’m sorry, in terms of the CRR, okay, I think we’re okay. I mean, as we’ve talked about before, if the CRR goes all the way through a full year, that could put some pressure for sure. I think the Army probably has backup plans, they’re trying to work in terms of how they would move money around. Obviously, FLRAA is a very high priority, very important program to them as well. So the whole thing would be a heck of a lot easier if Congress would just pass the budget for sure. But right now, I think we’re okay unless it really goes to a full year, I think we’ll collectively [return] (ph) ourselves and the Army to be able to manage through it.
Cai von Rumohr: Got it. And last one. At Aviation, can you give us some color in terms of where the order strength is in terms of fractionals versus high net worth versus corporate?
Scott Donnelly: It’s pretty stable, Cai. We aren’t really seeing a change from where we were. We don’t break all that out, obviously, but it’s — the demand has been pretty strong. In terms of mix, as you know, the jet stuff tends to be more domestic, roughly 80-20, the turboprop is more like 60-40 international. We haven’t seen big changes in that. We haven’t seen big changes in the mix between what goes through the fractional world and what goes through the whole aircraft side, end demand continues to be, we think, pretty strong across the board.
Cai von Rumohr: Thank you very much.
Operator: Next, we go to a question from Doug Harned with Bernstein. Please go ahead.
Doug Harned: Good morning, thank you. Scott, in the past, you commented on the supply chain that you’d actually seen more challenges at Bell than you had in Aviation. And given the strong margins at Bell, I mean, can you comment on where that stands today?
Scott Donnelly: Well, look, this is the [challenge of the world we’re look at, right?] (ph) I mean, we had some pretty significant impacts at Bell in the earlier part of the year around a very small number of suppliers, a couple of those suppliers either got healthier in some cases, we brought stuff inside and exited those suppliers. So when you do that, we had a situation at Bell with a couple of the aircraft models where we had very specific supply issues that we were able to resolve. And as a result, Q4 had a pretty strong delivery number on a year-over-year basis. So again, this is the challenge. So while the absolute number of parts might be getting less, you can still have a part problem that has a significant impact. So that’s just the nature of the beast and what our guys work through every day.
So I think we did resolve a couple of critical issues in the latter part of the year at Bell that enabled those higher deliveries. And obviously, we’ve got to keep working.
Doug Harned: And then if I go back to the Aviation side and the end market, one of the things we’ve seen is more preowned airplanes out there for sale, higher percentage. We’re still not back at kind of historical norms. But you were commenting that you’re seeing a little bit less pricing benefit relative to inflation. I mean are you seeing any potential pressure here from pre-owned and as you look at your market?
