Joel Reiss: When you’re saying suppliers as in like — because we obviously sell to the airframers as well as…
Peter Arment: Yeah. Your suppliers, yeah.
Joel Reiss: Our suppliers to us, I don’t think that there’s anything significant. I mean we’re still well — as Kevin put in his opening remarks, we’re still well-below the peak we were at pre-COVID. 787, I think was running at 14 aircraft per month. And so I don’t think, from that standpoint, our suppliers have that issue. I think it’s just been very sporadic. We can’t get a certain component in, they’ve got to ramp it up. I don’t know that there’s anything specific material, but I think we believe right now we’re well-positioned for the — where we are and can support a higher ramp-up rate.
Peter Arment: Appreciate the details. Thanks guys.
Operator: Our next question comes from the line of Michael Ciarmoli with Truist Securities. Your line is open.
Michael Ciarmoli: Hey, good morning, guys. Nice result.
Kevin Stein: Good morning.
Michael Ciarmoli: And thanks for taking the question. Kevin, maybe just back to the aero — the commercial aftermarket. Anything you parse out from demand trends or actual booking sales, wide-body, narrow-body airframe engine? I know you flagged interiors. Is that maybe a function of just more retrofit activity or any noticeable trends?
Kevin Stein: I think on the interior side, we’re really just in the early innings of refurbishment. We’re starting to see a few of those programs. Again, I think we’re anticipating seeing more of that likely as we get to the end of this year and into early next year. A few of them we originally thought might have happened earlier have slid to the right. In terms of passenger, I don’t know if we have any specific data to tell you, single-aisle versus wide-body. Certainly, we’re encouraged by the continuing improving trends in the international market. So that still lags the single-aisle market, but continues to be on a good rate of growth. I don’t know that we have any specific data, I mean with the number of part numbers we sell is it’s too difficult to try to come back to some specific around single-aisle wide-body, unfortunately, at that level of granularity.
Michael Ciarmoli: Got it. And then maybe, Kevin, just one last one on M&A. You keep talking about the small and kind of medium-sized pipeline. What is sort of your definition? I mean CPI, I guess, $300 million. How big is sort of the upper range of a medium-sized transaction?
Kevin Stein: Yes, probably somewhere around $1 billion plus. But not $4 billion that becomes big for us. So, hopefully, that gives you some — there’s no science here.
Michael Ciarmoli: Yes. Got it. All right. Perfect. Thanks guys.
Kevin Stein: Sure.
Operator: Our next question comes from the line of Gavin Parsons with UBS. Your line is open.
Gavin Parsons: Thanks, guys.
Kevin Stein: Yes.
Gavin Parsons: Maybe on CapEx, what’s driving the big step up this year?
Sarah Wynne: Yes. On the CapEx, obviously, we’re always looking to add infrastructure to our op units and provide cash productivity improvement, much like what Joel just mentioned with machinery and other efficiencies in the op units to help drive the value drivers. Nothing specific, there’s no big one thing in there. It’s just the usual CapEx that we provide to the op units based on their needs and driving the value.
Kevin Stein: Yes. Our process, it comes — these requests come from the sites. So our goal is to keep them fully funded. And if they see great productivity projects, that’s where the bulk of our CapEx goes to. But I would also say one thing that’s different from years past is, we’re now doing more solar types of programs that we wouldn’t have done in the past. They have great payback, but that has been an added need for us on the CapEx side.
Gavin Parsons: Interesting. Appreciate that detail. And I know a lot of aerospace work needs to be manual, but how much automation do you think you can get in the business over time?
Joel Reiss: I don’t know that we have any specific numbers, as I kind of highlighted it, if I was — you’re asking the same question five years ago, I probably have a very different answer. I continue to be impressed by the ways that we’ve been able to incorporate. I was one of our businesses in the U.K. last month, and they’ve automated painting operations, polishing operations, brazing operations. So, I think we continue to be optimistic that that as automation costs come down, as the cobots prices comes down is that it becomes easier and easier for us to incorporate it. and our challenges were a low-mix — sorry, high-mix, low-volume manufacturer. And so, the challenge is to be able to do automation, but be able to do it for many, many part numbers, not just one very small subset of parts. And I think we believe there’s still a lot of opportunity for that.
Gavin Parsons: Got it. And I think Noah asked about kind of the price cost spread. Have you guys seen your input costs starting to ease or not yet?
Kevin Stein: I think we’re still in the early innings for that. Labor costs, I think, are probably starting to, as you see in the overall market, but I don’t know that there’s anything significant at this point. It’s really too early in the fiscal year for us to have seen something dramatically different than planned.
Gavin Parsons: Make sense. Thank you.
Operator: Our next question comes from the line of Seth Seifman with JPMorgan. Your line is open.
Seth Seifman: Hey. Thanks very much, and good morning, everyone.
Kevin Steinans: Good morning, Seth.
Seth Seifman: Good morning. I wanted to ask about — I may be misremembering here, but if we go back to sort of the pre-COVID days, maybe even pre-Esterline days, I think kind of the cash balance to think about was something in the $750 million range. A lot of stuff has changed since then. I think if we do pro forma for the pending acquisition, probably at about $2 billion right now. How do we think about, what’s the appropriate cash balance now and going forward?
Sarah Wynne: Yeah. We’re not anchored into a specific amount, as you could obviously say. We’re happy to keep cash on the balance sheet. And like you pointed out, we have $2 billion of pending CPI acquisition, which is obviously more than we need to run the business, but we’re happy to have that cash on hand to support any other opportunities, M&A or any other investments that popup for us.
Seth Seifman: Okay. Okay. Great. And then maybe just a quick follow-up, I thought that last answer to Gavin’s question was interesting. When you think about — I think when we hit the pandemic and all the rates came down, most of the more labor-intensive part of your business is in the commercial OE piece. And so there is probably an expectation that as rates came up, you’d be adding employees. And so we’re certainly far from fully back up, but we’ve kind of come off the bottom. Has the amount of labor that you’ve added off the bottom, has it been kind of consistent with what you might have expected, less or more? And why?
Joel Reiss: I think our teams have worked hard over the last three, four years to continue to find good productivity projects. And so I if I — I don’t have any specific numbers in front of me, but I would think that we’re probably trending better than what we would have anticipated, if we were looking at the same thing three, four years ago. We had some learning curves I said, with turnover a couple of years ago, but I think the good news is with the lower rates that we’ve had, we’ve had a good opportunity to get those folks up to speed. So I think we think we’re positioned well going forward.
Seth Seifman: Okay. Very good. Thank you.
Operator: Our next question comes from the line of Scott Deuschle with Deutsche Bank. Your line is open.
Scott Deuschle: Hey, good afternoon.
Kevin Steinans: Good afternoon.
Sarah Wynne: Good afternoon.
Scott Deuschle: Joel, is F-35 aftermarket a significant portion of defense aftermarket revenue at this point? And then can you comment at all on how quickly that’s been growing recently?
Joel Reiss: I don’t have any specifics around any platform to give you. I think as we said, the defense aftermarket was a good solid quarter for us. I think considering the number of business it was distributed. I think we saw many, many platforms benefiting from it in the quarter, not just a single one. Certainly, as F-35 …
Scott Deuschle: Yeah.
Joel Reiss: …continues to supply, that’s beneficial for us. We’re on effectively every platform. And so certainly, the more things are used, the more that’s just good for us in general.
Scott Deuschle: Okay. And then, Sarah, sort of following up on Jason’s question, can you clarify what the outlook is on working capital this year? It was a pretty big headwind last year. You had a strong first quarter here. I was just curious where things go from here on? Thanks.
Sarah Wynne: Yes. You’re right. We had an influx of about, I think, it’s $500 million last year. So, we think we’re now in a good position so that going forward, we’d expect working capital to follow the revenue. As a percent of sales, barely flat as the revenue goes up as a percentage.
Scott Mikus: Okay. And then last question, Kevin. It’s been a while since the last Investor Day. Any plans for another one sometime soon? Thanks.
Kevin Stein: Yes, this summer.
Sarah Wynne: Expected.
