James McCabe: I’m hesitating, no, because I don’t know when we get into the margins of the segments, which we have given. We said that — this has been a 20% margin business in the past. I’ve said that this is easily back to the mid-teens on a normalized basis. So you can imagine if we’re just coming out of September and breakeven-ish to look into — with effect for the full year, have mid- to single high-digit on EBITDAP percentages, so you can expect to be in the double-digit percentages during those periods.
Daniel Crowley: What I’m most excited about is the growth in actuation and engine controls. Actuation is going to hit, I think $500 million in sales this year and 20% plus on business with great aftermarket. And engine controls is one that’s getting a lot of that military MRO work and new wins on helicopters. So even though Interior is getting a lot of headlines, its again, still 10% of the business. We know the drivers. We’re fixing it. But the core parts, what I’ll call the crown jewels of the company, actuation, engine controls are really performing well.
Noah Poponak: Jim, the release and the presentation discuss debt — recent debt reduction, but I’m seeing a few different numbers, seeing a different number for the 2025s, and I thought was left there. Can you just level set me on — what did you pay down in the quarter? What have you paid down since the end of the quarter? And what’s left on the ’25.
James McCabe: So in the quarter, we paid down $19 million of the bonds. And subsequent to the quarter, we paid down another $29 million of the bonds. And back in Q1, there was warrants, $14 million of debt was retired as part of that process.
Unidentified Company Representative: Take that off , where we’re going to be right now.
Noah Poponak: And the — it looks like you’re saying on Slide 9 that, that action reduces interest expense and that flowed to the free cash flow guidance. Is that correct?
James McCabe: So it does reduce interest expense for the balance of this year, but on a full year basis, it’s $5 million. So that’s not in the year. That’s a full year.
Noah Poponak: That’s a full year. So this year is a piece of that and then a piece of just core business operations.
James McCabe: Correct.
Noah Poponak: And then I guess related to that, that’s a positive, but you’ve got the big 4Q where you’re citing volume, which makes sense because of what’s happening with sort of planned volumes. But we — you continue to operate in these end markets where the planned volumes are shifting around. And so I guess, I was a little surprised you raised it given that, but at the same time, you’re giving us these numbers halfway through the quarter here. So I don’t know what’s the level of confidence in that number? Or where is there a risk of something sliding out of the end of your year and into next year, on that free cash flow plan.
James McCabe: We’re highly confident in our numbers, and we have a very detailed bottoms-up forecasting process by program, by site. The risks come in the demand in the aftermarket, which we don’t have long-term visibility, too. And then, of course, OEM rates. But I think it’s less on OEM rates as much as we talk about those with aftermarket being growing so much and being so important to the fourth quarter, that’s where the risk is, it’s just demand. And that demand is so diverse that I think it’s lower risk than a particular OEM rate schedule might be.
Daniel Crowley: And working capital certainly is a big swinger, and we’re highly focused on that. We ran dozens of lean events in October. We’re going to continue those through the second half of the year. And we’re doing all the kinds of analysis on our material planning and work in process and finished goods and safety stocks and rotables and things that drive working capital. So the rates do affect inventory burn down because the rates help us to draw up on what’s on the shelf. But that’s one of the swingers as well, but we’re confident we’re going to make it.
Operator: Thank you. And ladies and gentlemen, this concludes today’s question-and-answer session and today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.
