Hammitt at Bank of America Conference: Strategic Moves in Aerospace

On Tuesday, 18 March 2025, Hammitt (NYSE: HWM) presented at the Bank of America Global Industrials Conference 2025, offering a strategic overview that highlighted both opportunities and challenges. The company detailed its increased investment in capacity expansion, while also navigating uncertainties in the commercial truck sector and preparing for potential tariff impacts.

Key Takeaways

• Hammitt plans to increase capital expenditures by 50% in 2024 to expand capacity in aerospace and gas turbines.
• Despite a 20% demand reduction in the commercial truck sector, Hammitt maintains a strong EBITDA margin of 27%.
• The company anticipates aftermarket demand for commercial engines to grow to 20% of revenue.
• Hammitt is preparing for potential tariff challenges and plans to pass costs to customers if necessary.
• The company is responding cautiously to the SPS fire, focusing on long-term contracts and avoiding short-term opportunism.

Financial Results

• Capital expenditures increased by 50% in 2024, with 2025 levels expected to match or exceed this investment.
• Hammitt achieved an 88% conversion of net income and aims for 90% conversion through capacity investments.
• The company maintains a robust EBITDA margin of 27% despite reduced demand in the commercial truck business.

Operational Updates

• Hammitt is focusing on expanding capacity in commercial aerospace and gas turbines, driven by data center buildout and a shift towards fossil fuels.
• The company is addressing the impact of the SPS fire by prioritizing long-term customer relationships over short-term gains.
• No immediate change in customer approach to sole source parts, with a focus on ensuring parts availability.

Future Outlook

• Hammitt projects increased service volumes for the CFM56, V2500, and LEAP engines over the next five to eight years.
• The company expects sustained demand for the F-35 fighter jet program despite geopolitical uncertainties.
• The transition to LEAP 1B blades is anticipated around 2026, pending certification.

Q&A Highlights

• Hammitt is responding to OEM signals, with Airbus showing strong demand and Boeing indicating mixed signals due to inventory corrections.
• The company views Boeing’s leadership relocation to Seattle positively, expecting increased assembly and production.
• Hammitt is prepared to address potential tariffs, intending to pass costs to customers as a standard business practice.

For a detailed understanding, readers are encouraged to refer to the full transcript provided below.

Full transcript - Bank of America Global Industrials Conference 2025:

Unidentified speaker, Host: Welcome. We’re going to do a fireside chat. I’ll open up for questions. So raise your hand and we’ll have a microphone for you at about like the middle. And I’ll start with the big question and is what kind of signals you’re seeing from the commercial OEMs?

Unidentified speaker, Hammitt: In the case of Airbus, it appears that they’d like more. And hopefully, they’ll be able to produce more aircrafts. So that will be a good thing. In the case of Boeing, we have a Skyline, which also calls for more, although we’re seeing in certain product lines, some inventory correction as I discussed in our last earnings call. And so we’ve fully taken account of that.

But it’s a little bit more mixed in the case of Boeing. Generally, themes for other segments for our customers would be whether it be gas turbine business or oil and gas, it’s more. And maybe commercial truck is the only segment we have where it’s a little bit less. But those are the signals we’re seeing.

Unidentified speaker, Host: Perfect. And when you think about those signals and increasing capacity, what kind of like capital investments you have done? And how, I don’t know, like 25 investments compares to last year’s? And what should we expect going forward?

Unidentified speaker, Hammitt: We made a significant commitment in terms of capacity expansion in 2024, we increased our capital expenditures about 50%. And our aim was to achieve those sort of investments because of the market opportunities that we had, but while still converting our net income close to our goal, which is a long term conversion of 90% of net income. And I think we ended the year at 88%. So I think we achieved something which I believe was good, if not extraordinary in those changes basically to allow the company to show further growth in the future. When I look at 2025, we’ve given guidance that CapEx would be at least 2024 and therefore, again, very elevated, if not more.

And again, trying to make sure we could pass it ties for the growth in the Commercial Aerospace business and also now increasingly in the gas turbine business where we’re seeing a lot of opportunity as well, which I’ve talked to in terms of gas turbines to buy more electricity because essentially because of data center build out or some of the hyperscalers. And if anything, that market opportunity became bigger given the recent election and with new administration putting more emphasis on fossil fuels and less emphasis on renewables. So that’s another area of expansion. And so currently we are we were either increasing capacities and building out extensions or new plants. We have a couple of them in our commercial aerospace business.

And now we are doing a similar program in our gas turbine business where we are putting a new plant up and extending another one in parts of the world.

Unidentified speaker, Host: How long are these CapEx cycles usually and how they compare like the IGT ones to the commercial era?

Unidentified speaker, Hammitt: Well, in terms of build out of capacity, it takes close to two years to bring something from conception through all the way through to production. And therefore, we won’t really see the benefits of in the case of our Commercial Aerospace business, that capacity until the back end of ’20 ’20 ’5 going into ’twenty six. And even with trying to accelerate everything on the gas turbine side, it’s going to be again more future going into ’twenty six and into ’twenty seven.

Unidentified speaker, Host: Perfect. And how the SPS fire affects this, both demand and supply? Can you capture some part of that demand or do you need to make any investment to capture that opportunity?

Unidentified speaker, Hammitt: Well, of course, when we planned our year, we had no knowledge and no expectation of one of our competitors having such a fire. And I do understand some degree how devastating that can be because we in Hammitt had our own fire in the fastener plant. Of course, the capacities I’ve just talked to in our engine air force before I guess to my business had nothing to do with fasteners. And now we’re faced with this situation. So when we burnt down one bay of our fastener plant in France from that instance through to delivery of parts from that plant when it was completely, that bay was rebuilt and recertified was three years.

But my thought in looking at the photographs and aerial images of the SPS plant, it looks very extensive, the damage. And so it will be an interesting thing to observe in terms of what are the plans to replace that plant, if any. And given its age, location and indeed workforce. So we are in the process of providing responses to our customers in terms of their requests for quotation to respond to that opportunity or in their case, their need. And the only thing in terms of, I’ll say, where we have said we will not respond is where we’ve had distributors contact us who could be supplied them parts because it’s just them wanting to rent the market and take the opportunity they’ve got inventory which they can exact price for.

And so we’re trying to reserve what capacities we may have or can provide by way of increasing our employment and shift patterns and order materials for customers that will work with us and provide business on a long term basis. So it’s based upon contracting for the long term because I have no interest in taking these costs to only have to delete them later in the year. That doesn’t make economic sense at all. It has to be business which has duration and obviously an economic return.

Unidentified speaker, Host: Perfect. And then on the SBS plant, there were some like sole source parts. Have you seen any change in the customer’s approach to sole source given that like an accident like this could cost like years of inventory?

Unidentified speaker, Hammitt: I think it’s too fresh in everybody’s work plans at the moment. I think the task forces which have been set up at the, our customers, whether it’s been Boeing or Airbus or whether it’s been the engine manufacturers or landing gear manufacturers. So far, all of the energies have gone into how they can get parts availability and little to no thought about what does it mean for the future. And I suspect that given the age of that plant, things which were there sometimes had drifted into a very old part, only that plant can make it and therefore limited effort into providing fresh capacity sort of thing, which is very old. So I don’t know it’s going to change very much.

I mean the good news is we have already have certifications for certain of the parts. But for certain others, should we be able to have the opportunity under the right circumstances to supply, then we will need certification for those parts that we don’t have.

Unidentified speaker, Host: Perfect. And you mentioned the contracting and how you want this like economic return when you do such an investment. How do you deal with contracting or customers to actually feel confident and comfortable to spend that CapEx and take that time, both in the commercial side, commercial barrel and IGT?

Unidentified speaker, Hammitt: But of course, it does that has to expend the capital. So we have to be secure in the duration of the contracts and also that we will see the volumes and also realize the price and profits. It’s just normal cost of business that will carry out. And I suspect that it will be a more involved case than just taking on a few people and ordering a bit more material. So I think it will be a bit more involved with that to be able to provide the capacity, which maybe the industry requires to get through

Unidentified speaker, Host: Perfect. And if I may touch base on Boeing, you have taken a conservative approach on how much you deliver to Boeing. How do you think about the future?

Unidentified speaker, Hammitt: Well, the conservative approach is actually nothing to do with how much I think the Boeing will actually take or want because I don’t think we know. So what I’ve tried to do is to say, we make an assumption which underpins our financials and therefore the guidance that we have given. And if anybody feels more optimistic about the production of Boeing, then they would increment our revenues. And if they felt more pessimistic, they would decrement them in some way. So it’s meant to give a financial guide only.

I really do hope that Boeing achieves the skylines that they set their targets at, which is a rate 38 for the July. And it was meant to be at the March, I think rate seven for the seven eighty seven, but that’s recently been delayed to now the second half of the year. And then going back to July, I think it’s meant to get to rate 42, I’ve heard those numbers. And of course, we would vote for that if we had the ability to influence it. But my expectation is that should Boeing produce at the higher rates, then we have that will support them and achieve the necessary production.

And the only thing we need is to make sure that where inventory is corrected is that we are, to some degree, level loaded because we won’t be able to make little in one part of the year and a lot in another part of the year because it doesn’t work like that in the industry. So that apart, I’m not sitting here worried about what the Boeing actually, what their rate going to be, because I would love it to be the highest number that they can possibly achieve because that would be good for us. Because I can work out very simply that the more aircraft that get produced, the more revenue we have. So I like it.

Unidentified speaker, Host: Perfect. And have you seen any meaningful changes since Kelly took the leadership of Boeing in terms of like

Unidentified speaker, Hammitt: Well, I think the fact that he relocated himself to Seattle was very meaningful. I think that was absolutely necessary to be more engaged in the day to day running of what’s been the biggest, I think, I’ll say, center of manufacturing for the company. Because without sorting out July, then that was always going to be a huge problem for Boeing. So the fact that he is there and you see pictures of him on the shop floor having a more hands on approach, that’s very welcome to see. So I find that refreshing.

And how it turns out in terms of what the quantities of production will actually be, that’s again, that’s to be determined. But it seems as though the current conditions where they do have, I think it’s over 100, what they call good fuselage, which are in really good state for quality. We know they have a very healthy engine supply from, in fact the engines were produced while they were on strike last year and undergoing the additional training that they had. But we read that their CFO is commenting publicly that their inventory is $87,000,000,000 It’s too high. Therefore, we know they’ve got a lot of parts.

So hopefully, they bring it all together and the aircraft will be assembled quickly and in a higher volume.

Unidentified speaker, Host: And if they were to ramp up, up to expectations, how quickly can you ramp up your volumes? And what are the main constraints? Is labor, material?

Unidentified speaker, Hammitt: I’m convinced that we will be able to respond because first of all, we know we’re carrying higher inventory than we would otherwise carry. That’s one aspect. And that gives us the surety that we will be able to recruit in time. And if they went to rate 38 next week, then I suspect we’d be supplying below that rate. But then I’m not thinking they’re going to go to rate 38 next week because that would be in advance of their plans.

And where they have reduced requirements because of excess inventory, then that’s going to give us some, I will say, some palpitations around the ability to ramp back up because the only way we can cope with it is if they are not able to level load, then we’ll have to try to find the means to level load. And so today on a couple of product areas, we are producing at a higher rate of production than we believe they are. And so we are pumping parts into inventory to provide a level loading. So we’re smoothing production because I think that’s going to be necessary on the anticipation that they are going to increase volumes and therefore give, so I don’t I think Hammitt is going to be the last supplier that’s going to cause them problems, I hope.

Unidentified speaker, Host: But you never know. I mean, we’ll have our moments, of course, as well. Perfect. And now switching gears a little bit to commercial engines. How do you think about the aftermarket demand, even though you’re agnostic in your product?

What is the mix between like blades that go to aftermarket versus OE?

Unidentified speaker, Hammitt: Well, we’ve given numbers for the whole company. And so in 2019, about 11% of Hemat revenues were to the aftermarket, which essentially is the turbine blade business. But of course, saying 11% of the revenues of the company when there’s obviously things in there like, let’s say commercial truck wheels or there are structural parts, it isn’t directly relevant. But the most important thing is directionally that 11% in 2019 now sits at 17%. But if you take 17% of Hammitt’s revenues and it’s, call it, dollars 8,000,000,000 and apply that to the engine business, then clearly, it’s a much higher number of our engine business that goes to the aftermarket.

And then you could bifurcate that between that which is goes to the defense and IGT business compared to Commercial Aerospace. So but essentially, if it’s 17% last year and I did give a future view, which is it’s moving towards 20% of the company over the next couple of years because I believe that the aftermarket was going to grow quite healthily. And of course, it’s always I mean, but should OE go up very rapidly then it’s like I’d like both to increase personally. But I think we’re still trending towards a 20% of the company. But then as a proportion of the business which is relevant, it’s a much higher portion that goes to the aftermarket.

Unidentified speaker, Host: Are you concerned at all from like early retirement or a pickup on retirement?

Unidentified speaker, Hammitt: Not really because I ultimately think that would be good for the industry. But at the moment, I suspect that some of the older planes we’re seeing additional demands because of additional visits to the MRO shops for refurbishment. And part of that is the fact that aircraft production has been relatively low and underneath the market demand by airlines. And so the backlog is so large. And part of me thinks that the whole industry would benefit from that backlog being addressed with a higher production.

And it doesn’t mean to say that I think that our service sales will actually drop. My current thought is between the demand for the CFM56 range of engines or the V2500 engine and those requirements are yet to peak. It’s going to be another two or three years before those reach peak volume. And then I think the decay will be very modest over a decade or so. But during that time then I think the frequency of shop visits for the LEAP range of engines and also for the geared turbofan engine are going to increase.

So I see those increases continuing to escalate through the next decade. And so my expectation is that every year for the next five, eight years, we’re actually going to see an increase in service volumes, which is healthy. And if that can be combined with higher OE production of aircraft, then that’s really good because we’ll have both service increasing and OE increasing. And like it’s almost like what could be better than that. Those will be really great conditions for AMET to face.

And when I look across the whole portfolio, I see positive signs in the gas turbine business, which I can talk more about if you want. And the only area which is we are seeing demand degradation or have seen it is in the commercial truck business, which did reduce in the second half of last year. And my previous public statement has been, I thought that would continue through to the summer of this year. And now it’s like I’m not really sure because what will be the effects of tariffs and what will be the overall economic impact. On the other hand, maybe I’ll get a bit more optimistic about commercial aerospace production.

So either which way I think it’s set well.

Unidentified speaker, Host: How do you prepare for such an uncertainty on the transport business? Like how much you produce for, how much you hire for?

Unidentified speaker, Hammitt: We’ve adjusted both our employment levels and our materials intake. So we are seeing low production. The task at hand has been how we could manage our decremental to our profit number. And assuming a long run average of about 40% on or you can use the same number for incrementals and decrementals. And so far, I think we’ve done, I think, extremely well.

In other words, our EBITDA margin has held up. It’s about 27% it will take. And I think that’s a really good outcome in the light of the demand reductions of, let’s say, 20%. And so and I can’t remember quarter on quarter exactly, but I even feel that like Q4 last year was probably up on Q3, but in face demand destruction to have that margin profile was really good and generating cash.

Unidentified speaker, Host: And on HPT blades, where are the next milestones we should be looking at? When is LEAP going to be fully transitioned to the new blade?

Unidentified speaker, Hammitt: Well, first of all, it’s not in our direct control. So we have made the transition for the mass production on the LEAP 1A that has already occurred. We will still continue to produce the former blade, but in much reduced volumes, but it will still be a continuing feature of the business to service the LEAP-1A business. The LEAP 1B is not yet determined. My thought is that it’s probably a 2026 item.

So I think it’s at least a year away. And that’s dependent upon certification because that requires the FAA to be involved and certifications have tended to be a little bit longer. And should that be accelerated if the new administration was taking a different view, then tooling capacity is not that yet there. So we’d have to tool for it and that takes lead time. And so I still think we’re looking at a 2026 changeover for that in but without late certainty at all.

In terms of the geared servo fan engine by Pratt and Whitney, The advantage now has certification, which was good news and it was earlier than I thought would be the case. But again, tooling has to be, we have to increase substantially the tooling to be able to manufacture at rates because you can’t change over for a few. We are producing a certain quantity of engine sets per month already. But that’s not enough to do a full transition for the OE build. And then I think everybody knows that the transition ideally would involve not only supplying the OE demand, but also supplying into the aftermarket and also doing a retrofit program to accelerate the, say, getting engines back on wing.

So there’s a lot of demand increase that we are facing. And again, we’re doing rate tooling right now. And we have meetings this week to go through all of those plans to look at exactly the timing of dates of implementation, which will be in 2025 is my expectation.

Unidentified speaker, Host: When you think about both engine types, how those blades, the new blades compare to the mature comparisons like CFM56 and C2500? And do you have an opportunity to keep upgrading these blades or like having like better air force to increase time on wind from here?

Unidentified speaker, Hammitt: I think at this if you compare the graphs in, say, the 1970s to now, then I think the robustness level, so you have to be very careful with the words you use, but the robustness levels are as good if not better than they were at the introduction of the CFM engine forty years ago. The maturity of the new engine designs is not at the level of the, I’ll say, closing of the production of the CFM56 because that had forty years worth of learning and was a fundamentally simpler construction and the same for the V2500. And so with complexity, and complexity means increased airflow, produce additional cooling and it means additional cooling, then that complexity leads itself to increased stress because of the temperature performance. And so the I will say performance yet of the more modern engine has not been the equivalent of the outgoing engine. But of course, there are these robustness improvement.

That’s why there is a next generation already of the LEAP, which had been introduced, I said, on the LEAP 1A and there’s the advantage. And those upgrades have been more aimed towards robustness improvements than fuel efficiency at this instance, albeit I’m sure that everybody will return to the task of what’s the next improvements we can make for fuel efficiency, maybe three to five years from now. So they will regenerate again to improve design. So in the life of an engine, those turbine blades are probably changed four or five or six times to again further the fuel efficiency because everybody wants to have engines which are producing less by way of carbon emissions and improve fuel efficiency for economic purposes. So there’s always a lot of transition going on.

And therefore, there’s a lot of work that we know we’re going to face not only to introduce the new levels of technology for today, but also for tomorrow as well. And the same applies for military engines as well. So we’re already deep into improving the engine with our customer for the F-thirty five for the Block four upgrades, which normally are for 2028, even though it may be a bit longer, Again for improving thrust, improving maneuverability yet providing the power to provide increased weapon systems and then the avionics, there’s a lot going on. Again, all requiring more efficiency from the engine and then more efficiency from the turbine, the high pressure part of it.

Unidentified speaker, Host: But when you think about S35 or the S135, right, The fighter has been part of the prisoner of this politics, not only U. S. Domestic politics, but also geopolitical. How you think about demand to actually support and sustain and do maintenance on that engine? And are you concerned at all from the news headlines and that risk perspective?

Unidentified speaker, Hammitt: I think the facts are that it is a superb aircraft with both maneuverability and stealth characteristics. And I believe that the people who drive that aircraft or the pilots think it’s an extraordinary aircraft. And so I’ll say it’s good. Lockheed have never really achieved their rate. So through COVID and beyond, it’s been a little bit under in terms of production.

Meanwhile, it does appear to have become the fighter of choice by many foreign air forces. So whether it’s been the German Air Force or the Swiss or is it the Portuguese or is it Lithuania or is it the Slovenian, there’s been so many countries which have ordered the plane. When I five years ago, I thought that maybe we would begin to see production reductions in the second half of the decade. And I don’t think that’s the case at all. I think we’re going to see production static or increasing.

And therefore, I am very positive about the quantity of aircraft which have been ordered and approved by the U. S. Government. Now, of course, do I keep current with the news, which I believe today there are some articles that are saying Canada might rethink its F-thirty five purchase? Or is it Portugal are going to rethink that F-thirty five purchase?

I mean, of course, it’s all possible. But I don’t know what they’re going to buy. So if they do decide to buy an alternative, if they can find one, Then the question is what capabilities will it have by comparison, because they must have had a good reason to buy the S-thirty five in the first place. But I can’t find myself in the sense that, for example, if they were to buy the Rafael from Dassault, well, we have supply that aircraft as well. And it’s very difficult to change production.

So these are very approximate numbers, so they’re probably definitely wrong, but near enough is that, let’s say, if there’s 140 or 150 F-35s produced a year, maybe there’s 20 Rafales produced. So to increase that production from 20 to 25 or to 30 would be extraordinary and it would take many years. So should those countries believe they need to have obviously substantive national defense, I don’t see how they would change from their current plans. And given the stance of geopolitics at the moment, it seems as though the threats aren’t diminished, but maybe what appears to be the express support that people can rely on from The U. S.

May not be at the same order. And therefore, I still think that people are going to have to or want to buy what is I think the rare mia defense fighter in the world. So I’m quite a fan of the F-thirty five and but will things change over the years? Will there be more drones? Well, yes, for sure.

Will there be more F-thirty five? Yes, for sure. Will we make more engine parts? Well, yes, for sure. Will we provide a lot more spare parts?

Well, yes, for sure. So that’s why I stand on it. And I’m not sure if there’s

Unidentified speaker, Host: going to be many more competitors to that like increasing demand.

Unidentified speaker, Hammitt: I don’t know. I mean, and if they want to provide additional support back and re engine or re support the F-twenty two, well, that’s okay too because we supply that one. So like I’m good.

Unidentified speaker, Host: Perfect. So let’s open up for questions. If someone has a question, please raise your hand. I think we have a quiet audience, so I’ll keep have, like, five more minutes. On white bodies

Unidentified speaker, Hammitt: Yes.

Unidentified speaker, Host: What do you expect? Well When do you think the international will actually recover? When do you think that Boeing can ramp up to seven, considering them, but an entire supply chain that was stopped at like under five?

Unidentified speaker, Hammitt: I think the fundamental demand and the order intake for the seven eighty seven, which I think is a superb aircraft, is it’s been really strong. And so the backlog, I think, has grown. And when Boeing said they wanted to get to rate 10 in 2026, My belief the market can stand that and more. So I don’t think it’s a demand issue. I think the demand is really strong.

I think it’s also really strong for the A350 as well. Again, order intake has been really good and production has not really increased. And there are, I guess, reasons why that production of the seven eighty seven and A350 have not yet risen to what everybody would like. But the good news is the demand has not gone away. It will be produced.

It’s a question of when. And so I keep thinking to myself, widebody didn’t really achieve its marks in 2024 and yet we at Hammitt, we did okay. And we believe that we have got the right zip code for the outcome for 2025. And I am hoping that we are able to deliver the year that we think we can deliver. And should wide bodied, let’s say, not get to rate 10 or rate nine or whatever the number is later this year, That’s okay.

So I think we’ll put up a respectable year and that demand will be there for 2026 and 2027. So it keeps so when you think about so what’s really been occurring is I think we’ve been delivering solid outcomes for the company and demand has been not eliminated, but deferred. So I used to think ’22 or ’23, ’20 ’4 were going to be good years. And then as as each year has gone by, I think the next three years are going to be good. And now I think ’25 or if not ’25, then ’26, ’20 ’7, ’20 ’8 are going to be good.

So it keeps getting pushed and that’s okay because it’s still there and the future volume is expected to be there. And I think it’s going to be there because the backlog is truly strong. And if there were some form of disturbance or if there were to be, for example, recession as one possibility, I still think the age of the fleet of today’s aircraft is such that replacements and production will occur because we need the fuel efficiency, we need the emissions and the economics we’d go with lower maintenance where the age of the fleet has got significantly advanced during the last few years. And therefore, again, it’s a good underpinning of what we think we’re going to face. But again, it’s only a forecast.

It’s just it’s a maybe.

Unidentified speaker, Host: And given the strength of fleet demand, how do you think about the impact of Paris?

Unidentified speaker, Hammitt: We spent a lot of time on tariffs in the last couple of months. We’ve prepared ourselves as best we can and then obviously things have changed quite rapidly sometimes from day to day. And so it’s difficult to me to give you a clear and coherent answer on tariffs because I don’t know. But actually, the one thing that I feel certain about is that whatever they turn out to be, we will address them in a normal course of doing business, which we’ve always done at Hammitt. We just say those are the circumstances and then we’ll deal with it.

And the same as today, if we’re facing additional input costs of aluminum from Canada, which really centers on our commercial wheel business, then we’ll pass those costs through with the current arrangements that we have with our customers. And so and if the dating is like, if it goes to more generalized inflation, which nobody yet knows, then we’ll deal with it same as we dealt with it in 2022 when inflation went up substantially as a result of the invasion of Ukraine and the change of energy prices, which fed through to a very different picture of inflation, which is more like 8% in The U. S. And 12% in Europe, where energy costs, which became extraordinary. So it’s just like it’s just another business fact.

Either it will happen or it won’t happen and we’ll do with it, should it happen. So I’m not going to get too fussed about it. I regret the fact that I’ve wasted time because I’ve been preparing for this way, there ain’t changes and therefore it’s not taking us forward, but it’s just stuff you deal with. Perfect.

Unidentified speaker, Host: And my last question, because we’re coming up on time, on IGT, what’s the earliest you could see this demand in The U. S? And what plans are you supporting right now in the next couple of years?

Unidentified speaker, Hammitt: Well, we’re seeing the demand already because the existing fleet of turbine is running harder and therefore there is an increased spares demand. We also see that our OE customers want to build more turbines and therefore we’re seeing that demand. And then we’re doing our very best to increase our production by which way we can from the existing equipment. Meanwhile, we did lay in additional capacities by way of additional CapEx above normal in ’twenty four, which will come to have some benefits later in ’twenty five. And then we’re investing again in ’twenty five, which will again take time.

So we’re addressing what we think will be substantial increase in future OE bill, but also that’s going to lead to additional spare demand as well. So we’re not sure that we’ve got it right yet. It’s to some degree uncertain, but I’m trying to keep pace without getting crazy about the capacity we’re adding.

Unidentified speaker, Host: Perfect. Well, thank you very much. Thank you. Thank you, everyone.

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