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Good day! And thank you for standing by. Welcome to the RBC Bearings, Fourth Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded.
I would now like to hand the conference over to your speaker today, Josh Carroll, Investor Relations. Please go ahead.
Good morning! And thank you for joining us for RBC Bearings fiscal 2022, fourth quarter and full year earnings conference call. With me on the call is Dr. Michael Hartnett, Chairman, President and Chief Executive Officer; Daniel Bergeron, Director, Vice President and Chief Operating Officer; and Robert Sullivan, Vice President and Chief Financial Officer.
Before beginning today’s call, let me remind you that some of the statements made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to RBC Bearings recent filings with the SEC for a more detailed discussion of the risks that could impact the company’s future operating results and financial condition.
These factors are also described in greater detail in the press release and on the company’s website. In addition, reconciliation between GAAP and non-GAAP financial information is included as part of the release and is available on the company’s website.
Now, I’ll turn the call over to Dr. Hartnett.
Okay, thank you Josh, and good morning and welcome. I’ll present the highlights of our fourth quarter and following me Rob and Dan will discuss some of the details of this summary.
RBC Bearings net sales for the third quarter of fiscal 2022 – for the fourth quarter of 2022 were $358.9 million versus $160.3 million for the same period last year, an increase of 123.9%. For the fourth fiscal quarter of 2022 sales of industrial products represented 71% of our net sales and aerospace products represented 29% of revenues.
Adjusted gross margin for the quarter was $144.3 million or 40.2% of net sales. This compares to $67.2 million or 39.1% for the same period last year. Adjusted operating income was $70.4 million, 19.6% of net sales. This compares to last year's $332.5 million or 20.3%, a 116% increase.
Adjusted diluted EPS was $1.26 a share and cash EPS was $2.15 per share for the three month period. Revenues adjusted diluted EPS and cash EPS for the full year were $942.9 million, $3.89 per share and $6.51 per share respectively.
Five months of Dodge Industrial revenue, which was our period of ownership were $291.9 million and RBCs revenues net of Dodge Industrials revenues for the full year was $651 million.
Adjusted EBITDA for the fourth quarter was $104.4 million, 29.1% of net sales, compared to $45.9 million and 28.6% for the same period last year, a 127% increase. It's very clear we are thrilled with the record performance of the business this quarter, and with the overall speed of integration and management cohesion, of these two extraordinary and complementary businesses.
Now let's talk a little bit about our sectors, industrial and aerospace. During the period demand for industrial products continued to exceed both our capacity and that of some of our suppliers. We have worked through these constraints tirelessly over the past many months and see some relief as we head into our second quarter. The problem will continue to test us during the next few months, and we’ll have reduced impact on our revenues.
Our industrial businesses were up about 300% on a quarter-over-quarter basis, mainly because of the Dodge acquisition completed in November. Your base for classic RBC Industrial businesses expanded approximately 16% for both the OEM and distribution, with both OEM and distribution expanding in the mid-teens range. As stated earlier, total industrial revenues were $253.9 million and demand from oil industrial markets served was very strong.
Turning now to the aerospace and defense, the fourth quarter of fiscal 2022 net sales were up by 8.8%, led by aircraft OEM which expanded at 21%. We're experiencing a sea change in demand for aircraft OEMs from both Boeing and Airbus as they increase their build rates for the single-aisle on the 737 and the A320 ships. This is complemented by the introduction of new products that we are supplying for both of these planes.
Looking ahead, each successive quarter stands more robust than the last reflecting the rate increases planned by the major builders. Consequently we're seeing a stepped increase in demand from our commercial plane manufacturers. This will impact successive quarters this year and through next fiscal year and beyond.
We are currently adding to our installed capacity, to accommodate these higher volumes of single aisle production and for the new products that we were producing for these fleets. We look forward to the increased build rates of the wide body jets next year as our content per plane is several multiples of those for the narrow-bodies. Increased production rates for the 787 and 777 greater plan for 2023 and beyond are welcome and will be meaningful to us for the next several years.
On defense, our defense OEM business revenues were down about 2%, which is more reflective of timing on shipments than demand for these products. OEM demand for defense, priority programs is substantial and building for us today. These products are normally complex and highly engineered and requiring longer engineering and manufacturing cycles, hence lumpy revenues through the quarters.
The defense and aircraft market sectors were about flat with last year. Although we have seen a flurry of MRO defense products in recent - demand for MRO defense products in recent weeks, I'm sure that doesn't surprise anyone.
Following this activity, we're expecting to see increased spending from the military and the quarters ahead as we are still within production lead times in the fiscal year, any defense bolts which show up as soon as our fourth quarter. Regarding our fourth quarter, we are expecting sales to be between $355 million and $365 million.
And I’ll turn now the call over to Rob for more detail on the financial performance.
Thank you, Mike. Expanding on gross margin that Mike already covered, gross margin for the fourth quarter of fiscal 2022 was affected by a $6.8 million inventory step up related to the Dodge acquisition. This is not expected to impact future quarters. SG&A for the fourth quarter of fiscal 2022 was $56 million compared to $27.4 million for the same period last year. As a percentage of net sales SG&A was 15.6% for the quarter of fiscal 2022 compared to 17.1% for the same period last year.
Other operating expenses for the fourth quarter of fiscal 2022 totaled $23.7 million compared to $5.3 million for the same period last year. For the fourth quarter of fiscal 2022, other operating expenses included $5.7 million of costs associated with the Dodge acquisition, including $4.7 million of costs associated with transition services. There's also a $17.2 million of amortization of intangible assets and $0.8 million of other items. Other operating expense for the same period last year consisted mainly of $2.5 million of amortization of intangible assets, $1.5 million of costs associated with a cyber-event, $1.0 million of restructuring costs and related items and $0.3 million of other costs.
Operating income was $57.8 million for the fourth quarter of fiscal 2022 compared to operating income of $29.7 million for the same period in fiscal 2021. On an adjusted basis, operating income was $70.4 million for the fourth quarter of fiscal 2022, compared to adjusted operating income of $32.5 million for the fourth quarter of fiscal 2021.
For the fourth quarter of fiscal 2022 the company reported a net income of $32.2 million compared to net income of $25.0 million for the same period last year. On an adjusted basis net income was $42.0 million for the fourth quarter of fiscal 2022 compared to $27.4 million for same period last year. Net income available to common stockholders for the fourth quarter of fiscal 2022 was $26.5 million compared to net income of $25.0 million for the same period last year.
On an adjusted basis, net income available to common stockholders for the fourth quarter of fiscal 2022 was $36.3 million compared to $27.4 million for the same period last year. Diluted earnings per share was $0.92 per share for the fourth quarter of fiscal 2022 compared to $0.99 per share for the same period last year. On an adjusted basis diluted earnings per share for the fourth quarter of fiscal 2022 was $1.26 per share compared to adjusted diluted earnings per share of $1.08 per share for the same period last year.
Diluted cash earnings per share was an adjusted $2.15 for the fourth quarter of fiscal 2022 compared to $1.36 for the same period last year. Adjusted net – cash net income and adjusted cash earnings per share excludes non-cash expenses for depreciation and amortization of fixed and intangible assets, stock compensation and amortization of deferred financing fees, net of the tax impact. We believe that adjusted cash net income and adjusted cash earnings per share are useful in assessing our financial performance by excluding items that do not affect the cash available to common stockholders.
Turning to cash flow, the company generated $46.9 million in cash from operating activities in the fourth quarter of fiscal 2022 compared to $41.9 million for the same period last year and $180.3 million in cash from operating activities for the 12 month period fiscal 2022, compared to $152.5 million for the same period last year.
Capital expenditures were $8 million in the fourth quarter of fiscal 2022 compared to $3 million for the same period last year. Total debt as of year-end was $1.69 billion and cash on hand was $182.9 million.
I would now like to turn the call back to the operator for the question-and-answer session.
Thank you. [Operator Instructions]. Our first question comes from Kristine Liwag with Morgan Stanley. Your line is open.
Hey! Good morning guys!
Good morning!
Morning!
So looking at your gross margins in the quarter, I mean 40% plus growth margins, pretty impressive. I was wondering if you could talk about what were the key drivers into that. How much was on pricing versus synergies from the deal?
Yeah well, where do we start? First of all you know on the RBC side of the business, the classic RBC side, we had some favorable mix, and you know that was positive. On the Dodge side I would say where the synergy was.
First, let’s talk about pricing. You know obviously with what's going on in supply chain, there's shortages and there's inflationary impacts that are meaningful, and so we've been able to price the product in accordance with neutralizing the inflationary impact that we've been experiencing, and so for the most part that's been pretty neutral.
We've been on our game in terms of understanding what that pricing impact needs to be and what the inflationary impact is and metrics have been good. Systems have been clear and the actions, the right action has been taken. So we’ve sort of you know trimmed the ship just the way the ship needed to be trimmed during the period. So we're pretty happy with that, we're pretty happy with the people that were in the middle of managing that.
I think in terms of synergy, I think one of the more important and more immediate synergistic elements of the Dodge acquisition is that we moved, pretty much moved them into sort of the RBCs operating management schedule, where basically we kind of review plant-by-plant what the forecast is, what the product build is going to be, what the expenses are going to be, what the efficiencies of the plant are, what the needs of the capital or the capital requirement for the plant might be and so on so and so forth, and we do that sort of monthly with every one of the RBC plants and now every one of the Dodge plants.
And that’s had the effect of sort of keeping people sort of focused on the important elements of running the business, and so that focus has created an environment where the details of running the operations are clear and the actions that need to be taken are clear, and that the Dodge folks have responded extraordinarily well to this process; probably better than any acquisition we've ever had in the past and they embraced it, and so I think that that really helped their operational efficiencies quite a bit during the period. So that’s – you know in terms of synergy, that’s the most immediate thing that we could do, that we did do in order to sort of gain the efficiency needs that we thought would be inherent in the business.
I think in terms of other synergies, clearly it's very early in the game for us and you know this, the RBC side of businesses, the most impactful supply chain issues we've had to-date are with Dodge and so the RBC resources have been applied to assistant in remedying some of those supply chain constraints and so some of the RBC production sites will be effective in the future in taking over some of that supply responsibility.
That's really helpful. And then so when we think about your next fiscal year, is that 40% gross margin a good starting point for the year?
Well, I think we're going to live in that neighborhood. I think Rob and Dan have kind of their own opinion about that. I'll let them speak to it, but I think we're going to live in that neighborhood.
Yeah Kristine, it’s Dan. Right now we are targeting it internally at least 50 bips by the end of the year and it will be lumpy and quarter-to-quarter as it always is, but I think that's definitely an achievable number for us.
Wow! That’s great to hear. And if I could sneak one more in, in terms of integration with Dodge you've now owned the business for a few quarters now. What have been the surprises that you've seen, as you're doing the integration and are there any unexpected negatives that you've had to address?
Yeah, well you know I think the biggest surprise that we've had, there's no question about it. Certainly we started the acquisition process sort of last August I think, right, where we had a signed agreement and we started working through the details of everything and learning more about the business and we've had enough experience with acquisitions to know what goes bang in the night and what to watch out for. We've never had an acquisition where the problem was we had too much business.
Wow! That’s a good problem to have.
Of all the things that we anticipated, we didn't really have that, we didn't have that teed up, but it became clear as we moved towards the closing date, that their –the demand for their product was just overwhelming and beyond anything we expected or experience.
So obviously what does Mike Tyson say, you go into a fight with a strategy and you know that goes out the window as soon as somebody punches you in the face. And so we went into the acquisition with a certain strategy, but we had to put a lot of it on ice while we dealt with the, well immediate problem of getting product to our customers.
Great! Thank you for that color. That’s wonderful to hear about. I mean this is your acquisition, so if that's the biggest problem we have, that’s a great problem. I'll pass it on to the next analyst.
Thank you. Our next question comes from Pete Skibitski with Alembic Global. Your line is open.
Hey! Good morning everyone! So Mike, it sounds like your message of last quarter, which was I think your demand signals in industrial went through the roof, it sounds like that message is continuing. If you know – some people are talking about a recession right. So you are talking about added capacity. So do you feel pretty confident that that demand is going to remain strong for the foreseeable future, at least for another year or so and maybe you can give us a sense of how much capacity you're looking to add?
Well yeah, I mean that’s – it's a question that has lots of answers, because we have lots of divisions that have lots of needs and so I’ll try to keep it to the top of the parado here.
You know in terms of Dodge capacity, we – it’s hard for us to predict what the industrial economy is going to do for the rest of the year. Now having said that, we employ all sorts of economists that are specialists in the industrial world, who give us projections on what the future looks like and all those projections that we've seen to date have been positive for the industrial business.
We see, on the aircraft business, you know we look at Boeing's build out rate and Airbus's build out rate and it doesn't look like a short term recession, if that is in the cards, it will really impact that build out rate. Remember, one of the key things that are driving the need for the Boeing 737 Max is it’s fuel efficiency and now with fuel prices where they are, that’s even more justification for the plane operators to buy more max machines.
So I think the aircraft business is going to be really solid and I think the defense business is really good today and we're actually talking about the need for probably building another plant to support the defense business, because you know the – our capacity is strained very much in that area right now.
Okay, that's great. And do you have an estimate for the CapEx spend that you’re expecting in fiscal ’23?
Yeah, we’re going to hover right around that 2.5% to 3% sales as we move forward?
Okay, okay. The last one for me, Mike did you guys see in industrial, did you see any negative impact from the shutdowns in China?
Yeah, we actually have a plant in China and so you know we're having – you know our revenues are – it’s a small plant. You know our revenues are modestly impacted by that shut down right now. We are seeing – we are having – we do have suppliers in China that are part of the supply chain. We actually have to fly hardware over to keep some of our lines running in some of the plants and so we're doing that, that’s just the cost of doing the business.
Okay. So excluding the plant you have in China, some of the product that you export and sales into China, it sounds like you didn’t see you know a meaningful decline in demand there.
No, that's correct.
Okay, okay. Okay, thanks guys.
Yup.
Thank you. Our next question comes from Joe Ritchie with Goldman Sachs. Your line is open.
Hey! Good morning guys! Nice end to your fiscal year.
Thank you.
So my first question is just, I want to understand the supply chain comment. It sounded like there was an expectation that things would get better in the next few months. Just, could you maybe just kind of provide some color around your visibility on where you're being impacted today and then also visibility on things improving?
Yeah, let's see where we're being impacted today. Well obviously the – you know maybe it's not obvious, but you know we've been impacted with steel, shortages of steel. We've been impacted with shortages of bearings, we’ve been impacted with shortages of bearing components, and we've been impacted with shortages of gaskets. So those have been sort of the high watermark in what we felt to-date and we believe either much of that has either been repaired already or a repair has been – is in the process of being implemented and so the impact should be mitigated going forward. But it – even to-date it had really impactful – it's impacted our fourth quarter revenues by a significant amount.
Okay, I agree. No, that's helpful color. I also want to go back to the recession question. In fully recognizing that the demand levels that you're seeing right now are still very strong, I guess you got a new asset. I’m just curious, when you kind of think about scenario planning, if in fact we were to go to see some sort of downturn, you know how should we think about what the playbook is for the new company, but which obviously clearly like a new asset that you haven’t experienced a recession before.
Well, yeah I think unlike RBC, Dodge half of their cost of sales is variable materials. So you know as the – you know there’s a decline in revenue, there's you know a pretty much immediate decline in half of your cost base, so you know the rest of your cost base is pretty much labor and variable supplies to run the plant and some salaries to run the operation and so that, that is budget able and it can be mitigated by relieving out some of the budgetary allowances in your quarter.
So you know if you have – if you're running $10 million through a plant and your variable cost of supplies, tooling and hardware and oil and filters and other is 5% of your revenues, well if your revenues go down $2 million then its 5% of $8 million rather than $10 million. So you just have to – you have to get down there and you have to put some metrics in place that allow you the visibility that the local management is doing what they need to do in order to back down their requirements.
I think the rest of the plant cost is normally in labor and there you can, you know you can flex schedules, you can have – you can reduce the number of work days per quarter. I mean there's all sorts of menu items that can be chosen in order to reduce the overall plant cost and so you know I would say that the new acquisition is a little bit easier to manage than an existing RBC plant, because it has so much variable material in their cost of sales.
That was the problem. Thanks very much.
Yeah.
Thank you. Our next question comes from Steve Barger with KeyBanc Capital. Your line is open.
Hey! Good morning, guys!
Hey Steve!
I got on the call a little late. Did you say what the organic growth rate for Dodge was versus last year?
I didn't say.
Could you?
Yes, so compared to March of last year Dodge grew at about just under 8% year-over-year.
Got it, thank you. And do you expect a similar contribution from dodge in 1Q, somewhere in that low $180 million range?
Yes.
Perfect! You had the $8 million in transaction costs and almost $5 million in transition. Can you tell us what's in those two categories and do you expect to incur costs at that level in 1Q?
So to answer the second part of the question first, we don't expect it to continue at that level. Within the $8 million, roughly thereabouts, you have the inventory step up that the purchase price amortization is at 6.8. So that's going to – you know that should go away after this quarter, that’s what we’re anticipating and then there's $1 million of other ancillary costs as associated with legal, accounting, things like that, that were associated with the acquisition. And then the other costs should be the transition services agreement, which runs you know – it kind of waters down over time through November, so we expect that should start to decline a little bit next in the Q1 period, and more in Q2 and Q3.
Got it. And so it sounds like maybe half of that was cash cost if the inventory step up was non-cash. I'm just trying to get to how – what will have pre-cash flow would have looked like post these immigration costs.
That's a fair way of looking at it. 6.8 of inventory is non-cash, the TSA and the other components are primarily cash.
Got it. And what do you expect for SG&A inflation in ‘23 or you know for the next few quarters should we think this $56 million run rate is kind of sustainable?
I mean we're kind of thinking SG&A is going to fluctuate between 15.5% to 16.5% of sales over the coming period.
Alright, and then one more for me. You said supply chain affected 4Q revenue by a significant amount. Mike, can you tell us how much revenue was delayed and did you build in a similar delay and/or push out into the 1Q range?
Yeah, I can only say it’s – it was a significant amount and it’s you know probably an eight figure kind of an amount. And yes, we built and we expect that to be – we’re building that into our plan in the first quarter.
Got it, yeah. And honestly I mean, every prediction that anybody's made about when supply chain get fixed has been wrong, but as you just think about it, do you – is it reasonable to think that as you go into the back half of your fiscal year. You're running at that higher rate or the revenue delays kind of go away.
Yeah, we’ve built our annual plan with seeing these revenue delays being substantially mitigated and I think it's reasonable, because we brought on other suppliers and we've done all sorts of things to – and we're bringing on some of the RBC capacity to support the Dodge business that was available to us. And so I think it will be – it will definitely be mitigated. It's hard to say exactly how much it will be mitigated.
So the demand is there and if it is mitigated then the back half your running some number 10 digits higher per quarter on a run rate basis, is that fair?
That’s fair.
Perfect! Thanks.
Thank you. And our next question comes from Seth Weber with Wells Fargo. Your line is open.
Hey guys! This is Larry Stavitski on for Seth. Just to clean-up the last question, you’re looking for $180 million or so in revenue from Dodge in the first quarter?
Thereabouts.
Yeah, okay. And then how do you – I think I'm not sure if missed it. But how do you envision the cadence in terms of the seasonality between both Dodge and the legacy business, you know in terms of – I know you are only giving the first quarter revenue guidance, but any color on the normal seasonality ex having these - the shortages pushed out, like the revenue shortages from 4Q pushed out.
You know I think the seasonality; we're dealing with a couple of issue there. I mean you have a lot of the seasonality or a certain amount of it is driven by a vacation schedule in the summer and obviously the holidays in the third quarter. So that’s sort of built in seasonality that drives your capacity. And so we're going to probably have to do work around on some of that.
Offsetting the seasonality is you know the – Dodge’s some of the core businesses are extraordinarily strong and there's macro effects impacting them that will pull demand through and I think some of those macro effects are things like the infrastructure build – is we haven't even felt the effects of that, but the timing is such that, that will start to show up and that particular sector is already very busy. And then the grain shortages as driven by Ukraine is going to create demand for farm goods here, and that's another big issue with source for Dodge.
You know we have the defense programs which are just, the defense OEM programs which are just very demanding on us right now and we're trying to address the need of those programs and we have the aircraft build rate, the step-up rate and frankly we’re concerned about being able to meet the cadence and get out plant staffing properly and so on and so forth, and we've been worried about this for some time that its upon us now and we hope we've got this right.
Okay, makes sense. Okay, thank you guys. I’ll pass it on.
Thank you. Our next question comes from Elizabeth Grenfell with Bank of America. Your line is open.
Hi! Good morning, everyone.
Good morning!
Good morning! Just wanted to confirmed, so I think the initial expectation was for synergies with the Dodge acquisition of around $70 million to $100 million and I was wondering if that was still the target or that had moved around a bit. And then within that, I think part of it was using Dodge’s sales force and just the grater magnitude of the sales force that they have. I was wondering how that’s playing out, and the impact there, and then I have one final question.
Yeah, that's still our range by year five, to be in that range. We've always – on all these synergies that we identified back in October and November, all those programs have been initiated. But as Mike said, some of them are accelerating quicker, because of the needs of the current business right now, like we're trying to find as much capacity within RBC to be able to help out our Dodge friends down in Greenville.
And on the sales side we’ve started working with those sales teams, there's a lot of interaction going on, and so we're seeing some benefit from that. So I think we are on target and ahead of target from where we thought we would be just five months under our belt here.
Okay. And one clarification question for both gross margins and SG&A as a percent of sales. For the gross margin its, can you clarify what you're expecting for the first quarter versus the full year.
Yeah, so we were expecting gross margin you know looking at a 50 basis point increase throughout the course of the year. It should be pretty similar in Q1. It's just going to be – it’s a little bit lumpy throughout the year as it always is, but that's hopefully the trend that we are expecting.
Yes, so we entered fiscal year ‘22 at 39.4%. So we are hoping nearly close to 40% for the full year. As Rob said it gets lumpy, it gets a little lumpy in the third quarter because it’s our weakest quarter from sales and production standpoint, and our fourth quarter is always our strongest quarter, because we have more production days in there and get that to utilization.
And in the SG&A, the 15.5% to 16.5%, that’s for the full year?
That’s correct, yes.
Thank you very much.
Thank you. And our next question comes from Michael Ciarmoli with Truist. Your line is open.
Hey! Good morning, guys! Thanks for taking the questions. Nice results here. Just quickly, maybe some housekeeping, for ‘23 is $400 million in cash flow and trying to get under that three times leverage, are those still the right metrics you should be looking for?
Our intention of getting to that $400 million by the end of fiscal ’23 that we put out there was still the target for EBITDA.
Yeah, and our target still is by fiscal ’23, it’s to pay down at the minimum $400 million of debt and I think all the way through this quarter already we played down about $100 million through the fourth quarter and so we’ll continue every quarter reducing that, allocating our capital to get to our target and get that leverage down.
Okay, perfect! And then I – could I see your correctly the – are you guys adding capacity for commercial aerospace? Did I hear that correctly?
Yes, this is correct.
Is that – I mean, I would have thought, did you have the capacity? I know you were adding a lot of capability and capacity before the Max and before the downturn. Are you bringing in new capacity or are you kind of ramping back up the tooling and maybe labor that you already had or is this kind of fresh additional capacity?
Well, it's - for the most part it's fresh additional capacity, because you know they building these single aisle at a rate that’s beyond 2019 and their intention, now particularly if you look at Airbus, I mean their intention is to go to 65 planes a month on the single-aisle, and when you start layering back the building materials of what we supply, we have to add capacity, because we are the sole supplier of a lot of hardware on that plane and this is – we are obligated to produce. So yes, we are adding capacity.
Okay, okay. Any color on what kind of capacity, what capability you are adding.
Let’s see. For the most part on – it’s probably on engine components.
Okay, got it. Okay, and then just the last one I had, as it relates to the integration. I know you originally called out potentially $200 million of kind of internal component sourcing. Obviously supply chain complicating a lot of material availability, but any sort of thought there on you know – look at your internal supply chain, external supply chain, and think about, you know do we move some of that in house if you have the opportunity or where things stand kind of with realizing some of those kinds of statements.
Yeah, well there’s no question that we have to ensure some of it from a Dodge’s business and so we're going to – we are going to work on that. We are working on that. And that will take a little bit of time. So in some cases it will take time, in some cases we already have the capacity available, and it’s a matter of getting the materials and the engineering drawings and beginning the production. So it’s a little mixed, but it’s one of the major synergies that we identified last year, when we were looking at the acquisition.
Got it. Alright, perfect! Alright, thanks guys.
That’s all the questions I show. I'd like to turn the call back to Dr. Hartnett for final remarks.
Okay, well that was – thanks for your questions and your interest. Those were some interesting discussions we just had and we appreciate it. We appreciate you calling in and look forward to talking to you again in July. Good day!
This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone have a great day!