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spk_0: the lit and thank you for standing by welcome to the rbc bearing fourth quarter two thousand and twenty two earnings conference call at the some up to spencer analysts normally mode after the speakers presentation they'll be a question and answer session pascoe question during the session on the depressed star one on your telephone play the advisor to this conference is being recorded of a now like him a conference over to your spirit a day just carol and that's relations please go ahead
spk_1: morning and thank you for joining us for rbc bearings is go to a way to fourth quarter and full year marriage conference call with me on the call it a doctor michael orbit chairman president and chief executive officer daniel urge or on director vice president and chief operating officer robert out vice president and chief financial officer before beginning today's call where remind you that some of that statements made today will be for look at and are made under the private securities litigation format of ninety nine five x results may differ materially and as projected or implied due to the variety of factors refer you to rbc bearings recent filings with se fcc for more detailed discussion the risk that could impact the company's heater operating of and financial condition it's factors are also described the greater detail in the press really know the company's website in addition reconciliation between gap and non gap financial information included as part of the release of the bail on the company's website
spk_2: now appear appearing the call over the doctor hope
spk_3: you cash and
spk_1: good morning and welcome i'll present the i like summer fourth quarter following the robin van with discuss the details of the summary
spk_4: our bearings net sales for the third quarter of fiscal two thousand twenty two
spk_2: the fourth quarter of two thousand twenty two
spk_1: the three hundred fifty eight point nine million vs on hundred and sixty point three million for the same period last year
spk_2: increase in a hundred of a hundred and twenty three point nine percent for the fourth fiscal quarter of two thousand twenty two sales of industrial products represented seventy one percent of our net sales an aerospace products represented twenty nine percent of revenues adjusted gross margin for the quarter with a hundred and forty four point three million or forty point two percent of net sales as compared to sixty seven point two million or thirty nine point one percent for the same period last year
spk_1: i just did operating income with seventy point four million nine nineteen point six percent of net sales this compares to last year's three thirty two point five million or twenty point three percent a hundred and sixty percent increase adjusted deluded dps was a dollar twenty six a share and cassie ps was two dollars and fifteen cents per share for the three month period
spk_2: revenues adjusted to lose your dps and cash a psp the full year
spk_1: where nine hundred and forty two point nine million three point eight nine dollars per share and six point five thousand dollars per share respectively
spk_2: five months of dodge industrial revenue which was our period of ownership
spk_1: where two hundred and ninety one point nine million dollars and rv sees revenues that of dogs industrials revenues for the full year or six hundred fifty one million dollars adjusted even the a for the fourth quarter was hundred and four point four million twenty nine point one percent of net sales compared to forty five point nine million and twenty eight point six percent for the same period last year a lot be one hundred and twenty seven percent increase
spk_2: it's very clear are thrilled with the record performance of the businesses quarter and with the overall speed of integration and management cohesion
spk_1: of these two extraordinary and complimentary businesses alex talk a little bit about our sectors industrial and aerospace during the period demand for industrial products continued his exceed both our capacity and that have some of our suppliers
spk_2: we have worked through these constraints tirelessly over the past many months and see some relief as we head into a second quarter the problem will continue to test us during the next few months
spk_1: and we'll have would reduce impact on our revenues our industrial businesses were up about three hundred percent on a quarter over quarter basis
spk_2: mainly because of a dodge acquisition completed in november
spk_1: your base or classic rbc industrial businesses x expanded approximately sixty percent for both the only m and distribution
spk_2: with built are both oh yeah and distribution expanding in in the mid teens range
spk_1: as stated earlier the industry a total industrial revenues were two hundred and fifty three point nine million dollars
spk_2: in demand from all industrial markets served was very strong
spk_1: turning out to aerospace and defense
spk_2: the fourth quarter fiscal two thousand twenty two net sales were up by a point eight percent
spk_1: led by aircraft alien which expanded at twenty one percent
spk_2: we're experiencing a sea change in the man per aircraft aliens from both belt boeing and airbus as they increase their build rates for the single aisle on the seven thirty seven and the a three twenty ships this is how plummeted by the introduction of new products that they're supplying for both of these planes
spk_1: looking ahead each successive quarter stands more robust than the last reflecting the rate increases planned by the major builders consequently were saying i stepped increase in demand for a commercial plane from iraq 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 and for the new products that leaf were producing for these leaks we look forward to the increase build rates of the white body jets next year as our content per plane is several multiples of those for the narrow bodies and critique increase production rates for that seven eighty seven and triple seven grader plan for two thousand and twenty three and beyond are welcome and will be meaningful us to us for the next several years and offense or defense or we in business revenues were down about two percent which is more reflective of timing and shipments than demand for these products
spk_4: oh yum demand for defense
spk_1: priority programs is substantial and building for us today
spk_4: these products are normally complex and highly engineered in requiring longer engineering and manufacturing cycles and slump lumpy revenues through the course the defense and aircraft market sectors
spk_2: where about flat with with last year
spk_1: although we have seen a flurry of em are old defense products and recent demand for them are oh defense products in recent weeks i'm sure that doesn't surprise anyone
spk_2: following this activity were expecting to see increase spending from from the military and the quarters ahead as we are still within production lead times in the fiscal year
spk_1: and he defense volts would show up as soon as our fourth quarter regarding our fourth quarter we're expecting sales to be between three hundred and fifty five and three hundred and sixty five million dollars
spk_5: and i'll turn now the call over to to rob for more detail on the financial performance
spk_1: thank you mike expanding on gross margin and might already covered gross margin for the fourth quarter of fiscal twenty twenty two have was affected by it six point eight million inventory step up glitch dodge acquisition this is not expected impact teacher course as seen a for the fourth quarter of fiscal twenty twenty two was fifty six million compared to twenty seven point four million for the same period last year at a percentage of net sales as she was fifteen point six percent for the quarter of fiscal twenty twenty two compared to seventeen point one percent the same period last year other operating expenses for the fourth quarter of fiscal twenty twenty two totaled twenty three point seven million compared to five point three million for the same period last year for the fourth quarter of fiscal twenty twenty two other operating expenses included five point seven million of cost associated with the dodge acquisition including four point seven million of costs associated with transition services
spk_4: is also seventeen point you million of amortization of intangible assets and zero point eight million of other items are operating expense for the same period last year consists mainly of two point nine million of amortization of intangible assets on point five million of costs associated with a cyber and one point zero million of restructuring costs
spk_1: related items and zero point three million other costs
spk_6: operating income was fifty seven point eight million for the fourth quarter of fiscal twenty twenty two compare to operating income of twenty nine point seven million for the same period in fiscal twenty twenty one and an adjusted basis operating income was seventy point four million for the fourth quarter of fiscal twenty twenty two compared to adjusted operating under thirty two point five million for the
spk_4: twenty twenty one for the fourth quarter of fiscal twenty twenty two to company reported the net income of thirty two point two million compared to net income of twenty five point zero million for the same period last year
spk_1: on an adjusted basis net income was forty two point zero million for the fourth quarter of fiscal twenty twenty two compared to twenty seven point four million for the same period last year net income available the common stock holders for the fourth quarter of fiscal twenty twenty two was twenty six point five million compared net income of twenty five point zero million for the same period last year
spk_4: on an adjusted basis net income available to common stock holders for the fourth quarter of fiscal twenty twenty two was thirty six point three million compared to twenty seven point four million for the same period last year
spk_1: diluted earnings per share with ninety two cents per share for the fourth quarter of fiscal twenty twenty two compared to ninety nine cents per share for the same period last year
spk_4: on an adjusted basis diluted earnings per share for the fourth quarter of fiscal twenty twenty two was a dollar twenty six per share compared to adjust the diluted earnings per share of a dollar eight cents per share for the same period last year diluted cash earnings per share with an adjusted to dollars and fifteen cents for the fourth quarter of fiscal twenty twenty two compared to a dollar thirty six for the same period last year adjusted net cash net income unadjusted cash earnings per share excludes noncash expenses for depreciation and amortization of fixing tangible assets stock compensation and amortization of different financing peace none of the tax in fact we believe that it just to cast net income just a cash earnings per share useful and assessing our financial performance
spk_1: excluding items had do not affect the cash available the stock others
spk_7: turning the cashflow the company generated forty six point nine million in cash from operating activities in the fourth quarter of fiscal twenty twenty two compared to forty one point nine million for the same period last year and around one hundred and eighty point three million in cash from opry activities for the twelve month period fiscal twenty twenty two compared to one hundred and fifty two point five million for the
spk_1: same period last year capital expenditures were eight million in the fourth quarter of fiscal twenty twenty two compared to three million for the same period last year
spk_4: total debt as if your and was one point six nine billion
spk_0: and cash on hand with hundred and eighty two point nine million i would now like turn the call back to the operator for the question and answer session thank him as a reminder to ask the question you'll need to pop star one on your telephone to draw your question press the pound key
spk_8: first question comes from christina like wes morgan stanley the line is open
spk_9: hey i did the morning guys monday morning honey
spk_10: so i'm looking at your gross margins are in the quarter and in forty percent plus gross margins pretty impressive am i was wondering if he could talk about what were the key drivers into that how much was on pricing for says on synergies from the deal
spk_2: yeah i'm well
spk_1: where do we start arm
spk_2: fruit first of all are you on the rbc size of business classic rbc side we had some favorable next and and out there was that was positive
spk_1: i'm
spk_2: on the dutch side i would say where the synergy was
spk_1: first year let's talk about pricing you know obviously with what's going on and supply chain
spk_2: there's shortages and i'm in there's
spk_1: inflationary impacts that are that are meaningful and so we've been able to you know price to product
spk_11: in accordance with them the neutralizing the and inflationary a factor that we've been experiencing and so on for the most part that's that's when pretty pretty neutral
spk_2: i'm we've been on our game in terms of understanding that with that pricing in fact term who needs to be and with the inflationary impact is and on metric something good systems systems have been clear and direct actions the right action has been taken so we've sort of them you know trim from the ship just the way the ship needed to be trimmed during during the period so we're pretty happy with them were pretty happy with the the the people that them were the middle managing that i think in in terms of synergy are they gonna the more important and more media's synergistic
spk_4: elements of the none of the dodge acquisition is that we moved pretty much move them into
spk_1: some sort of the our our sees operating management schedule where were basically we're
spk_4: we kind of review plant by plan
spk_3: what the forecasters with the product build is gonna be what the you know what the expenses are gonna be with the efficiencies of a plan our with the need to the capital of the cap requirement for the plant might be and so on soon so forth and we do that sort of monthly with them
spk_2: live you know every one of the rbc plants and now every one of the or the dutch plants
spk_1: and that's that had the effect of sort of funk keeping people sort of focused on on the important elements of running the business and i'm and so then that focuses is has created am
spk_2: an environment where i'm you know the details of flow of running the operations are clear and the actions that needs need to be taken are clear and that the dodge folks have have responded extraordinary are extraordinarily well to this to this process
spk_1: probably better than any acquisition we've ever ever had in the past and they embraced it and and so i think that that really helped their operational deficiencies quite a bit during the period so that some
spk_4: know in terms of instructors of synergy that's the most immediate thing that we could do that we did do in order to i'm sort of sorry gain the am
spk_2: ghandi the efficiency needs that we thought would be inherently business
spk_1: i'm
spk_2: i think that in in terms of other synergies
spk_4: clearly it's very early in the game for us and you know this me rbc
spk_2: hum side the business that the most in impactful supply chain issues we had to date or with dodge
spk_1: and in so the rbc resources and have been applied to assist in
spk_4: in remedying some of those some some of those supply chain constraints and the
spk_9: and so on some of the rbc production sites will will be
spk_12: you know effective in the future in him
spk_2: taking over some of that done
spk_4: supply responsibility and that's really helpful and and so when we think about our your next fiscal year on is that forty percent gross margin a good starting point for the year
spk_9: while i think we're going to live in that neighborhood
spk_13: i think robin van have have kind of their own opinion about that i let them speak to it but i think we're gonna live in that neighborhood
spk_4: yeah yelling a christian it stands right now we're we're targeted internally at least fifty deaths by by the end of year now be lumpy and a quarter to quarter as it always has been to harm
spk_2: i think that's definitely achievable number force
spk_1: wow that's all that's great to hear arm and if i could seek one more an arm in terms of integration with dodge ah you've now on the business for a few quarters now ah what have been a surprise as if seen as a given integration and are there any unexpected negative that i
spk_14: you've you've had to address
spk_4: yeah well you know
spk_2: i think the biggest surprise that we've had just no there's no question about it
spk_15: you know certainly we started the acquisition process
spk_2: sort of last
spk_4: august i think right where are we had signed agreement and we started working through the details of everything and learning more about the business and in there you know we've had enough experience with acquisitions to know you know what goes who goes bang in the night and what to watch out for
spk_16: we've never had an acquisition where the problem was we had too much business
spk_1: while while again problem the house
spk_2: of all things that we anticipated we didn't really have that we didn't have that eat up and but it became clear as the is is we moved towards the clothing they said their their the demand for their product was just overwhelming and beyond beyond anything we expected or
spk_1: periods so i'm
spk_2: obviously
spk_9: what is mike tyson's a eagle entered into a fight with strategy and his echoes out the windows and it's only punches in the face
spk_0: and then and so we went into their into the into the acquisition with it certain strategy but we're we're put a lot of it
spk_17: in an ice well while he you know
spk_18: while we've dealt with the more immediate problem with getting chronic to our customers
spk_19: right i think i think you for that color are that's wonderful to hear about any this is your lap and i just after the acquisition to that's the biggest problem the have that that that's a great problem i'll pass it onto the next to her less thank you i next question comes up pizza been ski with olympic global your line is open
spk_20: a good morning everyone
spk_2: i'm so mike it sounds like your message of last quarter which was i think you know your demand singles a doctor or three room for doubt like that message is continuing ah i'm at eat out so people are talking about a recession right so it by your time i added capacity so each do you feel pretty confident that the man it's got remain strong for it out the foreseeable future lead for not a year or so ah and maybe to give us a sense of how much capacity or you're looking to add
spk_21: well
spk_2: yeah i mean that's it it's a question that as like the answers because we have lots of the reasons that have lots of needs and so are directly to the top of the parade or here
spk_4: you know interest in terms of that capacity you know we
spk_22: it's hard for us to get the let the industrial economies gonna do for the rest of the year now
spk_23: you know having said that
spk_4: we employ all sorts of economist's that are specialists in the industrial world who who us projections
spk_1: with the future looks like and all those current projections did a lead seen today have been have been positive
spk_2: now for the industrial business you know we see
spk_1: you know if we see the year
spk_2: on the on the aircraft business
spk_1: we look at boeing spilled out rate and airbases buildout out rate and
spk_24: you know it it doesn't look like a short term recession
spk_4: if that is in the cards will really impact that build right
spk_2: we never what or that one are the key things third driving the need for that boeing seven thirty seven max is it's fuel efficiency and now with you know fuel prices were they are that that even more justification for the for the plane operators to bomb to to bible more more max machines
spk_19: and i i so i think i think the aircraft businesses can be really salad
spk_7: mom and i think the defense business
spk_4: and the defense business is is
spk_25: really good today and we were actually talking about the need for probably building another plan to support the defense business because you know the are capacities is strange
spk_19: very much in in that area right now
spk_2: okay that that's great if the killer estimate for for the cat that expand the are expecting him fiscal forty three
spk_1: yeah we're going to have a right around and you'd have to three percent
spk_2: the sales to afford
spk_1: okay okay
spk_2: lachlan and for me with i might either see in industrial did you see any negative impact from the shutdowns in china
spk_4: yeah we we we actually actually have a plant in china and so on you know
spk_2: we're having in our our revenues or it's it's a small plant that you are revis revenues or modestly impacted by that shut down right now
spk_4: we are we are seeing
spk_19: we are having we do have suppliers in china that done
spk_4: that are part of the supply chain
spk_19: we actually have to fly
spk_0: ah hardware over to keep the some of our lines running and some of the plants and and so we quickly doing that
spk_7: mrs just the cost of doing business
spk_26: okay sure it's excluding the pie you have in china some of the some of that product that you that you exploit it has and sailed into china it it sounds like he didn't he get our a meaningful decline in demand there no that's correct
spk_2: okay okay i'll get paid guys thank you next question comes from tell which he was tom sacks your line is open hi good morning guys that night that night and get the player again
spk_1: so so like macrocosm his i want to understand the applied add comment and sounded like there have been expectation that that things would get better in the next you mind and he married a kind of the bite them color and your visibility ah i'm by you're being impacted today and
spk_27: the visibility on a big really
spk_4: oh yeah let's see where we're being impacted today will will obviously the am
spk_1: maybe maybe it's not obvious but and we'd we've been infected with steel shortages as deal with been impacted with shortages of bearings oh he it impacted with shortages of bearing components
spk_4: and leave and infected with shortages of caskets
spk_1: so those have been sort of the high watermark in in and what we felt the day and
spk_26: we believe mom either much of that is has either been repaired already or mom a repair has been is in the process of being implemented in so so the impacts should be mitigated going forward
spk_2: but it into it and even to date or ten really impactful it's impacted our fourth quarter revenues by a significant amount okay agree not that that's how color i also wanna go back to the i'm in every second but then i wholly recognizing that said the man bubbled that you're seeing right now are still very strong i get yelled you gotta do new i said i i'm just curious with mean you can i think about
spk_1: yet scenario planning if in fact we want to get at the kids with the and thirteen downturn you know how to be think about what what the playbook gets her bird bed and new company ah but when i didn't like they're like a deal out that that that damn yeah experience a recession but the point
spk_28: well
spk_2: yeah i think unlike unlike rbc dogs
spk_4: after the cost a sales or this is a variable materials
spk_1: so you know as the
spk_29: in our if if the if there's a decline in revenue there's there's an intimate you know a pretty much immediate decline in
spk_2: in in half your cost cost base so then the out here the rest your class bases is pretty much pretty much labor and variable supplies to run the plant and some salaries to run the operation and so that them
spk_1: that is
spk_30: but you double and and it can be a can be can be mitigated by
spk_1: by relieving out some of the some of it
spk_2: budgetary allowances in your quarter so if you're have
spk_1: if you're running ten million dollars a through a plant and and year that and your variable cost of supplies tooling and hardware in oil and filters and and other years
spk_26: five percent of your of your revenues wealthy revenues gotta go down to million the next five percent of
spk_0: of eight million rather than ten million so i'm just after you have to get on that and you have to on you know put some metrics place
spk_26: damn that
spk_31: allow you to the visibility that than the local management is doing what they need to do in order
spk_32: or to back down their requirements i think that the rest of the
spk_33: the rest of the plant cost is normally and labor and and there you can you know you can flex schedules you can you can have begun to peak reduce the number of work days per quarter and in there's all sorts of menu items listed that can be chosen aired in order to reduce the overall plan cost and
spk_1: and so on you know i i would say that the new acquisition is it a little bit easier to manage then and existing rbc plan because be because it has so much variable material in their got to sales
spk_31: and now it's figure out what thanks very much
spk_34: thank you ah next question comes from steve by jove were key keybank capital your line is open
spk_35: a big money guys i'm the
spk_26: i got on the call little late did you say what the organic growth rate for dodge was worse last year
spk_2: i didn't say
spk_5: put a gift
spk_7: yeah so compared the march of last year dodge druid about just under eight percent year over year got it thank you and dear to my contribution from dodge and one que someone that low hundred eighty million range
spk_1: yeah
spk_7: perfect
spk_36: hum
spk_1: you had the or eight million transaction costs and almost five million in transition can you tell us what's in those two categories and do you expect to incurred cost at that level in one que
spk_26: so
spk_2: to the second part of the question firth we don't expect to continue at that level within a million they're probably their about you have a mentor step up to purchase price amortization of it's explain that can add you know that should go after this quarter
spk_4: and to are anticipating and and there's a million dollars of other ancillary costs i'd as as as usual legal accounting things like that errors that you with the acquisition
spk_2: and then the other costs to be the transition services agreement which runs you know kind of waters down over time through november and so he expect at net should start to decline little bit and next in the queue one period and more and key to and key three
spk_1: got it and so it sounds like maybe half of that was cast cause of the image a step up with noncash i'm just trying to get to how what go freak out would have looked like a post these integration growth costs a that the fairway look at the six point of inventory noncash at usa and the any other components are bro
spk_26: nearly cash
spk_2: got it and arm
spk_1: what newspaper es una inflation and twenty three or you know for the next few quarters we think the city six million dollar run rates kind of sustainable and we were for kind of thinking as today is going to you know fluctuate between fifteen and sixteen app percent of sales over the coming period
spk_2: oh right and then one more for me and he said supply chain affected forty revenue by a significant amount of my can you tell us how much revenue was delayed and did you build in a similar delay and the were push out into the one key range guy i can only i can only say it
spk_1: if it's it said it with a significant amount can answer
spk_2: i'll probably and a figure kind of her mouth
spk_37: i'm
spk_34: and yes we built in the we we we expect we expect that to be
spk_0: were built we're building that into our planning the first quarter
spk_38: god yes and honestly i mean that every prediction that a but made about one supply chain gets picked as been wrong but you know like you just think about it you is there is a reasonable to think that as you go to the back up your fiscal year you're running at that higher rate or the the revenue delays kind of ah go away
spk_7: yeah no our we've we've we've built
spk_38: oh we built our our annual plan with some seeing these revenue delays being substantially mitigated and and i think it's reasonable because because we're we brought another suppliers and we've done all sorts of things to on and we're we're bringing on some of the rbc capacity to support the dutch business that that was available to us and in so i think you know it'll be it'll be am
spk_2: for it would definitely be mitigated it's hard to say
spk_1: exactly how much very few it'll it'll be mitigated so the demand is there and if it is mitigated than the back half year running some number ten digit tire or per quarter on a on a run rate basis is that they're at here perfect thanks
spk_2: thank you and i'm as costs income some says weber with wells fargo your line is open
spk_4: hey guys this is larry to this young for says just to to clean up the the last last question superb he looking for one hundred eighty million or so and revenue from and in the first quarter
spk_2: at thereabouts
spk_1: yeah okay and in have you have a think i'm not sure of anything but but how do you that the cadence in terms of the seed now the between both died in a and the lie the he business in own terms of and i only given first quarter revenue guidance but a to any color on on
spk_4: yeah the is the normal he's now the ax you know having having these you know that the shortages pushed out revenue for the like revenue for to support for you pushed out
spk_2: yeah i i think of seasonality that went with we're dealing with on
spk_4: eric
spk_2: a couple of issues there any you mean you have and a lot of the seasonality or a certain amount of it is driven by in the vacation schedule or summer and and and obviously them holidays in the third quarter so that's that sort of gilpin seasonality that drives your your capacity and so we're going to probably have to do a work around on some of that
spk_38: while setting them seasonality years is that you know the it
spk_0: the or garters dodgers some
spk_39: committed some of the core businesses are extraordinarily strong and there's mackerel effects it's impacting them it'll it'll on
spk_40: and a pull pull the man through and i think some of those matt mackerel effects or things like the infrastructure bill is if we haven't even help the effects of that but it's the timing years is such that and it be that i'll start started show up and that particular sector is already very busy and then you know the guy rain shortages are driven by the ukraine is is gonna gonna create you know demand for farm grits here
spk_1: and that's it that's another big issue with
spk_4: source for guys
spk_7: you know we have the defense programs which are just
spk_1: defensively and programs which are just
spk_7: it's very demanding on us right now and the and we're trying to address estimated of those programs and we have the up aircraft built right
spk_1: escape operate and frankly we're concerned about being able to
spk_7: meet the cadence anger in and get our plants staffing properly and so on and so forth and we've been worried about this for some time that pockets it's upon us now and the and we hope we've got this right
spk_1: okay
spk_4: how can he says okay thank you guys have esa
spk_1: thank you my next question comes from elizabeth grand south west bank of america your line is open
spk_40: how could one a month and good the
spk_1: twenty out it's one of the confirmed that i think the initial expectation was first energy that the data acquisition to have around seventy one hundred million dollars 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 an eating dodging else for an instant but
spk_5: not that great a magnitude of the salesforce that they have a was wondering how that playing out and the impact their on than i have one question one final question
spk_4: yeah that that still are arranged by your five hard to be in that range we've always you know on on all the synergies that we identified back
spk_40: october november
spk_2: all those programs happened and initiated but as might said some of them
spk_40: are accelerating quicker because in needs of that the current business right now
spk_0: i'm i would try and find as much capacity within our d to be able to help out our our our dodge
spk_41: friends down greenbelt and
spk_26: on the sell side yeah we've started
spk_4: working with their sales teams there's a lot of interaction going on and so seen some benefit from that ah
spk_1: i'm so i think our we're on target empire had a target from where we thought we would be no it just five months and or about here
spk_7: and one clarification question for for but gross margin than the as seen in the present itself further the gross margins it
spk_37: you clarify what you're expecting for the first quarter recently all year
spk_4: yeah so we were expecting gross margins are looking at a fifty this point increase throughout the course of year
spk_1: seems pretty similar and que one is can a little bit lumpy throughout sure as it always is but it's or for your trend or expecting
spk_2: yes so we ended up for your twenty two at thirty nine point four percent so we're open a close to forty percent or for the full year as rob said it gets lumpy it's low lumpy in the third quarter kids or weakest quarter fama sales in production standpoint and or fourth quarter is always our strongest quarter thing as we have more production these
spk_1: and or get that utilization and in the as dna the fifteen and and have to sixteen and an app that for the full year
spk_2: that's correct yeah thank you very much
spk_1: thank you and on next question comes from michael sam only were trust your line is open
spk_2: he acted morning guys thanks for taking the questions like nicer and nicer saltier just add up quickly that it's and housekeeping for for twenty three as it's four hundred million in cash flow and on trying to get under that three time by bridge or though still ah the right right metrics you should be looking for
spk_41: the our intention of getting to that four hundred million against fiscal twenty three that we put out there is was gonna target for for if up
spk_42: gannett and our target still as bike to school twenty three to pay them at the minimum four hundred million a debt and i think all the way to his quarter already with take down one hundred million clue what quarter
spk_3: mccain does so will continue every quarter of the produce an actor allocate our capital to get get to our targets and and get that leverage them
spk_2: open perfect and then i didn't hear them correctly the are you guys adding capacity for for commercial aerospace that i said i hear that correctly
spk_7: yes that's correct
spk_1: it is that i mean i i would have thought did you have the capacity to any we're adding a lot of keep a building capacity before the max for the downturn is it are you he bringing a new capacity or you kind of you know why have been back up the tooling and maybe labor like already had or is this caught up fresh additional capacity
spk_2: well it's it's fair most part it's fresh additional capacity because if the hundred building these single isles at a rate that's beyond two thousand and nineteen in their their intention feel particularly if you look at airbus and intention is to go to sixty five planes month on the am
spk_10: and the single aisle and or
spk_2: and when you when you start layering back and all materials at what we supply we
spk_4: we we have to six we have to a capacity guys were the sole supplier of a lot of hardware an airplane kinda
spk_43: there's there's and we're we're obligated to
spk_44: to produce so yes were at wearing asking
spk_2: okay okay and what many any color on what kind of capacity what capability erratic
spk_41: i'm
spk_0: yeah it it did not see it for the most part on
spk_10: it it's probably on an engine components
spk_2: okay
spk_0: got it
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