ESL
#Yes, that exactly.
Thank you Rob, that's correct.
That's a baseline target, yes.
That's absolutely correct.
I mean, if you recall the question that <UNK> asked was are we using adjusted earnings or GAAP when we did our comparison.
And I was thinking about the 159% that we talked about, and I said we used our GAAP.
Okay.
We talk about internally as <UNK> referenced in his remarks and our benchmark is that over the long term, we anticipate being consistently able to generate more than 100% free cash flow above our net earnings.
That's our baseline target.
And you are absolutely correct, Rob.
The GAAP this year ---+ no, wrong choice of words there.
The spread this year between GAAP and our adjusted earnings is abnormally large this year for all the reasons we talked about.
We anticipate returning back to a more normalized level.
However, next year as we've identified, we still have some items that we will be adjusting for.
So we would expect ---+ we would expect that our free cash flow again next year would be substantially higher than 100% of GAAP earnings.
And I think that's what your point is.
Right here in front of me, I do not have the exact number.
Right.
Right, I agree.
We could provide that.
No problem.
By segment.
Yes.
I just want to make sure that we are clear.
We are getting an additional nice bump from having the full year of DAT in the numbers next year.
It's a little more than that.
It's going to be in the $60 million to $80 million range as we flow it out.
Because remember, as we've talked throughout the year, DAT does have a seasonality component.
And last year when we acquired the business we missed some of their higher, their higher revenue generating months.
So will be $60 million to $80 million.
On a peer basis.
It will show on an al-out basis.
It will show the highest growth rate, but the organic has a little pressure.
No, I didn't mention it specifically.
But our expectations next year for corporate expense are somewhere in the $60 million to $65 million range.
Yes.
Well again, just a lot of moving parts still.
So I will just throw that out as a general.
As I take down through these ---+ we did stress the system on a lot of different things.
A lot of different challenges there with compliance.
We could spend ---+ we spent more than we thought on compliance.
That can hurt us a little bit although we adjust out part of that.
Miss on the low end, we would probably have to have the top of our end markets have a dramatic change I would think.
We're not banking on any really big wins, but there is a portion of incremental stretch like every year.
And I think we've done a very appropriate job of looking at those and putting in a makeable number.
But there's puts and takes there.
So it would probably be more on the top market side.
If we saw further deterioration or some of the short-term, short cycle stuff that we were less successful on.
Likewise on the upside, I think if we can continue to execute on budget and on track with the cost of some of our projects and start to drive some of the bottom line conversion on those projects, that can to help us.
And also some swings on some of the retrofit programs that we are always out chasing.
Those can have ---+ we probably got three or four of them that we're chasing right now if we were more successful on those or if they came earlier in the year, and I've done ---+ and I'm not even going to talk about them anymore because I'm terrible on the timing of those.
We have a pretty nice ---+ we've had some nice wins in the UK nuclear market.
We've got some incremental sales in 2016, we are planning on some pretty good size bookings this year.
But they won't happen until 2017 and beyond.
We could get a little bit of incremental there.
And if oil rebounded, obviously oil, we got hurt in 2015 specifically and a little bit of 2014 because of oil prices.
If that was to go up and help with oil exploration if we saw helicopter rebound a little bit, that could help.
We don't talk a lot about gaming.
Our gaming guys ---+ the Gamesman acquisition we did just knocked it out of the park.
To repeat there is a very tall order.
But with all of the consolidation that we've had, we were pretty nervous about being on the wrong desk, but they went out and got it done.
So we could have ---+ we are planning on coming back down a little bit just because of the wins that they had.
They could have another knock it out of the park year.
You bet.
<UNK>, this is <UNK>.
We see in 2017 we're getting back to GAAP to GAAP.
Based on our timing, we will still have the residual amounts of our compliance consent agreement going on in there.
But our accelerated integration initiatives will be completed.
And much of the heavy lifting for DAT that we are anticipating will be completed.
So we're looking at 2017 being about as close to a clean year as we've seen in a long time.
Thank you.
Yes Frank.
I mean <UNK>.
We moved a very small business from continuing ops to discontinued ops in the fourth quarter.
It was a business that we had moved some of our aerospace components into the Everett facility.
And we are selling the industrial components part of that business, and we moved it into discontinued operations in the fourth quarter.
That's the delta that you're seeing.
I think that it was probably close to breakeven.
Hi there.
Hello <UNK>.
Two things.
You are correct.
I would say that there's maybe three different things that we've had going.
Three big buckets that we've had going on.
Compliance is one that is ---+ we adjust out the things that we know for absolute certainty will go way.
So they are outside legal for investigations.
It's the cost that we are paying for the outside services that we are using there.
But there is also ---+ there has been a significant increase in our businesses and at corporate to go do and review all of the drawings.
To go redesign some things.
As we're moving things from one site to another, extra cost there.
And we are not adjusting that out.
So my anticipation is that has increased more than I thought it would.
It has chewed up some of our savings, but we are going ---+ we have a target as we embed these processes in our business ---+ there is some nonrecurring activities in the business that does go away.
Once we classify all the drawings and get the policies and practices set up.
We did tons of training this year that again is not broken out separately, that gets charged in the business and it pulls people off of working on product and designing new products or doing R&D.
So that is in the singles, but numbers of millions of dollars of disruption that is in our business that I think over time goes away.
There is what I will call the accelerated integration projects.
We picked a list of those and said here's some high-profile and we will adjust those out.
The one that <UNK> just mentioned actually is an example.
There is probably four other moves that we've done that we've not adjusted out that cost us money to go do that and time and effort.
So there's been some expense there.
Again, most of those are behind us, but we're going to have some ongoing run rate there.
But we're trying to get more of those done sooner rather than later.
There is some ongoing CI impact that we haven't broken out separately.
And again, a big push to get everybody trained.
This event that we just did up in Everett is a good example of that.
All of that hits the bottom line and we shut down the factory for a week and a half.
All of that is hitting expense right now.
And again, until we start self funding that by getting enough critical mass that's operating under the system, it's not really even breaking evening.
It's a drag on the system.
And that I think this year starts to turn the other way.
<UNK>, you have any other.
No.
If you are looking for a specific number there, it doesn't exist.
<UNK> did a very good job of describing the items that are hitting the P&L there.
And the way he described it with using the term self funding is how we describe it internally.
A number of these programs are absolutely going to have positive returns, but we weren't just going to have an extensive and even longer list than we already did.
It has manifested itself in our sales level.
I think we have leveled out.
It is still happening, but again, there is an increasing fleet out there.
We think it has bottomed out or it's leveling out or being offset again by an increased number of units out there.
No.
I think we chased our tail on that for a couple of quarters starting back in 2013 and 2014.
It had leveled out, and now actually we've seen a little bit of growth either by added ---+ probably at a higher liability, not as many removals, not as extensive an overhaul.
But that has leveled out now, and we're seeing some continued growth.
Believe me, we keep our eye on it though.
Okay.
Thanks.
