CIR
#Thanks.
Yes.
So, there's a couple points here.
So, appreciate the comments there, <UNK>.
The ---+ as you look at the fourth-quarter, we actually were able to get a little bit of favorability relating to stock compensation and some other aspects that we adjusted for in the fourth quarter.
So, as you look ahead, our run rate is probably a little higher than what you saw in the fourth quarter, but it is also an area that we focus on for cost reduction and cost control.
And so you're seeing the benefit of both ---+ you're seeing the benefit of cost reduction and cost control, combined with the fact that we had a little bit of favorability.
I wouldn't expect what you saw in the fourth quarter to be what you would see each of the subsequent 2016 quarters.
That's probably a fair assumption, <UNK>.
Well, it's really hard to know exactly, <UNK>, but I think that it would happen pretty fast.
And the reason I say that is that there is a lot of wells have been drilled and capped and not completed.
And when we ---+ where we really benefit is when they complete the well.
They complete the well and connect it to the gathering stations.
That's really our sweet spot; that's where we sell a lot of product.
So all these wells that haven't been completed are sitting out there waiting to go.
Once the oil price crosses a certain threshold, obviously these guys are going to move into action pretty quickly.
And that would benefit us.
So, our ---+ what we've seen in the past and what we're seeing in the market, we would expect that our Distributed Valves business would come back very quickly.
Just remember also, we've just experienced painful destocking over the last year, year and a half or so, <UNK>.
So, the distributors are keeping an awfully low level of inventory and often having us hold it.
So, if demand comes back and production goes up, I would expect there to be stocking orders that come in and really give us a lot more lift and tailwind as well.
So, if you look at our revenue in 2014 and you compare it to our current run rate, we're down over 60%.
That's correct.
Correct.
Thanks, <UNK>.
Yes, looking forward to seeing you too.
Yes.
So, we ---+ we're ---+ this is an estimate.
We really look at it by product line.
But I'd say in total, if you looked at all of Aerospace & Defense, about 70% of it is going to be design-to-spec and about 30% will be build-to-print.
And in general, as I mentioned, the build-to-print margins are much lower than the design-to-spec margins.
And we've been moving that over time, transitioning that over time.
So, a lot of the business that we've talked about, the bigger nuts that we've exited over the last couple of years, like the structural landing gear, in general, this has all been build-to-print type of business, where we don't own the design; we're basically contract manufacturer.
And the margins, in some cases ---+ well, they're always lower, but in some cases, they have been negative in the past.
So, the transition ---+ we were probably closer to 50/50, maybe 55/45 two years ago.
And we've been slowly moving that, changing that mix.
Yes.
And what ---+ in response to that question that <UNK> asked, that would be the expectation there, all else being equal relative to the topline.
You know, clearly if demand drops on the large project business for us or further on the Engineered Valves ---+ I mean on the Distributed Valves, that can change the equation.
But we are driving for at least keeping the margins level.
The biggest challenge we have on the margins year-over-year really is Distributed Valves.
So if you look at the decline from last year to this year, the difficult compare from Q1 to Q1, that's really the issue we have.
It's not so much pricing; it's really the DV volume coming out of the business that's giving us the headwind.
Yes, it's a good question.
And as you suspect, it's a hard answer, given the variables that go into that equation.
But I would estimate that we are probably carrying 20% to 30% more inventory relative to what we might have done historically, in an up-market.
And you're right ---+ if you're down 60%, it's not all going to bounce back immediately here.
But I think that's the rough order of magnitude that I would estimate at this point, <UNK>.
Okay.
Thank you for joining us this morning.
Thank you.
