David Burney: Yes, that’s what the plan is. It’s been tight for the past 2 quarters. We saw a pretty big buildup in our working capital in the second quarter between inventory and receivables. So we’ll — those receivables are converted to cash pretty quick. The one that we’re having the hardest time getting our hands around is the inventory at this point. But we are internally forecasting to be cash flow positive for the balance of the year.
Operator: Our next question will come from Sam Struhsaker with Truist Securities.
Sam Struhsaker: I’m on for Mike Ciarmoli tonight. I was curious, as you guys are kind of returning on the Aerospace segment to pre-pandemic levels in prior peak. How should we think about margins going forward? It kind of the same as you’re getting in the past at this level, stronger, weaker?
David Burney: They’re going to start out being probably — I mean it depends on what period you’re looking at [Technical Difficulty].
Sam Struhsaker: I’m thinking on like a go-forward basis, once you kind of — once you get back to those revenue levels, like what can we expect in terms of margins in pre-pandemic?
David Burney: Yes, I think we should be able to — I don’t see any reason why we can’t get back up to our pre-pandemic margins. We need the new program, the new programs that we are winning to, and pricing at higher margins to kick in here, which will happen as we through next year and in the second half of this year. But yes, the mix isn’t a whole lot different. And there’s no significant fundamental change there. We’re lagging in terms of getting our — the increased costs from the past year on wages and materials through into our new contracts, but that’s going to — that will catch up as we move through next year.
Sam Struhsaker: Great. And then kind of going along the line of the inventory and supply chain, where exactly are you guys seeing the bigger issues on the supply chain in terms of getting parts in? Is it extended lead times? And is there any particular area that’s worse than others that might be impacting guidance for the year?
Peter Gundermann: Well, a lot of what we do is electronics-related. So I think our answer to that question would definitely include the general electronics difficulties that the world has seen over the last couple of years. We have, in some cases, some extended supply chains that move into Asia, and all parts of Asia. And so, we’ve dealt with a little bit of that also. And it’s not uncommon for some of our more complex products to have a couple of hundred components in them. So all you need is one to be late. And the other 199 sit there on the shelf until you have everything you need. So, it’s getting better in that the general level of responsiveness and lead time has come down. The surprises we see today are decidedly positive compared to where they were certainly 1 year ago or 1.5 years, 2 years ago where they were decidedly negative, all surprises seem to be negative.
So I think we’re making progress on that, but it still is clumsy and it still is a situation where our customers want to be able to place orders and get parts in 20 weeks in many cases. But the components that go into those parts for us have 40 or 50 week lead times. So trying to balance the lead times that we face from our suppliers with the lead times that our customers are demanding, puts some risk in the system, and that’s part of what we’re dealing with also. Again, we think it’s all getting better. And we think — I think in terms of inventory management, most parts of our business are doing a better job, but we got to get more consistent across the entire company. So that is a major focus, all hands on deck, and we got to do a better job there.
