Q1 2021 Albany International Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Albany International first quarter earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session instructions will be given at that time. If you should require assistance during the call. Please press Star then zero.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host director of Investor Relations. Mr. John Hobbs. Please go ahead.
Thank you, Greg and good morning to everyone.
Welcome to Albany Internationals first quarter 2021 conference call.
As a reminder for those of you listening on the call today. Please refer to our press release issued last night detailing our quarterly financial results contained in the text of the release.
Certain information regarding our forward looking statements and the use of non-GAAP financial measures and their associated reconciliation to GAAP.
For the purposes of this conference call those same statements apply to our verbal comments, we make this morning.
Today, we will make statements that are forward looking that contained a number of risks and uncertainties, among which are the potential effects of the COVID-19 pandemic on our operations the markets, we serve and our financial results.
For a full discussion, including a reconciliation of non-GAAP measures. We may use on this call to their most comparable GAAP measures. Please refer to both our earnings release of April 26th 2021, as well as our SEC filings, including our 10-K.
Now I'll turn the call over to Bill Higgins, our President and Chief Executive Officer, who will provide opening remarks bill.
Thank you John and good morning, and welcome everyone. Thank you for joining our first quarter 2020 one earnings call.
And I'm pleased to report that we started the year strong delivering another solid quarter, both segments got off to a good start as a company, we achieved 222 million and revenues.
And excellent bottom line performance of GAAP EPS of <unk>, 85 cents or <unk> 87 per share on an adjusted basis.
Our cash flow generation was particularly good for first quarter, and we continue to pay down debt and have a healthy balance sheet, which enables investing and future growth on <unk>.
Particularly proud of how our employees continue to perform through the pandemic.
Even while following our COVID-19 protocols and safety procedures. Our operating teams are driving process improvements with lean kaizen. Our R&D teams are working on the next generation of materials and products and.
And we continue to do a great job for our customers and delivery quality and service.
Our machine clothing segment had its strongest quarterly top line performance since 2015 with revenues up nearly $12 million year over year and good order activity in Q1, which bodes well for this year.
In fact, other than the secular decline and publication grades machine clothing, and market demand and packaging tissue pulp and engineered fabrics were all positive and Q1 and.
In addition to our solid backlog our engineering teams are hard at work developing new technology builds for our customers, which is critical to our success and value proposition.
We have seen some instances of isolated supply constraints impacting raw material pricing and delivery timing and this segment and we continue to actively manage our supply chain and securing the materials, we need to support our customers' demand.
In summary, our machine clothing segment continues to perform well serving customers around the world as a recognized global leader supplying these critical consumable components and the paper industry. This success is the result of a disciplined and disciplined execution of our long term strategy.
And aerospace as we reported last quarter, our engineered composites segment, we'll be grinding through a year of destocking of excess inventory and the channels for leap Boeing 787, and F 35 products.
That said engineered composites is on track with their plan and ready for the upturn as commercial air transport improves inventory and the channels is consumed and our production is back in sync with aircraft OEM production.
We're on good platforms that we expect will recover and we continue to view this as a time to further improve our operations.
We're ready and looking forward to the upturn, we're working closely with safran to coordinate our operations of the leap engine production ramps up.
And the Airbus <unk> hundred 20, Neo on Boeing seven and $3 seven Max.
With domestic air travel recovering first and fueling demand for narrow body aircraft <unk> hundred 20, Neo and Boeing seven and three seven backs are and the sweet spot of the air transport recovery.
And engineered composites looking beyond our current portfolio and programs our opportunity pipeline is as full as it's ever been we're developing our breadth of capabilities to be the next generation supplier of advanced composite materials.
This ranges from our proprietary three D. Woven composites currently used on leap engine fan blades and fan cases, two automated fiber placement composite wing skins for Lockheed Martin's F 35 joint strike fighter the complex components on the Sikorsky CH 53 helicopter.
We continue to develop applications for the wing of Tomorrow program with Airbus Industries, and we're investing more this year on R&D projects with new customers and new platforms using advanced materials, such as our three day woven composites on a range of exciting applications, including unmanned hypersonic and electric aircraft.
But some of these efforts furthers our goal to diversify and grow our customer base and broaden our material science capabilities.
As I mentioned, we have a strong balance sheet and good free cash flow generation is allow us to sustain our investment and the technology technologies and customer programs and expand and broaden our competitive positioning and both segments.
Our first priority for capital allocation is to invest and organic growth programs across both business segments, and then to seek acquisitions that fit our long term strategy.
Our reputation for reliability service and technical excellence is well established and the machine clothing segment and our brand is growing and aerospace as a reliable supplier and engineered materials partner and we're optimistic about the long term opportunities in both segments.
With that I'll turn it over to Stephen for more detail on the financials even.
Thank you Bill good morning to everyone.
I will first talk about the results for the quarter and then comment on the outlook for our business for the balance of the year.
For the first quarter total company net sales were 220 to 24 million a decrease of five 7% compared to the 235 point and 8 million delivered in the same quarter last year.
Adjusting for currency translation effects net sales declined by eight 2% year over year in the quarter.
In machine clothing also adjusting for currency translation effects net sales were up four 9% year over year, resulting and the highest Q1 revenue for this segment since 2015 as Bill had mentioned.
The increase was driven by growth and all major products are all major grades of product other than publication grades.
The revenue from publication declined by 10% from the quarter and represented only 16% of M. <unk> revenue this quarter.
Currency neutral revenue in both packaging and tissue grades reflected a high single digit growth rate and the quarter driven by the high orders, we had seen in the fourth quarter of last year.
Engineered composites net sales again after adjusting for currency translation effects declined by $26 2 million, primarily caused by significant reductions in leap and Boeing seven and eight seven program revenue, partially offset by growth on the F 35, and CH 53 K platforms.
<unk>.
During the quarter the a S C leap program generated a little under 27 million and revenue and <unk>.
Slight improvement over the roughly 24 million delivered in Q4, 2020, but down significantly from the roughly 39 million delivered from Q1 of last year.
First quarter gross profit for the company was $88 5 million a reduction of 1% from the comparable period last year.
The overall gross margin increased by 190 basis points from 37, 9% to 39, 8% of net sales.
Within the M. C segment gross margin declined from 53, 2% to 51, 5% of net sales principally due to higher fixed cost and lower absorption.
Within H E C. The gross margin declined from 17% to 16, 4% of net sales driven primarily by the impact of changes in the estimated profitability of long term contracts.
Last year during the first quarter, we recognized net favorable change in the estimated profitability of long term contracts of close to $1 million. While this year, the net change and the estimated profitability and long term contracts for the first quarter was insignificant.
First quarter, selling technical general and research expenses declined from $49 2 million in the prior year quarter to $46 7 billion and the current quarter and were roughly flat as a percentage of net sales and about 21%.
The reduction and the amount of expense reflects the absence of severance costs recognized in the prior year.
The impact of additional accounts receivable reserves, we recorded in Q1, 2020 when the pandemic began and lower travel expenses, partially offset by lower foreign exchange gains.
As expected and consistent with our full year plans R&D expenditures in both segments increased this quarter.
Total operating income for the company was $41 8 million.
Up from $39 6 million in the prior year quarter.
Machine clothing operating income increased by $3 2 million driven by higher gross profit, partially offset by higher and higher S. P G and our expense.
And H E C operating income fell by $4 7 million caused by lower gross profit.
Other income and expense and the quarter net to an expense of $600000.
Per to an expense of $15 $6 million and the same period last year.
Last year's results included a significant charge related to our foreign currency revaluation loss.
The income tax rate for this quarter was $26 seven per cent compared to the unusually high 62, 1% rate we recorded last year.
The primary driver of the reduction and the tax rate with the non deductibility of last year's foreign currency revaluation loss.
Apart from that in this quarter.
Income tax adjustments reduced income tax expense by $1 3 million.
Compared to an increase of $5 1 million from similar adjustments in the same quarter last year.
Net income attributable to the company for the quarter was $27 6 million and increase of $18 5 million from $99 1 million last year.
The increase was primarily driven by the absence. This year of last year's foreign currency revaluation loss and by higher operating income.
Earnings per share was <unk> 85 cents and this quarter compared to 28 cents last year.
After adjusting for the impact of foreign currency revaluation gains and losses.
Structuring expenses.
Expenses associated with the Saar comp acquisition and integration and San Frans costs in the prior year period adjusted earnings per share was 87 cents this quarter compared to 78 cents last year.
Adjusted EBITDA grew two 6% to $60 7 million for the most recent quarter compared to the same period last year.
Machine clothing, adjusted EBITDA was $54 9 million or 37, 1% of net sales this year up from $49 2 million or 36% of net sales and the prior year quarter.
H E C. Adjusted EBITDA was $16 7 million or 22, 6% of net sales down from last year's $22 1 million or 22.3 per cent of net sales.
Turning to our debt position total debt, which consists of amounts reported on our balance sheet as long term debt or current maturities of long term debt declined from $398 million at the end of Q4 2000 $20 million to $384 million at the end of Q1 2021.
Non.
And cash declined by just over $3 million during the quarter.
Resulting in a reduction in net debt of over $10 million.
The first quarter is typically our lowest quarter free cash flow generation due to working capital seasonality and the incentive compensation payments made during the quarter.
This year, we performed better than we would typically expect and delivered free cash flow defined as cash flow from operations less capital expenditures of $21 1 million compared to a use of over 19 million and the same quarter last year, driven primarily by improvements.
And H E C working capital.
We were pleased with the cash flow performance of the E. C segment, this quarter, which swung from a significant use and the same quarter last year to significant cash generation this year.
Capital expenditures in Q1 of each year were approximately $13 million.
Our absolute net leverage ratio is now 0.65, providing.
Providing us with a very strong balance sheet, allowing us to take advantage of organic and acquired growth opportunities.
As we look forward to the balance of 2020, one and the outlook for the machine clothing segment remains strong.
Compared to the same quarter last year and see orders were down 2%.
However, as you may recall near the end of Q1, and 2020 orders spiked from customers, who are concerned about the availability of supply in light of the emerging pandemic.
Further from a backlog perspective, we are in a stronger position entering Q1 in 2021 than we were in 2020.
So overall, we are feeling good about our previously issued guidance of revenue for the segment of between 570 and $590 million.
From a margin perspective, and machine clothing, we delivered another strong quarter with adjusted EBITDA margins north of 37%.
I should note that some of the headwinds we projected this year.
Most notably a return to normal levels of travel.
And the absence of foreign exchange benefits, we enjoyed during the middle of last year have yet to impact our comparative results.
That said, we are pleased with our performance for the quarter.
While we are maintaining our adjusted EBITDA guidance for the segment of $195 million to $205 million. We are currently trending toward the upper portion of that range.
Turning to engineered composites, we are seeing the expected impact of the 70 eights and seven frames channel Destocking on our top line results.
During the quarter, we generated less than $1 million of revenue from the seven eight and seven frames program compared to over 12 million and the same quarter last year.
I already noted the ASC Leap program was also down by about $12 million during the quarter.
These two programs account for almost all of the year over year decline in E. C revenue that we saw during the quarter.
As a result of these declines the share of E. C revenue derived from defense programs grew to over 48 per cent during the quarter.
That said, we will still see the previously disclosed revenue impact from F 35 channel Destocking and the second and third quarters.
So I would expect a defense program share of H E C revenues to dip somewhat over the next couple of quarters.
This will also make the second and third quarters quite challenging for the segment overall.
Yeah.
The year is shaping up in line with expectations for the segment and we are maintaining our guidance range of 275 to 200, and <unk> 5 million per segment revenues.
From a profitability perspective, our performance to date is broadly in line with our expectations and we are maintaining our E C. Adjusted EBITDA guidance of $55 million to $65 million.
We are also maintaining all of our previously issued guidance ranges for company level performance with the exception of guidance for GAAP earnings per share, which has been updated to reflect non-GAAP adjustments reported in Q1.
Current guidance is as follows.
Revenue of between 850 and $890 million.
Effective income tax rate of 28% to 30%.
Depreciation and amortization of between 70 and 75 million.
Capital expenditures and the range of $50 million to $60 million.
GAAP earnings per share of between $2, and 38 and $2.78 down slightly from prior guidance of $2 40, and $2 80.
Adjusted earnings per share of between $2 40, and.
And $2.80.
And adjusted EBITDA of between 195 and $220 million.
Overall, we are very pleased with how the year's progressing and hope to see a continued progression to normalcy and the balance of the year.
With that I would like to open the call for questions over to you Greg.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press one and then zero on your telephone keypad you may withdraw your question at any time by repeating the ones Zero command, if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one and zero at this time and one moment. Please for your first question.
Your first question comes from the line of Peter Arment from Baird. Please go ahead.
Hi, Good morning, you actually have Eric Ruden on the line from Peter today.
But I wanted to touch on and you see and kind of a balance and a year here.
And the $60 million to $65 million of inventory Destocking and kind of headwinds still the right number for this year I think adding up the numbers there and we had about 23 million from 78, seven and on leap with F. 35 is still to come and how should we think about the remainder of the year.
And have we hit bottom on Sunday, and southern and where we're building on production from here.
So and for first thing the 60 to 65, Yeah. That's still the right number for the overall year roughly you know it's in that range and we as I mentioned the F 35 inventory Destocking has yet to hit US in fact and Q1, we saw some revenue growth and F 35.
As I noted from Q1 of 2020 to Q1 of that 2021, and but in the second and third quarters, we will see a dip down on F. 35. So that's still on that part is certainly still ahead of us and on and on the at Leap and we are seeing you know some destocking both in the channel.
And in fact, I am on our own books that you know some of the product that we had.
And as I mentioned over the last year, we've we've had a significant stocking inventory for example on that on and on leap, one beef, which powers the seven and three seven Max you know, we went up well over 200 chipsets and close to 250 chipsets and.
At the end of last year and at the end of Q1, we're now down under 200 chipsets on hand of leap one be revenue. So we're certainly seeing some of the destocking and and where that appears on our balance sheet that would be and contract assets. Because it is project on which we've already recognized revenue and profit. So if you see the decline and contra.
Assets this quarter part of that is this destocking and leap so that is progressing as expected.
However, you know predicting exactly what the profile looks like over the balance of the year largely depends on boeing's ability to ramp up as they expect to ramp up and seven and three seven and production. So I you know I'm not going to provide a quarter by quarter profile up to burn down but it is progressing as we would have expected.
On seven and eight seven certainly yeah as I mentioned, we less than $1 billion of revenue this quarter and.
It's hard to believe this quarters and off the bottom in terms of revenue, but Q2 is going to be another challenging quarter and odd on seven and eight seven and Oh.
The improvement on that program and.
Assuming as we say as we've said before that's Boeing and a good day.
You know Manny just a labor of both our existing and stock up seven eights happens and and sell additional aircrafts. So so followed our sales profile also and seven eights have and assuming that happens and we would start to see some recovery on seven and eight seven and the back half of this year and where we would start to go through to get through some of that and.
Inventory Destocking joined the channel, but the the second quarter is he's not going to be much of an improvement on SAP and eights happened over the first quarter.
Okay. Thank you that's really helpful. And then maybe just a quick one on M C and you've mentioned and rising input costs, and obviously interest rates inflation top of mind for a lot of investors here and maybe just provide a bit more color on what you're seeing there or is there any pressure on the once your numbers are you expecting that to.
Put more pressure on the back half of the year.
Yeah. Eric This is bill we're watching it pretty closely right now we seem to have a handle on it. So we're not seeing pressures at this time, but we are we did see some activity around logistics and transportation bottleneck slowing things down and then.
Some some price pressure.
Pressure that was very minimal and we are able to manage through so far so we are watching it and and as you've seen and other industries, there's quite a bit of a.
Price and logistic concerns out there.
Okay. Thanks, I'll hop back in the queue.
Your next question comes from the line of Glenn I'm kind of from Cowen. Please go ahead.
Yeah, Hey, thanks, guys.
Couple of questions. So just a follow up on the prior question.
On the F 35, do you guys have visibility that and in fact will decline.
Throughout the year or or is this just an anticipation of potential destocking and I'm just curious what your order visibility is.
Yeah Yeah.
And so.
Oh.
Yes, we do have visibility and our plans through the year of the.
Destocking, that's going to go through on F 35.
Okay. So when does that kick in.
I mean is it already kicking in in Q2 or.
Yes, we expect to see it through Q2 and into Q3.
And is it still 20 units I think that's what you guys talked about previously.
Price is certainly what what yeah, what we talked about previously that there were two drivers that that is the biggest one and where it were last year and Lockheed produced about 20 units fewer than they had expected and we we delivered all of our parts, but those 20 units, but in addition, as we noted and for a variety.
You have reasons and not all of which are clear to us, but presumably at pandemic related. So it was less depot activity last year and so there was less that product consumed also for you know aftermarkets and refurb and repair of aircraft and so the actual impact on us is more than just that.
And 20, chipsets, and but but it's in line with the debt. The dollar impact we provided at the end of Q4 still holds for the full year.
Okay.
Separately and I.
I may have missed this because one of the other earnings calls was running long on the one day and one b. So.
If you could just clarify again, how much inventory.
What when do you start to see a production increase for yourselves and.
Time based on the announced build rates of the.
Of the program so.
When do we see a pick up and then secondly, you mentioned the AAC cash conversion and a better and Q1, how much was that true up of.
How much is explained by the true up of the Safran contract.
From last year, where he had to absorb the fixed costs and get reimbursed later.
Sure No I I I I can take those two so so on.
On leap one b as I mentioned, you know, we were up and not quite 250 chipsets, but closer to 250, then 200 and at the end of 2020. We're now down under 200 chipset. So we're seeing some and we're seeing some a.
Destocking of parties on our books right now are they now.
We're not going to see a significant increase in production on that though for some time periods. Obviously still have those you know close to 200 chipsets on hand, and we we'd like to see you know Boeing meet its production ramp up so that that that is probably outweighs before we see a material and pick up on the on one day production on one day.
Right now and you know.
When we see a pick up and production all depends on when Airbus and meets its ramp up point says that you know they projected and a couple of points. Both at later this year and next year when they expect to step up production and.
And and we would certainly expect our production to rise in line with that and but overall and the lead program, but the next big step up is it is really on on one beef when when we get back to meeting the actual you know full demand for that and that's probably beyond 2021.
And so I wouldn't expect to see significant change as we said overall for the year and on leap collectively this year is going to be roughly comparable to last year, it's going to be up a little and but not appreciably up over the revenues, we delivered last year and in terms of the cash flow in Q1 looked at.
Very strong cash flow for Crazy for Q1, it was certainly benefited by and.
Benefited from leap in two ways, one as I mentioned that the destocking of inventory on our books and the west was a little bit of compression and won a inventory on hand as well, although much smaller non on one b because we just didn't entered the quarter and with the excess inventory, but clearly that is cash and that.
Our deliveries on which we've already recognized the revenue and costs and and profit and we eat cash collection when we deliberate on on the true up specifically and you know there are puts and takes on that and but for Q and some of it dribbles into and Q2 impact and so it's not all felt within.
In Q1, and it differs by facility, we have separate true ups reach but overall somewhere and they you know.
Mid teens, a little under $15 billion benefit in Q1, as a result of the true up.
Okay, that's helpful and.
I'm, sorry to keep asking questions, but I did want to make sure. We got these answered on the call.
On what.
Was there any cumulative catch up of.
As a consequence, it either segment, but AC and particular in Q1.
Yeah. So so we only really have Q2 catch ups in AC and in machine clothing, and we really don't recognize on a per cent complete basis, just because of the terms of our contracts there and so within that you see it was insignificant at this quarter compared to about $1 billion pick up and in Q1 of last year. So really.
Effectively rounded to zero.
Got it and and just on machine clothing, and so the margin performance very strong you mentioned you're trending towards the higher end of the guidance range.
But I am curious like again, how much visibility do you have out there.
Kidneys.
You know its been on what these segments that's done better for longer.
You know, what's you know what sort of what gives you.
Concerned about the Q1 run rate and not not extending are there any specific things and the order book or is it just you're making a macro assumption.
And yes. This is.
Thank you.
Yeah. This is bill yeah, we're we're still watching the publication.
And market pretty closely that that has been a good mark for us has become a much smaller part of our revenues and we said we got down into the <unk>.
16% of our quarter revenues for publication and it's hard to say, how fast that's going down and I think you'll see.
There were some announcements this past week by store and so in Europe to close down a couple of big Mills, very large business, and Finland, and Sweden, I think there and we're expecting there's going to be some more of that but it's really hard to tell our visibility goes out.
You know it goes out beyond the quarter, but it doesn't extend through the full year and our backlog so.
And we're we're just sort of we're being careful as we watched that publication.
The other end markets have I've looked pretty pretty good.
Packaging and tissue.
And then even some of the engineered fabrics and with wood products or non woven and segments are looking pretty good. So it was a little too early to kind of changed our guidance for the full year, we'll look at it as we get into the middle ear and see how the markets play out.
Thanks, guys.
Your next question comes from the line of John Friends read from Sidoti and company. Please go ahead.
And good morning, guys. So just sticking with machine clothing with the revenue growth and results uniformly good across all major geographies.
[laughter].
Yeah, John and this adult I I would say it was strongest in Asia and China in particular.
And then you know.
Not quite as strong obviously publication hit hard and Europe and.
Harder probably than Europe, and anywhere, but also and the Americas, but I would say Asia was strong overall.
Yeah, Yeah, John and the Q. The 10-Q will come out later today, and and you'll you'll you'll see but effectively Americas, where we combine both north and South America was effectively flat year over year. It was getting a lot less and it was down by you know a.
A few bips and whereas Eurasia, which is Europe, and Asia, combined and what was up quite significantly more and that 20% range and and our engineered fabrics business was actually up and double digit rates as well during the year and that that we don't break out by region.
And we break out our pay per machine clothing business by region engineered fabrics was up double digit rates as well.
Do you have a lot of and exposure to India I don't recall.
No we do not.
And and also you mentioned and the commodity pricing what ability you have to raise pricing and machine clothing or is it you're just going to have to absorb it.
Yeah as you know the machine clothing segment.
Most of the works on contracts on various ranges of time. So it's a it's not something where we can just pass through price increases quickly it would take us time to recover.
Significant material, you know price increases and our and our and product pricing.
We would of course, you know work on our best to improve operations and and take cost out and to adjust as well.
Got it and just just on the on the cash flow on Bill it's going to be another strong what's gonna be your priority for use with cash at this point.
Yeah and.
As we stated is our top priority is to continue to fund organic growth programs and and what we describe as the incubator projects we have.
And the company and both are primarily and a C for new products and that's where the next generation of belts and M. C. As well so that's going to be our first priority. After that if we can find acquisitions that fit our strategy.
To improve our materials capability, and our and diverse from a customer base, we will consider acquisitions as well, but our first priority will be to.
And your organic growth.
Okay. Thanks for taking my questions guys.
If there are any additional questions. Please press, one and then zero.
And you have a question from the line of Pizza Kubicki from Alembic Global. Please go ahead.
Good morning, guys.
I really don't know.
And I wish you don't know the AR question entry protocol [laughter].
Wanted to ask Stephen and I know you don't want to talk too much about the quarters, but I'm just trying to get a feel for kind of two Q and three Q. It sounds like you'll get the incremental headwind sales wise from the F. 35 is is I don't know if something and the low sixty's kind of what you guys are thinking or is that too conservative.
And any kind of a ballpark are you able to give.
Yeah look I I don't want to give a specific number but but certainly there'll be so theres not a huge amount of improvement as I mentioned, particularly in Q2 and programs like seven and eight seven and and and Leap day. In Q2, you have there is the additional headwind of some F 30.
Five decline so you know.
Even sequentially that will be a challenging quarter and Q3.
And that May have a and a little help depending on what happens on leap one day, but yeah, you know I I and so I would expect you know sequentially Q3 to be better.
Q2, and but look I I I've certainly.
I think that the low sixty's is probably a little too low for that business are you. There. So it is it's somewhere you know more challenged and that was this quarter and but I would expect it to be you know certainly it you know.
Somewhere probably and you know north of the low sixty's, but south and fourth we delivered this quarter.
Okay fair enough.
And then just going on the one on the Triple Seven X program.
I'm just wondering exactly for you guys as the activity pretty minimal right now and.
And is there any kind of you know if you look out a few years is there any kind of a minimum level of volume that you need on that program for it to be profitable.
And or even you know kind of in line with the balance of 86 programs.
Yeah, there's very minimal work on it right now we have continued a little bit of development work and that's primarily what we've done so far so we haven't gotten to the point, where we have them.
And of a commercial plan for it so it would be hard to answer the second part of your question what's the.
Minimum quantity and depends on them.
Okay, and design pricing and everything being finalized and from the development work.
Right now she she don't really have any kind of go forward you know risk from that project. Because you know you don't have any production term setup.
That's about right.
Yeah, well, we've been working it's been development program, so far and it's not a commercialized program yet.
Okay. Okay. Okay.
Okay. Thanks, guys.
Your next question comes from God, I'm kind of from Cowen. Please go ahead.
Yeah, just a quick follow up I think you've made comments in your opening remarks about.
M&A and I'm just curious it on what.
What can you say about the M&A pipeline and and the types of opportunities Youre looking at.
Yeah, we are where we are actively out looking it's a it's a difficult marketplace for acquisitions at a price and it's been high and a very few.
And as I've come to market.
So we're continuing to look for things that would fit within our strategy as we did the acquisition of Sir comp and and Germany at the end of 2019 as a small high technology company that brings us some more advanced capability around and thermo plastics and filament winding adding to our materials capability. So what we will continue to look for.
Technology plays that we could.
Fold in and that would add to our complement of what we can offer on the sort on the next generation of aircraft.
But it and it's pretty pretty tough marketplace out there for acquisitions right now.
Okay, and we should assume that's on the tuck in variety of their Sim.
Similar to what he did previously is that right.
And that would fit that would fit within our strategy yes.
Okay. Thank you guys.
And at this time there are no further questions.
Yeah.
Alright, well I'd like to thank everyone for joining us on our call. Today. We appreciate your continued interest and Albany International and of course, if you have any questions. Please feel free to reach out to John Hobbs, Our director of Investor Relations at 63033058 97, Thank you and have a good day.
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