Q1 2022 Innovative Solutions and Support Inc Earnings Call
Speaker 1: Good morning and welcome to the Innovative Solutions and Support first quarter 2022 earnings conference call. Our participants will be able to participate in the conference call.
Good morning, and welcome to the innovative solutions and support first quarter 2022 earnings Conference call.
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Please note. This event is being recorded I would now like turn the call over to Sharon Ascospore. Please go ahead.
Good morning. This is John <unk>, Chief Executive officer of innovative solutions and support.
Speaker 2: Good morning, this is Chaim Askepou, Chief Executive Officer of Innovative Solutions.
Speaker 2: Welcome to our conference call to discuss our performance for the first quarter of fiscal 2020.
Welcome to our conference call to discuss our performance for the first quarter of fiscal 2022.
Business conditions and outlook for the coming year.
Speaker 2: current business conditions and outlook for the coming year.
Joining me is rather benign our CFO before we begin I'd like to read the safe Harbor statement.
Speaker 2: Joining me is Raul Vinant, our CFO .
Speaker 2: Before we begin, I'd like to read the safe harbor statement.
Speaker 3: Thank you, Chairman. Good morning, everyone. I would remind our listeners that certain matters discussed in the conference call today, including new products and operational and financial results for future periods, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially, either better or worse, from those discussed.
Sure and good morning, everyone.
I'd remind our listeners that certain matters discussed in the conference call today, including new products and operational and financial results for future periods are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially either better or worse than those discussed including other.
Speaker 3: including other risks and uncertainties reflected in our company's 10K, which is on file with the SEC and other public filings.
<unk> and uncertainties reflected in our company's 10-K, which is on file with the SEC.
Other public filings.
Speaker 3: Before Sharon begins, I will read a statement from the board of directors.
Before it begins I will read a statement from the board of directors.
The board of by SNS mourn the loss of our Dear friend and colleague Geoff Hedrick, and our deepest sympathies remain with chefs immediate and extended family.
Speaker 3: The Board of IS&S mourns the loss of our dear friend and colleague Jeff Hedrick, and our deepest sympathies remain with Jeff's immediate and extended IS&S family.
Family.
Speaker 3: Jeff dedicated his entire professional career to advancing the state of the art and safety avionics systems and flight control.
Jeff dedicated his entire professional career to advancing the state of the art and safety avionics systems and flight controls.
Speaker 3: His extensive innovations included altimetry, flight deck display systems, and most recently, a full regime auto throttle for turboprops.
He has extensive innovations included altimetry flight deck display systems and most recently a full regime auto throttle for turboprops.
Speaker 3: Leading publications such as Flying Magazine and organizations such as the AOPA recognize to see theblindness of seven programs mentoring more than 3.5 billiondooratto.com sorry I missed your received their
Leading publications, such as flying magazine and organizations such as the <unk> recognizes jeff's significant contributions to the industry.
Several of Jeff's innovations have proven truly transformational.
Speaker 3: Several of Jet's innovations have proven truly transformational and have directly benefited air travel.
Have directly benefited air travel.
Speaker 3: we will miss his unique vision, tenacity, and humor.
We will miss his unique vision.
Tenacity.
Omar.
Dr. <unk> has been promoted to chief Executive Officer, and elected to the board of directors with our full faith confidence and support.
Speaker 3: Dr. Sharon Masterful has been promoted to Chief Executive Officer and elected to the Board of Directors with our full faith, confidence and support.
Sure I'm, starting with ISS as Vice President.
Speaker 3: Sharon started with IS&S as Vice President of Engineering in 2003 and was promoted to President...
President of engineering in 2003 and was promoted to president.
2012.
For almost two decades sure I'll work closely with Jeff fully engaged in managing the business well contributed to numerous key innovations fueling some of that success most.
Speaker 3: For almost two decades, Sharon worked closely with Jeff, fully engaged in managing the business while contributing to numerous key innovations fueling IS&S success.
Speaker 3: Most recently, he is named the inventor for the signal processing technology behind ISMS's new ThreatSense Autothrottle, adding to his numerous existing aviation patents.
Most recently he was named the winner, but its signal processing technology behind <unk> as new.
The restaurants auto throttle, adding to his numerous existing aviation patents.
To ISS.
Speaker 3: Chairman held technical and managerial positions with Smith Aerospace and Marconi Avionics.
Jeremy held technical and managerial positions with Smiths aerospace.
Marconi avionics.
Speaker 3: While Jeff's loss is immeasurable, IS&S is fortunate to have experienced long-tenured leadership and are a robust portfolio of industry-unique products.
Well Jeff's loss is immeasurable.
<unk> is fortunate to have experienced long tenured leadership and a very robust portfolio of industry unique products, we feel extremely privileged to have the continuity of leadership provided by chairman and his team and are confident <unk> will continue to execute on the industry unique products and market <unk>.
Speaker 3: feel extremely privileged to have the continuity of leadership provided by Sharon and his team and are confident IS&S will continue to execute on the industry-unique products and market opportunities that Elena has had in these series.
<unk> that enjoys now I will turn the call back to Cheryl.
Speaker 2: Now I'll turn the call back to Sheriff. Thank you Ralph. You all look greatly missed, Chef Hedrick. If leadership is vis-
Thank you Ralph.
We will greatly Miss Jeff Hedrick.
His leadership his vision.
Hi, Sharon I assume.
He founded and led the company for many years.
Speaker 2: He founded and led the company for many years and was an inspirational leader.
Was that an inspirational leader.
Speaker 2: In the process, he built a very strong company dedicated to sustaining his vision and legacy over the long term.
And the process is build a very strong company dedicated to sustaining his vision and legacy over the long term.
With nearly two decades I was fortunate to have worked very closely with Jeff.
Speaker 2: For nearly two decades, I was fortunate to have worked very closely with Jeff as head of engineering and in the last 10 years as president, focused on strategy and planning.
Engineering and the last 10 years as President and then focus on strategy and planning.
Speaker 2: Together we developed the plans and products that have driven three straight years of revenue growth, profitability and positive cash flows.
Together, we develop the plans on products that have driven three straight years of revenue growth profitability and positive cash flow.
This has enabled us to return nearly $20 million in dividends to our shareholders in just the past couple of years.
Speaker 2: This has enabled us to return nearly $20 million in dividends to our shareholders in just the past couple of years.
My goal is to carry on the collective vision to capitalize on our unique competitive advantages.
Speaker 2: My goal is to carry on that collective vision to capitalize on our unique competitive advantages, continue to grow the business and create value for our shareholders. Hello and welcome to ourford.com Book61. I would like to thank unique knowledgeable historical team of the opp panels who care for every service they provide to us all.
To grow the business and create value for our shareholders.
I want to thank the board of directors for their confidence in me.
Speaker 2: Our goal is to reward that confidence by continuing to strengthen and improve the organization to grow the company while delivering strong financial results.
Our goal is to reward that confidence by continuing to strengthen and improve the organization to grow the company, while delivering strong financial results.
We have excellent products in attractive growing markets, including our award winning oral travel that has been adopted as a standard equipment, but one of the largest most respected general aviation manufacturers in the world.
Speaker 2: We have excellent products in attractive growing markets, including our award-winning oral travel that has been adapted as a standard equipment by one of the largest, most respected general aviation manufacturers in the world.
And we believe our innovative flat panel display has continued to be the cockpit retrofit tourists with many cargo carriers converting 705 767 aircraft.
Speaker 2: And we believe our innovative flat-panel displays continue to be the cockpit retrofit choice with the many cargo carriers converting 75767F.
Now, let me talk about our recent results.
Speaker 2: Now let me talk about the recent results and the future.
In the future.
The momentum generated over the last three years has carried over into the new year.
Speaker 2: The momentum generated over the last three years has carried over into the new year, with revenues in first quarter up 38%, leading to strong margins, profitability and cash flows.
Revenues in first quarter up 38%, leading to strong margins profitability and cash flow.
Speaker 2: Our success is based on a growing portfolio of products that continue to offer what we believe are some of the best price for performance value in the general aviation, commercial air transport and military market.
Our success is.
Based on a growing portfolio of products that continue to offer what we believe are some of the best price to performance value and the general aviation commercial air transport and military markets.
We're also well diverse offering products to both the OEM and retrofit markets.
Speaker 2: We're also well diverse, offering products to both the OEM and retrofit markets.
Speaker 2: Our OEM production contracts offer a solid base of predictable recurring revenue.
OEM production contract offer a solid base of predictable recurring revenues.
As was once again demonstrated this quarter.
Speaker 2: as was once again demonstrated this quarter. This is the strong foundation for growth.
This is a strong foundation for growth.
We will continue to innovate both our existing products and the development of new products.
Speaker 2: We will continue to innovate both our existing products and the development of new products.
As our air transport display product line continues to experience strong demand. We are developing new features functionality and products to add to our existing portfolio serving that market.
Speaker 2: As our Air Transport Display product line continues to experience strong demand, we are developing new features, functionality and products to add to our existing portfolios serving that market.
When you also on other fronts, we have.
Speaker 2: On the Orotrol Front, we have developed a new installation process to reduce oro-trol installation time. Our marketing team and our technicians are training the Textron International Sales Force this month to take advantage of the new process that reduces downtime of the aircraft during Parking lot escape.
Developed a new installation process to reduce almost or all the installation time.
Marketing team and our technicians.
Training the Textron International sales force this month to take advantage of the new process that reduces downtime of the aircrafts during modification.
And that's not an answer then because I believe last quarter.
Speaker 2: Another announcement at the NBAA last quarter, we are broadening our product market potential by developing new auto throttle technology for turbo fans such as the CJA aircraft.
Rotating our products market potential like the <unk>.
<unk>, new auto throttle technology for tenable funds, such as the CJ aircrafts.
As part of our overall strategy, we will continue to invest in research and development.
Speaker 2: As part of our overall strategy, we will continue to invest in research and development. We plan to maintain our investment in R&D as a percentage of revenues at a level consistent with the past several years.
To maintain our investment in R&D as a percentage of revenues at a level consistent with the past several years.
Speaker 2: capitalized on the sizable retrofit market, we are growing our sales and marketing department. We have hired a new military program manager with background from the US Air Force and Sikorsky to help with our efforts in growing the military portion of our business.
To capitalize on the sizeable retrofit market.
Growing our sales and marketing department.
The new military program manager with backgrounds from the U S Air Force on Sikorsky to help with our efforts in growing the military portion of our business.
After a long period, where our marketing efforts were constrained due to the pandemic level restrictions Ram.
Speaker 2: After a long period where marketing efforts were constrained due to the pandemic level restrictions, we are ramping up our sales and marketing...
Ramping up our sales and marketing activity attending more trade shows meeting face to face with customers and therefore, I think new business development completion.
Speaker 2: attending more trade shows, meeting face to face with customers, and therefore adding new business development professionals.
While our OEM and aftermarket customer base remains enthusiastic supportive.
Speaker 2: while our OEM and aftermarket customer base remains enthusiastic, supportive.
Of our ability to deliver quality products. During these challenging times, we also see some opportunities on the military side of the business.
Speaker 2: of our ability to deliver quality products during these challenging times, we also see some opportunities on the military side of the business.
Speaker 2: Our strategy of developing industry leading price for performance products provide us with a competitive advantage in identifying new market opportunities.
Our strategy of developing industry, leading price for performance products provide us with a competitive advantage.
Defying new market opportunities.
Speaker 2: Operational efficiency is a key to our success, and we will continue to optimize our processes and personnel in all areas of our business.
Operational efficiency is a key to our success and we will continue to optimize our processes and personnel in all areas of our business.
Speaker 2: This continuous improvement effort resulted in reduction of operating expenses at the percentage of revenue by 10% in the first quarter.
This continuous improvement efforts resulted in reduction of operating expenses as a percentage of revenue by 10% in the first quarter.
In the first quarter cash flow from operations exceeded net income.
Speaker 2: In the first quarter, cash flow from operations exceeded net income.
Speaker 2: We judiciously use some of this cash to increase our inventory in areas where we see potential supply chain challenges to protect our ability to deliver to our customers in a timely manner.
Judiciously used some of this cash to increase our inventory in areas, where we see potential supply chain challenges to protect our ability to deliver to our customers in a timely basis.
Speaker 2: since adopting this current strategy several years ago, our focus
Since adopting this client strategy several years ago our focus.
Speaker 2: has enabled us to enjoy an extended period of success despite the pandemic.
It has enabled us to join to enjoyed an extended period of success. Despite the pandemic strain supply chain inflation and many other challenges.
Speaker 2: strains, supply chain, inflation, and many other challenges.
And some of our end markets begin to improve.
Speaker 2: As some of our end markets begin to improve and pandemic imposed restrictions are lifted, we are confident that we are well positioned to build on this success and continue to generate steady financial.
And pandemic imposed restrictions are lifted we are confident.
We are well positioned to build on this success and continue to generate steady financial results.
Speaker 2: I'd like to turn it over to Rell to review our financial in more detail. Thank you, Sheriff.
Now I'd like to turn it over to Ralph to review our financial in more detail.
Thank you Sir and thank you all for joining us this morning.
Looking at the first quarter revenues were $6 7 million up 38% from $4 9 million a year ago.
Speaker 3: Looking at the first quarter, revenues were $6.7 million, up 38% from $4.9 million a year ago. Our general aviation and commercial air transport business each contributed to the quarter's growth. Our long-term PC-24 and King Air autothrottle OEM production programs continue to provide steady, predictable revenue, and this quarter was no exception.
Our general aviation and commercial air transport business, each contributed to the quarter's growth.
Our long term PC 24, and King Air Auto OEM production programs continue to provide steady predictable revenue and this quarter was no exception.
Speaker 3: Our revenues tend to follow customer production schedules, with for instance, Taxon reported improved sales of both King Air 252.60s and 353.60s, while Pilatus continues to run at a high production rate. In our flat panel production line, air cargo revenues in order to remain strong.
Our revenues tend to final customer production schedules with for instance, Textron reported improved sales for both the King Air 250 to 60 and $3 53 to <unk> <unk> continues to run at a high production rate.
Our flat panel production line, Eric cargo revenues and orders remain strong.
Speaker 3: Total new orders in the quarter were approximately 3.8 million, and we exited the quarter with a backlog of 6.2 million, which is up compared to 4.2 million at the same point a year ago.
New orders in the quarter were approximately $3 $8 million and we exited the quarter with a backlog of $6 2 million, which is up compared to $4 2 million in the same point a year ago.
Gross margin for the quarter or 59, 3% up from $52 seven in the year ago quarter, as well as up sequentially to $57 six last quarter.
Speaker 3: Gross market for the quarter were 59.3% up from 52.7 in the year ago quarter, as well as up sequentially to 57.6 last quarter.
Speaker 3: Margin continues to trend in line with historical averages, with fluctuation quarter to quarter primarily attributable to product mix as well as operating leverage resulting from the growth and revenue.
Margin continues to trend in line with historical averages with fluctuation quarter to quarter, primarily attributable to product mix as well as the operating leverage resulting from the growth in revenues.
Speaker 3: For instance, our 38% revenue growth in a quarter helped to leverage our fixed manufacturing overhead and expand more.
For instance, our 38% revenue growth in the quarter helped to leverage our fixed manufacturing overhead and expand margins.
Speaker 3: Total operating expenses for the first quarter of fiscal 2022 were 2.5 million, which is up from a year ago in an absolute phase.
Total operating expenses for the first quarter of fiscal 2022 were $2 5 million, which is up from a year ago on an absolute basis.
Speaker 3: but at 38% of revenue down 10% from 48% a year ago.
38% of revenue down, 10% from 48% a year ago.
Speaker 3: to both our growth over the past year as well as some relaxation and public health restrictions, we have been strategically strengthening our organization in sales and marketing as well as resuming marketing spend on in-person ratios and customers.
Due to both our growth over the past year as well as some relaxation in public health restrictions, we have been strategically strengthening our organization and our sales and marketing as well as resuming marketing spend on in person trade shows and customer events.
Speaker 3: Research and development increased compared to a year ago as we continued to target 10 to 12 percent of revenues for development of innovative new technologies and products.
Search and development increased compared to a year ago as we continue to target, 10% to 12% of revenues toward development of innovative new technologies and products.
Speaker 3: Family, General and Administrative expenses were relatively unchanged from the year ago quarter. We believe quarterly operating expense levels will remain in the current range.
General and administrative expenses were relatively unchanged from the year ago quarter, We believe quarterly operating expense levels will remain in the current range.
For the quarter, we generated operating income of $1 4 million, which was 21% of revenue up significantly from just $232000 a year ago.
Speaker 3: With a quarter of each generated operating income of $1.4 million, which is 21% of revenue, of significantly from just $232,000 a year ago.
We recorded taxes of 307000, a quarter as we have now fully utilized our tax Nols, we anticipate that our tax rate will be approximately 21% going forward.
Speaker 3: We recorded taxes of $307,000 in the quarter as we have now fully utilized our tax NOL.
Speaker 3: We anticipate that our tax rate will be approximately 21% going.
Speaker 3: That income for the quarter was 1.1 million or 7 cents per share, an increase from $1.01 per share in the year of the quarter.
Net income for the quarter was $1 1 million or <unk> <unk> per share an increase from 240000 or <unk> <unk> per share in the year ago quarter.
The company remains in strong financial position.
Speaker 3: The company remains in strong financial position. We generated $1.5 million of operating cash flow in the first quarter of fiscal 2022, so that at quarter end, December 31st, we had $9.7 million of cash on hand.
We generated $1 5 million of operating cash flow in the first quarter of fiscal 2022. So is that a quarter ended December 31, we had $9 $7 million of cash on hand.
Speaker 3: As discussed on the fiscal year end earnings poll in December , the company anticipates that due to the ongoing supply chain issues and challenges resulting from the COVID-19 pandemic, we will continue to maintain a slightly higher than normal level of inventory as an added measure of precaution.
As discussed on our fiscal year end earnings call in December the company anticipates that due to the ongoing supply chain issues and challenges, resulting from COVID-19 from the COVID-19 pandemic, we will continue to maintain a slightly higher than normal level of inventory as an added measure of precaution.
The company is debt free we.
Speaker 3: We believe that the company has sufficient cash to fund operations for the foreseeable future.
We believe that the company has sufficient cash to fund operations for the foreseeable future.
Now I'd like to turn the call back to Charles for some closing remarks, Thank you Rob.
Speaker 3: Now I'd like to turn the call back to Sharon for some closing remarks.
Speaker 2: The fiscal year 2022 has started strong and we plan to continue that trend. We have built a strong operational team dedicated to creating value through product and technology innovation and customer service.
For fiscal year 2022 has started strong and we plan to continue that trend.
Build a strong operational team dedicated to creating value through product and technology innovation and customer service excellence.
Speaker 2: We will continue strengthening the organization as we grow the business.
We will continue strengthening the organization as we grow the business.
Speaker 2: We possess an arsenal of great technology and products with an energetic and enthusiastic team that is fully dedicated to executing on our growth plans.
We put this in Austin now look great technology and products.
And the JV and enthusiastic team that is fully dedicated to executing on our growth plan.
We will now open the floor for questions.
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Speaker 1: At this time, we will open the floor for questions. If you would like to ask a question, you may press star then run your telephone keypad.
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Speaker 1: To withdraw your question, please fill star then 2. At this time, we will pause momentarily to assemble the roster.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
Speaker 1: Our first question comes from David Campbell with Thompson, Davis & Company. You may now go ahead.
Our first client.
<unk> comes from David Campbell Thompson Davis <unk> company.
You May now go ahead.
Speaker 4: I Xen in the background I can actually speak Ryze controllers
Oh sure.
No.
Speaker 4: It's a great report, great start to the fiscal year.
Great report.
Ill start to the fiscal year.
I did want to I do want to know is there any problems with.
Speaker 4: I did want to know if there are any problems with
Well the supply chain issues getting Larson.
Speaker 4: with supply chain issues getting parts and information to you in time for your production. Have you had any trouble, issues with that delivery?
Information to you.
In times of your production.
Have you had any travel issues with the with that.
With that delivery situations.
So so far we've been.
Speaker 2: So far we've been fortunate not to have been bitten by that snake. We've taken a lot of measures, including earlier on, we hired some additional procurement people to help us find parts.
Unfortunate.
Not to not to have been.
And then that Tonight.
We've.
<unk> taken a lot of measures including earlier on.
<unk> hired some additional procurement people to help us find parts.
Speaker 2: also have taken steps in areas where we see the challenges, may or care, where we procure some parts ahead of time.
We also have taken steps in areas.
Where we see the challenges may or CAC.
<unk>.
Procure some parts ahead of time.
Speaker 2: So we have not had any situations where we have not been able to deliver to our customers.
So we have not had any situations.
It has not.
We have not been able to deliver top customers due to supply chain.
Speaker 4: That's good. That's good. And well, the G&A is down as a percentage of sales, but it's up substantially from the LaPraire two quarters.
That's good that's good.
Well.
Is down as a percentage.
Sales were down.
That's up substantially even little clear.
Q quarters.
Speaker 3: Yeah, so Q1 typically when we incur audit fees and things of that nature because of the financial audit, it's usually up. So, you know, if you look over history, first quarter is usually higher. We also have some trade shows in the Q1, so that bumps it up a little bit.
Yes.
Yes, so Q1, typically when we incur audit fees and things of that nature caused the financial audit, it's usually up.
You look over our history is first quarter is usually higher we also have some trade shows in the Q1, so that pumps it up a little bit.
Yeah.
Speaker 4: Yeah, so, but you are expanding your, as you mentioned, your marketing and research staffs. Yes. That must have had some impact on that cost line too. I don't, you know, if you want apples to apples, they'll probably bump it up, you know, from past history, if you know what I'm saying. Yeah.
But you are expanding.
As you mentioned your.
Marketing and.
Research staff.
Yes, yes.
Most of that impact on that.
So you know.
What's the apples to apples will probably bump it up.
From past history.
You know what I'm, saying so.
Yes.
Speaker 4: So the 1.8 million for the quarter is not necessarily
So the one 8 million for the quarter is not necessarily.
Speaker 3: Going to be 1.8 rates for future quarters served My guess is it'll be maybe a little bit less than that but More trayshows and audits. So it will be down a little bit going forward.
Going to the law reads for future quarters sure.
I guess it will be.
Maybe a little bit less than that but and more trade shows.
The success, we had tradeshows.
It will be down.
A little bit going forward.
Speaker 4: Right, right, right, right. The backlog is up nicely. The backlog reflects...
Right right right right.
The backlog is up nicely.
The backlog reflects.
Borders.
<unk>.
Primarily it's primarily the King air.
Speaker 4: primarily primarily the king air auto throttle equipment is that primarily where the growth is in all segments
Auto throttle.
Equipment and is that primarily where the growth is.
Yes.
We're seeing we're seeing gap.
Increased interest on almost all segments of the business actually including some military.
Speaker 2: increased interest on all segments of the business, actually including some military.
We are getting orders.
Speaker 2: We're getting orders from the US Navy.
So.
Speaker 2: Overall everything is tend to be moving up.
Overall, limiting us tend to be moving up.
This is a good sign.
Speaker 4: Yeah, well it should be reflected in future revenues.
Yeah, well it should be reflected in your revenues.
Speaker 4: future revenue growth, so that's good. I think the backlog is
Revenue growth that's good.
I think the backlog is.
You did an indicative of a lot of things.
Speaker 4: indicative of a lot of things but I assumed you know Jeff was the chief, I always saw him as the chief salesman of the company.
I assume you know Jeff was achieved.
That is a key sales event as a company.
Speaker 4: And I assume you've added some sales personnel, marketing people, which will help replace that, is that correct? I will continue to do that, yes. And I've also always been very close to all of our customers.
<unk>.
I assume that.
He then has lots of E vantage sales personnel marketing people.
Sure.
Please.
Right.
We continue to do that yes.
I've also always been very close to one of our customer base.
We continue keeping that relationship with them.
Oh right right right.
Speaker 4: Right, right, right. Jeff must have had some close relationships. Okay, I'll let you go. Thanks for the help. Thanks for having such a good quarter.
Yes, yes, yes.
Those relationships.
Okay I'll, let you go thanks. Thanks.
Hey, Chad so as you think cooler thank you.
Speaker 1: Once again, you may press star then 1 if you would like to ask a question. One final time, as a reminder, you may press star then 1 if you would like to ask a question. Our next question comes from Michael Friedrich, Retail. You may now go ahead. Good morning, guys.
Once again.
You May press Star then one if you would like to ask a question.
One final time as a reminder, you May press Star then one if you would like to ask a question on.
Our next question comes from Michael Friedrich Retail you May now go ahead.
Good morning, guys, Hey, good morning.
Good morning.
Speaker 5: Good morning. Certainly, my condolences out to Jeff and his family. I always enjoyed speaking with him and certainly seems like he's an incredible guy.
My condolences at that Jeff and his family always enjoyed speaking with unmanned.
So it seems like.
He is an incredible guy.
Speaker 5: Anyway, so my question, Sharam, was you discussed the innovation on the installation process to make it less time consuming and maybe even less costly. Can you try to give us a little bit of a, a little more color on that as far as, you know, as far as like how much shorter the process is and how much easier it will be for the Textron folks to be able to do this? And then also, do we expect the market for the retrofit to get going here?
Anyway. So my question for sure.
You discussed.
Innovation on the.
Installation process to make it less time consuming it may be the most costly.
Can you try to give us a little bit of a little more color on that as far as.
Like how much shorter the process is and how much easier it would be for the textron folks will be able to do this and then also should we expect the market for that could be a retrofit to get going here.
So.
Speaker 2: So, in terms of the, in terms of the...
In terms of the yeah.
In terms of that.
Speaker 2: installation time, we see more benefits in reduction of the installation time.
And so lets in time, we see more benefit in reduction of installation time in terms of downtime of the aircraft and keep it within the compartments of sex.
Speaker 2: in terms of downtime of the aircraft and keep it within the confinement of such things like an annual, where it takes about two weeks to do an annual for the aircraft.
<unk> things like like an annual.
We're very it takes about two weeks to do an annual for the aircraft and Textron believes that if we can keep the installation compliant to that period of time that they would be able to.
Speaker 2: and the tech strong believe that if we can keep the installation confined to that period of time that they would be able to It would be more attractive. So they don't have to hang on to those airplanes for longer than that And we believe we've achieved that It it
It would be more attractive to hang onto those airplanes for longer than that.
And we believe we've achieved that.
It takes it takes a while toward that technicians to come up to speed with the new with the new installation process is going.
Speaker 2: It takes a while for their technicians to come up to speed with the new installation process.
Speaker 2: improvements for example on calibration of the equipment. There were some manually steps going on in calibrating things like
On improvements for example.
Ration of the equipment.
There was some there was some modules taps going wrong and calibrating things like the picture on the heading.
Speaker 2: pitch roll and the heading of the standby instruments. We've automated that process. It takes about a day of time just out of that process. So there's a lot of areas where we've done improvements. I can't exactly.
The standby instruments, we've automated that process as it takes about a day.
Off time, just either that process. So there is the lot of areas, where we've done improvement all kind of exactly say.
Speaker 2: say how much the reduction in time will be until we see Textron technicians
How much.
The reduction in time will be until we see textron technicians perform their tasks and become proficient in it and then we'll have a better colleagues into exactly how much time you say.
Speaker 2: perform the task and become proficient in it, and then we'll have a better collab into exactly how much.
Speaker 4: Understood understood is the feedback been good from text around I mean a big excited about this So they are very excited about it. I mean another thing we also did with them was that we actually carrying some inventory
Understood understood.
The feedback has been good from Textron I mean, I'm very excited about this.
So they are very excited about it I mean another thing. We also did with them was we actually.
Carrying some inventory.
Speaker 2: in house because one of the issues also was...
And how does one of the one of the issues also want.
A lot of the time somebody comes in the shop with their airplanes to do on an annual or whatever and they.
Speaker 2: a lot of the time somebody comes in the shop with the airplane to do an annual or whatever and they convinced them to buy an oral travel and Now they don't have to order one and it takes time so we started carrying inventory Okay as of this month And so so so we can we can supply to the media
Convince them to buy in order of a struggle.
<unk>.
And now they're going to have to order one it takes time, so we started carrying inventory.
Okay as of this month.
So so so we can we can supply to the immediately but.
End of this month.
Speaker 2: End of this month, I think it's on the 25th, that our guys are going down to Textron. They have their annual international sales conference.
I think it's on the 25th Yep.
Our clients are going down to textron.
They have their annual international sales conference.
Youre going to talk about with the international salespeople, but all of these as well as our technicians are going down too.
Speaker 2: And we're going to talk about with the international sales people about all of these, as well as our technicians are going down the
To provide classes to train.
Speaker 2: provide classes to train textual technicians in the new...
Physicians in the new installation and then we will move.
Speaker 2: And then we will continue doing that training to all our other installers that are non-Textron affiliate.
Continued doing that training to all our other.
Other installers that are non tech strong.
Affiliate.
Speaker 5: Got it. Got it. Okay. And are there, I know that there's been other talk at least.
Got it got it okay and.
Are there I know that it's been out there talking to it at least.
Speaker 5: Uh, some discussion about of the idea of potentially putting some of. Putting the, um, the auto throttle into some of the other text run production lines. Um, I'm sure you obviously have nothing to discuss, but that is, is, is there right now currently in progress other. Other OEMs that are you're in discussion with.
Some discussion about the idea of potentially putting some of.
Putting the.
On a throttle into some of the other tax rod production lines.
I'm sure you, obviously have nothing to discuss.
Is there right now currently in progress are there other Oems that are in discussion with.
Speaker 2: We are currently in discussion with other OEMs for oral flow.
Yes.
Currently in discussion with other Oems.
For oral <unk>.
As well as some of our other product lines.
Speaker 5: I understand, right? And just without giving away too much, has there been much more progress on some of the large military prop planes?
Right and just without giving away too much as they've made much more progress on the.
Some of the large military prop plane.
So.
Speaker 2: So that's a long term view when we deal with the military. And there's a large field of KC-135 for example that actually have some of our primary flight displays which provide all the access.
That's a long term.
Long time.
When we deal with the military.
<unk>.
There's a large field of KC 135 for example that actually have our some of our primary flight displays we provide early on cemetery format.
Speaker 2: and we're starting to communicate and the idea of putting an oracle on those aircrafts.
Starting to communicate.
And the idea of <unk>.
On all of us on those aircrafts.
It doesn't happen overnight with the Ministry.
Speaker 5: I understand. I understand. Well, thanks a lot guys and you know obviously best of luck going forward and talk to you soon.
Understand I understand well.
Thanks, a lot guys and honestly the best the best of luck going forward and talk to you soon.
I think you actually explore.
Yeah.
This concludes our Q&A session as well as the conference you May now disconnect have a good day.
Speaker 1: This concludes our Q&A session as well as the conference. You may now disconnect. Have a good day.