Q3 2019 Earnings Call
Good day and welcome to innovative solution and supports third quarter 2019 earnings conference call.
All participants today will be in listen only mode should you need assistance during the conference. Please signal for a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then too.
Please note today's event is being recorded.
At this time I would like to turn the conference over to Geoffrey Hedrick, Chairman and CEO . Please proceed.
Good morning, this is Jeff.
I'd like to welcome you. This morning to our conference call to discuss our performance for the third quarter fiscal 2019 current business conditions and our outlook for the coming year.
Joining me today.
Our.
General mask for our pressure.
Well and well then our CFO .
Before I begin I'd like Joe relative to read the safe Harbor message Rell.
Thank you Joe 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.
Here is our 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 including other risks and uncertainties reflected in our company's 10-K, which is also on file with the FCC and other public filings.
Now I will turn the call back to Jeff.
Thank you Ralph the company's third quarter results continue to reflect the cost controls.
Marketing refocus initiated at the end of the last fiscal year.
The revenue increase this quarter EM and profit.
And we were profitable for the third consecutive quarter.
Profits were also up sequentially and we generate a 20 <unk>, 28% of our revenue and cash 1.3 million.
Once again.
Each of the three markets or segments, we serve.
Commercial Air Transport General Aviation and military contribute to our third quarter results. In addition customer service revenue remains.
Strong.
The company's ability to have products that provide access to these markets remains a core strength of the company.
Substantial revenues in the third quarter were generated from our general Aviation PC 24 production.
And the retrofit programs for commercial Air transport.
In the military market would continue.
Production for the KC 46 program and the Navy continues to evaluate our new air data computer for the company and we have developed for the five we believe that these programs along with our steady maintenance activities will provide a solid.
Base of revenues over the coming quarters.
Excuse me.
In addition, the revenue and development expenses have been relatively constant at approximately 15% of revenues historical sweet spot.
The company continues to implement its strategy of investing in fewer but more promising technologies and products.
At the same time, we continue to.
Our optimistic outlook for our patented thrust sense autothrottle, especially now that we've added a twin turbo prop sgc to our portfolio.
Just recently I note.
These restaurants auto throttle on the beach craft King Air Twin engine turboprop was subject to a was the subject of a.
Aviation International News feature they found the Autothrottle safety benefits compelling and noted how to the edge of bay are especially during takeoff.
They went on to further remark that many of the benefits of the auto throttling.
In concluding that great tools to help pilots concentrate on the flying the airplane without worrying about powerful.
So industry authorities currently understand its advantages I believe the Autothrottle provides the same level of protection in many cases as a paid attention. It offers engine protection from over temperature and similar costly maintenance issues.
For the auto throttle system fully operational and certify we've chosen to spend a little extra time refocusing on perfecting the installation procedures to make sure that it is simple and efficient.
We want to support the marketplace, starting with the first installation.
Minimizing aircraft downtime.
With this extra preparation does allow us to allow owners and operators to install the autothrottle quickly and at a lower cost and at the same time strengthening our market.
Penetration, let me turn it over to Ralph for a discussion of the financials.
Thank you gentlemen, thank you all for joining us this morning.
Revenue for the third quarter of fiscal 29, 2019 was up 35% from a year ago to 4.6 million, our third consecutive quarter of revenue growth.
We were also profitable for the third consecutive quarter.
Revenues were primarily comprised of product sales, which includes approximately $1 billion of customer service revenue, which has steadily increased over the last three quarters.
The balance of the quarter's revenue was for engineering services gross margins for the third quarter of fiscal 2009 were 55% an increase from 47%.
From in the same quarter last year.
Margins in the quarter were essentially consistent with the second quarter of 2019.
We believe the improvement in gross margin, primarily reflects better leverage from increased revenues and the benefit of the workforce reduction implemented in the third quarter fiscal 2018.
Total operating expenses for the third quarter fiscal 2019 were $2.1 million down approximately $500000 compared to approximately 2.7 million in the third quarter, a year ago research and development expenditures.
Expenditures were down 300000 for the quarter compared to the same quarter last year, our selling general and administrative expenses were down approximately 200000 for the third quarter.
Fiscal 29 as compared to the same quarter last year. Each of these decreases reflect the impact of the third quarter fiscal 2018 workforce reduction.
Well R&D spending is down from year ago, a shift in our strategy has enabled us to improve the productivity of our spending by investing in fewer but what we believe are more promising new technologies.
In the quarter, we earned $124000 of other income primarily interest from our cash balances.
We did not recognize any income tax expense in the third quarter of fiscal 2019 due to the utilization of tax loss carry forwards.
We reported quarterly net income of 511000 for the third quarter fiscal 2019.
Or three cents per share compared to more than a 1 billion dollar loss were six cents per share loss in the same quarter a year ago.
We believe that the company remains in a financial position, we generated positive cash flow of $1.3 million in the quarter and at June 32019.
We had 22.6 million of cash on hand with no debt.
The company has sufficient cash to fund operations for the foreseeable future.
Now I would like to turn the call over to Cheryl.
Thank you Ralph good morning, everyone.
We achieved steady progress in the third quarter, both financially and strategically.
Was our most profitable quarter of the year and was a period, where we made significant strides in strengthening our position in all our end markets.
As we continue to increase our organizational efficiency.
Even as the result of our actions through increased strengthening of our cash position.
Let me provide a little more detail on some of our ongoing programs that Jeff briefly review.
On PC 24 program production continues to grow as demand for the utility management system be supplying aligners.
Is keeping pace with the sale of what is one of the most successful new aircraft launches in the industry.
Keep in mind that we believe the lattice will be ordering a significant quantity of shipsets per yet however.
We include only a small portion of this future revenue in our backlog.
And we continue discussions with other aircraft five holes.
We will have expressed interest in this you on that Paul.
In our commercial air transport market revenues continued to be generated from our Boeing 737757, or 767 portfolio of cockpit technology, both from existing and new customers domestically and internationally.
There has been a little tailwind here because we anticipate by the end of next year support for existing CRT based displays will end.
Making it more attractive.
For these airplanes to get our cost reduction efforts.
And this is where our MRO channels are becoming more valuable as we continue to have new service centers, signing up as installation sites for commercial and business aviation fraud.
Relying on our dealer network to perform individual sales.
Allows our Intel sales force to focus.
On on on more lucrative opportunities.
Since we have been manufactured in many of our commercial aviation products for years, they require little additional engineering and are therefore quite frequently our most profitable crop.
In the military market a production KC 46 program continues forward.
Our engineering contract.
To develop then and you add data computer for the Navy is in the aircraft installation and slides that support please.
The basic product is derived from the successful at data computing, we developed for the 810 and we believe this versatile product opportunities on other platforms in the us and international military markets.
In General Aviation market, we remain excited about the potential of our Thrace sense or throttle.
Let me now have single and twin engine FTC.
Our strategy is to add optional features for the basic Stcs right.
Each feature is essentially a new technology.
More importantly in contrast to the base auto throttle.
The addition of these optional features is strategically designed to substantially enhance the oil from the field.
As we progress through the additional incentive education.
A lot of Kingdom auto throttle you will expand the syndication base to allow us to take advantage of the full market potential for all King gamma.
And as Jeff mentioned.
There are also refining the installation process to reduce the cost and critical downtime of yet.
This is it deliberately planned and disciplined way to ensure a successful launch and to improve our long term opportunities with this revolutionary fraud.
On the DC to all we're seeing increased interest in both food cockpit oral strong concentration as well as individual standalones dollars.
We've done deliveries under completed installation on both the configurations not just within the U.S., but also internationally, which is very promising.
The revenue growth and increase profits realized over the past several quarters of providing the time and resources, we need to carefully plan and meticulously execute our oral solid market entry strategy.
Oh this is being made.
Endorsements, we have received from industrial authority like Aerospace International News.
And the welcome reception you are seeing from manufacturers, the led them off or anything.
As this confidence is a large market for auto throttle constant cultivation will bring to fruition.
Let me turn the call back to Jeff for some closing remarks.
Thanks Sharon.
Another quarter of consistent performance has enabled us to advance our auto throttle.
Strategy at a pace to yield the greatest returns we are in some respects, creating a whole new market I am confident that we have the right product a sound strategy and a strong team that will enable stretch sense to achieve widespread adoption.
And we believe that.
It deserves.
We recently heard that certification authorities and completed a two year review of our unique safety feature that can prevent catastrophic loss of control of the aircraft when an entrant with a loss of an engine.
This is a breakthrough and and this prudent.
A review by the FDA and other.
Agencies has resulted in.
A pen I believe Oh, an approvable Anda and STC of this new feature.
So I I emphasize snow does not exist anywhere in the world today.
This feature within the next couple of months.
So it's a it's an optimistic output and we will be happy to answer any questions you have I'll turn it back over to the.
The operator.
At this time, we will begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
If your question has been asked can you would like to withdraw it. Please press star then too.
At this time, we will pause momentarily to assemble our roster.
Today's first question comes from David Campbell of Thompson Davis and company. Please proceed.
Yeah, good morning, everybody.
Good morning, good to hear thanks.
The answer is we're having a good quarter.
[laughter] you all what does.
We almost made my estimate you were close we worked hard on that but I needed a new car.
[laughter] well you got one Oh, you deserve what does and we're trying to do it in a sort of it there's a point where as you know.
Appreciate your interest keep going.
Well I wanted to ask you a little bit more about the revenue first of all.
Revenue in the quarter. It does not include anything from the auto throttle was that correct.
It does it does yes.
Does that revenue.
A small amount.
Okay and.
You mentioned something about.
Service revenue I'm, a little confused.
Is that the same thing as product revenue.
That's right exactly.
Its repair and overhaul we have equipment that's been out in the field for 20 years now and.
Some of that equipment is being.
Set back in for refurbishment or repair and the revenue from that is six now become significant because the amount of equipment has grown its a significant about a mile in service for a long period of time and that provides a significant revenue to the company continues to grow and we've hired a new.
I know.
Manager of that Department has done an outstanding job yet experienced with that.
Oems like that so and.
Other international OEM, so he's he's is doing it.
I think the operation is getting better and.
More productive.
Isn't likely to be sustainable I mean is it something that's going to happen every quarter.
It tends to grow because since you feel more equipment in support of that equipment gross.
Mhm for most companies have been around for a while that's a significant part of their.
Prospects.
When I was at Smith, we had down.
Significant repair and overhaul facility.
That generated significant.
A lot of our revenue.
Mhm.
Okay and.
Just like to know it's in so when you look at production it in in that number.
Okay. That's important it's into production number but it tends to be it tends to be almost a million dollars in the quarter.
You said the production number.
Hi, Rick.
It's in the production number yes, yeah.
Because there wasn't any.
There wasn't any engineering business in the.
Revenue in the quarter, Yeah, there were some.
It was it was but you didn't you didn't primarily I think today at the bottom right program, where we're still doing okay. We're getting funded.
For modifications to our existing site.
Uh-huh.
So.
Yes. It wasn't it was was it wasn't as it was smaller than in previous quarters, Yes, that's correct.
Alright.
I'm more focused towards our own development of our own products now.
Mhm.
Right.
So.
Uh huh.
But it sounds like auto throttle.
He's going to have more.
<unk> revenue in the future it's <unk>.
Based upon your optimism.
We're talking to a number of.
Sources that have expressed interest in that supply them.
Auto trials, obviously, we don't want to discuss who they are what they are right.
It's premature.
We're or shopped and we're excited about the recent Epay decision, which was a landmark decision. They did a great job was a top analysis, but.
Oh it is it's a profound.
It's a profound.
Change if we can implement this.
It has as they have pointed out it has the ability to save lives.
That's exciting itself.
Right.
All right now do you still do you still the auto throttle.
Are you selling that through a service centers are fixed base operators.
For example that you sell they sell through Apios, we expect to be selling it through Oems as well so.
We.
Look the market.
The thing that has everybody is waiting for especially this decision from the FDA and it looks like Antamina. So.
Yeah I.
I'm excited about.
After two years of outward view, it's nice to see them finally finish up.
[noise], but they've given you the answers education to until students dollar yeah, well, it's probably a little certification, but the one thing that I'm talking about specifically is this loss of control.
If the inventory, okay, [laughter] energen fails and the speed gets to slow the energy the airplane just flip side its back and kills everybody on board.
We've seen some examples of that recently by the way so as far as the system.
Well prevent that from happening.
Okay, [laughter] certification fundamental certification for the auto throttle.
The fundamentals are there certain potential for the Autothrottle, it's simply as that somebody in the system that controls the speed the power to the engines and protect the engines from over temperature and over over powered.
And Andrew Yes, yes is working on this.
[laughter] certification.
That's already approved.
Right.
Sure. This loss of control feature that's never been done before and so there was no.
There was no certification background for that would have to certify hunger. So they haven't developed.
All the background and extensive review.
To make sure that it was a safe.
And it appears that that completed that review and we expect that.
And momentarily.
Sometimes the.
Approval of Oh.
The approach and that and then we have to apply it improvement that's all.
Well, we've been waiting two years to fly.
Mhm.
Well you still have your King Air you can use yours to fraud.
Hi.
Oh, I mean, I always attached to it already I mean, we run a lot of pests as they've been very successful very promising.
But I'm worried that we now have tested for yeah, yeah, obviously.
As shown in representing more than a co-operative are being very prudently.
Perry program I mean, this is caution and its appropriate for a new technology, especially this is absolutely trying to mitigate a catastrophic event I know that you really don't have much chance to recover from.
Right. The only problem is the King air is not big enough to hold your new car.
You got that right [laughter] Guy had worked fine appoint a trend or truck.
For Rob.
Our newest isn't as that are great and on the trailer tracking at S.I. Smart car tucked in the back of that tractor certainly can drive around one it's not.
[laughter] pay up too much money [laughter] anyway. Thanks.
Thanks for the thanks for the good news I'll turn it over.
All right. Thanks.
Our next question comes from Irwin at Goldman a private investor.
Please proceed.
Hi, Jeff.
Hello.
Good morning, Jeff you might remember me I'm not like the old Guy at the annual meeting 96 years old.
Hello.
I remember.
I'm very nimble faster than I did.
All right I had a lot of the questions then I have a lot of questions now.
I'd like to start off with your employees number one how many that we had in the quarter and number two a Wi high right now.
We still continue to Ohio ups, a few number of a few people.
Because we don't have this this urgent need we're doing it in and a carefully carefully planned better away hopefully getting better quality people.
And then it's a it's a tough environment right next spring so unemployment.
Near an all time low so there are a lot of people looking for jobs. So recruiting the right people. It's a it's a typical but there are working we still find them and.
We've had a few remarkable successes recently.
Okay.
How many employees do we have right now.
65, roughly seven okay.
You had 49, so you added six.
Okay.
And we have some consultants that we use we use a lot of specialized consultants as well.
Okay. Next question was about to let us there's not a public company and if so what's its name.
Hey isn't a public company and it's a Swiss company.
I know, it's too much okay.
Right Yeah.
And it's not public.
Okay now about the politeness.
What percentage.
Oh about this about the sales to them.
I'd like to know the sales in a late this quarter.
And what percentage of total sales that is one would depend on the other.
Today's dollars and how many units.
Well I say, we don't make any of that public Oh, we can tell you that it represented a significant portion of our revenue absolutely.
Hey, guys again made a more than 25%.
Mhm moral and tender range, that's a little high but and I can hear you.
[laughter] range, its approximate and we can't tell you exactly what it is because we don't release that.
Okay.
Uh huh.
Oh your July sales to delight us.
More than they were in June .
We're not prepared to go into <unk>.
Maybe that's over the quarter.
Yeah, that's a detail we don't address directly that's the good news there.
We are on every production Polaris PC 24.
So.
Yeah, the rates at which we deliver at during the year, our not only depended on what they deliver but depending on how that stage they're material. So there is a period so.
Its lumpy its you'll have a lump and then you'll have nothing so we we don't define it because it's not representative of what the consumption. What we do know it's every airplane this belt and deliberate or on the <unk> on the airplane.
A couple of things, which is public on that is that is that they plan on delivering 40 aircrafts.
In 2019, how many.
40 40019, yeah.
He had in 20 twond.
Production is going to go up by 25%.
Next year.
A couple of years ago. They open the books they took border for 84 24 hours.
And <unk> $9.2 million.
And back in May they reopen the book.
At.
I I'd say at the GP <unk> in Switzerland.
The increase the price from 9.2 million 2.7 million.
<unk> <unk> <unk> and <unk>.
Yeah, Yeah, and they took a whole bunch more orders. So so it's a very very strong from successful product that's being marketed.
Okay.
The next question relative to provide answers.
How are they on paying their bills and do they have a credit limit.
No the owned by Swiss banks.
Hung by Swiss bank and that they pay on that based on time.
Okay I'm sure. It's a cooperation that stands on its own feet or do you have a credit 11 on them or a credit guarantee.
No, okay and that they've been paying their bills properly absolutely [laughter] revenues or over a billion dollars.
Okay, Oh really okay. Good.
Right could you tell us something about the KC 46 that smell that salary isn't it.
Yes, that's correct, Alex San Antonio much about KC 46, cousins built which are okay. So besides those two do you have any other customer who is over 10% of your sales from the last quarter.
Oh no single.
We expect and we expect to get more OEM business, we are talking to a number of Oems for different products. So we want we want to get a nice distribution, we're working on expanding our OEM business that Tony will provide stability in our.
Yeah, Robert It was more stability in our revenue.
While we pursue retrofits.
Okay.
The last question I have is.
Yeah tell us all about whatever you can about sales efforts and interest on the auto throttle.
We can tell you that the industry.
All the press assets.
Range about product.
People that have installed in rave about the product.
Our issue is simply trying to.
Implemented all of the technology that we developed.
But need to get approved.
Additional features.
And that's.
And we're getting close to that and we're refining actually I explain the installation procedures can minimize downtime which is.
If you don't want an airplane you don't like your airplane to be down so anyway.
Uh huh.
The.
We we don't expect to have any program in the near future. It represents.
[noise] individually I am very large percentage of our revenue we will expect to have that distributed over a broad range of people and retrofit first.
Hi, Gary.
You said something about the people who have had is installed I didn't know there were any how many installations have you made.
[laughter].
Okay. That's good. Thank you I mean, we have far when they're working fine and we were you know are bringing it up slowly because we don't want to have problems and we haven't had any problems today.
We're optimizing installation, which is critical when normalizing that installation, we're actually generate or going into building harnesses should we never end initially anticipated right now were doing interim provide consistency of installation and so those kind of refinements that we're in the process of doing it.
Okay, perfect, making further steps.
Hi, Thank you Jeff that takes care of the questions out probably think of some later on but I was talking about thank you very much.
The next question comes from Charlie Pine of Van Clemens and company. Please proceed.
Hi, good morning, gentlemen, congratulations and congratulations on another good quarter.
Thank you well. Thank you we got we're working on it.
Well keep it up.
Most of my questions have been answered so all in the last one I guess I would have.
It would be probably for you Jeff in that would pertain to.
Your.
Discussion and the information that you had provided regarding what you're doing to.
I guess to simplify the process.
For the auto Thrace installs.
How many man, there's I thought it would get somewhere in one in article that discussed up quite a bit of approximate man hours of time it took to to install the for us into a king here. What do you anticipate what are you trying to get that number what's your goal as far as getting that number two as far as you know that the amount of man hours to to do it.
To do a typical kind of normal install for the auto for the for also it depends on the airplane, but for a lot less it's less than a single engine is less than.
Yeah, I can yeah, well I guess I was referring to I would I wanted to you know I I wanted to address the King airs.
Okay, well the King airs.
We started out at 50, we believed were down we could get it down to 30, so that's how it works.
We want to keep it.
As long as possible.
Yeah that's.
To give you that's about.
[laughter], that's 10 or 15% of what an oral throttle installation normally takes so it's pretty remarkable.
We want to get it down simply saw that.
So that a person can bring their plan and get it back within a couple of days completely.
Updated and ready to fly away because anybody else an airplane hates to put rights to put it down.
I myself included so got it. So just you just saw that I heard I heard that right over these kind of scratching a phone line. You said you currently at around 50 and your goal is to get it to about 30 hours that's correct.
Right.
And then.
With the.
These additional features that youre I'm, referring to above and beyond this certification for loss of control did you because you'll lose today one or two of these in these additional features what's up what's the approval process involved and on on those.
You know for those types of situations what style.
<unk> [laughter] summary, it is true that they lost the control obviously I just got is a major feature and it requires FX certification review and it's a long procedure for this 'cause it was and never been it's still hasn't been done before.
But.
The ones, we're talking about an hour minor modifications and in some cases and in some cases, we can refer to them as a minor modification as simply submit the data the FAA, but but there's there's no test flying other than our own it's necessary. So these are primarily.
And in fact without exception right now features that will enhance that they.
The the operators experience, but.
Well, our not certification or not distinct certification issues.
Okay.
And lastly, you can you refresh my memory again on what you expect so just sort of the <unk>.
For.
You know kind of a plain vanilla cost Oh, then install on the all of the on a standalone basis without all the extra utility stuff utility management systems, but just the the drop in.
Raw sand into a king Air you know, what what you will be receiving on that again.
So right now in the King and the.
Well, what I asked and asked receive.
Yes, Oh, it's just the installation cost that they they MSRP at that at the deal or the guys are selling it Oh uplift flyways about 75 k. on the King Yeah. Okay. It's about 65 carry on that exactly 12 Ralph.
That's that's what that that's right that's what I meant the price on that date installed to a dealer.
Okay wait repeat please repeat that again, you said the MSRP on Threed through dealer will be about 75000.
Well now for the dealer for the end user and user M.S. Army installed is 75 brands.
Installed okay alright, thanks, Thank you.
For the King right roughly okay. Okay, great. Okay. Thank you for clarifying that to me that's it that's all I have and.
Congratulations again and I'm looking forward to more to come on and hopefully you get that up the next EFI a decision as soon as it as soon as you're alluding to.
It's a it's a it's a really a breakthrough technology has never been done before.
Okay, well great. We appreciate it keep it up thank you.
Thank you.
The next question comes from George Moran.
Oh perennial ventures. Please proceed.
Hi, good morning, Thanks for taking my call Jeff.
Had a couple of more questions on Autothrottle. Most of my questions have been answered, but I want to drill down a little more on the way I understand. This is you can sell the autothrottle by itself, but as you know 75 grand sort of number or you can buy it.
As a package with your your whole lot flight deck upgrade is that is that correct.
That's correct.
And then what would be your ballpark guess on on percentages like wood, a quarter, where people go for the whole upgrade or 75% or 10% or what what sort of expectations. Do you guys have for the standalone versus a complete upgrade [laughter]. It depends on the aircraft, but I would say initially that the vast majority would just by the auto throttle.
We are finding.
Strangely enough that the auto throttle.
Attracts people in to the deal are there get into the dealer and say Gee I'd like to do the whole topic shelf, we're getting people that are doing especially in the upon us as we're getting cockpit upgrades to the care.
Auto throttle that we never presently provide it's always certified in a more advanced cockpit that people aren't going to tear out and put a new cockpit is your im sure you know more oh linger generation cockpit advanced generation cockpit, and probably a far more expensive airplanes, but there's thousands of them out there so and in those cases were going to do or not as many.
Uh Huh pets were gonna due primarily the Autothrottle never stand in the auto throttle consist of also providing a standby instrument, which is a combination instrument and an oral trial. So we do provide some features additional features in the cockpit.
Yeah and currently are your demand signals for this primarily coming out of retrofits or do you also have.
Demand pipeline for putting it in new new planes.
Argue someone.
We're negotiating that right now.
And it is given your new breakthrough on safety features of this is there any discussion at all with the F.C. are about a mandate for this is in small claims.
Well the M&A doesn't issue mandates remember that today.
Their responsibility is fundamentally to make sure that whatever equipment is an airplane safe so they they do nothing more than.
Evaluate how safe they design and implementation is.
I will say that sick.
We got comments from one person at the ebay.
Hello.
[noise] commented that they watch.
A person every four days.
Things that we were doing with that could save lives I was.
I was surprised that he said that and very.
Appreciate it.
Hey, Ray.
[laughter] that's the good news.
They see.
Cockpit upgrades right now are.
Our primarily in applies we met you a king tenure, there, but right now we're focused on on equipment that will go into existing installations.
Okay, and one more given the demand signals you're getting currently can you help to give a little color or frame up.
The magnitude of this opportunity for 2020 and beyond.
Just to give some some ballpark idea ought to think about that.
Oh, I don't want to speculate on that but I will tell you that.
There are multiple thousands of aircraft as opportunities.
If it's successful we continue to work at it I'll try to keep the installation costs down.
Manufacturing costs down and out.
Hmm.
We would expect from <unk> excellent penetration, especially if there's there's a lifesaving safety feature potential which were not sure. Okay, but we believe there's an opportunity for that as well.
So it sounds like you feel like given all the articles over the years and the Big news about the there's probably a lot of pent up demand for something like this I would assume.
Well I don't know yet, but you know I I say say Phil.
Okay, too enthusiastic and target.
That's fair your cash the check for the equipment.
Understood.
Okay. Thank you.
Thank you.
Our next question comes from Rick Teller, a private Investor. Please proceed.
Hi, Good morning, guys. Just two questions here one is since since I guess the last conference call.
There were there've been a couple of crashes of King airs the IRS went out in Hawaii, and why I think one down in Texas.
Obviously, they had theres no reports, yet probably from the National transportation safety people, but as far as you can tell are either of those things that perhaps might have been prevented with your auto throttle.
Honestly I really wouldn't want to speculate I don't want to speculate on something that killed 21 people.
I really don't.
It is.
And if we're fortunate enough to be able to do something that's crazy.
But I don't know the details of either of those cat crashes, joining avon's third hand.
And I wouldn't want to speculate on.
On how that how our equipment.
Work, so [noise] right, Okay, I'm, sorry, I don't I'm, obviously evasive, but it's just I think it's appropriate.
That we don't we still don't have NTSB analysis of what happened. So for me to speculate whether we can do anything would be inappropriate.
Right. Okay understood no problem. The other question is is this.
A lot of King air or owners are using them for for various commercial purposes, rather than just as a.
That's a private plane it yeah I'm sure that the insurance expense for them is probably fairly high I'm wondering whether you have yet made any attempts or or plan to be in touch with aviation insurers.
To see if they would give a discount a 200.
King airs that have won a throttle installed with with the extra safety feature of your comments are very appropriate and well pointed but yes, we have contacted they they have some of the insurance companies.
Or anything that that then reduces pilot workload.
It's terrific.
And yes insurance is very expensive.
So.
It.
I I think clearly thats a feature that.
Okay that insurance companies would like I think but.
Yeah, ultimately anything you can do.
Tim <unk>, especially in a more complex complex airplane.
Anything you can do.
To reducing the Potlucks workload is important and we see this at a broad range of applications not only in their tenure, but.
The same system is applicable to a regional jets.
And there are a large variety of.
Literally tens of thousands of aircraft that have.
No auto throttle that could that we could certainly could.
ER work with.
So we see a large market, but look it's very early in the stage when when our production rates are up I can be a lot more bullish.
And right now I'm being a little circumspect.
Okay, great. Thanks.
Thank you for your interest.
Uh huh.
I appreciate your interest thanks.
Well shut off today and.
Well of course, having you join US next week.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.
[laughter].