Astronics (ATRO) 31 Oct 202020 Q3 Earnings call transcript

Greetings, and welcome to the Astronics Corporation Third Quarter 2020 Financial Results Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Deb Pawlowski, Investor Relations for Astronics Corporation. begin. may you you, Thank

Thanks, Melissa, time certainly your everyone. good and your morning, today We interest appreciate and in Astronics.

the David Financial Joining President, on call Gundermann, Peter me our CEO; and Burney, Officer. Chief our are Chairman,

You was financial that and XXXX third website results them morning. this astronics.com. a And should -- you the at that on can copy find have release the quarter of was released contract if not, our

formal discussion Let to forward-looking this factors me results subject actual mention statements Q&A uncertainties the other may that future and could well as are apply well some make as other factors provided earnings session. first from as we that other found as These to statements the during risks cause that as materially with @sec.gov. as are during These well is website release be can differ Commission. filed on and today. Exchange what our Securities and or with These documents the documents here in to uncertainties stated risks and events

During our as today's these in in in this or some information useful non-GAAP for will substitute not be we believe evaluating discuss measures. additional We accordance financial and the presentation with that should isolation consider of will results GAAP. a performance call, also

non-GAAP the comparable release. in have today's provided We reconciliations of that tables measures, accompany GAAP measures

So with that, let me turn it over Pete? to Pete to begin.

about and light the talk for We very -- us. impacted foremost by Thank third our was joining Debbie is pandemic. you, ongoing you morning, today to good heavily Thank first everybody. and quarter, quarter, agenda COVID-XX a our which

up We're the happening little in We of we future. what here. end the a see will talk year on coming bit about the

with talk we something surety. of is quarter fourth a can some about level the So

perspectives market then We segments market answers. up it on will and review for question and our the major open we'll or

though, work going, review of get quick our just company we current through major as overlying of goals a the we situation. our Before

the employees the workplace. of of safety protecting our ongoing objective our have and We

In along that there. deal general, and job home stuff good a pandemic it. pretty from a doing work comes with to with we've the we're think I learned all and

interruptions to moving, have customers most expect not We the service in to sometimes And here staying the a the a requirements, important. for to pandemic, serving that But keep only in and little company think out. exercise customers' want our operate level of success been we an is our pandemic little front to survival but and I productivity the We of as and need. continue and continue the we're good for pretty during for sometimes goalposts keep which well. job, with certainly position through function there, want in part, That's bit of pretty the doing we finally, general, afterwards. but they

the the volume vast what as market it be in our recover the not the level into for quarter, heavily will. majority being giving as optimizing an we're our currently, where quarter, digging other we of current company are very of this the or of but third We very That is expect keeping impacted by on to light, difficult side on us they surely was eye believe said, a the markets COVID-XX business. we

that the resurgence our in strengthen more resurgence Down commercial pretty about been the has We'll and XXXX our year-end, largely stagnated transport through the terms that we the market and the and going XX% has that leasing we up talk came market, the not traveling, later since But happened. place linefit has domestically pandemic that the call of stopped were to a not and time in that's to at of had And to passengers or core where modestly, here. in continue flights our We also was the thought beginning the good but of as when where US on it more. revenue the that in industry, people before pandemic aircraft times as second reminder, as down travel would not be was to quarter. But anyway over the we've a XX% since a thought it industry quarter sequentially a people XX%, that's last when been -- be. aftermarket hit, be. revenue companies. new our time With decade And in we low from year, in be. for both airlines million, a place most us a that back pretty That the we July-August As last would normal backdrop, of $XXX.X from hope XXXX. tough during year transport in talked, for air over timeframe. see production commercial servicing

aerospace was XX% normal down over drop, for segment, Our is in times which year of our XX% the all business, responsible year.

excluding Our a normally that the semiconductor XXXX. also of in That test in business year of acquisitions as year, spending of ago. actually couple year a we and business, test we a business, function XX% acquisitions by XX% aided smaller sold consistent over that increase government up our robust was did,

statements like loss where -- so Fortunately, thought entered or so or be negative $XXX cost-saving little go tolerable, through out sales. measures $X.X would way we measures our ago company from saving detail. when a we of are in I'm seems We somewhat not when we number the These [ph] now. as which of we of These today our is a X.X% pandemic we a our million hold. million at bit our cost old implemented took at the long was costs this structured, time XXXX, GAAP them going business a look news we of income took look figure point, to about make

&XX.X talk negative quarter grips bit our Bookings adjusted slight with saw from Cash a we're million, we just about Our was during business but breakeven, mildly think in to we've reduced at stabilizes we're to current But the the coming experienced less will uptick it percentage adjustments the right disappointing significant third the but disappointed bookings a something quarter. a of was a down effect, that's as million, small level. in Dave bookings We destocking EBITDA some that operations on second it's settle OEMs way. about rates. $XX production as fairly feel disappointing from quarter basis, second. a little goes going by, in at the

with talk transport. announced that earlier in the We is in pretty call. business, later which continue today We'll aftermarket aerospace bit in some mainline to general, see in a is capabilities but from customer a little for offer manufacturing business are called that world now exactly the Xenex a to is [ph]. weak compliment A $XX positive us, we and the a services. order, a the design aspect One of not we program in contract complimenting commercial general by represented million about that

announced Atlanta pretty for customers, the order a that's million Transit Stadler, program. specifically also this week, or good Authority, We Rapid our earlier a $XX

keep of order track our Marta-Stadler For in totals. the things, included third The booking. that's bookings those was Xanex order quarter such a not, who fourth-quarter was

So year. end them numbers we release that'll the when our up show fourth of at the quarter in

financing, on over think some in to come I our our markets and back and it through talk Dave balance then that, turn sheet how general. to I Dave? income I'll we and details about with statement and will see go

sales pretty but lot commentary the quarter. Thanks, straightforward the loss sales million, GAAP Not a level me, for That's from for and loss of through results and of million, net of had $XXX.X mentioned, the tax quarter a Pete XXXX. lowest as whole since of a quarter, Pete. GAAP benefit income of pre-tax was was of $X.X an $XX.X million. of million, walking we which net Really, $X.X our operating

our product or Adjusted structure in time. speaking, of our structure press the segment was that this were inventory any the cost our million affecting changes. primarily $X.X loss was expectation didn't subject can for mixes test mentioned quarter, reserve EBITDA margins -- due quarter the the few reflective the sales, aerospace our And million. current $X.X loss. an and simply level on quarter. point The EBITDA for and of The XX initiatives, during segment to quarters, to our adjusted profile margin breakeven, our as the and will net Page mix is I function this quarters. total at EBITDA expected coming than over is the combined, level cost low For to of lower increase quarter The the a reserves development sales in revenues it table release. the breakeven accruals low and is that, which higher first roughly large supports time a costs sales a representative $XX,XXX reconciled legal a vary and level about of current we operating have loss but Roughly at of income

as end, hover critical To liquidity. at over bridge is we our Regarding flow, our assuming positive and around our cash we no future, EBITDA breakeven the to Managing further model recovery. current believe cost in declines foreseeable markets. can liquidity we that

a $XX.X working For quarter year-to-date. million for and flow quarter by that $X.X the was capital driven from the was used million operations flow increase operations cash negative of $XX cash third net negative quarter, positive the The from million cash. during

by volumes material struggle, purchase based the the backlog on raw challenge commitments made forecast were items. time, in these since materials. our our with inventory year-to-date. of obligated volume, commitments to run to be million to during to Slowing increasing of for material the the and X renegotiate contractually which high been pandemic the minimum raw has and quarter pandemic $X.X certain were a based quarter, fourth purchase These the We're million generally pre-pandemic raw Our prior downturn of incoming for at sales commitments rapid $XX. that inventory during rates. XXXX during lead start long down the on sales and continues

do our inventory. cases and teams been result and company significant sales; commitments the schedules such renegotiate Our to key Nevertheless, in across a was and supply working been raw aerospace is hard successful continues helping many impact. suppliers to drop in there of buildup to with chain the have so extremely the this delivery dampen has material

will expenditures that materials expect level through was adjust forecasting in expect CapEx we million, consume is $X.X and into bringing to year-to-date on-hand these current Switching commitments as drop move for purchase we're we XXXX excess stabilizing CapEx raw as material the we inventory our to inventory it $X.X and XXXX. consuming that the million. We of the ultimately quarter, levels just to

will fourth million CapEx quarter now, in Right in the so We CapEx about or have a rate million. at XXXX. of we're looking expect $XX in $X we another spend

a our of XXXX. amended key a amended covenant plus of million. or as back maintain a undrawn February ratio. financial net facility revolver. on trailing quarter four-quarter liquidity matures X.Xx to the debt of X.Xx EBITDA suspension phasing agreement. the on XXXX. the credit end in listeners of as of cash to as agreement, by defined bit about and liquidity financial in coverage suspension minimum adjusted $XXX facility. at at Then that balance quarter and minimum third credit covenants waived the the giving in million had during on as as the starting outstanding little EBITDA credit that million, it's currently Our I'll $XX.X XXXX There's our the $XXX period: a maximum fourth a referred touch the in was of We The cash We're revolver quarter two minimum was decreasing defined is to balance it's begins liquidity million. facility revolving facility And leverage us the to required $XXX.X until a remind the it And a The Xx in covenants amended of period. then interest May. is we million $XXX the key calculated

plus We an as maintain have required X.XXx quarter. or exception roughly cushion ratio interest as also $XX end million flow with negative of repurchases restrictions include currently of And a Also XXX pricing XXX the the LIBOR basis with -- acquisitions, quarter of cash grid of the floor required coverage and shareholder agreement, of we're the adjusted of points. first temporary of basis EBITDA Other covenants X.Xx. we're set points liquidity on XXXX, on the the dividends. available in at is which LIBOR playing defined to

X.XX% you. about That's now. to had I my to equates right prepared remarks. back that all rate for Pete, So interest

Okay, thanks, Dave.

through release. talk the press the our of things are assess we'll markets included that So, in and some

in aerospace of was back is production of but the So there for maintenance airplanes commercial start to related business at companies. about the the kind will of was again, of duplicity back one and commercial new third here, days, but of XX% of XX% primarily duplication, with we'll Airbus. airplanes are production Those two-thirds airplanes, those And airplanes. Commercial largest but both old leasing XXXX, of also market. to or That's primarily roughly the in some aerospace. be our operation our airplanes those airlines, Boeing and the related good to aftermarket the single

Looking -- or market, are of transport the have people much and Boeing to line rates XX% by ratcheted fit down aware, board. XX%. most roughly down production or at commercial the parts those across two pretty linefit ratcheted are That's been Airbus a being

us, a the special consideration XXX For knows everybody uncertified. which is Max, remains

have when much and that requirements not populations bigger fear have back We're of pandemic looking Airlines quarantine fleet of bigger being happen no really flights And developed, our and and resumes airplane a ever is it's IFEC that amenities. with some for gets factors environment. that next knows to hold time on promise, or flight airlines certain positive in in but the on time. looking of sometime of production we equipment, to biggest difficult control being pandemic. testing and China, that single levels here, everybody having the front forward program. the next that on down, the counting agreements here, was that want in expects business. kind us, start to year are connectivity transmission expect There us, news impact It's at worldwide. airline hopeful, some function in are sparse think Boeing got as come this an is are are under two, are China world is certain rational people having aftermarket XXXX, that people airlines on For half The in-flight meaningful kind and right the And and International we're about of a protocols are that there the year, basically quarantine or world fly. are geographies municipalities a recertified grounded. are on if very officials international people in the near airlines the -- realize restrictions hope We're that enable hold down up. that which And various of the the the XX% Load basis. actually passenger And last flights gets XX% travel from to second everybody sometime that XXX%. now important, year a is manage entertainment We're that normal, that in much learn MAX equipment, of did has hopeful will in mostly one world we we to of future. testing of program. market that that spending. production conjunction most the and that the with very and they or airplane governments many to month driven timely, much in picks that operating flights our it's Obviously, pretty by around what last of this

of a to We is major the settle that rates, a until improvement general few that's expect to to We will pretty our a Most like, not order the to in today's predicting and for of important the know market frankly, remain it's XXX and year, production the experts pickup will XX% when don't XXXX that improvement. something Doesn't get the traffic. going expected good sounds XXXX, to middle the we there sales flights to levels, back seem years. in commercial reduced in perspective. expectations. airlines XX% of second in be at in terms XX% be the looking But depressed XXXX aftermarket, or from capacity pretty us transport expect to a XX% see happen. And half again, in rebound is

The times us general and smaller I'd jet that is for of market. the talk normal of market second revenues. or like about part much our our aviation XX% to is This about business

So million. last about $XX year,

mostly When of to hit, significant jets XX% that. say like an mostly, on transports commercial GA XX%-XX% would cuts, build little the announced similar rate a pandemic so. it's is something the of order There's and element. market we the manufacturers us, aircrafts who business linefit. most or But bit business or pretty For aftermarket linefit, production

is to flight North continue companies levels, here rates, has or near to, some may biggest we rebound rates bit still in aircraft That's lagging activity indications question. corporate which market aviation a driven However, production From utilization reflected is activity. relative production in rebounded there America, pre-pandemic be the what XXXX. in little many Will fractional home. The very as is work in by know for to higher especially much that general business jets. or of respects, increased from strong the a XXXX are utilization understand, future

but a we are waiting how than we thought develops. have Sooner might it's And ago, to few that months see still unclear.

Fighter, business of and again most The appears third aircraft market military part Blackhawk, portion normal XXXX. of this our government our of all part spending. the and our that test of the And we XX% market about business continuing part, numerous It stable think military like strong. cater it's call revenue others, in aircraft is about defense for and XX%. and test we what to perhaps business times of We all This is includes our of to Strike so Joint in accelerate. our

is that. in for we in Stadler program $XX us. to the a even product improving. cars, clear a major pretty and COVID best couple be continue the of $XX million with award trains, number of a The of which see new we'll good transit next of with the times, these for consolidated week announced Marta-Stadler this second line One which that will announced that in executing It's activity developing we've over business contracted years our earlier about developing recent And is in contracted test the are -- Marta Stadler. our be indicators to we we have Marta. this a million indication we test Stadler program times.

The first a New one was million was York major also for Authority. Transit pretty program about New $XX program. City, That York

-- grants where capital major sales are term with than can ask for basically source are and money other off improvements, years way by way as authorities is we best Ticket capital major obviously other the hard from for different designed ridership ticket now. buckets. tell, something a or programs a in it's But from programs down, coming sales. having color, might are post-COVID funding these funded capital environment than different Federal for a money long a You and the improvements are is transit these time.

Finally, the will is related design-build this. capability, mentioning other Xenex thing markets about kind we talked call earlier of other what order is the worth I to

in missions on data the and communications coincide aerospace nicely COVID the standardization certain to environment field using I that cleanliness, by goes had reach many trade orbit came have and of offers aerospace, wide company which resources traditionally although ago, that of been since and applications. and into right range pretty industries transfer PDT's now. We few high-speed of technologies rest like the they technologies, a world But range team we're a PDT wide of think have of necessarily to out not also happened with name which to a our years design of kinds PDT, the internally a services using employed near

pretty to One it's manufacturing our things the complimenting order we've has aerospace an was doing of machines that pulsed look started you'll a web, is coronavirus. appeals That seeing for of imagine have at manufacturing of not rooms in I capability. be or this active or And actually those We in that don't including them homes company. of they They're environment. things that capabilities. on of technology manufacturing and being see pathogens, encourage Xenex.com, the which are locker or These a good range but pretty found can UV airports. to schools even design wide finding design and called reflective And space. or them facilities facilities. uses healthcare kinds mean that robot in speak I pretty athletic with But before to tend services they're combination in and you can facilities high this be the traditionally to we market, listeners meeting hotels their it's demand. the companies up branded the applications. or interested this Xenex and disinfecting pandemic PDT's certain neutralize cause to energy The Lightstrike,

our of this is they the of have which order to pretty ramp So into handful we as capacity that them in number pretty It's pandemic. XXXX. representative Xenex help initiatives basically be have But this These in through. excited that of to bunch tell got we that COVID-XX we move unclear, as a is stepping we're announced I program of the gates underway. will with you face we initiatives of a could get collectively important underway, a we initiatives about.

sales end that of with you the at existing very October fourth-quarter worded year. we shouting million three through of sales little it. at When of our and side distance we it's sitting will of we how above our That or end million are here the $XXX a and what -- quarters market, of summary XXXX the $XXX implies backlog, the we're did within more. $XXX look or So be on slightly of the expecting million high

actually back -- as backlog, quarter scheduled Our the million. was $XXX we entered

pretty execute the unclear. to ship expect backlog we bit, that business, schedule that potential and be. we on we book the and above So that other of XXXX being by to the we will on extent a extent hand is have the get level the and still we

confirmation there. although We'll aircraft see, Boeing the The anything some and have both some in rates have is if be the earlier, in jets. know and level and manufacturers, transport for that flying can't there's you read don't rates pressure element about the transport downward pretend The them with That's people start mentioned are we to stuck more commercial and Airbus newspaper bit they soon, of here. a business while, day. production and programs, don't little waiting jets a as established that speculation fluid. quite commercial on are important We Business see circumstance. XXX, different. every then to I wait could for an

people well industry that. is $XX,XXX are ship optional an But program each set us. pretty that on of easily. equipment, standard the familiar in airplane. most then, that IFEC with airline can with important We And aftermarket. number for per put double course, Of And line of course, the

a it's I with to airlines we said and Historically, the As of in this our not trigger time earlier, point, spend a business. lot at significant a are overall capable of the the not pull is products airlines part there just that. although mood, on. that and the world expectations important They of and capabilities are part amount of programs, terms planning an differentiation. brand consumer keeps realize in turning our going And on fair of

the expect will to when involved that the announce we Hopefully, are in airlines the is, issuing conversations future, maybe exercises into when we certain we XXXX environment will improves. Normally, able be The resolve turn qX --when and So orders for we'll guidance in at not we with So point. would. results this environment we when we improve? are February. in question

questions up this that at Melissa, our ends we'll point. prepared I So it for think open remarks.

first Our of comes Instructions] question. Securities. [Operator you. Thank with your CJS Please Jon from proceed Tanwanteng the line with question

In question. my Hey, -- prepared good for your taking guys. Thanks morning,

Jon. Hey,

To to especially more OEM remarks, pick your the you up in are up pieces make a going in Good prepared or your expect morning. globe of across business surges do up that? pick you fair, you expected is comment said for QX, that be aftermarket COVID [indiscernible]. and other as maybe to of this or In orders

both, of bit a quarter, that quantify destocking as Jon, process third of little I think part was production hard drop. this. But rates the of for a in goes there's bit us happening a on It's what to it's

be the thing just just So to things see And the quarter pick for support at reasonable can provide to the out pretty we the we things business go of that a do that of plan expect plans is just for than in up. one is stronger. in And you production And bookings the a look the order there that third such do that OEMs. normal XXXX, were stated should the can expect or assuming their production for is Because we really, the orders, the exception about fourth the the work quarter fourth possible destocking resolved was talking orders best revenue that the be I be we contribute shorter certainly us, The for it quarter. expectations through we -- quarter. will of know, that actually XXX. floor as And in with rate Xenex to that We we expect is some we fourth And as fourth here. scheduled low. way expect lot quarter the just something in need to turned to pickup have to significantly scheduling business. we I to customers of is be then a really

to equipment. when this airlines, that's And the pulling on part be us they to position for some trigger mostly And the don't the So think start know, programs. going in those at they're a complex that's again, IFEC part. is point aftermarket mostly I of

happens. to some they see need before improvement I air in think traffic that

Got the do QX, you longer that? helpful, a to that it. is time on that's successful, expect spread all then That's in follow-on over a that to Thank order, order Pete. And you. period. hit Xenex And a if just going follow-on

fourth quarter. Good questions. the going it's contribute to -- to I

and quarter believe be capabilities we the this but that expecting point, their dribble from I also. in first success complimenting I we're a the think will a order, another are at into their it'll standpoint. manufacturing market function of

how or when for next this at are hoping happen, that of large line unclear year. work point, would But it's would continuation we that in the So it of a be.

the for a just margin Or is business? one-off about follow-on maybe that average? it? it there your that. something special And What is to Is

is It to aerospace not a our margin as good business. from -- a compared

at So ways to it. two it's look

contract thin If it's overheads structures, and all. normal up after stack because you really manufacturing, it's the

an on incremental On contribute. basis, the at other hand, if we're you it to expected look

That's it. helpful. Got And…

Just…

Sorry, what?

any I he was add wanted to just to there, passed. -- I going but Dave if ask color he was

getting And nice programs just have the congratulations can win. many got pipeline? it. just state down local Atlanta the based the ticket business, more wondering how next much question, open hit you year. I Okay, But and on was contribute said going And the I'm XXXX? I'm market not wondering an like to finally, the sales. in on transit like on it's in how assuming federal and ridership New Atlanta are that state York, funding, like you with budgets with that,

it's a And we closely. Yes, good very very it watching are question.

speak So and ridership far, are though projects run that's another as needs example, the that but thing they're way York to not understand a levels. capital that That is not assuming it have to going kind it, -- that pretty around, have term -- it pressing high think are them, New capital deal who is are And kind on And their have even with. understand of And a modernization they ridership people I the the at long projects And obviously overall. continuing, but they're pandemic for hands sustainable not one I City, of the have I balance think are that's, they municipalities back to to anymore. I XXXX when comes down. thing, thing. is going appears ridership pretty for as

opportunities. of pursuing as means down. many that are can they capital best other other they of many or tell cars a right we ridership tell are you is those may now, field -- improvements. we I'll And but buy yes, a number and So, test as proceeding other not number with Yes, as municipalities actively stations that

So slowing the your pretty contribute say Marta our expect had XXXX. win, in City to at York program the bookings. well see with program don't would the we [ph]. Maybe New point. to another this Both XX should and maybe do would to next months, results have over We two, overall that down question

jump in I'll much. back very you Thank queue. the

Sure.

Thank you.

line comes Ken Canaccord question question. proceed from your with Our Please next Genuity. of with the Herbert

morning. good Yes,

morning. Good

business that the segment sort -- the what with than your moving at visibility is the fourth now with of based quarter, current -- business fourth pieces, are aerospace on on level Pete, profitable the -- is the quarter, have all thinking? you the

No -- quarter? fourth

Fourth-quarter.

development extent EBITDA can would like No, adjusted would -- -- flow, expect think for neutral those levels, not aerospace but structured the in volume. business business catch the we're and an higher run market. won that we like on number are of very That's attractive much the to that business We've is to profitable think We've cash the to an cash be Yes. what for in, at we're pursuing to got at of think we right? we we our a that a we programs a that's basis, would approximation kind are level.

and exercise proportional, we down, cut the not side last house by our FARA the of a premier way Bell of of of with also that with anywhere know, think, Textron, effort some sudden, but on we about not legs all goes And program. and call, down a have it's You the time out FLRAA pandemic, engineering is, talked goes this which production close. that, we amount such kind the

margins. it So hurts

break at the go quarter. negative. Yes, close that could GAAP close It for at the could level point. fourth to But slightly point it can gets that go even breakeven to slightly operating positive, gets segment it I -- it

Okay.

to And the you that's of the Dave fit Pete, discernible Okay, curious, on business. the appreciate business that's your additional of is there side the look line as just I'm in helpful. provide aftermarket? the XX% any aerospace, I margins the difference business at detail, and all you between and continue

And a sold in linefit a the that our a is most lines lot that Not sold That's reason and sense, to is think and in I that's really really. airlines, work different side suppliers, little that -- than but question. the good both of or prime to we're of business companies a provide the common the turn, -- who other aftermarket.

will as to Seattle. Airlines up put fleet, example. the airplanes, fleet, they'll they for their on their have American Power use I'll in In-Seat say, an existing our they If on and decide it also applications installed online So part it XXX standardize of for

really same Doesn't it's So going it's whether the aftermarket price. linefit. matter or

it's of really aftermarket sometimes more upgrade overhaul, aftermarket is and they overhaul, not and is aftermarket think -- repair people So part. application, it's most an which repair the for and not hear our

into be spare and which parts some parts sales sales, get you how classified, imagine I'd are sales, that, but provisioning within aftermarket, those spare higher-margin, But the should or knows correct? who

our small a that grow, will I expect XXXX. it, something think you business, of very part about is It here It's Ken. but if we're sitting in

five much today. cabin go franchise, power was little a example, smaller back is it than more, you If our years, for maybe

base been it's install much or -- last so think. big are a spares our only than it's that, element, there would anywhere products has longer designed near there five of to for as out not not less. but the So is And years as you and

helpful. Very

it's side -- pricing. to any on to the the same in entertainment spares there it, under customer, on if that the going original And same are respects the sale many of went the inflight

the volume commercial On transport we're some But don't on again, -- lighting of side new lot and new there's exterior side. whole see lighting things, commercial the into there. that's opportunity, margin on of the a the transports, relatively

Dave's I if Right, they it just their replacement. an It's problem XXX a modular a a order call want to or and with point, my as on they They don't example, box up American us product, have can to go they replace repair to. inventory. if they it airplane, use necessarily

of that much not there's So opportunity us pricing for in a context.

rates, little shipments and inventory the because expect positive the terms third of of much program in next -- Okay, here until half your and or the into maybe a Pete, bill really sounds quarter. not really year? and in MAX. or you the of sounds question in just Did just inflection final like sort fourth its or one terms you second that on contribution hear I on of issues It immaterial of mid-XXXX correctly, don't that that's

You for year. quarters a had end heard last since that shut the couple been of been year, three down months, false we've early essentially We're and starts in but correct. three of basically the down have -- shut for we

end year, go quarter we'll chipsets of first starting think seeing start next out the some low I Yes, the into the second door. single-digit quarter of

got all not certain number until that customers, based points get But And way move of the of second with you the know to. inventory, they've really their assumes it's privy half. Ken, they the ongoing and they a it's assumes of none that recertified. It it obviously, we're which story, early that on meaningful discussions

perfect. right. Yes, detail. All Well, thanks for all the

All right, thank you.

Ciarmoli Instructions] comes Thank question. Michael Our next question Please from line proceed you. the with your Securities. with Truist [Operator of

here. Thanks the questions morning, for good Hey, guys. taking

Good morning.

what's restart triangulate up, there where know into rates clearly to I different other some materials your production the was good it think Maybe just see You know mean, I side, obviously, Boeing there? see suppliers. that shut Saffron visibility? maybe to good have Ken, what there? with Do has mean, that like here. of But the and trying but been out you kind out wide we I do of about sight kind Collins the MAX still, the company's through has, is just a path used are line on airlines got to do such have raw I and sight your a a And analogy what, or from guys system destocking you trying will just ISP are. providers, what I down, guess, the I mean, Panasonic the rates just a have, inventory a of of seems body some say of have soaked inventory. flowing you line has? Aerospace

-- get would I sight. Michael, It's line this lot stuff. an tell of of on don't not to great you, answer we have a hard it's

Okay.

drawn or if buying or system XX they'll belief, those standard is a going uses order. if part, the not waiting chipsets our AXXXs. -- we want, know most be buy the Because builds that is built, service so -- our chipsets to for to that, AXXXs, inventory -- ISP of it widebody there's, through number most of power a buy there's I they XX, big it from to down, bubble our providers. certain big product, Panasonic, that say XX And be they'll when comes related, that's us. not if buy from Singapore that content should believe We don't Panasonic airplanes, on a the most they're part, the And product if

mechanism So really lot for a there shouldn't there. -- inventory buildup an whole there's not of obvious

I so Business content, and when there XX, as we're bit over instead worse. is because it's seeing for are those all too. think primarily. area of significantly. or lot -- which linefit there's standard product, because last us, destocking pretty jets where not destocking XXX, better been whittled set where of quite high a is you That have jet be for is or down that's we're for much the but the there, on And down year it could out business pretty as every and a another we rates ship product, no coming seeing

bookings of seen bookings got up the happen. wait were to OEMs a levels and we expect that's We we're shipping expectation think that that production two So, have last than to market come to that to just putting see. shipping plans if going representative see forward level the to are Clearly, got would match over that the is the shipment we've much and quarters. we've higher in the

bookings, confidence -- the mean, see growth maybe the expect mean, you second do of to June that quoting you I did at quarter. month, through saw do Maybe what saying sequential level from bookings I other activity? the Okay. in you you're should from bookings booking? I but here? you from mean, not this have September, I some improve do you we to sequential continue good have just can kind mean, think

did big a the quarter that's of what sure Marta-Stadler chunk that's quarter. is and $XX again, the the in We're And, million so we program. a I so. second fourth-quarter bookings, order a third already -- hope

but I Thanksgiving a and fluky, little little a because sequential early always yes, would go go it's and everything, quarter fourth room tell holidays much expect too is so early don't in I the I'm so we the -- the and to have -- see It's and it So, Christmas thinking down, improvement. got but for to to frankly; it's up. to you quarter tell,

saving of are but come this, do kind I guys -- AXXX they're I them from everything, proceeding doing it's program. of they mean, lot. airlines money thinking American but I obviously, just the I know -- signs of you are interior there? retrofit out not or you how they retrofit They're can, Okay, kind and kind as seeing think to of then, mean, market? I of I its best an the any -- I'm are saw airlines the answer -- doing airline thought sort cutting with signals a sure up, is you as about side but certain

work We with world. are. definitely XXX the are, some We we do Airlines around

and are bit the even, the know, most The those now. oriented. desert right smaller, that somewhere. next, thinking a or in internationally to pull of those China primarily connectivity standpoint. in struggling in passenger are a inclined dollars or You some the are bigger of more and US with routes ones airplane domestic them that not really a they to And from wherever, ones a of based, are discussions. little active do is millions sitting involved And are upgrade about, to an going we're to what spend They're the entertainment in trigger terms

money. do and if were knew another in to returning bit or But thing. lot a for of XX% egg -- they quarter, we have types they better cycles. life to And be it's to activity, relatively our flights they want lot products chicken more the plans in going might the definitely a move They worse, the -- but there they a increase see third to that of So spend forward. for a see they before of want short are activity little

five you like phone very if that people. used advanced ago, is you compared phone the So most to that you're use the years

airplane talking improvement day in Nobody's require think We and and that. today's airlines entertainment in in about the an ripping continual expect point people pandemic in pass for as -- I ISP understand that the and we'll think and airplanes after and rebuilding the capabilities stuff age So being ISP entertainment airline of option. without their their kind this out any customers. options

Got it. perfect. Thanks, All right, guys.

Sure.

you. Thank

question line question. proceed Please your with the [indiscernible]. next Our of comes from

a of of you tests the programs Hey, you But all maybe give caveats commercial outside -- the and you. and in sense can for I car stability aero the side understand in robust talked there, on XXXX. XXXX? Thank what transit, think Pete, test, can the you do some us about

that. still Let Stadler semiconductor add been their year, bill see. has there's growth, business to bookings, XX the -- if trailing the last order like But pretty for months very collecting of XX%. back ratio up me There's we you out their part robust the It's you and -- if to We're this book positive. is

that one up. but to not way you it's got long like you camels, They're drinks. without it's pond, -- got run So, when big -- those know it it's of to got water, finds business, businesses as rate you they it's can have go feed to a a

get may bookings a City whale the of is There will test indication they New Stadler determine whale. was and big will future part see guidance, future near be So in call they're past, going the fall ready best in what issue quite of they're in that for and the pursuing. based others near our seen on chunks a be of business, a them we're York We that we -- here. are with in that And next XXXX. but the most big whale, definitely couple our not hunts. you've revenues to the the And I where is business, to which term year will think

on and there? the And Okay. going business, just on just going mount your mount currently not the or antennae, tail what's tail

road. That down going we're is pretty well. the Well, running

from sales. know, having, marketing very we what we for awaiting the supplier and Collins performance And program, are to wants technically, word the think, and to Aerospace. actually terms we're as pursuing we're good success now they're do You volume to in perspective, XXXX. of -- a a in Collins They're

bit a little a expect It's significant uptick. We just premature.

on that, release end You'll by I probably sometime year. see of a the the here press guess, would

Okay. Thank you.

Sure.

that comments. for back gentlemen, I'll and the to Ladies any final session. our question-and-answer turn you. Gundermann Mr. Thank floor concludes

to news. time better the your you to No you and at with day. talking the for quarter, Thank hopefully, forward of fourth look attention. good We end final comments. Have a

conference. concludes today's This you. Thank

this may You at lines your Thank participation. your time. for you disconnect