Innovative Solutions and Support (ISSC) 9 Aug 242024 Q3 Earnings call transcript

Good day, and welcome to the Innovative Solutions & Support Third Quarter Fiscal Year 2024 Financial Results Conference Call. [Operator Instructions]. Please note this event is being recorded.

I would now like to turn the conference over to Paul Bartolai, Partner at Vallum Advisors. Please go ahead.

you. Thank and Conference Solutions Call. everyone, Quarter Support to Results XXXX welcome morning, & Innovative Third Good Leading Askarpour; DiGiovanni. and call CFO, the today Jeff are CEO, Shahram

Earlier website publicly available our the Investor release and a of results. in today, our section XXXX corporate financial is quarter www.innovative-ss.com. operational detailing release This Relations we issued at third press

and include would outside nature, on today's questions like responses and to their control. company's to I the by call of remind forward-looking may commentary are which, you uncertain that management's statements, conference

Although and these differ statements current forward-looking are based beliefs, materially. management's on expectations could actual results

For a refer cause to of the our factors please actual Factors Risk that with section of discussion could of some the latest differ, results to filings the SEC.

find in financial historical today. can reconciliations issued earlier Additionally, of the release please measures that non-GAAP press note you

Honeywell with on provide who'll performance Today's the of will acquired for detail questions. the products Jeff remarks call recent a At and progress This conclusion from recent Honeywell. our our remarks, integration prepared will of initiatives, the an on we our review begin Shahram from made strategic by on business be line CEO, Askarpour, update update ongoing DiGiovanni. prepared of some including last followed year acquisition will CFO, a the our open financial from the we these and from your have

over call Shahram. to the turn I'll that, With

and morning, on good call everyone, Paul, you, today. us Thank joining the

the during existing XX% business positive to Honeywell continued platforms growth lines our recent the under from revenue quarter execution product our that year-over-year quarter. momentum pleased are during and as third We growth our third contributed

to initial approximately expectation accretive new an At we EPS. EBITDA XX% time, a combined consolidated legacy more growth on fully impact we where to that, over we drive even expected by with been laid EBITDA XX% increase significant business, of revenue with our these with our has just since Honeywell. our year that expected we once integrated, out products, with It transaction completed

based with the consolidated the in over we of initiatives. with strategic in assets XX of trailing compared EBITDA growth our Today, benefits XX% demonstrate These EPS. in and organic success XX% on our revenue, adjusted period, months Honeywell prior the XX% the integration the combined our in financial growth results results generated roughly

But in we have more quarters. continue to drive opportunities plan. we made on Honeywell progress lines, the further in and which additional during our quarter, regards our execute the ahead We product to benefits integration should coming

growth is to nice increase handled and a of continued that which in work was contributor repair We in to the maintenance quarter. being the Exton facility, proportion our

transaction is new Another The important several brought these of aspect customers. us relationships products. of key customer the the leverage Honeywell with transaction the to acquired opportunity base

new are a did where these presence focused have on with end particularly previously. We not with relationships, and we cross-selling markets customers international some opportunities strong

completed we example, sales radio a during some an European As to customer recently the quarter.

to been majority the to happy inventory test that we delivered XXXX. of the also report We're balance the delivered, and and be calendar expect in equipment has

on additional our acquisition of lines radio from year and navigation Honeywell. recent builds deal lines from most we end the At This communication the of Honeywell. last transaction includes July, and announced from product product

the markets. deal enables us acquisition our Exton importantly, military further facility. and the capacity relationships transaction, strengthen offerings this customers, our than establish While key in business help the in new smaller will and was key with aviation to initial leverage new

and far we opportunities additional the incremental and with synergy thus pleased are line, benefits in forward looking the Honeywell achieved under have to We coming growth product quarters. are progress we realizing our

standby UMS, Utility instrument for and product. T-X for We including and the our Textron Management System autothrottle continued stable margins our to KC-XX contracts revenues large generate our and and Boeing the for OEM or from Pilatus

contract dollar market, military the a aerospace multimillion military platform a company. with Further to on a focus our were foreign we major from awarded recently

will We strategy business This our focus a for further with development military on platform. computer displays an validates mission military to market. foreign integrated efforts supply multifunction in the

I strategic priorities the of accomplishments some quarter. highlight to our overview growth now a key our of quick and like would during provide

generating long-term OEM Our strategy revenue retrofit through existing sustained opportunity our expansion pipeline market programs, X growth opportunities new initiatives: growth following platforms, is and focused on of new the and growth, acquisitions.

growth growth growth key several meaningful expansion a driver provide by predictable and scheduled platforms on customer existing unit is platforms. highly This is unit Our opportunities at platforms. key driven through

For growth has PC-XX grow, for and been continue aircraft the providing will to example, opportunities IS&S.

long-term we Building relationships, contracts. the and nature deep customer business following to of opportunity significant stable This these retrofit to further provide focused on the particular, growth innovation, our given products growing programs a history Honeywell which on In more broad gives OEM and potential customers. are OEM our We opportunity. predictable benefit us new portfolio strengthened of from cross-sell has existing the our transactions. of

radio recently One particularly into market cockpit Honeywell from which were platform. our from expand excited are the in, products coupled in C-XXX under-penetrated the with a we adjacent is tremendous nicely As the are opportunity the significant a a to markets. growth years offerings an of come will market is what today, long-term acquired example, potential we market, in some about opportunity. coming the is military

in several military have that are market. platforms situated ideally the product We

highlights As this discussed, award opportunity. contract we recent our already

both enhance Additionally, a focus air transport increased and helps opportunity in cockpit IS&S workload applications. market automation significant on that pilot military safety reduce and for represents our

market to generate continue cockpit adding opportunity. represents features incremental We automation military solutions. and by to We multibillion-dollar believe cockpit transport automation air revenue our a addressable

strategic focus increasing Finally, through growth an of area acquisitions. is

We growing strong have and strong a have generated flow a have base acquisitions cash are developed financial we from revenue, pursue recurring profile. business given ideally of positioned to

space similar on remains to strategy leverage which focused manufacturing acquisition business, Our enable our lines capacity. to existing profile in and our electromechanical electronic product margin the with a us

on We look in you quarters. our our progress growth forward initiatives to updating in coming the strategic

like our quarter pleased and results in just and I to in to growth platforms, revenue from the would our Jeff, contribution enabled us and conclude growth to a our product Overall, are thoughts. EBITDA. generate Before final I with third turn with existing Honeywell few it we over

execute to at level, together we XXXX. momentum, first and business our X results based continue remain continued we during on positioned with well the look We towards our quarters high as a

to turn results Jeff, will I of financial it more that, outlook. quarter With a our provide over and third who detailed Jeff? review our

free I update with Thank you, and everyone. and an morning, sheet Shahram, commentary flow capital and quarter, conclude on cash good give our details on our additional provide the will and on working balance liquidity. some

earnings the for definitions, refer be everyone GAAP Before it. in and using we the like the which will we discussing reconciliations are to and measures release, them begin, includes rationale the I remind you to non-GAAP encouraged would to to

when XX% product well a year. growth the Looking at in third acquired revenues lines total quarter last as existing were compared contributions $XX.X third million, increase the to net as lines. The the was Honeywell driven quarter, representing increase from by

the saw We trends some to growth see weakness some appeared sequential the but continued market to second stabilizing in cargo quarter. relative and in market, this we to be

aviation was large decreased million ago primarily and commercial sales the quarter, increase in to Product general from customers. a to shipments transport an $X.X air to during offset military customers. order by partially This third attributed year a the to

acquired from the last largely support owing from million, $X.X increase an year revenue sales to service Customer Honeywell. $X.X customer product from million was lines the

XX% driven the period the profit during operating quarter, gain $X.X products. progress third Honeywell on which efficiencies, third integration further to from year, our XX% the up we Honeywell last was the continue our contribution margin during continued the up sequentially $X.X million initiatives in same quarter Overall was margins. quarter, Gross by gross improve and last XX.X% as million from to make from will

a it a was point item, our margins, given headwind. roughly gross this quarter, customer-funded As our reminder, erode a engineering XXX typically, is and this largely pass-through programs basis

As second some we we integration progress drag continue the on with quarter from equipment and a of Shahram to discussed, from testing improvements delays less inventory see Honeywell the sequentially and in shipments. did make

are efficiencies levels we to lines, witnessed acquisition. additional of return additional the Honeywell recently Honeywell including prior a to integration We the the continue to looking the products, as the margin acquired gross we targeting are and gain

Research and our by headcount development last product support quarter increase in was This comparable was the increase year. from of million, $XXX,XXX third development growth to XXXX driven an expense efforts. during the $X.X period

As scale benefits. gained expense X.X% during to R&D net decreased third as sales, year net of percentage quarter we the last of sales a versus XX.X%

expenses Third The of the related as approximately selling, intangible year. transition related expenses lines million, of general CFO $X.X quarter increase in with XXXX product onetime expense Honeywell the the a amortization quarter last administrative in an and were the acquisition result increase costs $XXX,XXX. approximately $XXX,XXX, of million of result acquired $X.X expense was primarily to SG&A to customer from the and along

and the the quarter margin to quarter, up third the $X.X Adjusted Adjusted partially last gross expense year, operating during due EBITDA in leverage. operating last by offset from period third margins. XXXX, $X.X EBITDA the lower the XX% products to during XX.X% expense contribution owing year was from the million same from up million leverage Honeywell of was

$X.X net $X.XX income the million quarter per to third or year was of net quarter. income compared The $X.XX or million $X.X ago per share in share

to on Moving backlog.

And fiscal our of XX, $XX.X million. of million. approximately XXXX, were was quarter $X.X third XXXX backlog the in as orders New June

Red PC-XX, orders years several reminder, sales. they not Boeing purchase for under a Textron Hawk product customers and from production and OEM future in Pilatus long-term generate do due Honeywell remain enter in excludes programs as to only Boeing our will Air, As lines KC-XXA. anticipates from and backlog their hand Further, programs T-X these to to backlog. nature, IS&S the orders includes such expects continue King typically

higher was In of and The from cash the up was from months capital million, flow. first to by improvement cash ago turning efficiencies. operations working earnings period. in driven year comparable Now $X.X flow the improved X $XXX,XXX cash XXXX,

were $XXX,XXX expenditures of $XXX,XXX the XXXX in same months versus X year. in period first Capital last the

flow these first cash XXXX of As result up $XXX,XXX factors, free million, from X year. last was of a quarters $X.X the during

XXXX, cash Honeywell. utilized acquisition Total was flow to at net XX, the June $XX.X our we the free quickly $X.X as strong 'XX debt million of delever as million, down end of from from following

end X.Xx Our quarter the at down X.Xx end a of net the leverage transaction. Honeywell from the peak third of declined X.Xx, immediately of to and at 'XX the following

and strategic line of the at our provides ongoing availability total quarter, was initiatives. Our support under the to operations cash flexibility end credit million financial us ample $XX.X third our which and

now our completes are Operator, prepared of we That call. our ready question-and-answer for the remarks. portion

[Operator Broker. first Sergei from with Instructions] question [indiscernible] Our Freedom comes

the congratulations First of Honeywell all, transaction. about my

it to As equipment far deal, the Is previous complete facility IS&S concerns regarding of the August, right? get completed? the movement in the the you as to

you can sorry, repeat that? apologize. I'm I

equipment completed? it that Or As Is regarding deal, you of concern far to the in you still? to in process movement the as complete August. are facility of previous the get the the IS&S

it is substantially So completed.

to get had that three -- identical there destined so are I the is well as to we in X stations. would think completed perform and there need one say instance, I as of inventory on. them We we're substantially we substantially

margin and Okay. And the October will next affect it quarters?

shouldn't also really and because building It them. us training more are technicians we on

-- trained is just much you here as So to this the doesn't equipment of plan without We're projects it more necessarily people increasing more team help having and we on run having either. these bringing in-house. that

had lot before, of They increase As of on help bringing that did We channel to Honeywell a outsourcing we third-parties. and a profitability. to lot all revenue their partners. of plan of in-house business talked

one -- this future other deal would with And for and right equipment kind got matter in hand of -- to to growth. test us help now, the do the we've enough so

And call, have net organic XXXX pace mentioned the income of Okay. opportunities it's sales growth growth? Honeywell year. new further great thoughts fiscal during to IS&S, you after you any about that Do transaction, the regarding

proud organic were So the we we're growth. going I with our acquisition. to to continue mean, do

a I were at CAGR running think XX%. we about of

down. be definitely, air in of the [ ahead we're the recovering of kind ] We've initiatives military going some from put slowing digits. us had we We've So to that air with rough that together. through double cargo

focus one suffers, recover game market the years. is it. on market we to put It's that we've our been This -- when from another XX playing for

in organically double forward, going we're going digits. to growing So continue

forward quarter, as consider acquisitions growth part as with our of we our going if both the come as going organic as they to definitely, of But to initiatives, because well. continue business any the this combination move acquisitions beyond acquisitions with doing the going to lines. own evaluating other intermingled and without is constantly And from done as the grow well get that we're product we're going more that. programs we've we're to third -- well Honeywell And

the In product development terms that we're on of part initiatives, focused of business.

in at products but to mentioned, R&D we're significant expenses, saw you market get a of And our looking materiality. several organic help team that to growth. to continue percentage As I And develop a new allow and years increase -- Again, not that from further as in further cockpit we're automation next we revenues as products. to we saw, developing sale, that over us is growing continue would and that that. goal there's incremental gain the there gives to develop us us

How in CapEx? Great. acquisition reflect additional could

acquisitions impact additional would How CapEx? Yes.

if kind of maybe have size factory floor, are been So we we and we've do we the our together. the acquisitions which and in where plans look that, next of further beyond to you acquisition the would beyond matter do, to increase hand putting

years. revenue $XXX another looking that here XX,XXX And at to order the get doing next beyond permissions million several to the planning foot we're have build in We space. square factory in of us

turn a the first happen next financial growth or quarter the And last when of question, sales in could path, year? product next it Great. could into decline in

predict So to it's the hard future.

we're a yet. navigate bit haven't new going a products and with As market believe the several waters the cargo funny we well. as market, that We year managed And of signs on year. that those this little picking we're We've year you after the happening it's all know, year up to internationally. that in developed seeing are elections hit things

had mean, last the transport quarter, -- we actually air the transport. I shipped in -- So in products we air

And recovery. the things continue so would on we're of hard the to optimistic predict path But future. that

Services. comes question from Our Ruth Lenox with Financial next Doug

order the want provide to you on was more more could congratulations us announced tell you I yesterday. details, my if that wondering offer about I some it.

customer agree it because made, the announced to reluctant haven't more the lot into put announcement we it's putting our we was more a in and to us guess I So themselves. going were color announcement. program to a lot that they Obviously,

in very the the us is it the And guess, well -- mission aerospace they didn't but another the with dollars. that for I -- is announce, a want military a contract one got integrated product, a We a large million computer display But several it's company. it's it's mission value award into unit. thing to

suggest for the how example? any quarter, flow much there Is to way might fourth in like

in once We in it the intend guess And deliver to on it we've I that but booked will reflect will our some fourth you backlog It quarter. -- will of see because -- you -- now. number.

backlog. our in it's now So

Right.

being Doug, So we QX. booked period it this

So backlog us around period. the put K, the it. our customers put really yes, in when we out we didn't Unfortunately, disclosed to want details too much

think their they're I still with customer. negotiating

Okay.

other you what you maybe it the you that parts with Honeywell you And it in the of was is have. than of quite like your it acquisition One to more you going? using that effect, Possibly, And are with, was seemed inventory. in inventory how doing how acquired of maybe indicated was How had operations? acquired? that are desired bit a doing

specs that we But as of the $X.X have about lot the so desired acquisition second that we that the know think did is it. we and call that are they the when things in as that rent would out get an which what inventory aircraft, on own. units, get loaner for we programs a we it we to worth million I has indicates it -- inventory more inventory A don't these in why will income that So of you fail well. we units have. the But

car we we can it look you and Hertz the at revenue for these like units the you're rental out get and it. So rent

is And that of we sell. ahead some inventory go and can it

supporting -- of an customer. that team sold inventory we QX, some we've a some to activities. international the inventory we European sales all We got them. now these sold in have to radio example, that's of And For

sounds That positive.

the of deserve fourth Is there what for you the the -- lot might do for in sequential goals a look, credit Now have improvement internal quarter? margins. you some in happen

Yes.

margin in The happened PP&E because or the So headwind expense that's we Also, transaction. at NRA, depreciation constantly Doug, in so the increase look always I was up you it it. also Honeywell what our would of our XXX little basis points with of the a our margins looking how about. and was I around -- year-over-year, increase things we're couple to about think the talked mean, impacting when margins, went that what quarter at

another, was to there. I XXX roughly basis would say, there points So XXX

So that, effectively. efficiencies in coming X will you the workforce when with efficiently units in test our more NRA our as those and factors, the XX% look fix further at And to these are getting here, keep to equipment margins, in XX% is the margins. repair and mind, to start to now

is goal our margins. look increase to to those So always

to training you're area. when we reference in these technicians And that from the equipment. street always to like sophisticated not the of are It's hit going mean, of equipment the running. they you and you'll ground have next get hiring aerospace couple hiring, within of initial some and like acquired you to the them you get rid Honeywell, do the it. can Like effective. you're sophisticated And get because new months very they're your as them -- are units technicians I hack as some off they're become don't going the

margins. inefficiency all is there in that reflects our gross that So of

there was Well, the and you that gross also product talked margins. was this about development affecting new had that

would of marketed seem products are were some for sale, that developed, they help well? these forward to margins going are so So being the that as

Yes.

computers be to us Jeff That the or aircraft. of would XX establish the of next Now second-generation was a developing years these specific, the and generation of bit referring call PC-XX Pilatus. we flight example, our what a control the little developing for computer next for I'll more what to for we're UMS

they customer, then you actually margins. some recognition. go enough development case, In because the of revenue were In -- ahead a to have And nice the in-house do give us little Pilatus this when the engineering investing starts funding we're some getting development And it it then into we future. ruining you that a into to help get -- would if the with get bit from lot to and a than was your it. you into minute of what comes estimated, growing more funding are costs instances,

the weren't seen in have customer, As margins. affected our those paid from and getting would we R&D all our if you it wouldn't have of

I So money customer, get still if from we rather some a can.

Yes.

might Shahram's recognize any to in if and the might we it's really and that's of point, a your hit a to the kind snag do at -- sometimes engineer of NRA contracts have snag at the and changes to what So quarter. -- look happened hit way complete changes, estimate revaluate you cost it look you the Doug, this contract the you terms you and

Okay.

next lot deserves of credit. the appreciate improvement in what think see I the I material questions, quarter to you in happens it results. my I'm And quarter. answering a excited and X There's

next comes with Andrew Odinson Our from question from Partners. Rem

Really just margin. here. of the test you've beat was follow-up horse appreciate the gross units to those I all you have one the gross X I you That's maybe correct? is margin for so but the -- in. that got want additional color to did kind need where technicians ask But three, on going, do And

in and And a training more Yes. technicians hiring as continue shift. as second them and putting well

So yes.

is the have for XXXX to second up shift and running. Our goal

We have have a to supervisor.

quality second in We have that have shift. to person a

to to during trained takes move just first time. some be able shift which really to have they So over, the

Okay.

you'll we So then as have the necessary to that technicians that assume fourth one the unit, tap can when test well? you get

That's goal. our Yes.

Will Honeywell X? from to like down with beginning go is the prepaid recent of heading nicely that Or up year. the looks that's the then acquisition? the And inventory, come Okay. on that

No.

to where because the So in inventory couple back, down we're and that's still today when we see lot the got quarter of that prepaid. and waiting get a that's in we that you went things from of paid closed. really it a inventory It's

and to in amount doesn't if September get happen, that keep So it some Honeywell XX. But before to new in is that contract you'll our really of goal prepaid the see inventory with inventory. working

fleet inventory. And and have commentary Is basically was that that a correct? rental is I that understanding Shahram, part of what's considered then your if correctly, you

repaired. -- good say used units the units -- of So that are in somebody's units will we would kind that if that the unit something the and charge I where And some pool of service. the the you equipment for typically in while we that's have finished send comes the on we size goods of that received airplane, that loaner them fails specs a we've a back gets

was And describing. so that's kind of -- that's I what

Yes.

Andrew, So we in those have get units. assets fixed always typically that what call depreciated, so rotables. They're we

need too have don't too, these have we're the on right customers so efficient not of too want also the So We volume amount assessing of and with we units we many to can now, hand. number little.

there's sales to So are to try some they in with the in if going sell ones international excess our marketplace numbers, teams. part the we're

more to more come and learn these as we assess units. So

contract, the All of duration right. military then is And on the what multimillion-dollar that?

That's X an item or that but not told we some years. X it of to, is were

Okay.

million dollars X So years? several over X to

Sounds about right.

year-over-year million look quarter? then you we And came a fourth basically of did that, $XX revenue shouldn't and Honeywell. be the than that it as Is the in kind much Honeywell assume comp, was growth for you in quarter quarter guys first to stronger will a fair last fourth result, in that got difficult year, expected. because in Okay.

a a of from $X quarter got hold it's anticipation I pull-ins delivered Honeywell in mean, period. we've quarter in the -- every about, it the quarter. I this the So because we again, and million That about to had customers. revenue Honeywell. I talked transition say, in remember a of fourth from roughly lot of lot would They

to So set expectations wouldn't want that in. pull any nothing else there's I to

comes next Ruiz, Asset Management. Ruby from Our question Chip

ask the address and and lie, both cash X growth, I'll my can them guys you where in up does is then the for execution really deleveraging. you which flow It and Congratulations set them. on the questions

typically especially military Maybe One, the military see, takes I'm It that it's to just qualification. a time. is you encouraging the design-in. contract curious takes got, long and

more the is Or about other that could will this think we growth a takeover take type significant see kind in of business military? can look could Or and one-off? you like as this you deals maybe you got do order grow some be talk it longer to business. you of designed-in military you So from

the And one, military. so that's

more been you've you M&A Two, and mentioned successful.

size wondering deals? think buy nature look criteria Honeywell, what So you -- And with product accretive you you whole just those lines with Do for you'll like of as you at two. accretion? you might far it deals the Honeywell as maintain with significant like of will do did you or did companies? the And I'll leave

So market. with went and took a on, marine time, to marketing a strengthening focus we we far. efforts in platforms. regards focus additionally focus pilot I U.S. moved of -- on to guess And retired on the the us kept sell. that put about a help about then got the was as military when started CEO. on lot sales the a from into military, we the and I hired lot We've it military well, the We more I actually over putting

one the was that bears this fruit. So first

hopeful that military I hopefully, -- share that. get I'm a lot additional getting we of internationally there's we mean on of market. the And our spending fair will be

companies. can to product electromechanical integrate that be we not other the more just as but Honeywell, risky is to tend lines necessarily earlier, similar to articulated or lines get floor, predictable. large They I for regards acquisition preference in factory here from is, less in strategy With our our field product and the the our in electronics from

kind business. smaller whole businesses. don't an like also I like I However, businesses, into of at look to buy accretive to speculations. do we see

if move So just generate EBITDA small them and with we integration. immediately to that's harder -- businesses, can find we and They're of my on are revenue, it. their that accretive, view And would by. will bolt-on generate come with

very accretive. any We're product business on of being what make kind sure to capital, acquisition our disciplined Yes. using is or we're that

So goal. really our that's

So diligent process. very it's a

Yes. of I the that. like sound

Do I -- with So talked think grow the putting utilization second your know in we how are you more today? your can or question, of where grow a put can out How about bringing and before do on have -- then you in much facilities existing future. and you really lines. shift some ground? lines about How then you the talking your doing you footprint? capacity some into last about revenue more CapEx the in brick-and-mortar current far need to you're maybe

do completely new there's I think so are in looking in new, product we terms at did two bring product ways now completely which That from we acquisitions of of line takes lines, If two -- footprint. growing. Honeywell.

that don't if -- to one have. more existing existing bring product But we it product grow can can footprint. handle and we product even our probably brand-new line, So we acquisition our which with do in I need a we I a -- line, say, we And if cockpit more necessarily cockpit displays, product of of that line have, to displays do lot an similar is footprint. lines

we've planning in to we that, -- to the going -- state running. Pennsylvania be up that been of if holding really $X the well but where have put to. get before government some we we've we around significant, as and CapEx The the about permission help addition from local in talking and that probably it's can year expand roughly is as here some the of brand-new So lines there's well it And Nothing here. requirement help our And depends. of is ahead could amount towards of we larger stuff that. million, inventory that, as a about bring to a expanding of in building, move because the both with terms factory floor, answer for which as product will

revenue. the I help like beyond that next to So grow us in $XXX grow. years, several order well over we're this to seriously looking at million the in

So that we expansion. need

Yes.

I at when some So can too, things Chip, redundancies look we those to the to the kind preferable place like work consolidate cost and into to units various and reductions them the expansion, one We're of the and out. way And we see when we you storage facilities, bank we get that redundancy down. is our with how even with. the working state spend, finance financing And money current do look locals it? get at have

The [ comes Instructions] ] with next Strahan Singular from [Operator Gausia Research. question

me? hear you Can

Yes.

The are first to you whether these question about made of is And kind know back talked Could new near-term staffing. contracts for comparable the regarding would on margin insight terms the also your the of if administration any profile initial those the NATO, military you've you've provide opportunities. hiring the decides impact commitment its and have on retrofit scale commercial into sector. I investments to operations? that to in in

similar -- profile. We're product -- so are to margin product they margin our profiles, our margin to in terms existing of

foreign regards what mean, reduction in world. military a with don't the lot we international to a have tapped is the again, you And lot With well. seeing [indiscernible] around business. happening new -- sales of in Honeywell we're from a spending opportunities a administration. from militaries also the on coming we hired I organizations team see based changing of as military But into foreign foresee I

I'm So optimistic military side. on the

the fiscal Okay. in-house is line that for And affecting kind the us Could realistic drawings I frame your on from And time from a an and is know last production. of how initiating Honeywell. information give line assembly delayed you for time update Honeywell? mentioned 'XX about time status information that call transition? some still on of And you design is your

believe yes. so, I

to on what I going think I've happen based far. 'XX calendar seen all so the is transition in

able fully -- advantages to and of to able should we operational to 'XX, calendar in we take able care the can. all be be And so be

for industry milestones is part interesting should I engine? to one autonomous to time the kind along exciting investors be past, And this milestones significant of you the or of the lines with the of flight your a opportunity of in into Could story outline -- growth those for opportunity. the transform growth aware know that key Okay.

think first of right I go So terms as [ these that the of the the now, is always, FAA Yassar that of transport into in maybe phase industry, ] of there side on the air were with autonomy XXXX it. whispers things, by would Head

looking of we're or some see potential where of over kind that's next years materializing. X at we'll that X So that the

continue some to side folks where utilize one terms to some on some these military is benefit closer the able they of and side is that within the in the of capabilities In those terms of have, developments the from of communicating of And because and is military things of IS&S, there movement opportunities of putting these. are the which with we could vision aircraft. kind be we in

As as in as small we I a getting said, us. base to Those that of customers offer and line road map cockpit. the develop, steps features, includes there well incremental automations lot to the brings revenue our in them of of for we

for question-and-answer remarks. any our like I to the management back conference session. would concludes closing to over turn This

and operator, time you, you in IS&S. thank for your interest Thank and all

quarter, we good to we speak on forward next look you don't If call. day. the quarterly Have a during speaking to again our

for Thank presentation. attending concluded. today's The now has conference you

disconnect. may You now