AstroNova Q4 2022 Earnings Call Transcript

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April 14, 2022

Key Takeaways

  • Negative Sentiment: In Q4, supply chain disruptions delayed about $2 M in shipments, extended backlog from ~5 to 15–20 days, and freight costs surged by over $600 K sequentially, contributing to a 450-basis-point drop in gross margin.
  • Positive Sentiment: Total Q4 revenue rose to $29.7 M (+$0.26 M YoY) and full-year sales grew 1% to $117.5 M, driven by robust recurring revenue where supplies comprised 62% of overall revenue.
  • Positive Sentiment: The Product Identification segment achieved its 9th consecutive year of revenue growth, with the T3 OPX system delivering a record year amid booming e-commerce and sustainability trends, and two new products set to launch soon.
  • Positive Sentiment: Test & Measurement revenue surged 20% in Q4 and 3% for the full year, with segment operating margins improving to 6.8% as aerospace printer supply and service demand rebounded alongside growing 737 MAX and A320 backlogs.
  • Neutral Sentiment: AstroNova ended FY 2022 with $5.3 M in cash, a $4.5 M inventory buildup to offset parts shortages, and reported full-year net income of $6.4 M (including $4.4 M from PPP loan forgiveness).
AI Generated. May Contain Errors.
Earnings Conference Call
AstroNova Q4 2022
00:00 / 00:00

There are 7 speakers on the call.

Operator

Welcome to AstroNova's Fiscal 4th Quarter and Full Year 2022 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the conference over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead, sir.

Speaker 1

Thank you, Diana. Good morning, everyone, and thanks for joining us. Hosting this morning's call are Greg Woods, AstroNova's President and CEO and David Smith, Vice President and Chief Financial Officer. Greg will discuss the company's operating highlights. David will take you through the financials at a high level, Greg will make concluding comments and then management will be happy to take your questions.

Speaker 1

By now, you should have received a copy of the earnings release that was issued today. If you don't have a copy, please go to the Investors page of the AstroNova website, www.astronovainc.com. Please note that statements made during today's call that are not Statements of historical fact are considered forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1934. These forward looking statements are based on a number of assumptions that could involve risks and uncertainties. Accordingly, Results could differ materially except as required by law.

Speaker 1

Any forward looking statements speak only as of today, April 14, 2022. The company undertakes no obligation to update these forward looking statements. For further information regarding the forward looking statements and the factors that may cause differences, please see the Risk Factors in AstroNova's Annual Report on Form 10 ks and other filings the company makes with the Securities and Exchange Commission. On today's call, management will be referring to non GAAP financial measures. AstroNova believes that the inclusion of these measures Helps investors gain a meaningful understanding of changes in the company's cooperating results and can also help investors who wish to make comparisons between Afrinova and other companies on both a GAAP and a non GAAP basis.

Speaker 1

A reconciliation of non GAAP financial measures to their most directly comparable GAAP measures is available in today's earnings release. With that, I'll turn the call over to Greg.

Speaker 2

Thank you, Scott. Good morning, everyone, and thanks for joining us to review our fiscal Q4 and full year 2020 financial results. I want to start today by acknowledging the outstanding work of our more than 3 60 team members around the world. In what was an extremely challenging year. They worked tirelessly to keep themselves and those around them safe, while continuing to provide outstanding service to our customers.

Speaker 2

While COVID-nineteen has gradually receded into the background in certain regions Over the past several months, the economic consequences of the pandemic, including supply chain disruptions, price increases and rising transportation costs continue to have a pronounced effect on our business in the Q4. In round numbers, we estimate that we would have shipped an additional $2,000,000 in product during the quarter, but for delays in receiving the parts necessary to fill those orders. The backlog in our Supplies business, which normally is about 5 days, has recently been running in the neighborhood of 15 to 20 days, and that's despite significantly beefing up our supplies inventory in an effort to help mitigate any potential delays. We're also seeing steep increases in transportation costs. To put those increases into context, freight in charges were up more than $600,000 on a sequential basis in Q4 and more than $700,000 year over year.

Speaker 2

We are taking steps to address these cost dynamics in a number of ways, including leveraging our pricing power to mitigate the impact of inflation and the increase in transportation costs. We expect to begin realizing benefits of these actions as we move into the second half of our fiscal year. With that as a backdrop, let me briefly review our results, which included higher total revenues for the quarter full year periods despite the macroeconomic challenges. Total revenue was up approximately $260,000 for the 4th quarter to $29,700,000 as a 20% increase in test and measurement revenue more than offset a 4% decline and product identification. Total revenue for the year increased 1% to $117,500,000 Increases in supplies and service revenue were key drivers in both periods.

Speaker 2

In both the quarter and full year, we continued to deliver robust recurring revenue streams. Supplies accounted for approximately 62% of revenue for the Q4 and the full year. Hardware comprised 28% 27% of revenue for the quarter and full year periods, respectively, while our serviceother accounted for 10% of revenue for the quarter and 11% for the year. Bookings were strong at $32,900,000 in the 4th quarter, up 12.4% from the Q4 of fiscal 2021. Bookings for the fiscal 2022 came in at $128,600,000 up 13.2% year over year.

Speaker 2

Turning now to our segments. Fiscal 2022 marks the Product Identification segment's 9th consecutive year of revenue growth. We continue to be very pleased with the strong performance of our direct to package printing solutions, such as the T3 OPX, which had a record year in fiscal 2022. Exponential growth of the e commerce channel over the past 2 years plays directly into the strengths of the T3 OPX. With more and more goods being delivered to customers' doorsteps, the demand has increased for the use of secondary packaging, both to protect the goods during transport and to provide another branding opportunity for the retailer.

Speaker 2

The T3 OPX is a best in class system designed for overprinting or postprinting on a wide variety of materials and packaging substrates. By using renewable substrates, the T3 OPX also enables packaged printers to meet the customer's sustainable packaging preferences. Sustainability is a megatrend that is driving a sea change in the packaging industry. Trivium Packaging's 2021 buying green report found that 67% of consumers find recyclability of packaging important, while 73% are actually willing to pay more for eco friendly packaging. Our T3 OPX system also plays directly into another bag of trend influencing the direct to package Printing market, and that is brand experience.

Speaker 2

WestRock's Pulse Packaging survey shows that for a majority of consumers, Packaging influences product satisfaction. The survey also demonstrates the importance of key sustainability features such as environmentally friendly design and the ease of recycling. So there's a clear link between sustainability and brand experience. The 3rd packaging megatrend that is relevant to our business is supply chain agility. Manufacturers want a package design that is not only e commerce friendly, but also cost effective and rapidly adaptable to the changing regulatory environment and rapid shifting in consumer preferences.

Speaker 2

Supply chain agility also requires packaging that is digitalization ready by enabling automation, real time tracking and other benefits that boost consumer confidence. We believe that the value proposition of our direct to package printing technology creates sustainable competitive advantage for AstroNova. Looking ahead in the PI segment, we expect to release 2 new products that build on our leadership in the label printing and direct to package printing markets in the next few months. We believe that these new products will make it even easier for our customers to develop full color, high quality labels and packaging that distinguishes their brands. Stay tuned for more.

Speaker 2

Switching now to our Test and Measurement segment. With an ongoing rebound in the commercial air travel in the U. S, Europe and other regions, the segment delivered improved results. Revenue increased 20% in the 4th quarter and 3% in the full year versus the same periods of fiscal 2021. GNM's segment operating margins also were up nicely, particularly in light of the higher manufacturing and transportation costs that we've experienced.

Speaker 2

1 need only look at the daily TSA checkpoint travel numbers to see the significant improvement in passenger traffic from calendar 2021. And while domestic passenger traffic has rebounded faster than other routes, The airline industry expects to see a return to pre pandemic levels in 2023 2024. Consistent with the ramp up in air traffic, we are seeing an increase in both printer supply sales as well as repair services. At the same time, The multi year backlogs for the Boeing 737 MAX and Airbus A320 Aircraft are growing, which both pertain well for the sales of our aerospace products in the future. With that, I'll turn the call over to David.

Speaker 3

Thank you, Greg, and good morning, everybody. I'll launch right in. Our 4th quarter cost of goods sold and gross margins were adversely affected by the supply chain and inflationary headwinds that have impacted us as well as so many other industries over the past year. While total revenue was up slightly in the quarter, Gross margin in Q4 was down 450 basis points to 32.8 percent from 37.2% in the prior year quarter and gross margin was down 320 basis points from the Q3 this year. The decrease was due to both higher Cost of goods and to a lesser degree unfavorable mix.

Speaker 3

For the full year, gross margin improved 160 basis points to 37 point 2%, driven primarily by our favorable gross margin comparisons to the prior year and the 1st 9 months. In the Q4 comparisons to the prior year, we've been hit by higher labor costs, higher material costs And significantly higher freight costs, which spikes significantly in the Q4 as we're forced to pay for expedited shipping to get parts on time, sometimes even by air freighting them over the top of the same goods being shipped and the rates we're paying are a lot higher as well. In the quarterly comparisons to the Q3 of the FY 2022 year, all of the same factors were apparent. Again, the freight cost spike was dramatically higher in the Q4. Looking at revenue by type, we continue to have good Robust recurring revenue.

Speaker 3

Hardware accounted for 28% of revenue in the quarter compared to 31% in the quarter last year. Supplies accounted for 62% of revenue in the quarter versus 60% last year. Service and other revenue was 10% in the quarter, approximately flat in percentage terms, but up about a $250,000 compared to the Q4 of fiscal 2021. For the full year, Hardware accounted for 27% of total revenue compared with 29% in fiscal 2021. Replies revenue was 62% of revenue for both fiscal 2022 and fiscal 2021 and our service Business accounted for 11% of revenue in fiscal 2022 versus 9% of revenue in the prior year.

Speaker 3

As Greg suggested, this reflects the rebound in the Aerospace portion of our T and M segment. Turning to revenue by geography. Domestic revenue comprised 57.3 percent of the total for the quarter Compared to $55,900,000 in the Q4 a year ago, international revenue was 42.7% for the quarter, down from 44.1 percent a year earlier. For the full year, domestic revenue accounted for 58% For fiscal 2022 versus 60.1% in fiscal 2021, International revenue came in at 42% for the year, up from 38.9% in fiscal 2021. Revenue from Europe, Canada and Asia was up double digits, while the U.

Speaker 3

S. Revenue declined 4% for the year. Operating expenses increased 1.5% in the quarterly comparison or approximately 140 $5,000 to $10,000,000 reflecting higher R and D expenses related to the new product development that Greg mentioned, partly offset by modest reductions in the SG and A and selling and marketing areas. On a full year basis, OpEx was up 1.4 percent or $557,000 to $39,500,000 which again primarily reflected on higher R and D. This year operating expenses did increase from last year's COVID induced Sales and marketing expense cut back period, but I should note not very much.

Speaker 3

Adjusted EBITDA, which is earnings before interest, taxes, depreciation, amortization and share based comp was $773,000 for the Q4 this year $13,200,000 for the full year period this year. This compares with $3,100,000 $10,900,000 for the same periods and fiscal 2021. On the bottom line, this quarter we reported A net loss of $758,000 or 0 point one $0 a share compared to net income of $837,000 or 12 percent at $0.12 per diluted share in fiscal 2021. For full year on a GAAP basis, 2022, we generated net income of $6,400,000 or 0.88 dollars per diluted share compared with net income of $1,300,000 or $0.18 per diluted share in fiscal 2021. This year's net income included about $4,400,000 or $0.60 of Diluted earnings per share from the PPP loan forgiveness.

Speaker 3

Looking at segment results, Product Identification reported a 4th quarter Segment operating profit of $1,500,000 or 6.5 percent of revenue. This compares to 3,100,000 13.2 percent of revenue in the prior year Q4, again reflecting higher manufacturing and procurement costs. On a full year basis, Product Identification segment operating profit was $10,400,000 or 11.5 percent of revenue versus $12,900,000 or 14.3 percent in fiscal 2021. Test and Measurement segment operating profit improved in the quarter, coming in at almost $500,000 or 6.8 percent of revenue compared with at $282,000 compared with $282,000 or 4.6 percent of revenue a year earlier. The improvement underscores the accelerating level of activity within the Aerospace business that Greg noted.

Speaker 3

On a full year basis, the T and M segment had an operating profit of $3,400,000 or 12.8 percent of revenue in fiscal 2022 compared to an operating loss of $1,000,000 in fiscal 2021. As Greg noted, the order momentum exiting fiscal 2022 is strong with full year bookings in the T and M segment running 50% ahead of fiscal 2021. Turning to the balance sheet, cash and equivalents at year end totaled $5,300,000 compared to 11 point $4,000,000 at the end of fiscal 2021. The decline is directly linked to uses to support operations, In particular, inventory. Inventory is up $4,500,000 over last year, largely to counteract shortages and procurement delays, But our financial position remains very strong.

Speaker 3

Before I hand it back to Greg, I'll just mention that the new ERP system for domestic operations went live successfully at the beginning of Q4. This would be a major undertaking and accomplishment for a company of any size and particularly for us during the COVID Ara, the ERP investment has consumed substantial resources over the last 2 years, both people and capital. It's working effectively, though we've experienced some natural adjustment pains. As with any ERP technology, it will take a bit of time for us to perfectly harmonize the entire system. But certainly, the heaviest lifting is out of the way.

Speaker 3

We remain extremely enthusiastic that this will enable efficient growth as we scale the company over time. Now, I guess I'll turn the call back to you, Greg, for closing comments.

Speaker 2

Great. Thanks, David. We entered fiscal 2023 in strong shape financially and operationally. We continue to execute on our strategy to grow organically through the development of new products and through complementary M and A that enables us to build on our leadership positions. Next month, we will be presenting and hosting 1 on ones at the Sidoti MicroCap Virtual Conference.

Speaker 2

Please check the Events and Presentations section of our Investors page for the presentation time. Now, David and I will be happy to take your questions.

Operator

And we will take our first question from Samir Patel from Ascendiant Capital.

Speaker 4

Hey, good morning guys.

Speaker 3

Good morning.

Speaker 4

So I guess let's start on the inflation Keith, so I think you mentioned in your prepared remarks that you were expecting to kind of see some benefit from your actions there in the second half The fiscal year, I was curious kind of why you think it'll take that long. Is it because of you're still using some of that expedited freight? You mentioned kind of like fuel surcharges and things that some of your suppliers had put on. I guess I'm wondering why it's taking longer to pass those along to year end consumers?

Speaker 2

So, yes, we're being a little conservative on that, Sameer, but a couple of things. So, Price increases, it depends on what kind of agreements we have with our customers, right? So sometimes there's blanket agreements. So it isn't like we can raise the price today and tomorrow they pay a higher price. That is true for a number of our products, but some of them are restricted that way.

Speaker 2

So we have to wait for timeouts of those existing agreements. So that's one part of it. And the other is, there's other kind of operational things we're doing that would mitigate that. We have things that are coming by sea, but also in the meantime, we're flying them by air because sea is taking much longer than it used to. So we expect to be on mainly a sea delivery schedule for some of our heavier and larger purchases from different parts of the world Yes, by the end of Q2.

Speaker 2

So that's those kind of all plays into that.

Speaker 4

Okay. That makes sense. And I think you talked about $2,000,000 worth of orders that You didn't manage to ship in the quarter. Did you break out were those mostly product identification or test and measurement?

Speaker 2

It was kind of a mix. I didn't break out which ones were which, but it really affected both groups. And sometimes it's Yes. There were some minor things like solid state drives that we expected a month before the end of the quarter and they came in Basically a month after the end of the quarter. So, but yes, in fact, in PI too, there's you might be aware that In Finland, there's a strike, which a lot of the paper materials, they're used for TLR supplies.

Speaker 2

So we found alternate supplies for that, but there's a lot of jumping around you have to do if the supply chain gets broken. So We do have all sorts for that now, but that did impact us as well.

Speaker 5

Okay. All right. Well, I

Speaker 4

have a few more, but I'll get back in the queue and I'll ask them if no one else has anything.

Speaker 2

Okay, great.

Operator

We will now take the question from John Deysher from Cineco.

Speaker 6

Good morning. I just have a couple of quick questions. Is there any inventory left on the 737 MAX that has to be worked through before they

Speaker 2

They're actually doing that in parallel. So the production line With Boeing continues to ramp up for new aircraft and in parallel, I don't know exactly where they are on the units that they had parked As far as those deliveries, but that is a kind of a parallel function. You don't have to be wondering for the other end of the year.

Speaker 6

Right. But do you know what the inventory is of the existing 737 MAX at this point?

Speaker 2

I don't know that exactly right now. I know it's been I know they've been ahead of their schedule on those, but I don't know exactly what the remainder is.

Speaker 6

Okay. Fair enough.

Speaker 2

But in terms, as we mentioned before, those already have our printers on them, of course.

Speaker 3

Right. I was just concerned.

Speaker 6

Right. Okay. The other question is, I think a lot of Plane manufacturers Boeing and Airbus specifically rely on Russia for a fair amount of their titanium. And I'm just wondering with the situation there, whether there is any talk of titanium shortages or bottlenecks or anything like that?

Speaker 2

No, I haven't heard that. I was I'm actually in Europe right now. I was at Airbus yesterday and there was no Concern that they had and the team I was with anyway, was more of they're really talking to us about, you know, can you ramp up fast enough to meet their schedule and they have pretty aggressive, schedules. So there wasn't any discussion at all about them having issues with deliveries. It's more a matter of Can you guys, us being suppliers, deliver to us as fast as we want you to grow?

Speaker 6

Okay. All right. That's my questions. Thank you.

Operator

Sure. We will now take the next question from Tom Spiro from Spiro Capital.

Speaker 5

Tom Spiro, Spiro Capital. Good morning.

Speaker 2

Hi, Tom. Good to hear from you. Good morning.

Speaker 5

Yes, indeed. Yes, indeed. Good to be on the call. On product identification, I see that for the Sales were up $600,000 You mentioned that the T3 OPX had a record year. That's wonderful news.

Speaker 5

I wondered Given that the segment sales were modestly, I wondered how the other printers are doing or the other stuff we sell?

Speaker 2

Yes. So it's a mix. So they're all kind of moving in the right direction, but not fast enough. You've had some little bit of overlap on some of the products. We see a little bit faster movement in The tabletop, in the last couple of quarters, to be honest with you, as opposed to some of the larger ones.

Speaker 2

I think the in the Trojan line, The T3 OPX is going to really run out there ahead. We've got more people interested in that and placing multiple orders. We're also landed a number of nice OEM deals for the T3 OPX, which helps accelerate those sales as well. Yes. The one thing that's kind of still slowing down, it's a bit of a drag on the PI business in general still is the in Asia, obviously, there's a lot of issues in terms of Just getting out and doing any kind of sales activities, much less trade shows.

Speaker 2

But just, you know, during the end of the year, we got well, there was an uptick and then they Shut down and they're back up again in terms of the trade shows. So that's one of our biggest sources for leads. So that did impact kind of Good chunk of the year, but they seem to be back pretty well right now. The last several months we've done a number of shows, all with good results, good turnout. And The one thing I would say about those is that the people that are attending the shows now are really more active buyers, people who really have Strong interest as opposed to people just kind of looking around to see what's there.

Speaker 5

I see. And I note from the press release the unusually high warranty charges in TI, what's that all about?

Speaker 2

So we had a couple of issues with some of the I won't name who the suppliers are, but they had delivered poor quality product to us. And it got into the supply chain and we had to essentially go back and Retrofit, repair or replace depending on what the item was to get those units back up and running in full production mode. So it was certainly an unplanned event and it did take a fair amount of time and a bit of cost to actually address that. But Yes. The solution has been put in place and we're kind of putting that behind us.

Speaker 2

There's a few maybe, if they've done 100% of the repairs out there, but It's a known solution. We did get to the bottom line there in terms of what the root cause was. We were able to trace it back. And In some cases, we did preemptive upgrades or replacements. So the main thing we want to do is make sure our customers always have a great product experience and Yes, we kind of jumped on that right away, but it's a bit costly to do.

Speaker 5

I see. I see. And when you say that $2,000,000 in sales We're pushed from Q4 into next year. Is that hardware, I would guess or is it supplies or a little of everything? What is

Speaker 2

Yes, it's hardware and supplies. So supplies mainly on the media side. I mean, there were some kind of Something can toner bits to that. Some people want complete shipments, so you can't do one without the other. But our media group, it was just the The nice part obviously is the orders are ramping up, just a matter of keeping up with it.

Speaker 2

And even in Q4, we did have some of these, I guess, we call it the COVID quarantine lockouts where one person in a work group, for example, tests positive, And then our role internally is that anyone who has contact with that individual in the Rhode Island world, it's mainly Rhode Island, They have to stay out for 5 days then be retested before they can come back. So we had some manpower issues on the media side as well. That's why I think I mentioned my comments here, We're kind of in that 15 to 20 day range right now and normally we like to deliver our media in 5 days or less.

Speaker 5

And when you speak of supply chain difficulties, is that principally on the hardware side or the supply side or again it's both?

Speaker 2

It's actually yes, it's both. The transportation costs are killers. Some of the toughest things though that to get a quick replacement for would be ICs, right? So some of these complicated circuits, FPGAs and things like that. What we really have to do is kind of go out Sometimes the supplier doesn't have it or our main wholesaler doesn't have it.

Speaker 2

We have to go through 3rd party sources. In most cases, we're successful in getting those products, but not using the time we want. And usually, we have to pay these guys Where we end up finding the parcel, it was rather than I was looking for and we have to pay a lot to get them.

Speaker 5

I see. And lastly a while back Relatively a lot. Yes. I see. I see.

Speaker 5

And lastly, a while back you suspended the dividend. Your balance sheet is in pretty good shape now. What are your thoughts about reinstating a dividend of some size?

Speaker 2

Something comes up at the Board meetings. Matter of fact, we have a Board meeting later on today. So it's always a topic that we cover and the Board will take a look at that and decide what's the best allocation of capital. So stay tuned if there's something like that. We had a preliminary board meeting already Follow-up on today.

Speaker 2

And then if they decide to do it, it'll be up to 8 ks and we'll announce it.

Speaker 5

Okay. Well, thanks much. Good luck.

Speaker 2

All right. Thanks,

Speaker 4

Hey. So in the close of your comments, you mentioned M and A and I was wondering if That was something you were closer to than you had been at any point over the past few years?

Speaker 2

Well, Sameer, yes, with respect to we are kind of out of the ballgame because for banking reasons and whatnot. So we did restart kind of filling the funnel and engaging in conversations again really in the Q4. So I mean, what I can say is, yes, we have some things in the funnel, some look good, some we've already washed out. I mean, I think I mentioned before is that really more than 90% of the things we take a close look at, we end up not going forward for one reason or another. But the activity level is definitely up in terms of our group that does take a look at these acquisition opportunities.

Speaker 2

And I can say We have quite a few that look interesting. So ideally, we can close 1 or more of those this year.

Speaker 4

And would you be focused more on product ID or TNM?

Speaker 2

It really kind of depends which one surfaces first with the right numbers, to be honest with you. We have good opportunities with both. It's a matter of what deal can we move first and depending on the size, we may be able to do both depending What the deals are and what the timing is and size and so forth. But, yes, we can use there's things that we're looking at that would be great to add in both camps,

Speaker 4

2. Understood. That sounds fairly concrete. So I guess it sounds like it's more a matter of price or Diligence as opposed to whether or not it's an interesting acquisition?

Speaker 2

Yes, that's how we do it. We're relatively conservative about it. Yes, we want to make sure that it's accretive relatively fast and that it's a good fit and that it jills well with what we're doing. It needs to be directly in one of those 3 product groups that we currently have or kind of a close adjacency that uses similar We're not looking to go too far afield. I mean, we get things over the transom from high bankers all the time, but Yes.

Speaker 2

We're not going to go very far afield from where we're already playing.

Speaker 4

That makes sense. And then following up on the previous Caller's question about plane production. So obviously MAX production is ramping up pretty nicely as you mentioned with Airbus. That's also they have a pretty aggressive ramp schedule for the 320neo family.

Speaker 2

I

Speaker 4

know I've asked you this before, but I just want Kind of if anything has changed based on the current environment, like the orders you shipped in Q4, like how does that relate to kind of Airbus or Boeing production rates in Q4? Are you kind of ahead of them, behind them? Just trying to figure out kind of how we should think about those revenues ramping over the course of this fiscal year?

Speaker 2

Yes. So depending on the particular program and whether it's PassFE or BFE, where the airlines purchase it and then ship it to the manufacturer, It depends on which plane we're talking about. But typically, we're looking at 3 to 6 months ahead of time that we would be shipping product. This is going to go on to a plane. Obviously, I don't want to cut it too close.

Speaker 2

So that's typically the range that you look at. So probably like, on average, 3 to 4 months from if you look at the production numbers.

Speaker 4

So you lag or you lead those by 3 to 4 months?

Speaker 2

We lead it. In other words, the production numbers that come out, we would Those 3 months before probably, maybe 4 months before.

Speaker 4

Okay. So you should start to benefit pretty materially.

Speaker 2

Go ahead, sorry. I was just going to

Speaker 4

say you should start to benefit pretty materially over the next quarter or 2 from the ramp up that's going to happen kind of towards the end of this year?

Speaker 2

Yes, it looks I mean from in both camps on those two aircrafts you mentioned, we do have their production schedules and They've been bumping them up and not back. Like I said, my Airbus meeting yesterday was very aggressive. But Yes, we're a small part of the plane, but we get to enjoy that ramp up.

Speaker 4

Got it. Okay. Appreciate it. That's all I had. Thank you.

Speaker 2

Sure. Thanks.

Operator

And as there are no further questions at the moment, I will turn the call Back to Greg Woods for the closing comments.

Speaker 2

Thank you. All right. Well, thanks everyone for joining us here Good morning, and we look forward to keeping you updated on our progress. Have a good weekend. Bye now.

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