Innovative Solutions and Support Inc (ISSC) 2009 Q2 法說會逐字稿

Good morning, my name is Mindy and I will be your conference operator today. At this time I would like to welcome everyone to the Innovative Solutions and Support second-quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you, Mr. Hedrick; you may begin your call.

Good morning. This is Geoff Hedrick, the Chairman and CEO of Innovative Solutions and Support. And I would like to welcome you this morning to our conference call to discuss the second-quarter 2009 results, current business conditions and outlook.

Joining me today at the Exton headquarters are Roman Ptakowski, our President; and John Long, our CFO.

Before I begin I would like to ask John to read our Safe Harbor message. John?

Thanks, Geoff. Good morning.

I would like to remind our listeners that certain matters discussed in the conference call today, including operational and financial results for the future periods, are forward-looking statements and are subject to the risks and uncertainties that could cause actual results to differ materially, either better or worse than those discussed, including other risks and uncertainties reflected in our Company's 10-K, which is on file with the SEC.

I will turn the call back to Geoff Hedrick, CEO. Geoff?

Thanks, John. We are reporting strong results for the second quarter ending March 31 of this year. Revenues were up over 50% from a year ago, exceeding our high end guidance. And revenues have driven -- primarily by our flat panel display system shipments.

We reported net income of $1.3 million or $0.08 a share, consistent with our expectations. And in the second quarter we improved the bottom line by nearly 6 million from the comparable year earlier.

We generated strong cash flow. In aggregate, an outstanding quarter which we met or exceeded our financial goals.

As a result, we believe that the demand for both our flat panel systems and our data systems will continue to increase as a result of renewed interest in modernizing and improving safety and reliability of existing aircraft. We are pleased with the progress in the Cessna program, where the company flight testing has successfully been completed. And they expect to flight test for the Cessna STC with FAA next month. We expect revenues from Cessna to ramp up as product is rolled out into their distribution system later this year.

In a minute, Roman will talk about progress achieved penetrating the military market. Keep in mind, the Cessna opportunity is quite significant. But very little will appear in the background, due to the nature of the product, and this is true with Vantage as well.

With growth of retrofit inquiries, we feel that we are at the beginning of the initial signs of a major revitalization of the retrofit market.

I would like to turn it over to John Long to go through the financial results in more detail, before wrapping up to provide our perspective on the third quarter.

Thanks, Geoff, and thanks again for joining our call this morning.

Revenues in the second quarter were $10.5 million, up 53% from $6.8 million a year ago, and on the upper end of guidance previously provided for the quarter. Growth is being driven by steady execution to existing customer production schedules for the contracts in our backlog, as well as the important contribution of [inner]-quarter orders.

Our revenue growth in the quarter was driven by record flat panel display system revenues from a mix of solid customers in each of our three market segments. In the quarter, flat panel display system-related revenues were $8.2 million, while air data product revenues were approximately $2.3 million.

Gross margins in the second quarter were about 50%, consistent with the first-quarter margins of 50.3%. Clearly, incremental product revenues, favorable product mix, and efficiency initiatives are delivering the leverage of our fixed engineering resource and manufacturing overhead, as anticipated. Obviously, we are pleased with the margins so far this year. For this year, current production levels should enable us to sustain gross margins in the mid-to-high 40% ranges. Longer term, our goal is to continue to expand the gross margins through additional leverage of our fixed manufacturing overhead.

Total operating expenses for the quarter were $3.9 million, of which $1.6 million was for research and development. R&D was about [15]% of revenue for the quarter, which as Geoff has previously mentioned, is in line with our long-term historical average. R&D productivity has improved by -- significantly, and I would say more than 50%, through a more focused effort as well as some organizational changes and workforce reductions that we've taken over the past six months.

Selling, general and administrative spending in the quarter totaled about $2.3 million compared to $4.7 million in the year-ago quarter. Last year we did have about $1.3 million of legal expenses in our general and administrative. SG&A this quarter is again below the $2.5 million to $2.7 million quarterly run rate we initially had anticipated. SG&A is also down marginally from the first quarter. For the quarter, SG&A was about 21.5% of revenue, and it is trending toward historical averages.

Pretax income for the quarter was over $1.4 million or 13.8% of revenues. The effective tax rate for the quarter was 6.6%, primarily as a result of two factors -- the research and development tax credit being reenacted, as mentioned on the last call, as well as our ability to utilize the tax benefit of the bad debt expense related to the [cliff solution]. And we do anticipate a 6% effective tax rate at this point for the balance of our fiscal '09.

We reported second-quarter 2009 net income of $1.3 million or $0.08 per fully diluted share. Our financial position remains very strong. At March 31 we had almost $38 million in cash, shareholder equity of over $50 million -- which is about $3.01 per share -- and we are also continuing to generate substantial cash from operations through improved working capital management. For instance, our inventory is down about $3.4 million since the beginning of the fiscal year. And our days sales and accounts receivable have been improving through this quarter. And we expect -- we continue to expect to generate cash flow consistent with profitability into the future.

In light of the current economic and industry conditions -- taking the current economic and industry conditions into consideration, we anticipate generating earnings per share for the current fiscal year between $0.28 and $0.30 per share.

Now, I would like to turn the call over to Roman for some comments on the current market conditions and new product and business-development issues. Roman?

Thank you, John. The quarter's revenues were generated across a diverse customer base from each of our three market segments. In the commercial air transport market segment, we continue to ship flat panel display systems to both cargo carriers and to revenue passenger airlines.

General aviation revenues this quarter included shipments for Pilatus PC-12 applications, and additional shipments to support Cessna's flight testing and product qualification requirements.

In our military sector, the company's revenues were generated by air transport, cargo, and aerial refueling as well as homeland security applications. Included in our military segment were continued shipments of our enhanced situational awareness displays. These are used by tactical officers to aid in their mission planning and execution. This is a good example of how our innovations of flat panel displays are now being used on some of the world's most sophisticated aircraft.

During the quarter, we further increased the productivity of our engineering staff through broader utilization of software and other tools, to increase the quality and efficiency of their efforts. We were able to meet delivery schedules on time, and add new development programs to our portfolio within the limitations of our current resources.

Backlog at the end of the second quarter was $39 million, down from $46 million at December 31. The reduced backlog is net of the $3.7 million of new business booked in the quarter, and the $10.5 million of shipments. We had no cancellations or de-bookings in the quarter.

The military segment is showing increasing signs that long-delayed maintenance and upgrade programs are going to be funded. In the first three weeks of April we have booked $4 million in military orders, some of which have been three years in the making. These are good wins, but significantly, these contracts from the Department of Defense and Homeland Security represent a bridge into the world's largest aircraft market.

Our successful flat panel display system implementations on foreign military aircraft, on the Boeing B757 and the B767, and on Homeland Security projects, has solidified our reputation within the United States military and won us the credibility we need to take the next big step into their broader retrofit programs. Right now, we have over $50 million of military proposals outstanding. We are enthusiastic about our growth opportunities in the military and defense industry.

We also remain optimistic about our prospects in our other market segments. Proposals for the commercial and general aviation applications now total over $55 million. Combined, we have an outstanding potential of more than $105 million.

In the quarter, we signed a distribution agreement with Rheinland Air Service to distribute the PC-12 flat panel display system in Europe. RAS is based in Germany. They have served as a dealer, distributor and consultant for avionics installations and modifications for more than 30 years.

Along with RAS, we expect to provide an entirely new customer base with our innovative single-sided and dual-sided cockpit options. Wide-area augmentation system, WAS capability, and group reduced vertical separation minimum -- RVSM certification.

Following on weeks of ground testing, this week we announced that Cessna Aircraft Company has successfully completed its initial flight testing of the IS&S flat-panel display system being marketed by Cessna as the AdViz cockpit upgrade solution for legacy citation aircraft. AdViz provides access to navigational aids such as XM weather, navigation charts, remote radio tuning, and enhanced video, all while improving reliability and reducing weight.

The AdViz system is being certified for the Cessna Citation 500, 501, 550, 551, S550, 560, and the 650. These represent over 4500 aircraft that are in the install base.

We have also entered into discussions with a number of other major retrofitters interested in the Vantage COCKPIT/IP for their avionics upgrade programs. As we have previously said, we believe the introduction of our Vantage and Cessna cockpit display products are entering the general aviation market at an opportune time. As the sale of new aircraft slows, we believe that owners will be motivated to undertake upgrades and retrofits. An IS&S flat-panel display system is an upgrade that offers the operator a very short payback period. These systems allow operators to retrofit their aircraft with a new flat-panel display system, while leaving existing third-party avionics installed in the aircraft, minimizing the cost of the upgrade. It also provides the owner the opportunity to upgrade to new radios, transponders, GPS, or other third-generation avionics. They can select from the best-of-breed from all the major vendors, providing choice unmatched by any other supplier.

So, in spite of the difficult overall economic climate, our outlook both near and intermediate term, is to be able to generate profitable sales and positive cash flow, and increase our footprint in all three of our market segments -- commercial, general aviation, and military.

I would now like to turn the call back to Geoff. Thank you.

Thanks, Roman.

Before beginning and opening questions, I would like to summarize today's remarks.

First, we forecast that we will be cash-positive, profitable, and grow the business. We are pleased we are accomplishing these objectives in a very difficult economic environment. The current economic environment is shifting the emphasis from building new aircraft to retrofitting existing fleets, a market which has historically been the basic mission of our company. Cessna is coming on board, and our success with the military is very encouraging.

Finally, over the last few months we've instituted major changes throughout the organization to prepare for additional growth and improved operations, and generate returns on investments.

Consequently, we are prosecuting our backlog very efficiently, without any slowdown in our efforts to pursue new opportunities. As you have heard this morning, in the first half of the fiscal year we achieved both top- and bottom-line objectives while simultaneously improving our overall financial strength. Margins are moving up, and costs are moving down. This formula for success -- for the long-term.

For the balance of the year we expect to hold the line on costs so that we will continue to achieve profit objectives and build value for our shareholders. Due to the global economic conditions, it may be more difficult to sustain revenue growth of the first half of the year in the second half. In these markets, cash is king, and we intend to continue to add to our strong financial position.

On the whole, this should make for a year of an incredible turnaround over last year's financial performance and the economic headwinds we've been battling. Therefore, we expect to exit the fiscal 2009 in a very strong financial position, with momentum in all of our business segments. The only question will be the rate of that momentum, since only owners and operators know when they are finally ready to proceed with the projects in our pipeline. So we believe we are on the inside track.

Let me now provide you with expectations for 2009, reiterating John's.

Based on our current conditions, we expect revenues to be in the $37 million to $39 million range, which implies approximately a 25% growth rate over 2008, which is remarkable considering the disastrous economic conditions.

Earnings per share are expected to be in the range of 28% to 30%, significantly higher than the projections earlier this year, assuming -- and that assumes a 6% tax rate.

With that, operator, would you please open the conference call for questions?

(Operator Instructions) Steve Denault, Northland Securities.

Good morning, everyone; nice quarter.

I just wanted to make sure that I heard everything correct. So you're EPS guidance for this year is $0.28 to $0.30?

Correct.

That's correct, Steve, yes.

Okay. What was the backlog? I completely missed it.

Roman, do you want to touch on that?

The backlog at the end of the quarter was $39 million.

Okay. (multiple speakers)

And it has grown (multiple speakers) --

In the first three weeks of the new quarter, we booked an additional (multiple speakers) $4 million.

Our backlog has grown since the end of the quarter.

Okay, and then I heard $50 million military proposals outstanding. What were the general aviation proposals outstanding?

Commercial and GA combined is about $55 million, more than $55 million.

Okay. And of course I missed your comments on the Cessna STC. Did you say next month?

They are going to go into FAA flight tests, which means the FAA is going to fly for -- and they expect STC issued, I think, in June, isn't it? Yes. They're going to flight test in May, with the FAA. I think they do ground testing next week. And they will be in FAA flight test I guess later this -- the month of May. And with STC probably issued in June. It's pretty remarkable; very, very fast track.

Okay. How do you see this playing out? Obviously there's a lot of Cessnas on the ground. In terms of rolling it out to -- whether it be company-owned, retrofit locations first, or how should we think about it?

Well, the way it's -- for the Cessna program, they have 34 centers worldwide and that will be the distribution channel and installation channel for the equipment.

We just spent almost four days this week out in Wichita, training and bringing all of the field sales and installation people up to date and briefing them on the program. Cessna is preparing their people and putting a full-court press worldwide. We expect the installations to be done by these 34 centers and sponsored and promoted by Cessna.

Okay. With revenues, you would start recognizing or realizing revenues anticipated some time in the late -- in calendar '09?

Well, we've recognized revenues already, because we have been shipping and filling their pipeline to be prepared for the rollout. They already have a certain amount of customers that they are not disclosing that amount and we will honor that request. (multiple speakers) And then we will continue to ship systems.

How many systems have we shipped? Yes, we've shipped over 10 systems already, 10 aircraft systems already.

Okay.

And they are actively and aggressively not only installing on their test airplane, but on other airplanes simultaneously, which is some endorsement in itself.

Okay, and will that largely look like book-and-bill business?

Essentially, yes.

It will be book and bill.

What else it does is pretty interesting. A couple other OEMs, one in particular, went to Cessna and asked to see the airplane, and have contacted us to ask us if we can do a similar program for them.

The value proposition is really essential for especially the OEMs. In these difficult times, recognize that all of the company-owned distribution centers and [FBOs] have been selling less fuel, doing less maintenance. And they are having a very serious impact on their business. So, a retrofit business is very welcome.

But more importantly, perhaps, is the fact that it's an excellent way to maintain customer loyalty. It keeps the customer in that airplane, and allows them to upgrade it so that when they are ready to trade it in for a new airplane, the airplane itself will be worth more and more easily sold.

So it's a real value operation, not only improving the performance and situational awareness of the aircraft -- the reliability and all the factors of the equipment retrofit -- it enhances the value and salability of the aircraft when they are ready to trade in. So it's very, very good for the OEMs. And that's why we are seeing a significant interest in several major biz jet OEMs.

When does the FedEx retrofits conclude?

The what?

When do they conclude?

Yes, when will you essentially be done with that program?

As long as FedEx keeps acquiring 757s, we continue shipping. That's --

It could go on for years.

Yes, we expect it to go on for years.

OK. And I think last quarter you referenced 8 million being shippable from your backlog in the third and fourth fiscal quarters. Does that still hold true?

I don't [say that I] recall the reference. Generally speaking, we've got 75% to 80% coverage for the second half.

And that coverage, Steve, as Roman said, is right in that 75% range, 75%-plus range and growing.

Okay, perfect; thank you.

David Campbell, Thomson Davis & Company

Good morning everybody.

Good morning, David, how are you?

Good thanks, good thanks. I just wanted to ask you about cash, since cash is king these days. You had good cash flow from operations in the quarter, it looks like about -- excuse me?

How much do you need?

Well, it is very unique. I would say about $2 million of cash from operations in the quarter. But you still have more receivables than at the end of September. And given the fact that your revenues are going to be lower in the next two quarters, some of that -- will some of that receivable come down and therefore cash -- go up some more in the last two quarters?

Yes, David. As I said in my comments, we anticipate the profitability being basically equivalent to the cash flow, and the days sales did improve from the end of December to the end of March here.

So yes, again, contingent upon how the sales sequentially occurred over the next two quarters, we are going to have a cash flow impact. But net-net we are looking to drive profitability equal to cash flow here as we go through the balance of the fiscal year.

David, the receivables are in pretty good shape. (multiple speakers) everybody in the business is pushing out their payables, big time. And we haven't been severely affected. In fact we've been able (multiple speakers) to do exactly the opposite. So you know, we've managed it well, I think, and we have good customers as well.

Well, I would almost rather see the receivables going up. That means the sales are going up, you know?

Let me tell you something. In these economic conditions when everybody is talking about cutting 30%, 40%, 50% off their top line, we are happy that we've been able to grow. Think about it; we grew it 25%, in a time when virtually every company out there has significantly reduced their revenues and of course devastated their profits.

Right, but of course, you are not going to be able to do that in the next six months, according to your forecast, which is basically unchanged from -- for a long time.

By the way, it's still -- and it's about the same -- but it still represents both profitability and cash generation; and, by the way, still marginally better than last year.

Right, right. Well, not the fourth quarter. Fourth quarter last year, you had 10 million in revenues, and your forecast (multiple speakers) --

-- only got paid for half of that, remember?

Right.

If you're talking about revenues that we can recognize and we get paid for, it was a lot less than that.

Right.

Let me ask you a couple of things. In your [for $55 million] of proposals, for flight-panel applications -- commercial and business jet -- do you have any commercial applications? Any commercial proposals?

Yes, we do. Included -- the numbers I gave were $50 million, more than $50 million for military and over $55 million for commercial and general aviation.

That is commercial air transport, as in package -- as in passenger carriers.

Passenger carriers as well as commercial cargo carriers. (multiple speakers)

So those passenger carriers would be new customers?

That's correct.

Okay, let's hope that they feel the same way about -- it's better to fix the old ones than keep buying new ones or something. But that's really a big -- that would be a big plus if you got some of those passenger companies.

That's correct.

No, there's no question about that.

Well, I think basically -- I think that basically covers my questions right away. I will let somebody else have it. Thank you very much.

(Operator Instructions) Michael Ciarmoli, Boenning & Scattergood.

Hey, guys, nice quarter. Thanks for taking my call. Just, in the quarter and in the backlog, was there any specific customer concentration, notable customers, that accounted for more than 10% of revenues or higher, like American or FedEx?

American Air, as you will see disclosed -- and we disclose in every 10-Q -- they were [some] significant percent for the quarter, and that will be in the 10-Q. I won't get into the percentages right now. And I think -- yes, they were basically the primary -- American Air.

Okay. And what about as a percentage of backlog? Are they still -- so it sounds like you've got about 16 million of that backlog is going to be recognized near-term, and the balance, 23 million or so, is going to be longer-term. I presume that is related to American and FedEx?

It is related to them and others, yes.

We have some military programs that go out (multiple speakers) --

-- that also stretch out.

Yes.

Okay, so (multiple speakers) --

-- movement, and as you can imagine, when you get a program the size of American Airlines -- currently it is at over 200 aircraft -- a very large program, it always represents a significant portion of your backlog. Because, I mean, the one order was larger than [all] revenues previous year.

Right. So I mean --

And what happened is, and that's probably going to move out -- we're going to have to watch that. That is a good revenue stream for the next couple of years. So we see that as being a very positive base. But all of the new revenues are starting to fill up that backlog, and the percentage of American will rapidly become a smaller and smaller percentage.

Were you saying new revenues? I mean, I am looking at -- backlog is down 20% sequentially, 47% year-over-year. You know, you're talking -- growth is probably going to slow the back half of this year, and you are talking about the revitalization of the retrofit market. Where is that confidence coming from? I know you got the proposals out there. Can we get an update? I think on the last quarter you talked about the 767 and 757 proposals being out there. Has there been any progress? Are you getting closer to closing those deals?

Well, a couple of things. First of all, when you go to the previous year-ago backlog, the year-ago backlog included things like Eclipse and about $7 million of other backlog that moves so slowly that we un-booked it. So there was -- if you looked at the net backlog, it wasn't very significant. We had to strip out almost $15 million of that. That's number one.

Where we see real strength is, obviously, in Cessna and the proposals that we have out. Furthermore, the military we are seeing with this $50 million worth of potential in military programs, we see that as a very strong -- going forward.

So all in all, we see a very strong future. Just as an example, we said we booked over 4 million in the first three weeks of this quarter.

On Cessna. Now, how are they going to order -- are they going to order units upfront to kind of keep their main distribution facility, keep product on hand and inventory on hand? Or is this going to be as orders come in from the centers, you will kind of ship them out?

Yes, they've already ordered -- [had our 15 ship sets] and there are more on order. And they will be inventorying them. And remember, they have 34 centers working the problem. So we will get releases in groups of five or 10 at a time. I think it's a contractual obligation. 10 at a time.

So we will see -- we expect to see, as soon as the FCC comes, for the releases, but they have already released a significant number that we've already -- in most cases we've actually delivered.

So, yes, the answer to your question -- they are stocking them. They are supporting their field. And they are doing it in anticipation of sales.

Okay. And then just, any update -- I mean the proposals, you guys talked about the proposals last quarter on the 757 and 767. Are they progressing, moving forward? What are the sticking points if they are still hanging out there and not getting closed?

Well, I think there's no sticking points, per se, but I think everybody is moving cautiously. They are continuing in evaluation, and they are actually having [delayed] the schedules significantly. They always planned on making the decision over about a seven-month or eight-month period, so actually we don't see a delay, but it is not moving quickly. I think they continue to carefully watch the economy, like all of us, and try to determine what is going to happen.

But, the 757, 767, is a uniquely good value proposition. These are aircraft that provide excellent fuel economies, have plenty of capacity, and they cost a fraction of what any comparable-sized aircraft [new gas].

So there is a real demand and a real interest both from the people, passenger carriers and the package carriers.

So, then, on the new proposals that you are kind of suggesting you've got today, we don't expect to hear anything for -- the decision process could take 6 to 8 months?

We expect a number of these to close favorably during the second half of the year.

Okay.

And as they do, we will certainly (multiple speakers) --

To be clear, some of the 50 -- the outstanding bids are bids that have been there for some period of time. And we hope that they will close sooner than later. But on an average, this kind of thing takes probably upwards to six months for it, whether it is military or commercial.

Okay. And then last question -- you mentioned cash is king; can you just walk me through the rationale for the one-time dividend again? Is that going to be something you do with the cash going forward, or what are the plans for the cash?

Well, the rationale for the one-time dividend as we discussed before, we had hoped that -- first of all we've got it pegged out -- successful litigation. Nobody believed that would be successful, but we are pleased that it was. And we were able to provide our stockholders with some cash at a period of time where the alternative might have been to sell our stock to support a -- margin calls. And we found out in a number of cases that that was actually a successful play.

Cash is king, and it is king as long as you can continue to generate it. A significant amount of cash, like our annual revenue in cash, is very important. So that was the rationale. I think it was successful, and we continue to generate more cash.

All right, fair enough. Thanks, guys.

David Campbell, Thomson Davis & Company.

Yes, hi, I just wanted some updates on the status of the 747 applications, the Pilatus program and Marshall Aerospace.

Marshall Aerospace, we've virtually delivered everything.

Correct.

And that's going well.

The Pilatus continues to grow. A program that at one point was not considered a terrific program is proving to be very, very profitable and generating a lot of revenue, and we continue to get more orders. And, internally, we make more and more special features available for the Pilatus aircraft.

The third was --

747.

(multiple speakers) program. 747 program, we continue to have worked on the EIDS, but we -- because that is a relatively small fleet, we don't see that as a major generator.

Okay. So the STC has not been attained for the 747?

Not yet, no. We are not applying for the STC. It is through another party, so our control over that process is somewhat compromised.

Right. But the Marshall Aerospace, you say, has all been delivered. But I mean, that was supposed to be significant. They were supposed to be doing significant work in Europe for [there's a little bit] the C-130s and the DC -- KC-10s and stuff like that. Is that just sort of (multiple speakers) --?

-- working on C-130s and L-1011 TriStars. We have delivered the product, as Jeff said. They are now going through their shakedown cruises with the aircraft and so on. Marshall's intent, and I would speak to only to a point, but Marshall's intent is to take that same application and make it available to other European operators. And we are there to support them with that. (multiple speakers) KC-10 is --

They haven't finished their work on it.

Haven't finished their work, right. And KC-10 is the Boeing Royal Netherlands Air Force application. And that has gone very successful. We keep working with them, we've expanded the applications of what they are doing. And we hope, as we said, to use that success to help us with the United States military and other KC-10 operators.

Right, right, right, right. So I guess in terms of cash from -- for fiscal 2009, we should think in terms of maybe another couple of million besides the 37.5 million you ended the year with -- ended this quarter with. That would bring you to around 39.5 million by the end of the year?

That sounds correct, David. I am comfortable with that, yes.

That sounds about right.

Okay. Alright. Well, thanks; good luck on your new business, and I can't wait for some announcements on it.

Right. Thank you very much, David.

Thank you David.

(Operator Instructions)

That's it. Okay, there are no more questions. Are you there, Operator?

Yes. At this time, there are no more questions.

Yes, okay.

And I would just like to summarize what went on today. Today, we were fortunate to report not only growth but profitable and cash-generating growth. We are pleased with the performance. It continues to be a very uncertain economic condition, as all of our comparable companies are reporting.

But we make the best out of a difficult situation. And that continues to improve as we have gone through this quarter. We expect to have a reasonable growth this year, and we will have a number of products and positions for the future.

So we have an optimism for the future, and some concern about the uncertainty of the economy, but we are making the best of a difficult situation.

Thank you for joining us today. Bye-bye.

Thank you. This concludes today's Innovative Solutions and Support second-quarter earnings conference call. You may now disconnect your lines.