Innovative Solutions and Support Inc (ISSC) 2025 Q3 法說會逐字稿

Good day, and welcome to the Innovative Solutions & Support third-quarter fiscal 2025 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. Please go ahead.

大家好，歡迎參加創新解決方案與支援 2025 財年第三季財務業績電話會議。（操作員指示）請注意，此事件正在被記錄。現在我想將會議交給保羅·巴托萊 (Paul Bartolai)。請繼續。

Thank you. Welcome to Innovative Solutions & Support's third-quarter 2025 results conference call. Leading the call today are our CEO, Shahram Askarpour; and CFO, Jeff DiGiovanni. This morning, we issued a press release detailing our third-quarter 2025 operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at www.innovative-ss.com.

謝謝。歡迎參加創新解決方案與支援 2025 年第三季業績電話會議。今天主持電話會議的是我們的執行長 Shahram Askarpour 和財務長 Jeff DiGiovanni。今天上午，我們發布了一份新聞稿，詳細介紹了我們 2025 年第三季的營運和財務表現。本新聞稿可在本公司網站 www.innovative-ss.com 的投資者關係部分公開查閱。

I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest reports filed with the SEC.

我想提醒您，管理層在今天的電話會議上的評論和回答可能包括前瞻性陳述，這些陳述本質上是不確定的，並且不受公司控制。儘管這些前瞻性陳述是基於管理階層目前的預期和信念，但實際結果可能存在重大差異。有關可能導致實際結果不同的一些因素的討論，請參閱我們向美國證券交易委員會提交的最新報告中的風險因素部分。

Additionally, please note that you can find reconciliations of all historical non-GAAP financial measures mentioned on this call in the press release issued this morning. Today's call will begin with prepared remarks from Shahram, who will provide a review of our recent business performance and strategic outlook, followed by a financial update from Jeff. At the conclusion of these prepared remarks, we will open the line for your questions.

此外，請注意，您可以在今天早上發布的新聞稿中找到本次電話會議中提到的所有歷史非 GAAP 財務指標的對帳表。今天的電話會議將以 Shahram 的準備好的發言開始，他將回顧我們最近的業務表現和戰略展望，然後由 Jeff 提供財務更新。在這些準備好的發言結束後，我們將開放式熱線回答您的問題。

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

說完這些，我將把電話轉給 Shahram。

Thank you, Paul, and good morning to everyone joining us on the call today. Let's begin with a high-level overview of our third-quarter financial performance. During the third quarter, we delivered revenue growth of 105% compared to the third-quarter 2024, driven by continued momentum from new military programs, including significant growth from our F-16 program. As Jeff will discuss in more detail, our results did benefit from a pull forward of F-16 revenues ahead of the upcoming integration into our Exton plant.

謝謝你，保羅，今天參加我們電話會議的各位早安。讓我們先概述一下我們的第三季財務業績。在第三季度，我們的收入與 2024 年第三季度相比增長了 105%，這得益於新軍事計劃的持續增長，包括我們的 F-16 計劃的顯著增長。正如 Jeff 將更詳細地討論的那樣，我們的業績確實受益於 F-16 收入在即將併入我們的埃克斯頓工廠之前的提前增長。

Our business momentum remains strong with a backlog of approximately $72 million as of June 30, 2025. Our adjusted EBITDA increased only by 43% from last year as our strong revenue growth was impacted by lower-than-anticipated gross margins received from Honeywell on the F-16 product line due to additional costs associated with building safety stock prior to transition.

我們的業務動能依然強勁，截至 2025 年 6 月 30 日，積壓訂單約 7,200 萬美元。我們的調整後 EBITDA 僅比去年增長了 43%，因為我們強勁的收入增長受到了霍尼韋爾 F-16 產品線毛利率低於預期的影響，而這又是由於在過渡之前建立安全庫存所產生的額外成本。

As we have discussed, we fully expect our integration efforts and investments for growth to create some near-term volatility in our margin results. However, the actions we have taken are important strategic steps in advancing our long-term growth strategy. And once the transition is completed and cost efficiencies are realized, we expect improved margins in latter quarters of fiscal 2026.

正如我們所討論的，我們完全預期我們的整合努力和成長投資會在短期內為我們的利潤率帶來一些波動。然而，我們所採取的行動是推動長期成長策略的重要策略步驟。一旦轉型完成並實現成本效率，我們預計 2026 財年後幾季的利潤率將會提高。

We were pleased with our third-quarter results, and we are encouraged by the continued progress on the expansion of our Exton facility and the integration of our acquired lines from Honeywell. We are excited by the long-term opportunities that will result from this investment. We continue to make progress on our key strategic objectives during the quarter, and we are confident these measures have strengthened our foundation for future growth.

我們對第三季的業績感到滿意，我們對埃克斯頓工廠擴建和從霍尼韋爾收購的生產線的整合取得的持續進展感到鼓舞。我們對這項投資帶來的長期機會感到非常興奮。本季度，我們繼續在關鍵策略目標上取得進展，我們相信這些措施為我們未來的成長奠定了基礎。

To that end, I would like to shift the discussion to an update on our progress on the IS&S Next, our long-term value creation strategy. As a quick refresher, our strategy centers on a combination of targeted commercial growth within high-value markets, improving operating leverage and a disciplined returns-driven approach to capital allocation. I would like to take a moment to highlight just a few of our key achievements during the quarter.

為此，我想將討論轉向關於我們的長期價值創造策略 IS&S Next 的進展。簡單回顧一下，我們的策略以高價值市場中的目標商業成長、提高營運槓桿以及嚴格的回報驅動的資本配置方法為中心。我想花點時間強調我們本季取得的一些主要成就。

Early in the quarter, we received a new engineering development and production contract for a derivative of a radio management unit we acquired as part of our first acquisition under our long-term growth strategy. We have made further progress on the expansion of our Exton facility with construction having wrapped up during the third quarter. We expect the fit-out to be completed in early fall, at which time we can begin to take advantage of our expanded manufacturing capacity, which will increase by more than threefold.

本季度初，我們收到了一份新的工程開發和生產合同，該合約是作為我們長期成長策略下首次收購的一部分而收購的無線電管理部門的衍生產品。我們在埃克斯頓工廠的擴建方面取得了進一步進展，工程已於第三季完成。我們預計裝修工作將在初秋完成，屆時我們就可以開始利用擴大的生產能力，生產能力將增加三倍以上。

As a reminder, we manufacture 100% of our products in our Exton facility, and this expansion is the key element of our long-term strategy to achieve revenues exceeding $250 million over the next few years. With the ongoing trade uncertainty and priorities of the current administration, we should be in an enviable position to give the likely significant push for reshoring of manufacturing and an America-first mentality.

提醒一下，我們 100% 的產品都是在艾克斯頓工廠生產的，這次擴建是我們實現未來幾年收入超過 2.5 億美元的長期策略的關鍵要素。鑑於持續存在的貿易不確定性和現任政府的優先事項，我們應該處於令人羨慕的地位，為製造業回流和美國​​優先的心態提供可能的重要推動力。

Additionally, as it relates to tariffs, we are not directly impacted by the uncertain tariff environment, given our US-based manufacturing and vertically integrated strategy. However, we could see some impact from our foreign-based customers that are reducing their production forecasts due to potential tariff implications. Meanwhile, we don't expect a meaningful impact on our results and view this to be a short-term measure while political negotiations are at play.

此外，就關稅而言，鑑於我們在美國製造和垂直整合策略，我們不會直接受到不確定的關稅環境的影響。然而，我們可能會看到一些來自國外客戶的影響，由於潛在的關稅影響，他們正在降低產量預測。同時，我們預計這不會對我們的業績產生重大影響，並認為這只是政治談判期間的短期措施。

During the third quarter, we continued with the integration of our most recent acquisition from Honeywell. As we have discussed in the recent quarters, much of the spending and integration activities are being done ahead of the expected growth from these platforms. We anticipate the integration to be completed during our first half of fiscal 2026, and we are excited by the opportunities from this acquisition.

第三季度，我們繼續整合最近從霍尼韋爾收購的業務。正如我們在最近幾季所討論的那樣，大部分的支出和整合活動都是在這些平台預期成長之前完成。我們預計整合將在 2026 財年上半年完成，我們對此次收購帶來的機會感到非常興奮。

Importantly, we were pleased with the recent closing of our new credit facility, which Jeff will cover shortly. Deploying capital for strategic acquisitions remains a key priority, and our new credit facility extended by Chase Bank provides us with expanded access to credit and more flexibility to accelerate our long-term growth plan. Although our most recent acquisitions have been focused on complementary product lines from large avionics suppliers, we continue to evaluate opportunities to acquire smaller avionics manufacturers where we anticipate synergies will be realized by incorporating their outsourced production in our facility.

重要的是，我們對最近完成的新信貸安排感到高興，傑夫很快就會談到這一點。為策略性收購部署資本仍然是我們的首要任務，大通銀行為我們提供了更多的信貸管道和更大的靈活性，以加速我們的長期成長計畫。雖然我們最近的收購主要集中在大型航空電子設備供應商的互補產品線，但我們仍在繼續評估收購小型航空電子設備製造商的機會，我們預計將其外包生產納入我們的工廠將實現協同效應。

Additionally, we are also evaluating opportunities in adjacent markets that are more developmental in nature but offer unique long-term growth opportunities. Despite recent margin pressure due to impact of the F-16 safety stock, we expect EBITDA and profit margins to grow steadily. We are further establishing our company as a premier systems integrator in flight navigation and precision instrumentation with cutting-edge technology. Our vertically integrated US-based production provides a competitive advantage, fostering relationships with key aircraft manufacturers, operators and defense organizations.

此外，我們也正在評估鄰近市場中更具發展性質但提供獨特長期成長機會的機會。儘管近期由於F-16安全庫存的影響導致利潤率承壓，但我們預期EBITDA和利潤率將穩定成長。我們正在進一步將公司打造成為擁有尖端技術的飛行導航和精密儀器領域的頂級系統整合商。我們在美國垂直整合的生產提供了競爭優勢，促進了與主要飛機製造商、營運商和國防組織的關係。

In summary, we remain focused on the long term, so we are encouraged by the progress we have made on our strategic priorities and remain committed to taking strategic steps to further our growth objectives. We remain on track to deliver our goal to generate both revenue and EBITDA growth of greater than 30% when compared to fiscal year 2024. We are excited by everything we have accomplished and are confident we are strategically positioned to continue generating profitable growth for the future to come.

總而言之，我們仍然著眼於長遠發展，因此我們對策略重點所取得的進展感到鼓舞，並將繼續致力於採取策略步驟來進一步實現我們的成長目標。我們仍有望實現我們的目標，即與 2024 財年相比，營收和 EBITDA 成長率均超過 30%。我們對所取得的一切成就感到興奮，並有信心我們已做好策略準備，能夠在未來繼續實現獲利成長。

With that, I'll turn the call over to Jeff for his prepared remarks.

說完這些，我會把電話轉給傑夫，讓他發表準備好的演講。

Thank you, Shahram, and good morning to all those joining us. Today, I will provide a high-level overview of our third-quarter performance, including a discussion of our working capital, balance sheet, and liquidity profile at quarter end. We generated net revenues of $24.1 million in the third quarter, more than double our revenues during the third quarter last year. The increase was driven largely by the contribution from the recently acquired F-16 product line from Honeywell, which contributed $12.6 million.

謝謝你，Shahram，向所有參加我們活動的人問好。今天，我將對我們第三季的業績進行高階概述，包括討論我們的營運資金、資產負債表和季末的流動性狀況。我們在第三季實現了 2,410 萬美元的淨收入，是去年第三季收入的兩倍多。這一成長主要得益於霍尼韋爾最近收購的 F-16 產品線的貢獻，該產品線貢獻了 1,260 萬美元。

Our revenues related to the F-16 products once again included some revenues that were pulled forward as Honeywell built safety stock ahead of the shift in the production to our Exton facility. As a result, we expect a temporary dip in revenues related to the F-16 product line during the fourth quarter as we complete the transition before revenues begin to ramp back up in fiscal 2026.

我們與 F-16 產品相關的收入再次包括一些提前的收入，因為霍尼韋爾在生產轉移到我們的艾克斯頓工廠之前建立了安全庫存。因此，我們預計第四季度與 F-16 產品線相關的收入將暫時下降，因為我們將完成過渡，然後在 2026 財年收入開始回升。

Product sales were $16.6 million during the third quarter, up significantly from $5.1 million last year, driven primarily by the recently acquired military product line. Service revenue was $7.5 million, owing largely to customer service sales from the product lines acquired from Honeywell, including $1 million associated with the F-16 program. Gross profit was $8.6 million during the third quarter, up 37% from $6.3 million in the same period last year, driven by the strong revenue growth, partially offset by lower gross margins on the acquired F-16 product line from Honeywell as well as higher depreciation expense resulting from the Honeywell acquisitions, duplicate costs in support of the migration of the recent Honeywell acquisition and continued investments in growth initiatives, as Shahram discussed.

第三季產品銷售額為 1,660 萬美元，較去年的 510 萬美元大幅成長，主要得益於最近收購的軍用產品線。服務收入為 750 萬美元，主要來自從霍尼韋爾收購的產品線的客戶服務銷售，其中包括與 F-16 項目相關的 100 萬美元。第三季毛利為 860 萬美元，較去年同期的 630 萬美元增長 37%，這得益於強勁的收入增長，但部分抵消了從霍尼韋爾收購的 F-16 產品線的毛利率下降以及霍尼韋爾收購導致的折舊費用增加、支持最近霍尼韋爾收購遷移的重複成本以及對增長計劃的持續投資的那樣。

Our third quarter gross margin was 35.6%, down from 53.4% in the same period last year. The decline from last year was driven by lower-than-anticipated gross margins received from Honeywell. As we have discussed, this is a gross margin of less than 25% in the F-16 revenues, which impacted our overall margins. As we have stated in recent quarters, the potential exists for our gross margins to be lumpy in the near term as we continue to integrate the Honeywell product lines into our facilities. This can be due to a variety of factors, including duplicate costs as we prepare to integrate these products, the hiring and training of engineers and staff to support these products, and as we saw this quarter, the cost to build stock to ensure a smooth transition.

我們第三季的毛利率為35.6%，低於去年同期的53.4%。去年同期的下滑是由於霍尼韋爾的毛利率低於預期。正如我們所討論的，F-16 收入的毛利率不到 25%，這影響了我們的整體利潤率。正如我們在最近幾季所指出的，隨著我們繼續將霍尼韋爾產品線整合到我們的工廠中，我們的毛利率在短期內可能會出現波動。這可能歸因於多種因素，包括我們準備整合這些產品時的重複成本、為支持這些產品而僱用和培訓工程師和員工的成本，以及我們在本季度看到的為確保平穩過渡而建立庫存的成本。

Additionally, as we discussed previously as it relates to the product mix, generally, military sales carry a lower average gross margin versus commercial contracts. However, importantly, there is minimal operating expenses associated with these contracts, so the incremental EBITDA margins are strong. Similar to last quarter, this dynamic was fully evident in our third quarter results as we saw a very strong operating expense leverage in the quarter.

此外，正如我們之前討論的產品組合一樣，一般來說，軍事銷售的平均毛利率低於商業合約。然而，重要的是，與這些合約相關的營運費用很少，因此增量 EBITDA 利潤率很高。與上一季類似，這一動態在我們第三季的業績中充分體現，因為我們看到本季的營運費用槓桿非常強勁。

Operating expense during the quarter of 2025 was $5.1 million, an increase from $4.2 million last year despite the significant growth in revenue. The increase in operating expense was driven by approximately $200,000 of incremental depreciation and amortization, $600,000 in employee-related costs and $100,000 of acquisition and onetime expenses. Operating expenses represented 21% of revenue during the third quarter as a significant decline from 36.1% in the third quarter of last year, highlighting opportunity for improved operating leverage as the business scales.

2025 年季度的營運費用為 510 萬美元，儘管收入大幅增長，但仍比去年的 420 萬美元有所增加。營運費用的增加是由於約 20 萬美元的增量折舊和攤提、60 萬美元的員工相關成本以及 10 萬美元的收購和一次性費用。第三季營運費用佔營收的 21%，較去年第三季的 36.1% 大幅下降，凸顯隨著業務規模擴大，營運槓桿有機會得到改善。

Net income for the quarter was $2.4 million as compared to $1.6 million last year. GAAP earnings per share of $0.14 increased from $0.09. EBITDA was $4.3 million during the third quarter, up from $2.7 million or an increase of 62.7% largely due to our revenue growth and operating expense leverage, partially offset by the lower gross margins.

本季淨收入為 240 萬美元，去年同期為 160 萬美元。每股收益 0.14 美元（以美國通用會計準則計算），高於 0.09 美元。第三季息稅折舊攤銷前利潤 (EBITDA) 為 430 萬美元，高於 270 萬美元，增幅達 62.7%，主要得益於收入成長和營運費用槓桿，但毛利率下降部分抵消了這一增長。

Moving on to backlog. New orders in the third-quarter of fiscal 2025 were $17 million and backlog as of June 30 was $72 million. The backlog includes only purchase orders in hand and excludes additional orders from companies' OEM customers under long-term programs, including Pilatus PC-24, Textron King Air, Boeing T-7 Red Hawk, the Boeing KC-46A and the F-16 with Lockheed Martin. We expect these programs to remain in production for several years and anticipate they will continue to generate future sales. Further, due to their nature, the customer service lines do not typically enter backlog.

繼續處理積壓事宜。2025財年第三季的新訂單為1,700萬美元，截至6月30日的積壓訂單為7,200萬美元。積壓訂單僅包括手頭上的採購訂單，不包括公司 OEM 客戶根據長期計劃的額外訂單，包括皮拉圖斯 PC-24、德事隆空中國王、波音 T-7 紅鷹、波音 KC-46A 和洛克希德馬丁公司的 F-16。我們預計這些項目將持續生產數年，並預計它們將繼續產生未來的銷售。此外，由於其性質，客戶服務熱線通常不會積壓。

Now turning to cash flow. During the nine months ended June 30, 2025, cash flow from operations was $10.3 million compared to $5.4 million in the year ago comparable period due to our solid operating results. Capital expenditures during the nine months ended June 30 were $5.5 million versus $500,000 in the year ago period.

現在轉向現金流。截至 2025 年 6 月 30 日的九個月期間，由於我們穩健的經營業績，經營現金流為 1,030 萬美元，而去年同期為 540 萬美元。截至 6 月 30 日的九個月的資本支出為 550 萬美元，而去年同期為 50 萬美元。

The increase in our capital expenditures related primarily to the cash outlays for the expansion of our Exton facility. Despite the increase in spend of over $5 million when compared to the nine months last year, we were still able to generate free cash flow of $4.8 million during the nine months ended June 30, 2025, which is in line with our previous year.

我們的資本支出的增加主要與擴建埃克斯頓工廠的現金支出有關。儘管與去年同期相比支出增加了 500 多萬美元，但在截至 2025 年 6 月 30 日的九個月內，我們仍然能夠產生 480 萬美元的自由現金流，這與上一年持平。

As of June 30, 2025, we had total long-term debt of $23.3 million and cash and cash equivalents of $600,000, resulting in net debt of $22.7 million. Net debt was down $3.5 million from the end of the second-quarter 2025 despite elevated capital expenditures related to the Exton expansion project, reflecting the strong operating results and disciplined financial management.

截至 2025 年 6 月 30 日，我們的長期債務總額為 2,330 萬美元，現金及現金等價物為 60 萬美元，淨債務為 2,270 萬美元。儘管與埃克斯頓擴建項目相關的資本支出增加，但淨債務較 2025 年第二季末減少了 350 萬美元，這反映了強勁的經營業績和嚴格的財務管理。

As of June 30, 2025, IS&S had total cash and availability under its line of credit of approximately $12.3 million. Our net leverage at the end of the quarter was 1.1 times. As Shahram mentioned, on July 18, 2025, we entered in a new five-Year $100 million committed credit agreement with a lending syndicate led and arranged by JPMorgan Chase.

截至 2025 年 6 月 30 日，IS&S 的信用額度下的現金和可用餘額約為 1,230 萬美元。本季末我們的淨槓桿率為1.1倍。正如 Shahram 所提到的，2025 年 7 月 18 日，我們與摩根大通牽頭和安排的貸款集團簽訂了一份新的五年期 1 億美元承諾信貸協議。

The credit agreement replaces our existing $35 million line of credit. The new facility provides an additional $65 million in expanded liquidity and an option, subject to certain conditions, to request up to $25 million in additional loan commitments under an accordion feature in the credit agreement. This improved flexibility better enables us to execute on our long-term growth strategy.

該信貸協議取代了我們現有的 3,500 萬美元信貸額度。新的貸款機制提供了額外的 6500 萬美元擴大流動性，並可選擇在一定條件下，根據信貸協議中的條款要求最多 2500 萬美元的額外貸款承諾。這種增強的靈活性使我們能夠更好地執行我們的長期成長策略。

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

我們的準備好的演講到此結束。接線員，我們現在準備好進行電話問答部分。

(Operator Instructions) Jeff Van Sinderen, B. Riley Securities.

（操作員指示）Jeff Van Sinderen，B. Riley 證券。

I just wanted to touch a little bit on the gross margin outlook. Given the F-16 impact, what do you think is a normalized gross margin rate for you?

我只是想稍微談談毛利率前景。考慮到 F-16 的影響，您認為您的正常毛利率是多少？

This is Jeff. So when we look ahead, our expectation is right in the mid-40s what we said before, depending on the mix of our products. As you look at military, it's lighter gross margins so it really depends on the mix, but we're gauging in the mid-40s.

這是傑夫。因此，當我們展望未來時，我們的預期是在 40 年代中期，正如我們之前所說的，這取決於我們的產品組合。從軍事角度來看，它的毛利率較低，因此實際上取決於產品組合，但我們預計該利率在 40% 左右。

Okay. And then I realize you have a new facility. Just wondering what the targeted net leverage ratio you're comfortable with at this point.

好的。然後我意識到你們有了一個新的設施。只是想知道您目前對目標淨槓桿率的滿意度是多少。

Overall, depending on the size of the acquisition, we're comfortable around a net leverage ratio around three.

總體而言，根據收購規模，我們對淨槓桿率在 3 左右感到滿意。

Okay. And then as a follow-up to that, can you speak a little bit more about your acquisition strategy? Do you have a pipeline? How are you approaching targets?

好的。那麼作為後續問題，您能否再多談談您的收購策略？你有管道嗎？您如何實現目標？

Are they typically more auction situations? Are they mostly Honeywell? Just any other color on that would be helpful.

它們通常是拍賣情況嗎？他們大多都是霍尼韋爾嗎？任何其他顏色都會有幫助。

So in terms of -- yeah, we do have a pipeline. Some of them are acquisition that we're looking at potentially doing from Honeywell. Those are typically auctions.

所以就這一點而言——是的，我們確實有一條管道。其中一些是我們正在考慮從霍尼韋爾收購的。這些通常是拍賣。

We also were looking at a number of smaller avionics companies that we're engaged in dialogue with. And we're looking at probably doing some acquisitions of that nature if we can agree on a price that suits IS&S.

我們也正在關註一些正在與我們進行對話的小型航空電子公司。如果我們能夠就適合 IS&S 的價格達成一致，我們可能會考慮進行一些此類收購。

(Operator Instructions) Gowshi Sri, Singular Research.

（操作員指示）Gowshi Sri，Singular Research。

Can you hear me?

你聽得到我嗎？

Yes.

是的。

Yes, (inaudible).

是的，（聽不清楚）。

My first question is you mentioned the F-16 safety stock deliveries pulled forward into Q3 will reduce revenues from the line for the next two quarters. Can you help us frame the magnitude of that dip and whether there are other programs in the backlog that are positioned to compensate for it?

我的第一個問題是，您提到 F-16 安全庫存交付提前到第三季將會減少未來兩季的生產線收入。您能否幫我們估算一下下降的幅度，以及是否有其他積壓項目可以彌補這一下降？

Also, the Q3 product sales came in sequentially above Q2. Was it entirely due to the pull forward or were there other program wins or price mix factors that lifted the product revenue?

此外，第三季產品銷售額連續高於第二季。這是否完全是由於提前推出，還是有其他計劃的勝利或價格組合因素提升了產品收入？

Yeah, so I could take a little bit of that. So sequentially, a lot of it was through the F-16 and the pull forward. When we look ahead, and as the equipment is getting transitioned to IS&S currently right now in our factory, we're expecting nominal F-16 revenue for Q4 and Q1 potentially because the equipment has got to be set up, it's got to be certified, it's got to be calibrated. So we're working through that process as we speak.

是的，所以我可以接受一點。因此，按順序來說，大部分都是透過 F-16 和向前拉動來完成的。展望未來，隨著我們工廠中的設備目前正在向 IS&S 過渡，我們預計第四季度和第一季的 F-16 收入將很低，這可能是因為設備必須進行設定、必須經過認證、必須進行校準。我們現在正在進行這個過程。

Okay. And my second question is, I know the management has emphasized EBITDA margins as the key profitability metric. But given the Q3 gross margins, could you provide some context as to how you're thinking about the trajectory in gross margins over the next few quarters?

好的。我的第二個問題是，我知道管理階層強調 EBITDA 利潤率是關鍵的獲利指標。但考慮到第三季的毛利率，您能否提供一些背景信息，說明您對未來幾季毛利率走勢的看法？

Are there any structural or short-term factors that could -- that we should watch out that might lead to further compression from here? Or do you believe that major headwinds have now played out? Any color on how quickly operational efficiencies or mix changes might stabilize the margins would be helpful in modeling. Thank you.

是否存在一些結構性或短期因素需要我們注意，以防進一步的壓縮？還是您認為重大阻力已經顯現？任何有關營運效率或組合變化如何快速穩定利潤率的顏色都將有助於建模。謝謝。

Sure. So when we look at our gross margins, that's why we've been guiding conservatively throughout the year due to the lumpiness of the product mix, more importantly, the F-16. So when we look forward, we're gauging in that 45% range for gross margins. That's kind of the target we're focused on.

當然。因此，當我們查看我們的毛利率時，這就是為什麼我們全年都採取保守的指導，因為產品組合不均勻，更重要的是 F-16。因此，當我們展望未來時，我們預計毛利率將在 45% 的範圍內。這就是我們關注的目標。

Okay. Are you seeing any changes in defense budgets that might impact backlog execution over the next 6 to 12 months?

好的。您是否認為國防預算的任何變化可能會影響未來 6 到 12 個月的積壓執行情況？

I think what we're seeing is a lot of positive feedback that we're getting from our defense contractors. As I just mentioned, we recently received a contract that was partially a military program, which is based on the commercial platform. But we're seeing an increased level of interest from all aspects of the government and the military side of the business. Very encouraging.

我認為，我們從國防承包商那裡得到了很多正面的回饋。正如我剛才提到的，我們最近收到了一份合同，部分是軍事計劃，基於商業平台。但我們看到政府和軍隊各方面對此的興趣日益濃厚。非常令人鼓舞。

Okay. Any breakdown into that backlog, whether some of that contains any multiyear military commercial -- multiyear military retrofits?

好的。有沒有對這些積壓訂單進行細分，其中是否包含多年的軍事商業 - 多年的軍事改造？

So obviously, that backlog includes some of the F-16 backlog that we inherited from Honeywell, but there is a small amount of it for these multiyear programs because typically, we only put things in the backlog where we have a purchase order delivery date on it. And some of the long-term agreements don't -- they kind of forecast, and that we don't put it in backlog.

顯然，這些積壓訂單包括我們從霍尼韋爾繼承的一​​些 F-16 積壓訂單，但這些多年期項目的積壓訂單數量很少，因為通常情況下，我們只把有採購訂單交貨日期的訂單放入積壓訂單中。而一些長期協議則沒有——它們是一種預測，我們不會將其積壓。

Okay. And just one last question. With that $100 million credit facility giving you significant headroom, are you prioritizing acquisitions to fully leverage your Exton facility? Is that how we're supposed to think about it?

好的。最後一個問題。有了 1 億美元的信貸額度為您提供了巨大的發展空間，您是否會優先考慮收購以充分利用您的 Exton 設施？我們該這樣思考嗎？

Organic growth is a significant part of our growth strategy. It's -- obviously, acquisitions, you see quick results when you do an acquisition. Organic growth, it's more of a long-term objective, but certainly a lot of that capacity will be taken with our organic growth.

有機成長是我們成長策略的重要組成部分。顯然，收購後你會很快看到結果。有機成長是一個長期目標，但毫無疑問，許多產能將隨著有機成長而增加。

I would like to turn the conference back over to Shahram Askarpour for any closing remarks.

我想將會議交還給 Shahram Askarpour 並請他做最後發言。

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

謝謝接線員，也謝謝大家對 IS&S 所付出的時間和關注。祝你有美好的一天。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。