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spk06: Good morning and welcome to the Innovative Solutions and Support Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. All participants will be in lesson-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jeffrey Hedrick. Please go ahead.
spk11: Good morning. This is Jeff Hedrick. I'm chairman of the board. Joining me today are Rel Winand, our CFO, and Sharon Mastropour, our president. We will discuss the fourth quarter presentation performance for fiscal 2021 and the 2021 completion. I'd like to turn it over to Rell for the safe harbor message. Rell.
spk05: Thank you, Jeff, and good morning, everyone. I would remind our listeners that certain matters discussed in the conference call today, including new products and operational and financial results for future periods, are forward-looking statements that are subject to risks and uncertainties, that could cause actual results to differ materially, either better or worse, from those discussed, including other risks and uncertainties reflected in our company's 10-K, which is on file with the SEC, and other public violence. Now I'll turn the call back to Jeff.
spk11: Thank you, Ralph. We finished the 2021 fiscal year, positioning us for strong top and bottom line growth going forward. The strength of our growing OEM demand provides us an excellent foundation for the growing demand in the retrofit section, in the segment. The autothrottle is now developing in our military sector on King Air and larger multi-engine aircraft, and our turbofan autothrottle program doubles the market opportunities. We are expanding our sales force and planning expansion of our strategic marketing. Our growth has been affected by the lack of sales people and exacerbated by the pandemic. Our recent emphasis has produced a new, strongly experienced GA sales director, and we are in a process of finding individuals for the other two market segments, military and air transport. I will now turn it over to Rell for the financial analysis. Go ahead, Rell.
spk05: Thank you, Jeff, and thank you all for joining us this morning. Looking first at the fourth quarter, revenues were $6.9 million, up 5% from $6.3 million a year ago. As a result, we saw sequential revenue growth in every quarter this year. Revenues were generated in each of our general aviation, commercial air, and military markets. with ongoing recurring revenue from our PC24 and King Air auto throttle production programs. Gross margins for the quarter were 57.6, up from 54.3 in the year-ago quarter, with the increase attributable to product mix as well as the favorable leverage achieved by the growth in revenues. Margins remain in line with historical averages. Total operating expenses for the fourth quarter of fiscal 2021 were $2.1 million, down both sequentially compared to the third quarter of this year as well as from $2.3 million in the fourth quarter of last year. Compared to a year ago, research and development expense was marginally lower. At 10% of quarterly revenues, R&D was in line with our historical averages and continues to reflect our strong commitment to innovative and new product development. Selling general and administrative expenses were down from the year-ago quarter The decrease reflects lower professional fees and benefits expense in the quarter. We believe quarterly operating expense levels will increase as the company expands its sales and marketing efforts this fiscal year. For the quarter, we generated operating income of $1.9 million or 27% of revenue. We recorded taxes of approximately $356,000 in the quarter. The company recognized a tax benefit in the fiscal third quarter of fiscal 2021 due to the reductions of the deferred tax assets valuation allowance. Therefore, income tax expense will be recognized on a go-forward basis. The company anticipates the tax rate should be in the 21% range. Bottom line net income was $1.5 million or $0.09 per share for the quarter, up from $1.2 million or $0.07 per share in the year-ago quarter. Quickly looking at results for the year, total revenues were $23 million, our third consecutive year of revenue growth. For the year, net income was $5.1 million, or $0.29 per share, which includes $1.1 million, or $0.06 per share in tax benefits, reflecting the release of a deferred tax valuation allowance. As a result, this was our most profitable year in over a decade. The company remains in strong financial position. We generated $4.6 million of operating cash in fiscal 2021 with $800,000 of operating cash flow in the fourth quarter. At fiscal year end, September 3rd, we had $8.3 million of cash on hand and that is after dispersing approximately $20 million of cash dividends in fiscal 2021. The company is debt free. I would make one additional note on the balance sheet that due to the ongoing global supply chain challenges, as resolved among other things, the ongoing COVID-19 pandemic, we are maintaining a slightly higher than normal levels of inventory simply as an added measure of precaution. However, to date, we have managed to largely avoid production disruption as a result of the supply chain challenges, even amongst an increase in production volume. We believe that the company has sufficient cash on hand and to fund opportunities for the foreseeable future. Now I'd like to turn the call over to Sharon. Sharon?
spk08: Thank you, Rayl. Good morning, everyone. Fiscal year 2021 Innovative Solutions and Support made good progress in virtually every aspect of its business. Revenues were up for the third consecutive year. Margins expanded compared to the fiscal 2020, driven by improved productivity and efficiency by the extraordinary measures undertaken to ensure the safety of our employees, customers, and vendors in response to the COVID-19 pandemic. While we recognize the pandemic continues to harm supply lines and many industries are reporting labor shortages, we have experienced few disruptions. Nevertheless, we remain vigilant to quickly identify and resolve any issues that may arise. Let me provide additional information around some of our revenue-generating programs that are driving our success. The company has three OEM production contracts that continue to provide a level of stable recurring revenue. The general aviation market seems to be improving, and as a result, Textron is reporting increased demand for King Gas, on which we are the supplier of production oil withdrawals. Consequently, we are somewhat optimistic we may see some increase in revenue from these programs. Our strategy has been to use our King Air Aerosol as a foundation to branch out onto adjacent airframes as well as expand beyond turboprops into the business jet market where our products are equally valuable. I'm happy to report that we are expanding our aerosol market to retrofit any appropriately equipped Cessna Citation and Embraer Phenom 100 and 300 business jets. The HILADIS PC24 program is also making steady progress. Like Textron, HILADIS also reported a nice increase in the number of PC24s delivered over the first nine months of 2021. The Dexron and Pilatus OEM production contracts are therefore expected to provide a steady level of recurring revenue with some potential for growth in fiscal 2022 as well as thereafter. Our government contract on the KC-46 continues to run at expected production rates. In addition to our OEM business, we continue to grow our retrofit business primarily flat panel displays for air cargo conversions. We have a competitive advantage in that many air cargo operators are buying U75 and 767 aircraft for conversions, aircraft on which we believe we have the best cockpit upgrade on the market. For some sense of perspective, the only other competitive cockpit upgrade on the market takes four times longer to install cuts significantly more and its proven reliability is much lower. In addition to OEM applications, our Orosol is an ideal retrofit option. We are adopting a much more aggressive approach to the Orosol retrofit market, having highly dedicated business development professionals and expanding our reach beyond Textron's own service centers to target independent fixed space operators and our maintenance, repair, and operations center network. I should also briefly mention our two big recent announcements. The European Union and Canada certification of our King Air Orosol opens up new geographic markets, while our expansion into the business jet market provides the base to expand into another adjacent market. Finally, Eclipse continues to show interest in technology upgrade of their cockpit. We are in ongoing discussions regarding additional needs. New orders in the fourth quarter of fiscal 2021 were $6.5 million, bringing the new orders for the year to $28.5 million. Backup as of September 30 was $9.1 million, a 250% increase over the course of the last 12 months. fiscal 2021 was a good year that has us well positioned for continued success. While end markets have not fully recovered to pre-pandemic levels and various safety and other protocols have been an obstacle, our emphasis on price for performance across various markets has enabled us to deliver stronger tests. Before we open for questions, Let me once again applaud the ongoing effort of our employees to integrate new safety protocols into our standard operating procedures. It has enabled us to maintain productivity without jeopardizing the health, safety, or well-being. I'd like now to turn the call over to questions.
spk06: Thank you. At this time, we will open the floor for questions. If you would like to ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from David Campbell with Thompson Davis and Company. Please go ahead.
spk10: Good morning, everybody. Good morning. Excellent presentation and excellent results for the quarter, although, of course, you missed my targets, which is because I'm always optimistic. But let me ask you a question first. At least one. Your sales and new products are going up and substantially increasing the opportunities for you to get new revenues. Why do you need new salesmen? Why do you need more salesmen? You're doing very well.
spk11: I believe that we are massively understaffed and that the opportunities are multiples of what we are presently realizing. And that's primarily because we don't have active people in the field. So, I mean, if you think about the revenue that we want to generate, we're talking about trying to generate 25, 30 million this coming year. If we are attempting to do that, to try to do it with one guy in the field, That just doesn't make sense. So we're looking for smart, capable people to deal with the three segments. And, again, remember we have three market segments. We have the BizJet, which is now being covered by our latest GA marketing director. And we need an equivalent of that. for military, and we need an equivalent for that for air transport. We get a lot of business that's inherited business, but we want to expand both those segments, both the military and the air transport. There's huge opportunities there that have yet to be touched, and we need sales guys to do it.
spk10: These salespeople, would they likely come from existing competing companies, or would they likely be people that have no experience in the business?
spk11: No, no, no. They'd all come from existing companies. Or in the case of the military, we may get a retired – like in a retired Air Force or Navy officer, Colonel or Commander that was a pilot and had extensive flight test experience, et cetera, and the opportunities at Pax River, et cetera. So that's That would be the military for sure. The commercial air transport would come from one of the people. As an example, there's been a lot of acquisitions, and the combining of multiple companies ends up having a number of people looking for something to do, and that's what we're going to look and try to exploit. How we've done it in the past has worked out well.
spk10: Okay, last question for now. Your backlog was down from the previous quarter, which I think was $9.5 million. Now you're down to $9.1 million. That's strange that the backlog is going down. when the revenue opportunities are going up. So can you go ahead and explain that?
spk11: If the shipments go up, the backlog goes down. So when we have bad shipping quarters, our backlog easily goes up. It's a relatively small amount, David. Obviously, it's something that you keep an eye on. And if it was consistent and subsequent quarters, we had an equivalent, we would be concerned. but I'm not concerned in this case. It's gone up massively over the past year, so I'm delighted for that.
spk10: All right. Thanks for the help. I appreciate it.
spk11: Thank you. Thank you, David. You sound good, by the way.
spk10: Well, I'm still in here. I'm working away.
spk11: I'm reminded people talk, remind me that I'm looking good. I said, you know, the reports of my death are pretty sure.
spk10: Don't forget, Jeff, don't forget you're coming up to see me.
spk11: Yeah, I will. I'll do it.
spk10: Okay.
spk11: Take care.
spk06: Our next question comes from Roger Nedro, private investor. Please go ahead.
spk03: Yes, good morning. Thanks for the good call today. You paid out a nice dividend at the end of last year with an $8-some million balance or cash on the balance sheet. Are there anticipated to pay out a dividend again this year?
spk11: Not really. We have not anticipated, put it that way. But it was bluntly I want to make sure that Whatever dividend we had, we paid out in this year where we had some confidence in the tax situation, et cetera, for our stockholders. That's all. So right now we anticipate making investments, and we want to keep some reasonable amount on hand so that in the near future we don't see an opportunity But that may change. The company has a habit of generating pretty consistently cash. And as we generate cash, we're all happy to distribute it. We've distributed over $100 million in cash, I think, over the years. So we consistently do that. But there's nothing planned right now to answer your questions.
spk03: Okay, thank you. Keep up the good work.
spk11: Thank you.
spk06: Our next question comes from Michael Friedrich with Private Investor. Please go ahead.
spk01: Morning, everyone. I didn't hear a whole lot in the call about what was happening with the large air cargo company, online retailer that was retrofitting and building a large fleet. Is all of that still on target and still continuing to go well?
spk11: Yeah, we have, in rough terms, just under 100 aircraft done. So, I mean, some of those aircraft will be airplanes that they bought from somebody that had already done the upgrade to it. But the important issue is that we're flying with... It's exhibiting our outstanding reliability and acceptance in the field. So that's going well, and we want to take very good care of that customer.
spk01: Okay. And remind me again how large their fleet could be when they're done?
spk11: Well, I mean, it's speculation. If you want to know my speculation, I think it could be bigger than what is now the biggest fleet, which would be FedEx, it's about 700. I remember I built equipment for FedEx when they had seven airplanes. So their growth has been spectacular. I suspect this will do about the same or more simply because it has huge resources behind it. And bluntly, the profile for business, as you know, has changed. I mean, I I personally buy an enormous amount online now. I mean, it saves me driving to the store, honestly. So they've got to move those packages around, and there's a limit to how many trucks you can put on the road. So I think the growth is inevitable, and I think we're on a hell of a good course in the race.
spk01: Okay, great. Thanks, Jeff. Yeah.
spk06: Once again, you may press star then 1 if you would like to ask a question. One final time, as a reminder, you may press star then 1 if you would like to ask a question. Our next question comes from Glenn Remington, private investor. Please go ahead.
spk09: Good morning. Thank you for taking my call. I really like this stock, beginning my journey with this company, but I've read quite a bit. I think I understand the notion of what you're building there. I'm wondering if you could speak a little bit to the notion of future proofing with all this conversation about alternative fuels, electrification, you know, whether it's R&D or whether it's software baked in for future proofing. Adaptation, I'd be curious what your feedback would be on the 510 going forward with all these alternatives that everybody seems to want to talk about.
spk11: Well, I mean, from my, this is Jeff Hendrick, from my perspective, the electric airplane has got, may have application in short runs near, in urban areas. But it certainly doesn't have a good opportunity for long runs for a simple reason. The airplane, an electric airplane, has the same weight when it lands as it does when it takes off, which means it has to carry that enormous amount of weight through the entire distance. A fuel-based airplane burns off at least 30% of its weight, reducing the load it has to carry. So certainly in my practical lifetime, I don't think I'll see a huge change. But I didn't think, honestly, I didn't think the electric car would come as quickly as it did. So I'm not sure. But I believe the airplane is a very different problem. than an electric car. The alternative fuels, it's all a question of right now there are airlines that are looking at and running alternative fuels. If you can make them economically practical, it's terrific. But fuel is a major cost in the operation of an airplane. So you don't want to raise that per unit cost of the fuel if at all possible. So Maybe it's just in summary. Honestly, I don't have the wisdom of giving you an accurate answer. I can only speculate that I think that the electric airplane will be limited to reasonably short runs around urban areas. The longer runs will still be done by these massive airplanes with big engines. and they have gotten over the years much more fuel efficient. There is a huge incentive for the operators to optimize the efficiency of their equipment, and they spend billions and billions of dollars doing it because it's a direct operating cost. So I anticipate that will continue to be a driving force, but I don't see any major changeover.
spk09: I'm really excited about the safety and efficiency aspects. I just want to say thank you for your hard work, and I'm very excited with your company.
spk11: Well, that's very kind of you to say that. It means a lot to us. Trust me.
spk06: Our next question comes from Rick Keller, private investor. Please go ahead.
spk04: Good morning. I'm not sure I heard Sharem correctly there. My sound was kind of going in and out a bit. But did you say something about working with Embraer, possible retrofits or something? Because that's a whole new, let's call it, brand of aircraft. Was I hearing that correctly? Maybe I just misheard.
spk11: Yeah. I think I believe what we said was we were working on the Embraer aircraft. The Embraer makes a wonderful airplane. The Phenom 300 has been a super seller, terrific, and is ideal. It does not have an auto throttle, and we can provide it and provide some distinct palpable safety features and reduction of workloads. So what we're focusing on now is we're working directly to get retrofit installations. And that's different than OEM as an example. When you have a building airplane from scratch, you can put parts in wherever you feel is appropriate. When you have a retrofit situation, you'll more likely have tables and hoses and stuff in places that you don't want. You have to learn to deal with it. And this company has done retrofits for 33 years, so we know what we're doing. There's a huge opportunity, and we're working that with people like – not with people, but with airplanes like the Embraer and other airplanes – as retrofit potential for our oil throttle. It has, we're going to be looking at both the military and expansion in the GA. So both of those are coming, and turbofans, which is what Embraer is. Does that answer your question?
spk04: Yes, it does. Are you in talks with any other OEMs for turbofans? including autothrottles in their newer models?
spk11: Well, I mean, we're always in talks, but substantive talks, not so much. You know, we're moving. The reality is that the retrofit market is magnitudes, orders of magnitude, larger than the OEM market. And we love the OEM market. We're delighted to be in it. But For certain programs, the retrofit is massively larger, and we want to focus on that. As an example, one of the things we're doing, just to give you an example, the installation of our autothrottle into the King Air has taken, in some cases, over 100 hours of labor to put in. We estimated it originally at about 40 to 50. But with recent work and development and refinement of procedures, et cetera, we reduced the time to install this to under 20 hours. That's significant savings for the operator. But more importantly, and I owned an airplane for 35 years, People who own airplanes hate to give up their airplanes, even for an hour. I mean, whatever reason, all of a sudden we feel like we need it. And so we're trying to focus on minimizing the effect or impact of a retrofit installation. And that is a very different – test or objective than what you would usually face in an OEM because you're not interested in moving stuff around and that kind of thing that you have to do in a retrofit. Does any of that make sense?
spk04: Yes. And the fact that you're expanding potential retrofit markets to things like Embraer and presumably other manufacturers, I guess that would be behind the new focus on working with fixed based operators and other things other than the Textron system.
spk11: Yeah, the Textron program is a wonderful program. I actually admire them for showing the responsibility and clarity of implementing this as quickly as they did in their production. They did a great job. And I really commend them for doing that. They recognize that there's a real safety feature. You know, they talk about 100 people a year die. That's a humbling challenge, trust me. At any rate, What we have now is working with FBOs and trying to get them up to speed so that they can turn airplanes quickly. And we're looking at new kinds of airplanes. For instance, the Embraer is not a prop airplane. It's a turbofan airplane with a different kind of engine. And so we have broadened out our applications.
spk04: All right, well, good. Well, thank you.
spk11: You're welcome.
spk06: Our next question comes from Roger Goldman, private investor. Please go ahead.
spk07: Good morning, Jeff and team. Nice to hear about another year of progress. My dad is looking down with a smile. A couple of things, Jeff. The first is... I just want to comment a little bit about electric airplanes. My son, Jake, who's also a shareholder, is a senior guy at a company called Beta Technologies, which has an EVTOL. They're based in Burlington, Vermont, and they are operating very differently than the others. seem to be more interested in an IPO than in the future of aviation. These guys are very – that's a personal comment, Jeff. These guys are – okay. These guys are really interesting in terms of – and you might just want to take a look at their website, but they've got airplanes. They're flying.
spk11: Where are they in Vermont?
spk07: Burlington.
spk11: I had a house up there for 45 years.
spk07: Okay, so you know the area. But there are a couple of things. One is the improvements in batteries are happening very, very quickly. And second, they have a pretty unique battery configuration. And they're already, I believe they've signed up UPS. The government is a customer. And a lot of where they are, the planes are flying. They're waiting for FAA approval. And they're focused on package delivery, not customers, because as you well know, package delivery is three times the size of customer delivery in terms of potential revenues. So I just mentioned it, that it's worth having somebody on your team look at their website, and if you want an introduction, I can make it. Certainly not worth spending a lot of time on, but keeping an eye on it. The second thing is I'm delighted to hear that you're ramping up your marketing and sales effort. I've always felt that there was a lot of opportunity to move faster with this suite of products in the marketplace. And it sounds like what you're doing is you're redefining the marketplace to be much bigger than you had been. And I think the ramping up of sales and marketing, and it looks like you're also doing a little bit of branding, is just terrific. So I compliment you on that. The third, of course, is the question I ask you every year, which is you've got a lot of cash, you've got a lot of credit lines. I understand your conservatism about dividends, but... would like to lobby again for a short-term dividend to reward the shareholders.
spk11: Listen, I have one shareholder compliment me and say that his net cost for the stock was zero or less than zero.
spk02: Yeah, I know.
spk11: So, honestly, I think there's – you know, look, the company is willing to provide dividends, but right now – The dividend flurry that we did this year was done for obvious and pragmatic reasons. It's always nice to have a little cash. And $8 million is a hell of a lot of cash. $40 million, $50 million is nice. But we will probably keep. some amount on hand, $8, $10, $12 million on hand. And then if we get a big flow, we'll take a look at dividending here. We're not obsessed with cash. But it's a tool that we want to use prudently, put it that way.
spk07: I understand. I always look at cash plus available credit. particularly in this interest rate environment. If interest rates were different, I would feel differently.
spk11: Yeah, yeah, I understand that. And I know, but right about now, you know, I prefer to focus my energies toward developing a market, which I think will have a better return than getting cheap cash from the banks.
spk07: Okay, I get it.
spk11: That's one bad opinion anyway.
spk07: Again, the most important point I'm making, Jeff, is well done on raising your ambitions for the company.
spk11: Well, thank you. We appreciate that. And we appreciate your support. Listen, our shareholders are really important to us. We talk about them and think about them a lot. So appreciate your interest, appreciate your support.
spk10: Okay. Stay well, Jeff.
spk06: Thanks. Our next question comes from Glenn Remington, private investor. Please go ahead.
spk09: Yes, hello. Thank you, Ed. One other question. I noticed in the release and following along for a while now, there was a lot of mention about approvals in additional regulatory jurisdictions for your products. And I guess in simple terms, I'm curious if the bureaucratic overhead costs to achieve those are captured in this year's books, but the future sales won't have the burden of those costs spread out against them. So I'm wondering if it's more of a one-time business development investment, and then in the future the sales just stand on their own.
spk11: Well, it is a one-time business development effort, practically. But, you know, remember, every country has their own certification authorities. And it isn't terrible, but you have to submit the paperwork. It's the bureaucracy that exists worldwide now. But it is a one-time effort. And once you get it, there's maintenance in some cases, but that's minor. So the answer is yes. The good news is once you get authorization in Canada and Europe, you don't have to do it every year, it gives you an opportunity now to sell worldwide or in that area.
spk09: Perfect. Thank you very much.
spk11: You're welcome.
spk06: Our next question comes from Brent Derrickson, retail. Please go ahead.
spk02: Hi. Hi there. I'm curious to know why pay these dividends, why not keep the cash on the books and maybe buy back some shares because, you know, we're the biggest, let's face it, we're all here because we want to make money. And dividends are nice, but, you know, when you're one of the largest shareholders and some of these other funds that own the shares, you know, they make a lot of money, you know, on a dollar basis. I'd rather see the stock price up. It hasn't gone anywhere for 14 years. Biggest bull market we've seen in 10 years and the stock is still sitting here It hasn't been over $8 since 2007. As a shareholder, I'm not real happy sitting in a stock because I'm sitting here doing nothing. I'd rather not hold the shares until I die. I like to try to make some money myself. Quarter was good, year was good, but at the same time, nothing's happened.
spk11: Well, something must have happened because one of the A shareholder tells me that their net cost for their investment is zero or minus. Something must have happened. And that's what happened to the $100 and some odd million that was distributed. As you know, I'm an interested shareholder myself. And we have done a buyback in the past. We did that. We did an aggressive one. some years ago. The problem I have is that I have limited liquidity in the stock, and if I buy back, as I buy back, it reduces that and constricts it even more. So it's not, I've been advised that that's not such a good idea. We would like to believe that if we distribute the dividend you can also consider buying stock. So it's not a simple answer. We took the opportunity to distribute the dividend. If the capital gains goes up by 30%, it may be more attractive to have the cash than a stock that would go up. And then the question is, with a higher capital gains, does the stock go up as fast? I mean, I'm not prepared to make those kind of judgments. I try to just run the business in the most practical way. I appreciate your interest. And do I anticipate buyback? Not right now, but certainly soon. You know, I don't have an issue doing it. I've done it before.
spk02: Okay. So as far as the additional employees, are you saying that without these employees, you're not going to be able to grow the way you want to, or, you know, we're going to kind of stay at the same?
spk11: Well, right now we're anticipating growth of 20% to 30%. Now, I don't know, that may not be Apple or NVIDIA, but I think it's a good, solid growth that we should focus on. Now, right now, we've never made an acquisition, but I would prefer not to go out and borrow money to make an acquisition and have the additional burden. So I would like to have some free cash in the business. And $8 million is not a lot. So, I mean, we'll have a different – you obviously have a different opinion. I'm just telling you what my feelings are. Am I saying it's going to limit the growth one way or the other? No, because we're going to focus on the growth. We're going to do whatever we can to optimize the growth.
spk02: I don't know if I heard you correctly, but earlier in the call, you said that you had maybe worked on about 100 planes for your online retailer for this quarter.
spk11: It's short of 100. I don't know what it is today, but it's somewhere between 80 and 100.
spk02: And that was reflected in this quarter's earnings report?
spk11: And that was what?
spk02: And that was reflected in this quarter's report?
spk11: Well, they didn't do 100 airplanes. As I explained, a good portion of those airplanes were already done. As an example, American Airlines had a whole bunch of 767s that were modified with our equipment on board. So the operator bought those airplanes, in some cases converted them, The passenger ones, some cases got freighters. And so this was some percentage that were already equipped with our flat panel displays system, the cockpit. And so, but we probably did about half of those airplanes were all new and they were all done this quarter. They were done over a period of time because they now own them, but they were before leased through other companies. Now they're, you know, own them and then lease them back.
spk02: One last question. Since the first quarter, your trend in new orders have been increasing and this quarter, saw a decline. Is that a seasonal thing or is that something else?
spk11: It's pretty much seasonal and it's typical because you build up at least as long as I've been in the business, as much as I'd like everything to be a uniform growth rate, it always ends up being a little bit of a sawtooth such that the first quarter suffers from getting the last equipment out, and year-end sales that occur because we do our price increases on a fiscal basis. So when we go to a new fiscal year, there's a price increase, and some of our customers take advantage of ordering and taking delivery at the end of the year. So the end of the year tends to be –
spk02: Okay, thank you.
spk11: You're welcome.
spk06: This concludes our question and answer session as well as our conference call. Thank you for attending today's presentation. You may now disconnect.
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