Kaman Corporation

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Command Corporation third quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. At this time, I would like to turn the conference over to Ms. Carrie Baer. Ms. Baer, you may begin.

Good morning. Welcome to Command's third quarter 2022 earnings call. Leading the call today are Ian Walsh, Chairman, President, and Chief Executive Officer, and Jamie Coogan, Senior Vice President and Chief Financial Officer. Before we begin, please note that some of the information discussed during today's call will consist of forward-looking statements, setting forth our current expectations with respect to the future of our business, the economy, and other events. These include projections of revenue, earnings, and other financial items, statements on plans and objectives of the company or its management, statements of future economic performance, and assumptions underlying these statements regarding the company and its business. The company's actual results could differ materially from those indicated in any forward-looking statement due to many factors, the most important of which are described in the company's latest filings with the Securities and Exchange Commission including the company's third quarter 2022 results included on form 10Q and the current report on form 8K filed yesterday evening together with our earnings release. We also expect to discuss certain financial measures and information that are non-GAAP measures as defined in applicable SEC rules and regulations. Reconciliations to the company's GAAP measures are included in the earnings release filed with yesterday's 8K. Finally, we posted an earnings call supplement on our website, which provides additional context on our financial performance. You can find this presentation at www.command.com slash investors slash quarterly earnings call. Now I'll turn the call over to Ian Walsh.

Thank you, Carrie. Good morning, everyone, and thank you for joining us for our third quarter 2022 earnings call. I'll start by providing highlights on the quarter and then share some operational and business updates along with some respective accomplishments and innovations in each segment, before passing the call over to Jamie for a more detailed discussion of our financial results and outlook for the remainder of the year. As you may be aware, in September, we completed the acquisition of Aircraft, Wheel, and Brake, the largest in the history of our company. They joined our engineer product segment and will be a very meaningful part of our company going forward. When you consider 2021 results, they add approximately 10% to our sales and nearly 30% to our adjusted EBITDA. This transaction has created a unique opportunity to expand our highly engineered product portfolio by investing in a high margin quality asset with potential for growth. For more than 80 years, Aircraft Wheel and Brake has been a trusted provider of mission critical wheel and brake technology, products, and solutions. They have a strong OEM and aftermarket portfolio of more than 100 platforms specializing in wheels, brakes, and related hydraulic components for helicopters, fixed wing, and UAV aircraft. They provide customized proprietary designs protected by intellectual property and are actively working to win new business. One such area for growth is in carbon brakes for future military and civilian applications. The benefit of carbon brakes compared to steel brakes are that they are lightweight have competitive lifecycle costs, offer more landings between overhauls, and have increased heat tolerance. The team has been working to advance carbon break technology, which will allow them to compete on larger business aircraft platforms and even eVTOL applications where weight is imperative. Now let me start the business discussion with an update on general market conditions. Demand across the commercial, business, and general aviation markets continues to show signs of improvement through additional orders for our bearings, springs, seals, and contacts products. In fact, sales to Boeing and Airbus were higher for the fifth quarter in a row. These trends support the higher sales and improved margins we anticipate over the next few years. The defense market is relatively stable, while our industrial and medical order rates continue to increase. Sequentially, consolidated performance for the third quarter improved organically with higher sales and adjusted EBITDA. Performance for the period relative to our expectations was impacted by certain program executions from supplier challenges. The teams have identified the most significant areas impacting our results and are working to correct the issues that are creating the delays. These issues are the primary driver for the downward revision in our outlook for 2022. Engineer products posted strong results with both sequential and year-over-year sales growth, despite some margin compression due to rising input costs and some supplier challenges that they faced. Our precision products and structures performance fell short for the quarter due to delays associated with the part availability for one component in our JPF program, the timely satisfaction of technical design changes from our customers on some of our missile fuse programs, and the recovery of our A-10 and the supplier fire which affected our Black Hawk program. Gross margin for the company was 32.5%, relatively unchanged compared to the second quarter, but decreased 260 basis points from the third quarter of 2021. Compared to the prior year, quarterly sales and associated gross profit were lower for our JPF and KMAX programs, and we incurred an $800,000 inventory step-up associated with the purchase accounting for aircraft wheel and brake acquisition. Our engineer product segment continues to deliver excellent results, with quarterly sales increasing 9% compared to the third quarter of 2021, inclusive of aircraft wheel and brake and $4.4 million of foreign exchange headwinds. Absent these items, sales increased 11% for the period, demonstrating the underlying strength of the segment. Within the quarter, not only was medical demand strong, but sales of commercial bearings also improved. Order rates for many of our products also remain robust. Backlog, excluding the addition from aircraft wheel and brake, has increased nearly 40% since the beginning of the year. Our employees continue to provide innovative solutions that push the boundaries of application engineering, material science, and process improvement, allowing us to meet the needs of our customers. Recently, we have been working on industry 4.0 tools and techniques, the next evolutionary step in lean business practices to streamline our capabilities to drive improved throughput and performance. Additionally, we just implemented an advanced manufacturing technology cell in the third quarter. This is a dedicated team with dedicated equipment that focuses on creating new processes to improve productivity and margin performance across a range of our most challenging products. They are also developing cost minimization and industrialization strategies for new products by leveraging the knowledge of process and manufacturing subject matter experts. This allows us to drive efficiency in the product manufacturing without causing disruption and waste in our production line. We have seen early successes since implementation of this cell, where we have identified savings of 50 to 80% on certain process steps for two of our more complex bearing products. Our precision product segment continues its important transition. Sales and margin in the third quarter increased sequentially, but we were slightly below our expectations. During the quarter, we experienced a delay in receipt of a component from one of our suppliers, which changed the timing of shipments for GPF to later in the year than we had previously expected. This accounts for a meaningful portion of the downward revision in our free cash flow expectations for the full year 2022. In October, we are very excited to announce that we reached another milestone in our strategy to expand autonomous technology in this segment with our purpose-built cargo UAV unmanned aerial system. The United States Marine Corps selected command to build a cargo UAV prototype for their MALS-A program. The Marine Corps will be funding the build for the prototype in 2023, and once completed, it will undergo a field user capability assessment. We will continue to take a stage-gate approach to R&D funding and have released an additional $4 million for this program in the third quarter. We believe this will be a major growth driver for our air vehicles business and look forward to providing an affordable, reliable, and maintainable logistics vehicle for the autonomous market. We are playing the first flight of our full-scale cargo UAV demonstrator in the fourth quarter. Our initial adjustable market for this fully autonomous medium lift vehicle is the US military and special operations commands, along with a wide range of commercial applications, such as supporting oil and gas platforms and pipelines, search and rescue, humanitarian relief, and the middle mile delivery for logistics companies. There is no question that there is a very strong demand signal for our cargo UAV across the Department of Defense and specific commercial operators. Our structures segment continues to focus on strengthening operating margins and seeking new, more profitable programs that fit our core capabilities. In fact, we have successfully executed on our plan to diversify this segment's program base by securing multiple military aftermarket contracts. We expect contribution from this higher margin work to begin in 2023. For the quarter, sales and margins were higher than the second quarter of 2022. However, challenges with suppliers and execution in certain programs delayed the level of recovery that we expected in this segment and our ability to meet our plan for the quarter and the remainder of the year. Within structures, we continue to take the necessary steps to right size our businesses. In Jacksonville, we have finished the facility consolidation, And in the third quarter, we sold our Mexico operations. This has lowered operating costs while improving capacity utilization. In Vermont, we continue to see strong performance. The team has been focusing on transforming the culture through improved communications and training, successfully applying lean tools and process improvements, and winning new profitable business. This has resulted in an average productivity year-to-date of 85%. increasing from 81% last year, which has greatly improved their profitability. Looking ahead, we remain confident that the return of the commercial aerospace market and the durable demand in aviation, medical, and industrial markets will benefit our high-margin engineered product segment. Precision products will continue to transform and is quickly shifting to autonomous systems and next-generation safe and armed products. Additionally, our structure segment will continue to benefit from our focus on operations excellence and the addition of new, more profitable programs, including more aftermarket. We are excited about the opportunities before us as we position the company for best-in-class performance. Lastly, we are very excited about the strategic investment in aircraft wheel and brake and have been very pleased with how smooth the integration has been thus far. We are now laser-focused on duty-levering our balance sheet as quickly as possible so that we can continue to assess strategic opportunities that provide the highest return to our shareholders. Now I will turn the call over to Jamie for more detailed discussion of our financial results.

Thank you, Anne. Good morning, everyone. Today I will discuss our third quarter results and provide an update on our outlook for the year. On a consolidated basis, our net sales in the third quarter were $172 million compared to $161 million in the second quarter of 2022 and $180 million in the third quarter of 2021. The decline of 4% year-over-year was largely due to lower sales for our JPF and KMAX programs, partially offset by increased sales of commercial aerospace bearings. Adjusted EBITDA in the third quarter was $20.6 million, or a margin of 12%, compared to $16.4 million, or a margin of 10.2%, in the second quarter of 2022. Sequential improvement resulted from higher sales and margins for our JPF program, and higher volumes of commercial aerospace bearings in our engineered product segment. Additionally, we saw a benefit from our sales and margin on our UH-60 program in our structure segment as the team in Jacksonville started the process of recovering from the supplier fire that impacted their results in the second quarter. These increases were partially offset by lower profit for our K-Max spares and support program in our precision product segment. When compared to the third quarter of 2021, Adjusted EBITDA decreased 26% and margin declined 350 basis points. The decline resulted primarily from lower JPF sales volume. Additionally, sales and margin for our defense bearings and KMAX program were lower. These decreases were partially offset by robust sales in the third quarter of 2022 for our commercial bearings. Now I'd like to walk through each of our segments, beginning with engineered products. During the third quarter, we incurred an inventory step-up of approximately $800,000 related to the acquisition of aircraft, wheel, and brake, with the remaining $2.3 million of inventory step-up to be taken during the fourth quarter. Adjusted EBITDA for the third quarter increased to $21.8 million with a margin of 23.7%. Compared to the second quarter, volumes increased in the third quarter for bearing products serving commercial aviation. partially offset by lower sales and associated margins for engine aftermarket products and industrial bearings. Year over year, sales increased 11%, excluding the benefit of $2.7 million of sales from aircraft wheel and brake and the $4.4 million negative impact from foreign currency exchange rates. Adjusted EBITDA increased $300,000 and margin decreased 180 basis points. Sales increased at a slightly lower combined margin for commercial bearings and springs, seals, and contacts for industrial applications. For defense and industrial bearings, sales and margins decreased. Incremental margin opportunities have been slightly tempered by some supplier challenges and rising input costs in this segment. However, we are pleased with the way our teams have been managing these issues to limit the disruptions while continuing to meet our customer requirements. The demand for our spring seals and contacts, as well as our commercial bearing products, have continued to improve. Looking ahead, we expect continued strength in this market for the remainder of 2022. Order intake during the quarter was robust, with a backlog increasing nearly 40% since the beginning of the year, excluding the addition of aircraft wheel and brake. In our precision product segment, adjusted EBITDA for the third quarter was $6.5 million, with a margin of 14.1%. Sequentially, results increased in the third quarter due to higher sales and associated gross profit for our JPF program. This was partially offset by a decrease in sales and margins for KMAC spares and support and our SH2 program. Year over year, quarterly adjusted EBITDA declined $8.3 million and margin decreased 920 basis points, primarily due to lower JPF sales and associated gross profit when compared to the third quarter of 2021, which had a much larger volume for this program. Additionally, sales and margin declined for our KMAX program, and we had higher R&D expenses. We are revising our expected JPF deliveries for 2022 downward to 20,000 to 25,000 fuses. Deliveries planned for the second half of the year have been postponed slightly due to a delay in a component from one of our suppliers, shifting cash collections for some of the deliveries into 2023. In structures, adjusted EBITDA for the third quarter was $900,000, with a margin of 2.8%. Compared to the second quarter, sales increased 13%, and adjusted EBITDA increased by $900,000. Results improved primarily due to increased sales and margin for our Sikorsky UH-60 Blackhawk program. Year-over-year results declined from an adjusted EBITDA of $1.2 million and a margin of 3.7%, mostly due to lower sales and associated margin for certain composite programs, This was partially offset by higher sales and margin for our Boeing P-8A and Rolls-Royce programs. For the remainder of the year, supplier challenges and program execution are delaying the recovery we expected in this segment, which will impact planned earnings and cash flow performance for the full year. SG&A increased $9.7 million compared to the third quarter of 2021 to $49 million, or 28% of net sales, as a result of higher corporate development costs mostly associated with the acquisition of aircraft wheel and brake. When excluding aircraft wheel and brake, SG&A decreased to $38.1 million, which was 23% of sales as we continue to manage costs and seek opportunities to increase efficiencies across the organization. Diluted earnings per share were two cents for the quarter, which was lower than the 14 cents in the second quarter of 2022 and lower than the 53 cents in the third quarter of 2021. On an adjusted basis, diluted earnings per share were 32 cents compared to 31 cents in the second quarter of the year. Most of the 30-cent adjustment in the third quarter of 2022 relates to costs associated with the acquisition of aircraft wheel and brake. For the first nine months, adjusted diluted earnings per share decreased from $1.45 per share in 2021 to 77 cents per share. The decline from the first nine months of 2022 was primarily within our precision product segment with an impact from JPF of 67 cents per share and increased R&D spend for this segment of 13 cents per share. These reductions were partially offset by strong performance from the engineer product segment, which represented an increase of 37 cents per share. During the quarter, we had cash usage from operations of $6.7 million. This was driven by cash payments and related costs associated with our acquisition of aircraft wheel and brake and delayed collections and structures due to the program execution and supplier delays we've discussed. Now I'd like to discuss our outlook for 2022. Given the favorable sales mix and strength we have seen, sales and margins in our engineer product segment are anticipated to be in line with our prior expectations for the year. In precision products, our plan for the year includes the sale of four KMAX aircraft, with an expectation that we will sell the two remaining aircraft prior to year-end. Profit expectations for this segment have decreased at a lower margin realized year-to-date on our missile fuse program, and KMAX aftermarket spares and support, as well as the $4 million of additional R&D for cargo UAV, of which $2.5 million is expense and $1.5 million is for CapEx. Of these amounts, we expect approximately $1.1 million of additional expense and $600,000 of additional CapEx to occur in the fourth quarter. Lastly, cash flow performance for the segment is expected to be significantly lower due to the delay in supply of a component for our JPF program, which has caused a shift in shipments to later in the fourth quarter, postponing a meaningful portion of our cash receipts to the first quarter of 2023. Within structures, we are experiencing challenges with supplier and program execution at our Jacksonville and Wichita sites, which has limited the recovery that we had previously anticipated and will result in lower profitability and cash flow generation compared to our prior expectations. Finally, our revised guidance also includes the expected results from aircraft wheel and brake and the incremental interest expense we expect in the fourth quarter as a result of the transaction. Our full year outlook is updated as follows. Sales in the range of $695 to $710 million. adjusted EBITDA in the range of $72.5 million to $77.5 million, EPS in the range of $0.95 per share to $1.10 per share, and free cash flow in the range of a use of $10 million to a generation of $5 million. With that, I'll now turn the call back over to Ian for closing remarks.

Thank you, Jamie. We recognize the challenges we face today and our teams have the capabilities and the resources to work through our program supplier issues, including enhancing our customer interactions. I am confident we are laying the groundwork for a much stronger company that will generate improved EBITDA margin, free cash flow conversion, and return on invested capital leading to exceptional shareholder returns. I would again like to welcome the Aircraft Wheel and Brake team to command and to thank all of our dedicated and talented employees who are working hard to meet our goals enabling our customers to achieve greater in all that they do every day. With that, I'd like to open the line for questions. Operator, can we have our first question, please?

Ladies and gentlemen, if you have a question or comment.

Ladies and gentlemen, if you have a question or comment at this time, please press star then one on your telephone keypad. Again, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Steve Barger from KeyBank Capital Markets. Mr. Barger, your line is open.

Thank you. Good morning. Jamie, if... If I look at the full year guide, the implied 4Q will be the highest revenue quarter of the year, but EPS will be the second lowest. Obviously, that implies deterioration in some or all of the segments sequentially. So, does engineered hold up while precision and structures deteriorate sequentially, or can you talk us through what we should expect on a segment basis?

Yeah, so engineered should hold up pretty well, Steve, and the expectation is that some of the incremental R&D spend for cargo is going to hit in the fourth quarter, which will drive that down. There's going to be probably some pressure on our KMAX and SPARES performance in the fourth quarter, driving precision products down, as well as the potential for some continued deterioration in our legacy missile fuse programs that we had talked about impacting third quarter results. There's some expectation that that will continue in the period as well. You know, structures performance, you know, also as, you know, we go through that recovery, there's some downward pressure there as well. So largely engineered products in line, precision products and structures, you know, are driving that down.

And you're expecting a loss in structures in 4Q? On the operating margin line?

On the operating margin line, it's going to be a close call there. You know, it will probably be closer to break even, but it could be a loss.

Okay. The negative contribution from JPF was 17 cents in the first quarter, 53 cents in 2Q, and now 67 cents in 3Q. And sorry if I missed this in your comments, but what do you think that'll be in 4Q? And how should we think about the negative contribution from that program in 2023?

Yeah, Steve, I've got to go back. I think in the very first quarter, fourth quarter results, we put that in around about an 86 impact year over year, you know, overall from JPF on a downward trajectory. You know, again, given the shift in our JPF performance, that's really impacting our cash flow expectations for that program. Not so much our profit expectations. There's been a little bit of deterioration, but, you know, largely I think we'd still expect it to be about an 86 cent drag, you know, plus or minus, you know, over the course of the full year.

It was 67 cents alone in 3Q, right?

No, that was year-to-date, Steve.

Oh, that's year-to-date. Okay, I understand. So I can do that. Yep. You know, obviously the year hasn't unfolded the way you guys would have liked to see. And I'm sure you don't want to talk about 2023 yet, but do you have any kind of framework for investors to think about in terms of the roll-off of strong contributors versus the timeline for fixing the non-contributors? I guess, you know, just broadly, do you expect revenue growth? Can you expand gross margin from where this year ends? Just anything in terms of how you're thinking about 2023.

Hey Steve morning, this is Ian and I apologize everybody for the technical glitches. Yeah, so you know we're already obviously super focused on 23. You know we had some speed bumps this quarter for sure. The teams are laser focused on on correcting those problems, which I think will be in good shape by year end. You know, regarding 23 to couple things. One is, you know, we're in our kind of going in our third year. around operational excellence across the board, a lot of training, a lot of focus, a lot of improvements so far. We've got demonstrated examples, and even quite frankly, our structures businesses, relative to some historic performance, Vermont being a shining star right now, and some really good work going on in engineering products businesses relative to Industry 4.0. So a lot of efficiency that we expect to pick up next year as we continue to kind of build that capability inside. You know, I think about the top line for next year, I think, you know, we're still putting those plans together. We see growth in most of our end markets, which is nice, especially on the medical and commercial side, which are all rebounding nicely. So, again, we always lag the market there, but we're seeing a nice uptick with single aisles and double aisles will come online, I think, you know, probably 24 and 25, a little bit there. So top line, I think, you know, we'll be in a – You can't tell you the exact number there. Bottom line, we're definitely looking to see improvement year over year. We've got strong five-year plans. Teams all know what those targets are. We just hit a couple speed bumps this quarter.

Yeah, and Steve, I'll just add to that. You know, from a cost perspective, we're going to continue to look really hard at our cost structure and make necessary changes there. And so as we get closer to 2023, you know, we should be able to provide maybe some incremental detail on that as well.

All right. Thanks. I'll get back in line. Thanks, Steve.

Thank you. Our next question or comment comes from the line of Larry Solo from CGS Securities. Mr. Solo, your line is open.

Hey, good morning, Larry.

Hey, everybody.

Lots of moving parts, I realize, but just on the guidance, can you just take a step back just and clarify? So essentially you're lowering just on the EBITDA line just to make it simpler. lowering basically mid-point 75 from 96, so $20 million or so. Can you maybe, for starters, tell us, I assume the wheel and brake business has a positive contribution in Q4. I don't know if it did in the two weeks, but I imagine in Q4 there will be something, a few million. And then is it, engineering product sounds like it certainly was a little, it was strong, backlog strong, but it doesn't seem like it was a little bit slower than I thought we'd get a sequential uptick. So you mentioned that you still expect that to be in line with full-year projections. So is that net of the wheel and brake business, and then is essentially the other $20 million then coming out of mostly precision products? Can you just give us a little more clarification on that?

Yeah. So, you know, on that, we do expect to have a positive contribution from aircraft wheel and brake as that comes online. You know, there's some inefficiencies that, you know, result just through acquisition transition, right? Some overhead rate and sales mix challenges. But, you know, roughly that's going to be in line with their historical performance, maybe a slightly lower, you know, for the full year period. You know, with that, you know, there is, you know, when you look at the guide for the full year, it is still a pretty wide range. Um, you know, because there are still a number of variables. And so what we're trying to make sure as we account for those variables, as we, as we provide that guide for the full year, you know, the, the biggest of those, and we talked about it on the call, we've got the supply component issue with, with JPF that has shifted out some of our deliveries. Um, you know, so what we're trying to account for there is because of that, there's a, there's a shift, um, you know, potentially in, in some deliveries later in the year, there could be some potential incremental shift there. Uh, we want to account for that, uh, as part of the guide. And additionally, as we mentioned, Larry, it's really, you know, additional risk at precision products and structures on some of our longer-term programs, you know, primarily focused on those missile fuse programs, you know, as well as some, you know, incremental absorption on some of our other long-term structures programs there that could provide some challenge in the fourth quarter.

And the shift on the JPS specifically, does that, you know, the timing shift it sounds like you may still recognize a lot of that revenue in this year, but you just won't get the cash flow. Is that correct?

So it's more of a cash flow hit? It's a more significant and meaningful cash flow impact for the full year, just given the shift in timing of those deliveries. And what we are trying to account for is that there could potentially be one more shift in that delivery as we're trying to recover from the supply component issue that resulted in that initial shift. The team feels confident that they've resolved that issue, and they're working hard to make sure that we meet those deliveries. But, you know, again, we just want to make sure that, you know, as we go to the back half of the year, we're accounting for all the relative risks.

You know, absolutely. And on the supply chain issues, it sounds like it's a little bit – it's a mixture of some external and some maybe internal as well. And maybe internally, perhaps you have a better visibility or gauge on that. But, Ian, you guys sound pretty confident that most of these issues – I realize the environment is really tough, but it sounds like where we stand today, you kind of see light at the end of the tunnel and resolution with most of these stuff, not the end of the year, but early next year.

Yeah, this is Taylor. Just some more color there. So, you know, we've had the benefit of time on our side. You know, the supplier fire happened back in March. That kind of directly impacted our Sikorsky program. You know, that's a lot of outsourced parts there that we had to go second source. So those are all coming online now. That's good. Jamie mentioned there was a single part literally for JPF, very critical part. We had a failure. That has actually literally been corrected and approved. So now it's just a question of production ramp up to get those things delivered. Then we've got constraints around boats and paperwork and stuff like that. But again, those are all coming online. The last one really that we've been wrestling with is a legacy program, A10 program. This is working with our customer. A lot of challenges there. Everything from a technical data package changes. old tooling, old design, coming online, new testing. So we've been working through all that. And again, time is on our side here. So we're literally working through the final kind of fixes and changes right now to deliver those products between Q4 and early Q1.

Okay, great. Ian, while I got you here, you've in previous calls shared some updates on some of the new products or maybe that's in the pipeline. I mean, you talked a lot about the cargo UAV this morning. It sounds like, you know, certainly some exciting upcoming milestones and moving progress there. Anything else, you know, I think the titanium products you had spoken about the last couple of calls or just any newer products, new introductions that we should sort of look forward to over the next, if not in 23 and 24?

Yeah, I'll give you just kind of a range of some of our exciting, you know, kind of product developments here. First, obviously, cargo is a is a big one for us. Major milestone win by the team with the Marine Corps. We are working also hand-in-hand with several commercial operators. We anticipate some really nice results there in terms of help and support and potentially orders. So a lot of opportunity there on the cargo side for sure, both military and commercial. Shifting over to some other things, we've got a lot of strong activity on the medical side with blood circulation pumps and micropumps. Really good technology there coming out of our Germany facilities. Firebursts coming online. New content on Gulfstream. Those are just a few examples of some of the great innovations, including, quite frankly, a lot of new players in the market when you look at eVTOL and some of the players there. Again, we're laying some really strong groundwork, a lot of new platforms, FLORA-FARA. You guys know that that's a program that's coming out here hopefully this year, maybe in the next year. We're well positioned on both those OEMs.

Great. I appreciate all the call. Thank you so much.

Thanks, Larry.

Just a point of clarification on the structures comment that was made. Again, I was not accounting for the performance of our Vermont facility in there. They would actually be incrementally positive over at structures. you know, as a result of the strong performance we've seen out of the Vermont facility.

Thank you. I'm sure no additional questions in the queue at this time. I'd like to turn the conference back over to Ms. Carrie Bear for any closing comments.

Thank you, everyone, for joining the Command Corporation third quarter earnings call today. We're looking forward to talking with you next year about our fourth quarter results. where we'll also discuss our outlook for 2023. With that, we are adjourned for the day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.