Firan Technology Group Corporation

Good morning, everyone. My name is Lara, and I will be your conferencing operator today. I would like to welcome everyone to the FDG Q4 2022 analyst call. All lines have been placed in mute. There will be a question and answer session following the call. If you would like to ask a question during this time, simply press star followed by the one on your telephone keypad. If you would like to address your question, please press star too. Please note that this call is being recorded. I would now like to turn the call over to Mr. Brad Bourne, President and Chief Executive Officer of Ferran Technology Group. Mr. Bourne, you may proceed.

Thank you. Good morning. I'm Brad Bourne, President and CEO of Ferran Technology Group Corporation, or FTG. Also on the call today is Jamie Crichton, our Chief Financial Officer. Before we go any further, I must caution you that this call may contain forward-looking statements. Such statements are based on the current expectations and management of the company and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the company's industry generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the company. The listener is cautioned to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward-looking statements. The company does not undertake and has no specific intention to update any forward-looking statements, written or oral, that may be made from time to time by or on its behalf, whether as a result of new information on future events or otherwise. In 2022, FTG went on offense after two years of playing defense. During the year, the company invested in technology in their existing sites, grew the business organically, acquired our building in Chatsworth to protect our operations, but then, as committed, completed a sale lease back, announced two acquisitions, and bought back stock. Through all these actions, FTG is strategically deploying its cash balance in ways that will drive increased shareholder returns for the future in both the near term and long term. Specifically, FTG accomplished many goals in 2022 that continue to improve the corporation and position it for the future. These goals include we were awarded up to $7 million of funding from FedDev Ontario under the Aerospace Regional Recovery Initiative to invest to make our Canadian operations globally competitive post-pandemic. This funding is in the format of a repayable interest-free loan. On November 17, 2022, we entered into an agreement to acquire IMI Inc. based in Haverhill, Massachusetts. The closing of the acquisition is subject to approval by the Committee on Foreign Investment in the United States, or CFIUS. FTG will acquire 100% of the common shares of IMI for cash considerations of approximately $2 million, subject to typical closing adjustments. On December 24, 2022, after a year ends, we entered into an agreement to acquire Holiday Circus, based in Minnetonka, Minnesota. The closing of the acquisition is also subject to CFIUS and other customary closing conditions. FTG will acquire 100% of Holiday for cash consideration of approximately $24 million and contingent consideration of up to $6 million, subject to typical closing adjustments. Subsequent to year end, on January 31st, 2023, FTG completed a sale ways back of the Aerospace Chatsworth facility, resulting in net cash proceeds of approximately $8.5 million. Subsequent to year end, FTG's U.S. sites received $3.5 million in funds from the U.S. Employment Retention Credit Program. On the bookings front, our full year bookings were $113.3 million, up 41% over 2021. Within this, new orders included $8.8 million to supply cockpit assemblies for military and commercial simulators for different aircraft. We achieved a 1.26 to 1 book-to-bill ratio for 2022, resulting in increased backlog of $65.5 million compared to $39.7 million at the end of 2021. Our full-year revenues increased by 13% to $89.6 million as global air travel and commercial aerospace market continue to recover from the pandemic. We maintain strong liquidity with net cash on the balance sheet of $12.3 million after investments in the year of $3.8 million in capital expenditures, $5.9 million for research and development, $8.5 million for the aerospace Chatsworth facility, and $1.1 million for FTG share buyback. We achieved adjusted net earnings of $1.2 million for fiscal 2022. Jamie will talk about our financials shortly, but I'd like to highlight what we are seeing in future market demand. Our markets are strong or rebounding nicely. Air travel continues to rebound. It is nearing pre-pandemic levels. When you look at aircraft deliveries, Airbus reported an 8% increase in deliveries in 2022. They average about 43 A320 aircraft per month in the year. They are working to ramp production and are targeting 65 planes per month by early 2024, a 50% increase. At Boeing, it is more dramatic as they also had the challenges of the 737 MAX to deal with. Their 2022 deliveries were up 40% from the prior year. They have plans to ramp their 737 production from its current rate of 27 aircraft per month to 47 per month by the end of 2023, a 70% increase. Both companies continue to book new orders faster than they are delivering aircraft. In the business jet market, Lombardier delivered 123 aircraft in 2022, a slight increase from the prior year. They provided guidance for a 15% to 20% increase in 2023. All of this bodes well for us as we look to future demand in 2023 and beyond. I've also looked at results from key defense contractors, and Lockheed, the largest defense contractor, posted strong sales in 2022 and provided guidance for continued strong sales in 2023. Northrop Grumman provided guidance of 3% to 5% growth for 2023. The defense market is government-funded and appears well-supported in the near term due to increased geopolitical tensions across the globe. Looking at the longer term, Boeing's most recent 20-year forecast shows long-term industry growth. and it continued to show 40% of all new aircraft deliveries going to Asia, as has been the case in the recent forecast. The business jet market has already seen traffic recover. A recent business jet market forecast from Honeywell similarly predicts growth in this market in the coming years. The simulator market mirrors the end market applications. But as we always remind everyone about this market, it is lumpy, so year-to-year variations are large. So as we have said for many years, FTG's goal is to participate in all segments of the aerospace and defense markets as each moves through their independent business cycles. This continues to prove effective. Beyond all this, let me give you a quick update on 2022 for FTG. First, as already noted, the leading indicator of our business is our bookings or new order. Full-year bookings were up 41%, and total backlog at the end of the year was 65.5 million, a 65% increase from year-end 2021. Within these increased bookings, our simulator-related business came back to life with over $8 million in new orders. In 2022, sales were 89.6 million compared to 79.4 million last year. This is a 13% increase. This could have been higher if not for some challenge in ramping production across the company. In our aerospace business, sales were up 14% or 4.4 million compared to last year. The increase was across all sites. On the circuit side of our business, sales were up 7.4 million or 14% on a year-over-year basis. Again, all sites contributed to the growth. Overall at FTG, our top five customers accounted for 55.7% of the total revenue in the year. This compares to 51.1% last year. While the percentage is similar, the companies have changed. Last year's top five included a large simulator company, and there were no simulator companies in our top five in 2022. Also interesting to note, of the top 10 customers, seven are customers shared between circuits and aerospace. We like to see the shared customers as it means we are maximizing our penetration of these customers by selling both cockpit products and circuit boards. Also, for the first time, Sales to the U.S. Defense Logistics Agency made our top 10 list, as we increased our sales into the defense aftermarket segment. In 2022, 38.6% of our total revenues came from our aerospace business, compared to 38% in the prior year. I'd like to turn the call over to Jamie, who will summarize our financial results for 2022, and afterwards, I will talk about some key items we are working on. Jamie?

Thanks, Brad. Good morning, everyone. I'd like to provide some additional detail on our financial performance for 2022 and Q4. On sales of 89.6 million, FTG achieved a gross margin of 21.3 million or 23.8%, compared to 17.1 million or 21.6% on sales of 79.4 million in 2021. Excluding pandemic-related government subsidies, the gross margin was 21 million or 23.4% in 2022, as compared to 14 million or 17.6% in 2021. The increase in gross margin dollars and the gross margin rate is a result of increased operating leverage on higher sales volume and a favorable foreign exchange impact. Revenue per employee was 194K in 2022 as compared to 176K in 2021. In Q4, on sales of 23.8 million, FTG achieved a gross margin of 5.7 million, or 24.2%, compared to 4.2 million, or 20.9%, on sales of 20.3 million in Q4 2021. The increase in gross margin is also the result of operating leverage on higher sales and a favorable FX impact, partially offset by a 0.3 million reduction in government subsidies. There were no government subsidies in Q4 2022. From a geographical standpoint, FTG achieved sales growth in each region in 2022. 73% of FTG sales were derived from customers in the United States, which is down nominally from 75% in the prior year. A large majority of our revenues in all other geographic regions is tied to the commercial aerospace market, which in 2022 grew more than military markets on a relative basis. SG&A expense was $12.7 million or 14.1% of sales in 2022 as compared to $11.0 million or 13.8% of sales in the prior period. The increased expense level is due to resumption of normal business travel, reduced wage subsidies, unfavorable FX impact on U.S. dollar-denominated expenses, and acquisition-related expenses. Acquisition-related expenses for our holiday and IMI deals were $0.2 million for 2022 and $0.1 million for Q4 2022, as compared to zero in the prior periods. Operating expenses also include a loss provision on the sale leaseback at the Chatsworth facility. Although the gross proceeds of the deal exceeded the purchase price that we paid in Q2 2022, the loss provision of $357K covers commissions, taxes, and legal fees in connection with the transaction. R&D costs for 2022 were $5.9 million, or 6.5% of sales, compared to $5.4 million or 6.7% of sales for 2021. R&D efforts include product and process improvements at the circuit segment and efforts to develop and qualify new products for future aerospace programs. FGG is exposed to currency risk through transactions, assets, and liabilities in foreign currencies, primarily U.S. dollars. The average exchange rate experienced in 2022 was 1.295, as compared to $1.254 in 2021, which equates to a weakening of the Canadian dollar of 3%. We estimate that for each 1% weakening of the Canadian dollar, FGG would experience an increase in pre-tax earnings of 345K. In 2022, the positive impact was approximately $1 million, a positive impact on earnings, which was supplemented by realized gains on foreign currency forward contracts of 0.3 million. Adjusted EBITDA, as described in the press release, was 9.1 million for 2022, or 10.2% of net sales, compared to 9.6 million, or 12.2% of net sales for 2021. The benefit of increased sales volume was largely offset by reduced government subsidies. On a pre-tax basis, subsidies in 2022 were $0.3 million as compared to $6.5 million in 2021. Items adjusted from EBITDA for 2022 were the $357K loss provision on the sale-leaseback of the Aero Chatsworth facility and $168K of expenses related to the two pending acquisitions. Adjusted EBITDA for Q4 2022 was 2.9 million, or 12.1% of net sales, as compared to 2.3 million, or 11.1% from net sales in Q4 2021. For 2022, FGG recorded adjusted net earnings of $1.2 million, as compared to $0.3 million in 2021, with the same adjustments as in EBITDA. The 2022 income tax provision of $1.6 million, or 55% of adjusted pre-tax earnings, reflects that the corporation's Canadian operations were profitable and that deferred tax assets on foreign operating losses were not recognized in the year. Our net cash position as of Q4 2022 is $12.3 million as compared to net cash of $17.9 million as of Q4 2021. The decrease in net cash position is after investments in CapEx of $3.8 million, R&D of $5.9 million, share buybacks of $1.1 million, and the temporary use of cash to secure the aerospace Chatsworth facility of $8.5 million. The stale leaseback of that facility was completed in January 2023, generating net cash proceeds of $8.5 million. Excluding the Chatsworth facility purchase, free cash flow for 2022 was $4.1 million, as compared to $2.1 million in 2021. As at the 2022 year end, the company's primary sources of liquidity totaled $52.4 million, consisting of cash, accounts receivable, contract assets, and inventory. Our revolving credit facility includes 10 million US in support of working capital requirements and 10 million US in support of CapEx investment, which is committed through July 2026. As of the 2022 year end, outstanding term loans on the credit agreement are 1.1 million US or 1.4 million Canadian, leaving nearly 19 million US of credit availability. Other sources of financing for qualifying investments include up to $5.1 million in incremental funding from the Government of Canada to the ARR program. We received $1.9 million from this program in 2022. All such funding is repayable over five years without interest, starting in 2025. Subsequent to year-end, our U.S. sites received $2.6 million in funds from the Employment Retention Credit Program, These funds further add to our net cash balance and will be included in first quarter 2023 income. Working capital at November 30, 2022 was $30.8 million. Accounts receivable DSOs were 64 at the 22 year end compared to 72 in 2021. Inventory returns were 3.7 at year end as compared to 3.4 in 2021. and accounts payable days outstanding were 73 at the 22-year end as compared to 86 in 2021. Inventory returns were better in 2022, despite our decision to carry higher levels of certain raw material components to mitigate the risk of global supply chains. We entered Q1 2023 with a record level of backlog of 65.5 million. which is an increase of 65% as compared to the start of 2022. 2023 will be an exciting year for FTG as we deal with the challenge of growing organically to meet customer demand and the integration of IMI and Holiday into FTG. Our existing sites are completely focused on meeting delivery requirements. Both acquisitions will continue to operate as independent sites in their current locations making the integration considerably less complex. Our complete set of year-end and quarterly filings are now on CDER.com. And with that, I will turn things back to Brad.

Thanks, Jamie. Rather than talk about individual site items, I'd like to address some higher-level items from the year. For me, I thought 2022 showed exceptionally strong operational performance. I say this because our government support reduced dramatically from the previous year and our results improved. The government support was truly appreciated, and it really helped FTG retain a skilled workforce during the pandemic, something that positioned us much better for recovery. But in 2022, government support dropped dramatically by $6.3 million versus 2021. But even with the reduced support, we increased adjusted net income by $1 million. So on $10 million in increased sales, net income increased by $7 million on an apples-to-apples basis. While government support to help with our day-to-day expenses dropped in 2022, we did enter into agreement with the Canadian government for longer-term financial support in the form of interest-free loans to invest in our Canadian facilities to ensure they remain globally competitive post-pandemic. The program will enable us to invest across a range of initiatives, including product development, process improvement, automation, green technology, and cybersecurity, including both R&D expenses and capital equipment. In our third quarter of 2022, we acquired the facility that houses our aerospace transfer operations. We did this as it was the only way to ensure our business continuity. But at the time, we said it would be a temporary situation and we would work towards a sale leaseback arrangement. Subsequent to our year end, we did what we said we would do and we completed the sale leaseback. Our net exposure or expense was the commission on the sale and minor professional fees, which are included in our 2022 results. We are very pleased with the outcome and our lease plus auctions gives us a 17-year secure horizon on this facility. As we hunkered down during the pandemic, we saw FTG's valuation and market cap drop more than we thought was appropriate. As part of our regular review of our capital allocation strategy, we concluded that it would be appropriate and a good investment to enter into an NCIB program to repurchase FTG shares. Through the end of calendar 2022, we acquired 580,000 shares or approximately 2.4% of our total shares issued for just over $1.1 million. As part of our capital allocation strategy, we also realized we needed to deploy our substantial cash on our balance sheet to maximize our total returns. This included finding accretive acquisition aligned with our overall market focus and strategy. And we were very pleased with the deals we announced in November and in December. In both cases, While purchase agreements have been signed, we are still awaiting U.S. government approval for the acquisitions before they can close. In November, we announced we had signed an agreement to purchase IMI Inc. in Haverhill, Massachusetts. While a relatively small deal, it increases FTG's presence in the RF circuit board market, which is growing fast, and it brings new customers to FTG. Our plans are to operate the business in its existing site with its existing teams. Our latest information from the U.S. government is the review will be complete early in our second quarter. We expect IMI will add $4 to $5 million in incremental sales and $800,000 to $1 million in incremental annual EBITDA. The 2023 benefit to FTG will be a prorated proportion of these estimates based on when the deal closes. In late December, we announced we had signed an agreement to purchase holiday circuits in Minnetonka, Minnesota. This is a more substantial acquisition as they have revenues of over $40 million pre-pandemic. With the acquisition of Holiday, we now have a U.S.-based plant that can provide advanced circuit boards. The U.S. base is critical as it can address segments of the market that were not addressable from our Toronto plant due to its location outside of the U.S. Again, our plans are to operate the business in its current location with the team already in place. Holiday sales did drop during 2020 and 2021 due to a pandemic-related drop in demand, and their headcount dropped by about 40 staff or 20%. They are seeing a strong recovery in their demand, but have not yet ramped production. In 2023, we anticipate building up the production staff and increasing throughput. When this is done, we do expect to see pre-pandemic-like results from that site. So by 2024, we anticipate approximately $40 million in incremental revenues, and approximately $5 million in incremental EBITDA. Again, the U.S. government has provided us guidance that their review of our acquisition will be done in our second quarter. Together, we expect these acquisitions will enable us to positively invest the cash on our balance sheet without the need for any significant amount of new debt. This should materially increase our EBITDA with no shareholder dilution. and it will continue to strengthen FTG's market position for aerospace and fence printed circuit boards. All of this should create value for our shareholders. And subsequent to year end, our U.S. sites were approved for the employee retention credits that Jamie mentioned and received approximately $3.5 million in our first quarter. This is a one-time event and will benefit our Q1 2023 income and further strengthen our balance sheet. With the more complex geopolitical situation in China, I'm sure there are questions and concerns about our activities there. In 2022, both our operations in China had their best sales year ever, and both were profitable. We have repatriated some of the profits back to Canada during the year, and we're working to repatriate more in 2023. Also in 2022, the C919 aircraft development program achieved CAAC certification and we are finally in a position to see production orders after 10 years of development. This will benefit our China operations going forward and make them less susceptible to geopolitical uncertainties. But notwithstanding all this good news, we are being cautious about our operations in China, and any further increase in tensions between China and other countries could impact our operations there in the future. We continue to see further acquisition opportunities that could fit with either of our businesses. Given our increased confidence in our performance, the overall recovery in the commercial aerospace market, and our strong balance sheet, we are evaluating these opportunities. And finally, looking forward into 2023 and beyond, there are reasons for optimism. As already noted, the industry is recovering and ramping production. Our sales team has been doing a stellar job, and we are seeing them winning new programs and adding new customers. With a focus on operational excellence in all parts of FTG, our improved financial performance in 2022 and our announced acquisitions, we are confident we have weathered the storm and will return to long-term growth in the coming years. This concludes our presentation. I thank you for your attention. I would now like to open the phones for your questions. Clara?

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by the number one on your touchstone phone. If you would like to withdraw your request, please press star followed by the number two. One moment please for your first question. Your first question comes from the line of Nick Corcoran from Acumen Capital. Please go ahead.

Good morning and thanks for taking my questions. Good morning. First question is there's strong growth in backlog, backlogs at record levels. How much of the backlog do you think you'll get through in the first quarter of fiscal 2023?

Yeah, always a good question, Nick, and always challenging to answer. I guess a couple of things on that. First of all, our Q1 is always constrained because it covers the Christmas, New Year's period, at least in North America. And so we... end up losing about one week of production compared to Q4 of last year. And so that makes it tough sequentially. And then the second complication or variable in this is just supply of components, any issues around supply chain. And there's some. It's never something that's gigantic for us, but it certainly impacts us a little bit. So having said all that, For sure, we see significant growth compared to Q1 last year, but I'm not sure we're going to see significant growth compared to Q4 last year on a sequential basis. Sorry to make it so complicated, but those are the factors that we're dealing with and looking at in our Q1. We certainly have lots of orders, so we're not constrained from that perspective at all.

I'm maybe thinking in terms of constraints and. With either labor or supply chain, how do you, how do you see yourself wrapping up for demand?

Yeah, and let me come back to the supply chain 1 for 1 2nd, because we are working to do what we can to mitigate any impact from our supply chain. And certainly in 2022, we have had our sites increase the raw material. at their site to try to smooth out any disruptions in the supply chain, and it's helped, but we can't cover all of the issues that might appear. On the labor front, we added staff through the year, but we ended the year, and this is versus an internal one, we ended the year about 20 people below our planned headcount for the year, and it's not not impossible to add staff, but it's certainly taking longer to add staff than what we had seen historically. And we are working and exploring different options to, you know, to accelerate the addition of our staff. But it's still, it is taking longer and therefore, you know, it is impacting our ability to ramp. But also, as I said earlier on this, and I want to reiterate it, that The fact that we could retain as much of our staff as we did through the pandemic has helped us. And our revenues were down significantly, more than $30 million from 2019 to the low point in 2021. And we didn't reduce our headcount by that same amount. So we have some staff. It's helped us ramp up. Last year, it's helped us ramp this year or will help us ramp this year, but we still need to add more.

And you've added some simulator orders for the backlog. When do you expect those to be delivered?

Yeah, we did. And, you know, that was important to us because, you know, made our activity during the pandemic even tougher because that kind of went to zero at the same time. We added... between $8 and $9 million of orders for simulators. Majority of that is actually in our first half of 2023. I guess the good news and the bad news on that. So the good news is it actually requires a relatively small amount of labor to deliver it. So that's good. The offset to that is, you know, it's got a higher material content, and therefore, you know, if there's any issue on supply chain around the components go into that, there could be a little bit of delays on that. But at this point, from what I've seen, I'd say, you know, we're still on track to deliver the majority of that in the first half of 23.

And just the last question for me, the CFIUS approval for Holiday and IMI, are there any risks to that either being delayed or potentially holding up the deals?

Yes, there's always risk. But I think the risk of it being delayed is substantially higher than the risk of it not being approved. We have been through CFIUS approval a number of times when we bought the Teledyne PCT business, we went through the CFIUS approval. When we bought Colonial Circuits in 2019, we went through the CFIUS approval with no issues at all. My expectation is it will get approved. The government gives you a target completion date, but for sure the government has the option to extend that date if they choose. Again, if I go back to the last one we did with Colonial, they did extend it, and I don't remember the exact amount. So, anyways, there is a risk of delay on closing, and we'll just have to see what happens.

Thanks for talking to me.

Thanks, Greg.

Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the number one. Your next question comes from the line of Paul Seat from Dunlop Capital. Please go ahead.

Morning. Could you speak just a little bit? You've talked publicly and on this call about holiday, what it adds. Brad, could you talk to what it can add in terms of program capabilities? When I look through the list, you know, it looks like there's one major defense customer you picked up in this. Is this maybe a program program? opportunity? Because it looked like they're already running two shifts. Where's the real opportunity so that we can get a better perspective on this? They got two quick follow-ups.

Right, right. And I, you know, definitely they're involved in programs that we are not involved in, so we're adding that. But I guess what's important to me, number one benefit of having Holiday Their capability is very similar to my plant in Toronto in terms of the level of technology they can build. And both of them are good at high technology circuit boards. The difference is our Toronto plants in Toronto, in Canada, the holidays in the U.S. And there's always been parts of the U.S. market, primarily around the defense side of that market, that we cannot address because they want to keep the work in the U.S. And so to address that level of technology, it was not possible for us. Now it will be possible. And then after that, as we always do, we try to have sites specialize in certain levels or certain types of technologies. We definitely want Holiday working at the high end. Right now, they have a range of technologies in that site. So over a longer period of time, I guess my hope would be to move some of the lower technology stuff out to other FTG sites, spread works where it comes to mind, and try to drive holiday to an overall higher average of technology, hopefully with higher margins than what they have right now.

That makes sense. Maybe just during the year, was there anything significant in the shift with regards to the program wings? Did you pick up anything meaningful in the large air transport market segment that maybe previously you would have said was a small portion of the business that might be a meaningful shift?

Yeah, let me just think for a second. That's a very good question. And definitely we did. And, you know, I'm actually not as prepared as I should be to give you a great answer. And I'll give you one good example though. So for the past five years, we were on the cockpit product side of our business. And truly it was a five-year process. We worked to be approved by Boeing to supply cockpit products onto their aircraft. Remarkably painful process. And I think it was in late 2021, we actually achieved the approval And that led to increased and significantly increased revenues in 2022. And we're still, I think, just scratching the surface of this. You have to basically capture part number by part number to grow your market share. But on a relatively small number of new part numbers in 2022, our revenue jumped significantly. And so, you know, that's a great one for us. As I said earlier, Boeing's activity is ramping and so hopefully we can really continue that path going forward. Sounds like Jamie has another example.

I think the other one perhaps is we earned a contract with the Defense Logistics Agency. That really started from zero two years ago and as Brad mentioned is now our seventh largest customer. It was about $3 million in the year. So that, I would call a program win.

That's great. Last one for me, Brad, you sort of made commentary around acquisition. You've made public commentary and printed commentary around being on the offensive, and we've seen that through two deals so far. Can you just give us context around how aggressively you're willing to be here. I think I was, I was expecting that you might consolidate and sort of work through some of these changes, but it sounds like you're still very much open for business and maybe the context around how you look to finance any further acquisitions would be great. Right, right.

Sure. And, you know, yes, for sure. We're playing offense and there are opportunities, but at the same time, If I can go back and talk about these two that we announced. So IMI, my first discussion with the owner of IMI was 15 years ago, at least 15 years ago. And so it didn't happen overnight. Holiday has been on my list as an interesting target for a decade. And I reached out many times and they were never ready to talk and then they were ready and here we are. So good news. We're definitely reaching out. We're definitely talking to people. It doesn't mean that I'm trying to close another deal in Q1 of this year. It means we're laying the seeds for future opportunities that could happen later. But at the same time, having said that, one important thing is that different acquisitions take different amount of effort to integrate. The two we're doing with IMI and Holiday are are at the easy end of the scale. And the reason I say that is in both cases, we're going to run them as is, where is, essentially with the existing team. And so it's a smaller integration effort. You know, a number of years ago, for instance, when we bought Teledyne PCT or we bought PhotoWash, that was buy them, close them, move the work to other sites. That's a much more complex integration process. And so, you know, These are the sorts of things that determine whether we could do more sooner or not. But the good news is these are on the easy end of the scale.

Really helpful. Great year. Thanks, guys.

Okay. Thank you.

Thank you, sir. There are no further questions in the phone line at this time. Mr. Boring, please continue for any closing remarks.

Okay, thank you. A replay of the call will be available at 416-764-8692 or 877-674-7070, PASCO 863452. The replay will also be available on our website in a few days. I thank you all for your interest and participation. Thank you.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.