Good day, everyone, and welcome to the Astronics Corporation's Q2 2024 Financial Results Conference Call. All participants will be in a listen-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 and one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Deborah Pawlowski. Ma'am, please go ahead. Thanks, Jamie, and good afternoon, everyone. We certainly appreciate your time today and your interest in Astronics. Joining me on the call are Pete Gundermann, our Chairman, President, and CEO, and Dave Burney, our Chief Financial Officer. You should have a copy of our Q2 2024 financial results, which crossed the wires after the market closed today. If you do not have the release, you can find it on our website at astronics.com. As you are aware, we may make some forward-looking statements during the formal discussion and the Q&A session of this conference call. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents filed with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. During today's call, we will also discuss some non-GAAP measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release. So with that, let me turn the call over to Pete to begin. Peter? Thank you, Debbie, and good afternoon, everybody. Thanks for tuning in to our call. We're going to talk about Q2 results, obviously, dig into some specifics of a recent refinance effort that we, or refinance process that we went through earlier in July, and close the call by talking through our expectations for the remainder of 2024. So long story short, we feel that Q2 was a very good quarter for Astronics. Simply put, strong sales, improving margins, and very strong bookings. Our aerospace segment, which is just shy of 90% of our sales year to date, had a very good quarter. Our test segment, approximately 10% of our sales, had what I would term as a reset quarter. We'll get into the segment results a little bit later. But as I already mentioned, we also, after the quarter closed, accomplished a refinance in early July, which we feel is a very important step forward for the financial health of our company. So running through some overall consolidated numbers, again, sales of $198 million exceeded our guidance for the quarter. That's happened a handful of times recently. It's become a little bit of a trend. Up 14% year-over-year in the comparator quarter and up 7% sequentially from Q1. The sales level marks a return, frankly, to pre-pandemic levels. The sales level was enabled by positive trends that continue to propel us forward. And these are things that we talked about the last few calls. I'm not going to go into them a whole lot of detail, but we continue to see moderating inflation. We continue to see price increases that we have implemented taking hold and beginning to have an effect on our business. Most importantly, our supply chain, which is very much global in nature, continues to improve. Also, our workforce turnover has reduced from the very high levels of 2022 and 2023, and the efficiency of our workforce is improving, and I expect will continue to improve. A tidbit of number, which may surprise you, did me when we ran these numbers. Our workforce currently totals about 2,600 people, and 43% of them at the end of Q2 had been with us for less than three years. That's almost half, and it's a much higher percentage than what we are typically accustomed to. I don't think it's unique. I think a lot of companies in our space are dealing with the same realities, and it makes it challenging to step on the gas and immediately have a response in terms of organizational efficiency. But we're getting better, and it's starting to show in our financials. The income statement is improving with the sales level. Dave will talk through a lot of the details in just a few minutes. The adjusted EBITDA for the quarter was 10.2%, up from 9.1% last year, or $20.2 million compared to $15.9 million. That's an improvement, but we expect more of it as we go through the year, as our sales continue to climb, and as our supply chain continues to improve, and as our workforce efficiency and quality improve, and as price increases continue to take hold. Also, and it shouldn't be understated, demand continues to be very strong. Our second Q2 bookings were $219 million. That's a book-to-bill of 1.11, and it was strong demand really across our range of product lines. It's really nice when you have a high shipping quarter and an even higher booking quarter that makes you feel really confident about the near-term future of the business. Our 12-month bookings at the end of the Q2 were $783 million. That, again, is a number that's approaching pre-pandemic levels. We ended the quarter with a record backlog again of $633 million, with, importantly, $402 million scheduled to ship in H2 of 2024. Looking at our segments, simply put, again, our aerospace segment had a really nice quarter. It's 90% of our consolidated sales. Basically, as aerospace goes, Astronics goes. Solid growth of 11.7% year over year, $177 million in revenue with good margin improvement. Dave will talk through those details in a second. I want to spend a few minutes talking about test and what I described earlier as a reset quarter. We had a restructuring in April that I think we talked about on our Q1 call, and it was designed to save about $4 million annually beginning in the current quarter, the Q3 of 2024. So that restructuring was accomplished. And as part of that, we closed a facility in Texas, a smaller one, about 30 people or so, and consolidated those results in our Orlando headquarters. It's similar to a consolidation we implemented last year of an operation up in the Boston area and another one that we have announced but not yet accomplished for a smaller UK operation. All of these are designed to simplify the business, simplify the operations, and lower costs. We're well underway with that effort. An unfortunate development in Q2 was an estimate to complete adjustment of $3.5 million for a couple of revenue over time, or otherwise people might know it as percentage of completion jobs in our transit test business. These resulted in sales and margin reductions of $3.5 million in the quarter, and it's basically a result of doing a ground-up review of those programs and learning or deciding or discovering that we weren't as far along in terms of a development effort as we thought we were. We should get that revenue back over the next few quarters. The contribution on it is something we're going to have to wait and see what that's all about. But that was a negative development for our test business, but we feel sets us up pretty good for the second half of the year, getting it behind us. Most importantly, in Q2, we were finally awarded that radio test contract by the U.S. Army that you've heard me talk about almost for two years now. It was an IDIQ, or Indefinite Delivery Indefinite Quantity, contract for radio test equipment that is designed to allow the U.S. Army to test its full range of radios proactively and to diagnose failures in the field or in the lab or wherever. It is a big program. It's funded to be $215 million. We understand that there's clearly demand in the field at the Army to consume that amount of money, and we expect that it will be consumed in the coming years. The initial contract came with an award for $15.5 million, and $7.2 million of that was recognized as revenue in Q2. We expect the majority of the remainder, a total of about $10 to $12 million, will be recognized over the course of 2024. That initial delivery order was for engineering qualification and low-rate initial production tasks. The question remains, when will full-rate production begin? We don't know the answer to that yet. We have some tasks we need to get through as part of the initial LRIP award. We also are dependent on the Army getting through some of their tasks. Our best guess is that it's mid-2025 or later, but probably will be commenced by the early part of 2026. More on that as it happens over the coming months. But that program, along with the cost reductions that we've implemented, we expect will put the test business on a much better footing compared to where it's been over the last few quarters. Finally, the refinance that we announced early in July, this is a big deal for our company. It is basically a larger, improved ABL revolver facility combined with a reduced, less expensive term loan. And the combination of the two, in sum, provides us a lower combined interest rate, much lower amortization compared to what we had before, an improved level of available liquidity, and friendlier covenants. In sum, it's an important step towards the recovery of our company and gives us the flexibility financially to make the investments we need to make to realize the opportunities that are ahead of us in the near future. I'll turn it over to Dave at this point to talk through some of the details of the quarter and the refinance package. Dave? All right. Thanks, Pete. As Pete discussed, we continued our strong momentum into Q2 with consolidated sales growth of 14%, with strength across most product lines and notable increases in demand from the commercial, transport, and defense markets. Consolidated revenue was $198.1 million, and this is the highest we've seen since Q4 of 2019. It's difficult to make comparisons to 2023 as we're still fighting through the pandemic, part shortages and high inflation, and hadn't yet re-implemented bonus plans. So I think it's more relevant for the most part to compare performance to Q1 of this year sequentially. As we frequently point out, there is inherently strong operating leverage in our business. The double-digit growth in sales compared with Q2 last year translated into a 21% gross margin, which was up 220 basis points compared with last year, while operating margin improved 240 basis points to 3.8%. While these improvements are nice, our sales and profit were actually dampened by about $3.5 million due to an increase of estimated cost to complete that Pete had mentioned on mass transit test contracts. This had the effect of lowering sales and related margins by the same amount as the percentage of completion on those contracts was reduced. Also, $1.3 million of restructuring and severance costs, primarily in the test segment, were recorded in the quarter. Consolidated operating income was $7.6 million and represents 45% operating leverage on the incremental sales over Q1 of 2024. Adjusting for the estimated cost to complete revisions and the restructuring and severance costs, our consolidated operating profit would have been $12.4 million, or about 6%. Still not where we want to be, which is up in the double digits, but on the right track. As we've stated before, we feel we should be a company that should be able to achieve EBITDA margins in the high teens, at least. And that translates to operating income in the 14% to 15% range for us. Sequentially compared with Q1 of this year, consolidated SG&A increased $1.3 million, primarily related to restructuring and severance costs of the test segment, slightly higher legal costs, and being partially offset by lower equity compensation. Sequentially, again, corporate expenses declined by about $1 million as Q1 had roughly $1 million of annual equity compensation granted and recognized in the quarter primarily to directors. We expect the $6.8 million in corporate costs to be about the run rate for the rest of the year. Looking at the segments compared again to Q1, Aerospace operating profit grew 59% on an 80% sales increase. The $19.3 million in operating profit for the Aerospace segment was its highest since Q1 of 2019. The sequential improvement was a result of strong contribution margin on the incremental sales and improved operating efficiency. Test sales were flat compared with Q1, while the operating loss increased $2.3 million to $5.3 million compared with the first quarter. Test sales reflect $7 million of revenue and related profit from the recently awarded 4549/T radio test contract. Included in the test segment loss was the $1.1 million in severance and restructuring costs and the $3.5 million reduction to sales related to the transit programs. Excluding these, the test segment would have approached break-even. As we continue to execute on new programs to grow revenue, we expect that the test segment will approach break-even by the end of the year. That's not to say we think this segment should operate at break-even, as we believe this business should also be able to achieve double-digit operating profit. But for that to happen, the top line needs to improve, and we need to get past the current program mix, which has weak profit profiles. 4549/T will provide a significant step towards higher volumes with solid margin profile. We've taken steps to simplify the business, as Pete mentioned, by consolidating facilities and reducing the workforce during the last quarter, and we should see the impact of that as we move forward into next year. Moving on to the balance sheet, as we announced on July 11th, we amended and expanded our asset-based revolving line of credit and refinanced the term loan. The refinancing included an expanded asset-based line of credit and a smaller, lower-cost term loan. The revolving line of credit was expanded to a $200 million maximum, subject to the borrowing base, with an interest rate of SOFR 2.5%-3%+, varying based on our consolidated leverage ratio. We're currently at SOFR 3%+. At closing, we had $128 million drawn on the facility and total availability of about $50 million. The new $55 million term loan interest rate reduced the interest rate by approximately 200 to 325 basis points to SOFR 5.5% to 6.75%+, depending on our leverage ratio, and importantly, reduced the mandatory annual principal payments from $9 million to $550,000 annually, saving us $8.5 million annually in principal payments. We're currently at SOFR 6.75%+ on that. In all, the refinancing improved liquidity, reduced our annual cash cost for debt service by about $10 to $11 million, and provided overall greater financial flexibility. The term note and the revolving credit facility both expire in July 2027. Jumping forward a bit, this refinancing, since it was completed in Q3, will have an impact on our third quarter income statement. As the refinancing was the Q3 event, our Q3 will reflect some one-time costs relating to the write-off of some deferred financing costs from the old term loan and the revolving credit facility, and the payment of the call premium on the old term note. These costs total approximately $7.5 million. About $7 million of these costs will be reflected in Q3 as a loss on extinguishment of debt in our income statement, with the residual $500,000 recorded as interest expense in Q3. Our blended cash interest rate today is roughly 9.5%, but could move if SOFR rates change or our leverage or drawn balance changes. Additionally, we'll have non-cash amortization of the new upfront fees classified as interest expense of approximately $500,000 per quarter. Although it might not appear this way, we have been focusing resources on managing our inventory. Inventory increased a modest 0.6% compared with the first quarter and reflects the continued delay in several new programs that have moved out one or two quarters. We continue to target mid-3x turns per year for 2024 and a goal of over 4x turns per year in 2025, which gets us back to a more acceptable inventory turnover rate. CapEx was $1.8 million in the quarter and $3.4 million year to date. We are planning CapEx for the full year to be in the range of $17 million to $22 million, so a pickup in H2 of the year. Much of that is related to machinery and equipment and test equipment that we need for the new programs that we're winning. We had no activity on our ATM program in the quarter and are not anticipating any further activity with that program. This concludes my remarks. Pete, back to you. Okay. With respect to the remainder of 2024, in our Q1 call, we identified three watch items which we felt would be important for how 2024 was going to shape up and work out. The first one was whether the demand groundswell that we had been seeing for many quarters up to that point would continue. The second one was whether we would get the 4549/T contract award in a timely manner. And the third was what would Boeing rates do with respect to their demand signals for us. The good news for today is that all three of those things seem to be in pretty good shape. We've talked about demand already, $219 million of bookings in the second quarter, very well answered that question. And we continue to be pretty optimistic about our prospects in the market. So demand continues to be very strong and is a helpful tailwind as we move into the second half of the year. The 4549/T radio test contract with the Army came a little later than we'd hoped, but it still got into Q2, which is what the plan was as we started the quarter. We are thinking, again, that that will provide $10 million to $12 million of revenue over the course of 2024, and it already did $7.2 million of that in Q2. So it'll be a reduced rate in Q3 and Q4. But the important thing here is that the sooner we get through that engineering low-rate production portion of the program, the sooner we will get into full-rate production, again, assuming that that's consistent with the Army's expectations, we think it is. Finally, Boeing rates. I'm not going to tell this crowd on our call anything they don't already know. Boeing is committing to or has the goal to get up to 38 ships a month by the end of 2024. I talked in our last call that they had held us at 30 to 35 ships a month. They're still doing that. So we don't think they're building at that rate. They're building inventory, apparently, but they don't want to turn their supply chain down and then try to turn it back up later in the year. So we're expecting, although we don't know, that we will stay at this 30-35 ships per month over the rest of the year. And eventually, they will accelerate beyond 38 a month. I'm sure they're planning that sometime in 2025. And when that happens, our rate probably will not increase accordingly while they burn off inventory. But that's where that arrangement stands for us at this point. So given all that, we are increasing our revenue guide for the year to the range of $780 million to $800 million. That's up from the initial $760 million to $795 million. That would be a 15% increase over 2023 at the midpoint of the range. I mentioned earlier that at the end of Q2, we had scheduled a backlog of $402 million for H2 of the year. If you take our first half actual shipments and if we were to be successful shipping everything we've got scheduled in H2, we would already be at the low end of that range without any additional book and ship orders over the course of the year. Now, that was all as of the end of Q2. We typically do get a healthy amount of book and ship business. So assuming supply chain keeps up and assuming our capacity continues to develop, we should be in pretty comfortable shape with that stated range of $780 million to $800 million. We also announced in our press release that we are forecasting Q3 revenue of $195 million to $205 million. Midpoint, obviously, $200 million, which is a relatively small step up from our actual Q2 revenue that we're reporting today. But again, we put the range on there for a reason. We have been in recent quarters pretty consistently at or above the high end of our ranges, and we haven't changed our forecasting techniques significantly from last quarter to this quarter. If we were, however, in Q3 to be at the midpoint of that range, again, $195 million to $205 million, that would imply something in Q4, like $207 million, to get to the midpoint of our new range of $780 million or million. So I just spit a whole bunch of numbers out there. They're all in the press release to digest. But what it basically means is that we are anticipating a continued ramp in top-line growth over the next couple of quarters. We believe that we have reset our test business so that it will not be anywhere near as big a drag on our financial results going forward. If you look at the change from Q1 to Q2 and the marginal contribution in our aerospace business in particular, we think we're set up for a pretty healthy close to the year, a pretty exciting close to the year in terms of recovery from the pandemic and rebuilding our income statement. I think that concludes our prepared remarks. Jamie, we can open up the floor for questions at this point. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Jon Tanwanteng from CJS Securities. Please go ahead with your question. Hey, Pete. Hey, Dave. Thanks for taking my question. Nice job on the bookings and the recovery here. I was wondering if you were still comfortable with the mid-teens, even a margin exiting the year. I think you've talked about that several times or maybe just below that. I know you're trying to get higher than that, but is that still in the picture with the way the backlog is and how your supply and prices are improving through the year? Yeah. I think it's going to be close. I think we've got a very healthy backlog, and we've demonstrated the incremental margins that should get us there if our top line does what we think it might do. The other obvious unknown at this point is how our test business is going to respond to all the changes that happened in Q2. We're hoping that it makes big incremental contributions simply by avoiding the big hits. So I would say it's going to be a push, but we think we have a good shot at being there. Dave, what would you say? Yeah. I think I would echo that. You make an assumption that we don't have any of these odd things that we had in Q2 here with adjustments, significant adjustment to the estimated cost to complete that program and severance. I think getting up into the double digits in mid-teen area is an achievable level of adjusted EBITDA. Got it. And when do you think cash flow will start to catch up to the earnings? It looks like you've built some working capital here. I know you're working on inventory trends, obviously, but is there any thoughts on kind of when that actually converges and how much cash flow you might see this year? Yeah. I won't give you a quantitative answer here, but qualitatively, definitely H2 of the year is going to be a significant improvement in cash flows. Okay. And then when do you expect test revenue to ramp as we go through, as you start executing on this contract? Is that mid-next year, or do we have to wait till 2026 before you get out of this program, this low-rate initial production? Yeah. I think we're going to have to wait and see on that one, Jon. As best we just won the program a month ago, we had a kickoff meeting with the Army, so we learned a little bit about what their intentions are. And it seems like this original $15 million delivery order will be followed by another similarly sized delivery order of further engineering development work for TPSs for test program sets that need to be done and some other ancillary engineering requirements. Your question at its core is, when are we going to get into production? And we are thinking that that will be, at the earliest, the middle of next year, but it could be slower than that. It really depends on how long it takes us to get our part done because we have a lot of things to do. But also, the Army has to do their part. So we obviously don't control how they allocate resources internally to these kinds of tasks. But we'll know more about that, and I expect that'll be a regular part of the conversation in these calls every quarter going forward. Okay. Last one, if I could sneak one in there. Just any thoughts on what happened to Delta? That will flow through to you as one of your customers. Does their impact on the operations have any effect on their spending? No. Not significantly, no. Their longer-term plans stay in place. We can't really comment on what happened to them or why, but we don't see any ramifications directly for us as a result of that whole issue. Okay. Great. Thank you. Our next question comes from Michael Ciarmoli from Truist. Please go ahead with your question. Hey. Good evening, guys. Thanks for taking the question. It's a nice quarter here. Pete, I guess just on the you've got the line of sight here. You've got the bookings, the backlog. And it certainly sounds like Boeing wants to protect its suppliers. I mean, do you have the visibility of what you're shipping direct to Boeing, what you're shipping direct to Airbus, and I guess simultaneously what's going to the two big seating suppliers and carriers? I mean, it just seems like there's so many different cross-currents out there on these production rates. You did call out some inventory in the channel, presumably. But do you have that line of sight from the bookings? I would say that the bookings are driven mostly by demand for updating. A big portion of our bookings are driven by demand for updating in-flight entertainment and connectivity equipment. So we ship to channels that aren't always correlated with production rates, right? So they generally are to airlines, ultimately, and they may go to line fit installation, or they may go to retrofit installation. I think the simplest thing I can say about our booking trends is that it's robust. I mean, there's a lot of demand for both retrofit and, I think, preparation for increased line fit rates. So we're not thinking that there's a whole lot of inventory being built up there. Obviously, if Boeing can't get their 87 rate up and can't get their 37 rate up, then sooner or later that becomes an issue and things change. But it seems to us that the world is expecting those rates to go up, and they're planning accordingly. I think part of it, I think you and I had this discussion also separately, that for better or for worse, the interior parts of the industry, like seats and interiors and some of the other ancillary parts, tend to be problematic for aircraft production in terms of the suppliers getting out and being on time and having all the quality that everybody wants. And so it tends to be one of the last places, I think, that the industry is going to want to slow down or cut back. I think they're looking at this opportunity as a way to maybe get ahead of the curve a little bit and deliver more product and get on time. Of all the things that we worry about or struggle with, I don't think building inventory in the channel is a major concern at this point. Got it. Got it. And then you see any behavioral or demand changes? I know you talked about airline retrofit. It seems like some of the low-cost carriers are having their struggles. And Southwest, maybe that could be a tailwind given they're going to finally move to the 21st century here. But any noticeable difference between the majors, the discount carriers? Not really. I mean, Southwest has become a major customer for us this year. We're going to have revenue approaching the $20 million range, something like that. They are kind of catching up. They were one of our biggest, certainly North American airlines that hadn't invested heavily in our product. They are doing so now. There are some fleets on some airlines where decisions are getting pushed out because of the inability for the OEMs to deliver the airplanes that the airlines want. I mean, that's definitely happening, and we are seeing that in certain situations. But I mean, you step back and you look at our overall booking trends. We put that chart on the back of our press release, and I think it pretty effectively tells a story. For a couple of years now, the booking bars are significantly ahead of the shipping bars, and that's ultimately not just building inventory. That's increasing strong demand kind of across the customer base, and we're very much enjoying it and like to see it continue. Got it. Got it. And then just last one for me because shifting over to test. The EAC in the quarter on the transit program, I mean, is there any additional risk on that contract? Did this EAC sort of write down the margin on a go-forward basis, or do you have some residual kind of tail risk on this program? Just trying to understand if this is the front end of EACs, or you think this kind of cleans it all up? It's a very fair question based on our history here with this particular product line. But the way we've developed so far in terms of consolidating effort and shutting down ancillary operations and the fact that we're at the very tail end of the programs that are in question leads us to believe that we're in pretty good shape. I mean, certainly, we took the reserve that we took or the adjustment that we took with an idea that that's all there's going to be. I mean, there might be more going forward at the smaller marginal end, but we don't see that at this point, and we're hoping for something quite a bit different. Okay. Got it. Perfect. Thanks, guys. Our next question comes from Scott Lewis from Lewis Capital. Please go ahead with your question. Thanks, Dave. Pete, Dave, Debbie, thanks for taking the call and congrats on the nice quarter. I've got kind of a conceptual question about price increases. I know you guys are probably trying to capture the material cost increase you've seen, but I wonder if you're thinking about the increase in cost of capital with a kind of much higher interest rate environment and maybe also your increased cost of protecting your IP. Do you think you have the ability to kind of capture those in your price increases going forward? Yeah. I think the whole industry has exercised some muscles that had been kind of dormant for many, many years in terms of how to manage inflation. And we certainly have learned or relearned things that we knew a long time ago in terms of protecting ourselves in contracts and also identifying in our business those areas where we can increase prices and certain spares opportunities and one-off buys or retrofit buys or things like that. I think the whole industry has kind of shaken off the cobwebs and has gotten pretty good at that. And I would say we have too. So I think we're doing a pretty good job of it. Our material cost is significantly higher than our direct labor cost, but we're protecting ourselves contractually on both sides with inflation indices and things like that that I think will leave us in a much stronger position. I'll also say that I think it's been so severe, not so much today, but over the last two years, inflation pressures have been so significant, and they're so pervasive, and everybody feels it, so that it was not terribly difficult to raise prices. Our customers were surprisingly accommodating because they were going through the same thing also from all suppliers. So there was kind of an accepted understanding that you could change price levels, and nobody liked it. We didn't like doing it ourselves, but you kind of had to, and everybody knew that. So I do think that's kind of changing. I think it's going to be harder in the future to get those kinds of price increases than it has been over the last year. So I think everything is going to quiet down. But those long-term programs that are multi-year, when those come up for renegotiation, there will be big increases. And I think everybody involved on both sides of those kinds of programs are aware of that. So this dynamic will continue for two or three years, even if the kind of ambient inflation rate drops back to the Fed's goal of 2% to 3%. Okay. Thanks. And then just my last question. Have you seen anything with eVTOL programs, either picking up or slowing down? What have you seen there? Well, we are actively involved with a number of those eV programs on a fee-for-service or kind of an off-the-shelf architecture that we've developed for certain critical technologies. I would say the general nature of the industry is that in-service dates have slipped a little bit, maybe got a little bit more realistic compared to where they were initially. I think we're also entering a phase or have been in a phase for a while here where funding is going to be more challenging, especially for the startups. And I guess our feeling is that the airplanes are going to fly, and the FAA and the EASA are going to figure out a certification path. The question is whether the business cases are going to develop in time to make a real industry out of it. And it'll be interesting to watch. We are involved. As I said, we're not betting the farm by any stretch. But for people who are interested in that part of the industry, if it develops anywhere near some of the more optimistic scenarios that are out there, we should benefit pretty substantially from it. Okay. Great. Thank you. Once again, if you would like to ask a question, please press star and then one. To withdraw your question, you may press star and two. Our next question is a follow-up from John Tanwanteng from CJS Securities. Please go with your follow-up. Hi. Yeah. I was just wondering if you could give an update on litigation and expected expenses as you go through the year and beyond? It's been pretty quiet, actually. So we have a couple activity will pick up towards the end of the year depending on a couple of decisions that we're expecting, particularly in France and in the US on the Teradyne matter. We pretty strongly won in both those jurisdictions, but the other side appeals and the court has an obligation or a willingness to hear the appeal. And then depending on how that appeal is handled, will influence where we go from there. I think the exciting thing about it from my perspective is that it's the middle of 2024 already, and we are thinking that there's a good chance that both of these things are wrapped up before we get to the end of 2025. That sounds like a long ways off, but when you look at how long these things have been going on, we're pretty excited about that. Okay. Great. And then just I may be getting ahead of myself here, but as your cash flow starts to improve and accumulate, what are your priorities for the cash flow? Obviously, you have to catch up on some CapEx. Maybe you got to get up to a level that's more normalized for you. But beyond that, what is the expectation for capital allocation? I would say the first thing that we would be wanting to do would be to pay down our debt a little bit. That debt load's a little bit higher than we would like it for kind of a normal run rate situation. I mean, in the past, we would lever up to these levels or even a little bit higher on the heels of an acquisition. But not having done an acquisition, this is a debt level that we would like to see reduced. And that's a function of what happens to our income statement and our cash flow over the foreseeable future. We do expect that the acquisition world is going to wake up a little bit. It's been pretty slow from our perspective. Certainly, deals are getting done, but there isn't much of a flow that we would be interested in. I guess I would say that we feel we have such an opportunity ahead of us just to execute on the backlog that we have in place and the opportunities that we've won, frankly, including during the pandemic, that our best way to create value is to execute on what we have on our plate in front of us. Acquisitions will be a secondary pursuit when our balance sheet makes us more capable there. Our first priority is simply to execute and pay down debt. Dave, I don't know if you'd describe it any differently. No, I'd say that that's the priority is to execute and, as we move through the next 12 months, rebuild our dry powder and liquidity and kind of be ready for next year. Got it. Thank you, guys. Ladies and gentlemen, with that and showing no additional questions, we'll be ending today's question and answer session as well as today's conference call. 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