Welcome to the HEICO Corporation Q3 and full year fiscal 2022 financial results call. My name is Connie, and I will be the operator assisting you today. Certain statements in today's call will constitute forward-looking statements, which are subject to risks, uncertainties, and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements as a result of factors including, but not limited to, the severity, magnitude, and duration of the COVID-19 pandemic, HEICO's liquidity and amount and timing of cash generation, lower commercial air travel caused by the pandemic and its aftermath, airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services, product specifications, costs, and requirements, which could cause an increase in our costs to complete contracts, government and regulatory demands, export policies and restrictions, reductions in defense, space, or homeland security spending by U.S. and/or foreign customers, or competition from existing and new competitors, which could reduce our sales, our ability to introduce new products and services at profitable pricing levels, which could reduce our sales and sales growth, product development or manufacturing difficulties, which could increase our product development and manufacturing costs and delay sales, our ability to make acquisitions. Parties listening to this call are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to, the Form 10-K, Form 10-Q, and Forms 8-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. I now turn the call over to Laurans Mendelson, HEICO's Chairman and Chief Executive Officer. Please go ahead. Connie, thank you, and good morning to everyone on the call. We thank you all for joining us, and welcome you to the HEICO Q3 fiscal 2022 earnings announcement teleconference. I'm Larry Mendelson, Chairman and CEO of HEICO Corporation, and I'm joined here this morning by Eric Mendelson, HEICO's Co-President and President of HEICO's Flight Support Group, Victor Mendelson, HEICO's Co-President and President of HEICO's Electronic Technologies Group, and Carlos Macau, our Executive VP and CFO. Today, my comments will address our consolidated Q3 results, acquisitions, and accomplishments, followed by a presentation of the segment results from Eric and Victor, HEICO's Co-Presidents. Now, before reviewing the quarterly results, I would like to take a moment to thank all of HEICO's talented team members for their contributions to another remarkable quarter. Their commitment to producing the highest quality products for customers resulted in excellent quarterly financial results for all HEICO shareholders, and I remain very optimistic in the future for our company. Summarizing the highlights of our Q3, I will tell you that consolidated Q3 fiscal 2022 net sales and operating income represent record results for HEICO, driven principally by record operating results within the Flight Support Group, mainly arising from continued strong rebound in demand for our commercial aerospace products and services. In addition, this marks the 8th consecutive quarter of sequential growth in net sales and operating income for the Flight Support Group. Consolidated operating income and net sales in the Q3 of fiscal 2022 improved 28% and 21% respectively, as compared to the Q3 of fiscal 2021. These results mainly reflect 13% quarterly consolidated organic net sales growth, as well as the favorable impact from our fiscal 2022 and 2021 acquisitions. Consolidated operating margin improved to 22.6% in the Q3 of fiscal 2022, and that was up from 21.4% in the Q3 of fiscal 2021. Net income attributable to non-controlling interests was $10.5 million in the Q3 of fiscal 2022, as compared to $6.8 million in the Q3 of fiscal 2021. Of course, the increase principally reflects improved operating results of certain subsidiaries in which non-controlling interests are held. We continue to estimate the annual allocation of earnings to non-controlling interest partners to approximate 7% to 8% of pre-tax income. HEICO's effective tax rate was 27% in the Q3 of fiscal 2022, and that compared to 15.7% in the Q3 of fiscal 2021. I wanna comment on this tax rate because it's a major issue, and later in this call, Carlos Macau will explain the complexities between actual tax that we pay in cash and the tax provision required for GAAP. S uffice it to say, from an operating point of view, in my mind and management mind, our tax rate is really 21%. For the analysts out there who are on the phone, if you apply the 21%, which is our annual tax rate, you will find that the earnings per share for the quarter would be $0.65 to $0.66. In my opinion, and Carlos's too, and he'll go into detail, the additional 7% difference between 21 and 27 will most likely never have to be paid. Carlos will explain why that is, and I just wanted to point it out very, very clearly. The increase in our tax rate reflected a 5.3% unfavorable impact from tax-exempt, unrealized losses in the cash surrender value of life insurance policies related to the HEICO Leadership Compensation Plan, and that was recognized in the Q3 of fiscal 2022. That compared to the tax-exempt unrealized gains recognized in the Q3 of fiscal 2021, plus a 2.6% unfavorable impact from a larger income tax credit recognized in the Q3 of fiscal 2021 due to higher qualifying R&D expenses as compared to the Q3 of fiscal 2022. That's a big mouthful. It's very complicated, but the simplistic answer is, as we look at it again, the real tax, in my opinion, and management, is 21% for the quarter. We now expect the full year effective tax rate to be between 20% and 21% of pre-tax earnings. The increase in our estimated annual effective tax rate, up from prior year estimates of 18% to 20%, is directly attributable to overall stock market declines causing unfavorable investment results within the HEICO Corporation Leadership Compensation Plan during the Q3 of fiscal 2022. Consolidated net income increased 7% to $82.5 million, or $0.60 per diluted share in the Q3 of fiscal 2022, and that was up from $76.9 million or $0.56 per diluted share in the Q3 of fiscal 2021. Liquidity and cash generation was very strong. Cash flow provided by operating activities increased 20% to $149.2 million in the Q3 of fiscal 2022, and that was up from $124 million in the Q3 of fiscal 2021. This despite our continued investments in working capital to support strong orders and our increased consolidated backlog. We now expect capital expenditures for the full fiscal 2022 to approximate $35 million, and this is down from prior estimates of $40 million. HEICO's total debt to shareholders' equity ratio improved to 9.9% as of July 31, 2022, and that was down from 10.3% as of October 31, 2021. Our net debt, which is total debt less cash and cash equivalent, of $112.2 million as of July 31, 2022, compared to shareholders' equity ratio improved to 4.5% as of July 31, 2022, and that compared to 5.6% as of October 31, 2021. Our balance sheet is very, very strong. Net debt to EBITDA ratio improved to 0.2x as of July 31, 2022, down from 0.26 as of October 31, 2021. We have no significant debt maturities until fiscal 2025, and we plan to utilize our financial strength and flexibility to continue aggressively pursuing high-quality acquisitions of various sizes to accelerate growth and to maximize shareholder returns. In July 2022, we paid our regular semiannual cash dividend of $0.09 per share, which represented our 88 consecutive semiannual cash dividend. In July 2022, our Flight Support Group acquired Accurate Metal Machining, a leading manufacturer of high-reliability components and assemblies in the aerospace, defense, and semiconductor equipment subsystem supplier markets. Accurate employs approximately 250 people at its Cleveland, Ohio, production facility. In July 2022, we announced the agreement for our ETG group to purchase Exxelia International, which represents HEICO's largest-ever acquisition. Exxelia is headquartered in Paris, France, and is a global leader in the design, manufacture, and sales of high-reliability, complex passive electronic components and rotary joint assemblies who are mostly aerospace and defense products. Exxelia is expected to generate approximately EUR 190 million in revenue during calendar year 2022 and has 11 advanced locations worldwide to support its over 3,000 customers. The Exxelia transaction is expected to be completed in the Q1 of fiscal 2023. In August 2022, a subsidiary of the ETG Group acquired Charter Engineering, located in Pinellas Park, Florida. Charter designs and manufactures RF and microwave coaxial switches for the aerospace, defense, commercial, and automated test equipment and instrumentation markets. In August 2022, we announced the ETG Group acquired Sensor Systems, and that's based in Chatsworth, California, and is one of the world's largest leading designers and manufacturers of airborne antennas for commercial and military applications. Sensor's antennas are found on nearly all large commercial transport aircraft built in the last 50 years, along with numerous business and military aircraft. We expect all of these acquisitions to be accretive to our earnings within the year following their respective close date. At this time, I'd like to introduce Eric Mendelson, Co-President of HEICO and President of HEICO's Flight Support Group, to discuss Q3 results of the Flight Support Group. Thank you. The Flight Support Group's net sales increased 39% to a record $330.3 million in the Q3 of fiscal 2022, up from $237.1 million in the Q3 of fiscal 2021. The net sales increase in the Q3 of fiscal 2022 reflects strong organic growth of 25% as well as the impact from our profitable fiscal 2022 and 2021 acquisitions. The organic growth mainly reflects increased demand for the majority of our commercial aerospace products and services, resulting from continued recovery in global commercial air travel as compared to the Q3 of fiscal 2021. The Flight Support Group's operating income increased 68% to a record $70.8 million in the Q3 of fiscal 2022, up from $42.1 million in the Q3 of fiscal 2021. The operating income increase in the Q3 of fiscal 2022 principally reflects an improved gross profit margin, mainly from increased net sales across all product lines and efficiencies realized from the higher net sales volumes. The Flight Support Group's operating margin improved to 21.4% in the Q3 of fiscal 2022, up from 17.7% in the Q3 of fiscal 2021. The operating margin increase in the Q3 of fiscal 2022 principally reflects a decrease in SG&A expenses as a percentage of net sales, mainly reflecting the previously mentioned efficiencies as well as the previously mentioned improved gross profit margin. Now I would like to introduce Victor Mendelson, Co-President of HEICO and President of HEICO's Electronic Technologies Group, to discuss the Q3 results of the Electronic Technologies Group. Thank you, Eric. The Electronic Technologies Group's net sales increased 2% to $244.2 million in the Q3 of fiscal 2022, up from $239.5 million in the Q3 of fiscal 2021. The net sales increase principally reflects the impact from our profitable 2021 and 2022 acquisitions, as well as 1% organic growth. The organic growth mainly reflects increased demand for our other electronics, space and medical products, partially offset by decreased defense product sales, which seems to be common among defense companies this year, with U.S. government outlays lagging. The increase in non-defense revenues underscores these other product lines' strength in the quarter. The Electronic Technologies Group's backlog remains healthy, with a roughly 16% increase since October 31, 2021, and it remains elevated, reflecting strong orders. However, we've experienced increasing delays in receiving components and raw materials from some suppliers, adversely impacting some defense products, planned production and shipment during fiscal 2022 and during the quarter. We estimate somewhere around $25 million of our revenues moved out of fiscal Q3 into future periods, mostly estimated to be in the fiscal Q4 due to supplier or even supplier issues or even customer ordering delays. Notably, our book-to-bill ratio increased in the quarter and year to date. The Electronic Technologies Group's operating income was $68 million in the Q3 of fiscal 2022, compared to $69 million in the Q3 of fiscal 2021. The slight operating income decrease principally reflects a lower gross profit margin, mainly from the previously mentioned decrease in defense product sales. The Electronic Technologies Group's operating margin was 27.9% in the Q3 of fiscal 2022, compared to 28.8% in the Q3 of fiscal 2021. The lower operating margin principally reflects the previously mentioned lower gross profit margin and an increase in SG&A expenses as a percentage of sales. I turn the call back over to Larry Mendelson. Thank you, Victor and Eric. As we look ahead to the remainder of fiscal 2022, we expect global commercial air travel to continue on a path to recovery, despite the potential for additional pandemic variants. We remain cautiously optimistic that the ongoing worldwide pandemic vaccines and boosters rollout will continue to positively influence global commercial air travel and benefit the markets we serve. While signs of stability in global commercial air travel continue to surface, it still remains very difficult to predict the pandemic's path and effect, including factors like new variants, vaccination rates, potential supply chain disruptions, and inflation, which may impact our key markets. Therefore, we feel it would not be responsible to provide fiscal 2022 net sales and earnings guidance at this time. In closing, I'd like to again thank our incredible global team members for their continued support and commitment to HEICO and its shareholders. Together, we continue to win in the marketplace, exceed our customers' expectation, and build a larger and more successful company for the future. Your contributions are what makes HEICO an excellent company. I would now like to open the floor for questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. Please state your name and company before posing your question. Again, press star one to ask a question, and we'll pause for just a moment to allow everyone a chance to signal. We'll take our first question. Your line is open. Hi, good morning. Thanks for taking the questions. Maybe just first question, Larry, if we could just kick off, and I realize you haven't closed this acquisition yet, but just on the Exxelia acquisition, obviously your largest purchase ever, sounds exciting. Maybe you can give us a little more color on that. It looks like complementary markets and I pick up you're entering Europe, so maybe that's a nice advantage for you, maybe on the defense side. Other, you know, maybe question 1 there, and then maybe possibly are there room for improvement on the operating side? It sounds like maybe margins are not quite where you were you guys are. Or is it just sort of a mix issue there that kind of keeps that down? Thanks. I'm gonna let Victor furnish most of the color. All I can tell you is that Victor and I and the team have been looking at Exxelia for, I can't remember, 4 years, 5, I don't remember. We always liked this company. We got to know the management. We now got to know about the company, and we feel that this will be a great adjunct or addition to the ETG group. I think their margins are good. They're not the extraordinary 30% margins that we like to see in ETG, but we have good margins. I think we have an outstanding management team there, and I think the opportunities for expansion through acquisition are very realistic. I think this will be a great addition to the HEICO group. I'll let Victor get into some of the more details that he could explain. Hey, Larry. Those are good questions. Morning. How are you? Great. Those are good questions. I think until we're completely done with the regulatory processes. Mm-hmm We'll hold off on kind of predicting anything there other than to say that the same management will continue running the company. The people who are there will be there, and they'll be implementing the plan that they've laid out in their own internal growth plan, which certainly impressed us. We remain very excited about the company. Okay. No, no, fair enough. Victor, while you got the mic there, how about just a couple of just questions for you. The quarter, you know, obviously looked pretty good if you take out that, you know, sort of $25 million push forward on sales. Maybe just give us a little more color on what's driving this growth. With defense, I think you should mention being still down a little bit, and that's half of your, I guess, close to half of your revenue there in your segment. What is it? Just a mix of space, medical, you know, general industrial. What's driving your pretty good growth ex defense? Visibility on defense specifically, do you see that improving as we go out over the next few quarters? Yeah. In kind of the order that you raised this, those are also good questions. We had very nice growth, sort of across the board in- Mm-hmm Most of the or all of the other markets. Some, you know, stood out certainly in percentage terms for us, space, medical. Other electronics markets were particularly strong in the quarter in sales. Aerospace was very nice and, you know, telecom, other things that we serve, even some of the smaller markets. You know, some of the other really small markets was like marine, also very strong. Kind of across the board in the other markets. On defense, you know, as I mentioned in the introductory remarks, we're all seeing that DoD outlays have been lagging this year. Mm-hmm nobody seems to really know why. Right There are a lot of different theories on this and so on. You know, my tendency is to be conservative and not believe that it's coming in the next 60 or 90 days, that it turns. These things tend to take a little bit longer. That's why, you know, as the year has worn on, we've been careful in our remarks. No, I don't know of any orders or small amounts maybe here and there, nothing outside the ordinary that's been canceled in defense for us. You know, there are always, by the way, and you know, in businesses like ours, of course, there are always cancellations and pull-ins and things like that, the normal noise level. Referring to outside of the normal noise level, I don't see anything unusual there. What's happening is, as I mentioned, our book-to-bill has been growing, and our backlog has been growing, so it confirms that they're not lost orders, and they ship at some point. I'm guessing, you know, like I said in the call, some of those are gonna be in the Q4 and some of them be beyond. Okay, great. Just shifting gears real quick, just to give Eric a quick shout-out. Just on your revenue trends, obviously, they've been really strong. I assume we obviously have to slow down, you know, as we're back sort of looks like to pre-COVID levels. You know, but can you just give us a little more color on airline, you know, inventory levels? And I imagine they're still below normal. Y ou know, how do you sort of see the next, you know, that coming about? And just in terms of passenger travel, obviously, it's pretty much back to where we were. I guess ex sort of business travel, I guess, that's still the lagging factor. Just trying to see, you know, how you envision growth over the next, you know, few quarters, you know, from a high level. Yeah. All great questions, Larry. You know, I spend a lot of time thinking about this and talking to our folks about it. No question, our results have been outstanding. I think that we've captured market share. I know we've captured market share. We've got parts that other people don't have. I think HEICO is increasing in credibility in the industry. We're viewed as a major, you know, industry participant and supplier. You know, we're not the small PMA company that we used to be many, many years ago. I think that credibility is very important, and we're viewed very much in a different light. Having said that, North America has returned basically back to the pre-COVID levels or is pretty close, with Europe a little bit behind. Of course, Asia is still lagging substantially, and Latin America is lagging somewhat, sort of in between Europe and Asia in terms of the return to service. With regard to your questions about inventory, we don't believe that airlines are stocking a lot of inventory. I think a lot of what we have supplied is going directly onto aircraft. However, when you look at the industry in general, and you know, I talk to our people about supply chain and what's going on, there's tremendous extension in the turn time, the quoted turn times and lead times, for materials, parts, services, all sorts of things. As a result, I think it's logical to assume that airlines are buying ahead of their needs. They're ordering ahead of their needs. They're not necessarily building inventories, but they have had a very large demand in this return to service. As they've, you know, put aircraft back into service, they've needed a lot of maintenance, so there's been a big increase there. When you factor all of this together, I think HEICO is gonna continue to do very well. We've gotta be careful that, you know, obviously, 25% organic growth is outstanding and, you know, we've done this now for quite some time. We're back basically to our pre-COVID levels. You know, I wouldn't anticipate this kind of growth to continue. We don't know. Right. You know, we're trying to figure it out. Nobody tells you, "Well, I'm ordering more than I need because I'm worried I can't get it next year. Right. I think having done this for a long time, I'm cautious that, you know, that there could be some of that going on. Now, of course, that's gonna be mitigated by the recovery in Asia and South America, you know, somewhat. I think we're in a great place. We're gonna continue to do very well. I just sorta cautious about getting, you know, extrapolating this too far forward. Sure. because nobody knows. Understood. Great. I appreciate all the color. Really helpful. Thanks a lot, guys. You're welcome. We'll take our next question from Sheila Kahyaoglu from Jefferies. Hi, this is Ellen for Sheila. Thanks for the question. Under Sensor Systems acquisition, you paid in part with HEICO shares. What made you decide to use equity here, and how does that change the returns profile for that transaction? The reason for that is that one of the sellers of Sensor Systems would only sell because he wanted HEICO shares. It really was as simple as that. We're very happy to give cash. We have worked on that acquisition for over 7 years. The seller really loved HEICO, was approached by many other companies, we believe, who offered more money. He only wanted to sell to HEICO, and he only wanted HEICO shares. That was the only way we could make the deal, and we were happy to do so. Great. You've been pretty active with 4 acquisitions announced in the past month or so. Is there anything that changed in the M&A market that allowed you to be more active, or what drove that activity? No, I don't think so. I think we have often said that we make acquisitions when they become available to us. I think perhaps in some cases, it might be that the market for acquisition loans by private equity was getting a little tougher. Private equity, when they did their arithmetic, found out that they couldn't match the terms that HEICO has on its credit line. They were in 1 or 2 cases, they couldn't really compete with us, and we were able to win the day. I think that might have been part of it. I can tell you some of these acquisitions, as I said, Sensor, we worked on for 7 years, and it just time had come. This is Victor. I would say it really is a question of timing in these deals that we've closed and when they came available and when we were able to reach terms. In most of the acquisitions we're working on now or we've announced, they were talking exclusively with us, and it's just when the timing became good. Yeah. Awesome. Maybe just 1 more on ETG. Do you have any visibility to when that $25 million of delayed revenue will be recovered? Is there something that you need to see in the market, or how do we think about how much confidence you have in recovering any of that in fiscal Q4? Look, I think that our expectation, our company's expectations is that the bulk of that will be in the Q4, and then some of it will be, let's say, first, Q2. I mean, we don't see it being out that far. What has happened is that there's a shift that's going on. We have something that shifts from the 2nd to the 3rd, and then those things that moved into the Q3 shift, but then it was more, a little more in the Q3. The amount that was, if you will, delayed increase. As I said on the call, last quarter's call, I think I said that we thought in the Q1 it was about $10 million worth of delayed shipments. In the Q2, we estimated that grew by 50% to 70%, right? You know, kind of in the $16 to $17 million range. $15 to $17 million range. Now we're estimating in the $25-ish million range. It's that growth in particular that we see. I do expect a lot of the Q3 delayed shipments to ship in the 4th, but I expect some pushouts then in the 4th going into the Q1. I would hope at some point those moderate. My expectation is first that they'll moderate, flatten out, and then start moving down. It's possible, you know, it moves down straight. Thanks for that color. That's it for me. Thank you. Thanks, Ellen. We'll take our next question from Peter Arment from Baird. Yeah. Good morning, Larry, Victor, Eric, Carlos. Morning, Peter. Eric, hey, can you maybe talk a little bit about, you know, maybe the size of your parts catalog today or the, you know, the runway that you still see in developing parts, 'cause obviously organic growth continues to be incredibly impressive. Thanks. Got it. Yeah. Good morning, Peter. Our parts catalog in terms of PMA, I think you're referring to, is about, we've got about 13,000 approvals. It is really quite broad, and it covers many engines as well as all different ATA chapters. We're in fuel, hydraulic, pneumatic, electromechanical, avionics, wheels and brakes, structures, really interiors all over the aircraft. I think it's really a very diversified product line. It's not focused on any 1 area nor any 1 competitor. We like that approach very much. We think that really makes a lot of sense. You combine what you asked about concerning the parts catalog, along with our line replaceable unit or component overhaul capability, and it really is quite large. Of course, you add in the distribution, and it gets even larger. We pretty much touch everything in the airplane for a whole variety of customers. Eric, do you still have the ability to kinda add more to that? I mean, now that you've gotten to such a large size, in terms of, you know, 13,000+ parts, do you still kinda see the ability to add a few hundred parts a year as you've done in the past? Absolutely. We're keeping our new product development spending levels consistent with where they've been in the past. We continue to develop 300 to 500 new PMAs per year, similar number of DER repairs. We're continuing to increase the product range that we've got. In addition, we've got a number of, you know, I would say, extremely complex, critical products which we offer, which we don't publicly speak about for competitive reasons. Sometimes our competitors know about them, other times they don't. We've been really very. Our team is phenomenal in, you know, finding all sorts of opportunities and figuring out how to engineer and how to do this stuff. As far as I'm concerned, we've got the best sales force on the planet, and they're really able to get a lot of customer excitement and customers to work with us. Customers trust us because the stuff we're doing is very complicated. They've got to have a you know, high degree of faith in HEICO, and that's why we you know, take so seriously our quality organization and the engineering content that we put in to make sure that we're really extremely robust, very thorough. Frankly, what we do goes beyond what's required in any of the regulations. It's something that we've done for 32 years because it's the right thing to do for our customers and to protect HEICO. We spend a lot of money making sure everything is perfect. Frankly, that's why we've got the quality reputation that we've got. From Eric product. Yeah, it was good. Yeah, no, thank you for that color. Just, how do we think about, as wide body activity starts to recover, you know, as going forward, we should see, you know, a pickup there. We're already starting to see some pickup in wide body traffic. How much of an impact will that have on kind of overall FSG? Yeah, it'll be very helpful. I say, you know, Asia, a little bit of South America, wide body, you know, that's the upside from here. Most of our business, as I've, you know, mentioned before, is narrow body. Of course, cargo has done very well, and a lot of that cargo market is, you know, basically wide body aircraft. So we've done very well in that space as well. I do think there's gonna be additional demand, obviously, as the wide body is further returned to service. Okay. Just 1 quick one for Carlos. Expectations for the tax rate for the Q4. Can you give us a little color there? Thanks. Yeah, I think you should plan on somewhere around 21% for the year. Could be 20% to 21%. You know, I give you that number. That's assuming that we don't have a catastrophe in the stock market. As Larry mentioned earlier, if we have, you know, broad losses in the overall stock market between now and our fiscal year-end, that could amplify our rate a little bit again in Q4. Y ou know, I don't. I'm not in the business of predicting that. That's where we stand right now. Appreciate all the color. Thanks, guys. Bye. Thank you. We'll take our next question from Ken Herbert, RBC Capital Markets. Yeah, hi. Good morning. Morning, Ken. Hey. Yeah, hey, good morning. Victor, maybe if I could first start off with a question on ETG. The last couple of years, you've had a nice sequential improvement in margins from the fiscal third to the Q4. Can you talk about, you know, maybe how we should think about margins in the segment this year, considering there's, you know, clearly some recovery of part of what's been delayed with the normal seasonal benefit you get in the segment? Hey, Ken. Thank you. This is Victor. It's a good question. I am not looking for an increase in margins. If that happens, that would be great, but you know, on my own planning at least is to be more conservative on that and not assume an increase in margins in the Q4 at this point. You know, we're now in our budgeting process for 2023, and you know, we'll start thinking about those. Of course, again, the 2023 margins will be moderated from historical levels somewhat because of the Exxelia acquisition, which, you know, we've said, we've talked about, you know, their margins being within our, in our target range, but, you know, not at the top, more toward the bottom of our target range. So we'll start to think about those later. Just on that point, for the base business, you know, I mean, depending upon where this year ends up, it's hard to say, but I think of your margins have been running sort of that 29-ish to maybe 29% to 30% range. Is there any reason in 2023, excluding Exxelia, you don't get back to those levels? I don't know yet because I really have to see the individual budgets. You know, by the way, keep in mind that that's, of course, the GAAP margin after amortization. The businesses on their own, you know, are running about 5 points higher than that. You know, if you're running at 29%, that's 34. If you're running at 28%, that's 33. I'm happy with that. I don't know. It's like, you know, again, as I've said on these calls in the past, you know, it's sort of hard to go to somebody say, "You bum, you came in at 32% instead of 33% or 30% instead of 32% or 33%." That's, you know, that's part of the challenge. Ken, this is Carlos. Yes. Just to follow up real quick on what Victor said. There's so many businesses in the ETG and it is a very mix sensitive segment. You know, with the little bit of the drag that we've had this year on defense, that has brought the margin down a little bit. You know, we've been running the last couple quarters 28%. I think as a management team, we're very happy with that. You know, as Victor said, I think going into the Q4, we'd be very happy if that maintained at that level. Perfect. No, that's helpful. If I could just 1 for Eric. You know, Eric, it's been a few calls now that you've called out sort of incremental opportunities as supply chains continue to stretch for new material into the aftermarket. I'm just curious, as you get these opportunities as they come up, how much opportunity is there for you to really sort of scale the PMA offerings in a particular year or timeframe? Or maybe how long does it take to go from identifying an opportunity to perhaps having a product in the marketplace? I mean, how quickly can you take advantage of this share opportunity considering the broader supply chain disruptions in the aerospace side? Yeah, a good question, Ken. You know, I like to say that to develop, if you're speaking about a PMA part, you know, the typical cycle time from when we induct it until we have it available is approximately a year. That can be as short as a couple of months, you know, for something that's very hot and not that complex, to a couple of years for something that's, you know, on the other end of the spectrum, you know, something that's super complex. I would say what we're taking advantage of now is increased penetration of our existing product line. These are parts that we've had available for sale. There's no good reason why, frankly, you know, more people aren't buying them. It just takes a while to get all this done. As a result of having them, I think we're able to pick up market share. I think it's really as a result of that. Also, you know, since we don't have a lot of leverage, and we make sure that we're, you know, very well-financed within the company, unlike others, we didn't squeeze our inventory, so there you know, as nearly as much as others. As a result, when demand came back, we've been able to satisfy it, as opposed to others who have really been. You know, frankly, drain down their inventories. I think that's leaving us in good place right now. I would say the market share capture isn't as much from finding an immediate opportunity and developing it as it is, stuff that we've already had in process for, some time. Great. All right. Well, thank you very much. Thank you. We'll take our next question from Robert Spingarn, Melius Research. Hey there. Good morning, Rob. Good morning, Rob. Good morning, everybody. I wanna follow up on a few things that have already been asked. Larry, I was gonna start with you on M&A. You talked about the concentration of deals and just the random timing there. You know, I thought your private equity comment was interesting. Are we seeing a different pipeline now than we've seen in the past, and is the size of the transactions getting larger? I don't think so, Rob. I think it's pretty much business as usual. I mean, in the past, the very large transactions normally went to private equity and other industry buyers at multiples that we just don't trade in. If they were trading, and you know some of the ones I'm talking about, 17, 15 times EBITDA and things like that, we have looked at these companies in the past, but we were unable to do that. I think now we're seeing a little bit lower pricing so far because of interest rates. I think that would, you know, normally be expected. Private equity, I think, has to be a little more careful. We've been told by many bankers that private equity has to put in more equity and pay higher interest rates. Some of the banks we have been told are really out of the ball game for certain borrowers in private equity. I think this puts a little bit of pressure on the pricing and lets us participate. I would say overall it's kind of business as usual. I can tell you that we have many deals that are in the pipeline that we're looking at, which is normal for us. The question is, will we be able to close the deal? Will the pricing be right for us? Will our due diligence show this is really a great company as opposed to some hockey stick presentation that a seller puts out, and then when we start to dig in and turn over the rocks, we say, "Wait a minute." I think the answer is sort of business as usual, maybe a little bit better. Okay. Eric, a couple for you. I just wanna go back to this discussion of recovered from COVID, because clearly you said wide body, we're not there yet. I imagine there's certain regional areas where we're not fully recovered. Notwithstanding the fact that you had record sales in the quarter, which I think were $6 million higher than the prior record quarter right before COVID, it would seem to me that some of what got you there is share and, you know, new products, new customers. Is there a way to calibrate what a recovered quarter would look like if you got that wide body and you got everybody that you're missing in your sales? In other words, is a $330 million number closer to $400 million fully recovered? Yeah, because we've got obviously some acquisitions in there. Right. It is a higher number. I'm not sure what the, you know, what the number would be. You know, maybe it's. I think we're pretty close right now. I'm just thinking for a moment in my head. I mean, maybe it's more like a $370 million quarter. You know, but that would be record to record. You know, that kind of thing. You know, maybe $360 million would be record to record. And that vein- With, without acquisition. Right. With the long lead times for spares that we're hearing the airlines discuss, have- Yeah. You know, given that many of these parts are all sourced, are you seeing folks come in at a higher rate, and asking HEICO to develop parts 'cause they just can't get them from the OEM? We are seeing, you know, definitely tremendous interest in our product line, a lot of trust and confidence in our process and our ability to develop things. We had our global sales meeting for the parts and repair businesses, and I can tell you in my nearly 33 years of doing this, I have never seen such enthusiasm across all of the businesses, across all of the regions, all of the people. Frankly, you know, I just have to add, the team that we've got there has been doing this, you know, some of them have been there nearly 30 years, others 20, others 10. This is a team that's worked very well together for decades, and there's a lot of trust, a lot of confidence. It's extremely well led, and I really think we're seeing, if you will, tremendous internal synergy of being able to respond to our customers', our customer's requests. We don't have. You know, it's not like we got a whole bunch of new people doing this for the first time. It's quite the opposite. It's people who really understand the capability, understand how to get things done at the customers, how to develop the parts, how to get it sold, how to get it bought. It's really, I would say, a very, very well-oiled machine as well as in our distribution business as well. I mean, it's exactly the same thing. I think these companies are very much hitting their stride. You know, as I said, parts repair and distribution. I should also add, we've had our global sales meeting for the distribution business. Again, you know, enthusiasm like I've never seen before as a result of market credibility, with both our customers as well as our principals, as well as really understanding maturity. Just a team that's been together a long time can rely on each other. I think market share is a big part of what we are seeing. You know, my comments with regard to return to service, you know, it's hard to figure out exactly where you are in that, you know, in that cycle. I felt it was something that just had to be called out because obviously 25% organic growth can't be done forever. Right. Fair. You know, this actually brings up another question on the PMA side. You know, there are a few new entrants, some folks trying to get in here, but you just talked about how, you know, you've got this well-oiled machine. Does that concern you at all, or are you just happy when PMA is growing overall? Do you expect this market to have a different growth trajectory post-COVID-19? You know, my comments honestly are focused on HEICO PMA. You know, we have to be very, very careful. You know, HEICO uses a process that we're very proud of, that we've developed, and we really fine-tuned over the last 30 years. I think that is a unique HEICO process. I'm very reluctant to extend that in general to PMA. I mean, what we see in terms of interest in our product, I think is very much focused on our product. I specifically ask our people about any competitors in any of the spaces, and we don't believe that the competitors, frankly, are in the same area in terms of technical credibility, product breadth. My sense is it's much more of a HEICO phenomenon. Just quickly, thank you for that. Victor, post all of the deals, could you update us on your end market distribution once these things are fully in? Yeah. So they should be roughly comparable to what we have now. Defense may grow a little bit, but it's pretty much within the noise level of where we are with the acquisitions we've added. I guess, you know, Sensor Systems, that increases our commercial nicely. Overall, it's probably not a major shift. Then there's some other acquisitions we're working on as well that would probably keep us close to around where we are now. Okay. Thanks so much, everyone. Thank you. Thanks, Rob. Again, it is star one to ask a question. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll take our next question from Robert Stallard, Vertical Research. Thanks so much. Good morning. Good morning. Just a couple of follow-up questions from me. On the Exxelia deal, you mentioned it's the biggest deal to date and that the margin's lower than the overall ETG group. How would you compare this business compared to the other things that you see in this division? Does this mark any sort of change in your approach to the sort of deals you'd be willing to do in the future? Rob, this is Victor. It's very consistent actually, with the strategy in ETG. The overwhelming majority of Exxelia's revenue is derived from components, subcomponents, and down at that level, which as you know is a world we love. That's part of what interested us in it in the first place, or a big part of what interested us in it in the first place. I don't really see it as a departure or shift. It is larger for us, and that just happens to be because it was a larger opportunity. They have done a great job. I will say 1 thing that is a little different in Exxelia than our typical acquisition is, the management team has done an excellent job creating a unified platform, a unified company there. As opposed to just the strict individualistic model that we've typically followed. This marks kind of our, if you will, participation in something that's more integrated, and we're excited about that because I think it broadens our aperture a little bit. While I have you, Victor, just to follow up on your comment from earlier on how these delays seem to have gone from $10 million to $15 million to $25 million over the last 3 quarters. You seem to be suggesting that we're gonna go the other way in the Q4. Is that accurate or do you expect this trend to continue? Yeah, I apologize if I left you with the impression I think we're going the other way in the Q4. I'm not sure which way it will go in the Q4. My comment to answer one of the other questions earlier was intended to convey that I don't think it's going to suddenly reverse and that, you know, you're gonna see this disappear. I think that what's more likely to happen, this is just my opinion, is that at some point it flattens out and then starts to reverse. I would expect that in the Q4 we will see some revenue that we had expected to ship, we had scheduled originally to ship in the Q4, move out into the first and future quarters, while we ship in the Q4, things that move from the third and, let's say, Q2. That makes sense. Thanks so much, Victor. My pleasure. We'll take our next question from Peter Skibitski. Hey, good morning, everyone. Good morning. Just wanna start by talking about SG&A. It looks like you guys are getting some really nice efficiencies here year to date, and particularly in the last couple of quarters. I was just wondering kinda what opportunities going forward are there for continuing efficiencies and to what extent they could possibly accrue to the FSG segment? No, I'm sorry, Pete, this is Carlos. You know, in the FSG in particular, we've benefited by leverage on the fixed costs. You're correct, our spend relative to revenue growth has been stable, therefore the percentages come down. You know, we pride ourselves on running efficient operations, not overspending on G&A type activities. I do believe that selling costs, as revenues go up, will continue to mirror that revenue growth. Overhead, things like that, we'll continue to catch efficiencies on. Same in the ETG. You know, the ETG had a slight increase in expenditures in the SG&A area relative to revenues. A lot of that was due to the fact that we're not getting this year the growth that we typically are accustomed to. I think that too will cure itself, as Victor just talked about, as we get into probably some more better times out in the future, particularly in the defense area, that then I think we'll start catching those efficiencies again on the SG&A spend. Long way of saying that I believe overall for the company, our fixed costs in the G&A area are stable and low, and that we will see selling costs increase proportionally with our sales volume increases. Okay, that's helpful. Thank you for that. Just last 1 for me. You know, when you guys talk about mix a lot in FSG, you know, you talk about Specialty Products, and Specialty Products I think was up about 50% in the H1 of the year. I don't know what it did in the Q3, but maybe you could talk about demand there kinda, you know, going forward over the next kinda, you know, 6, 12 months in terms of what you're seeing. Yeah, Pete, a great question. Demand was very strong. We did very well in the Q3 on Specialty Products. It's important to note that, you know, whereas the aftermarket parts repair distribution has been on the rebound really since, you know, we've had extremely high organic growth rates. I'm just looking for my numbers here. If you just bear with me. 32%. Starting in the Q3 of last year, organic growth at 32%, then 28%, 30%, 23%, 25%. You know, very, very high. The Specialty Products recovered later. Therefore, we are seeing greater growth right now out of the Specialty Products only because, if you will, the comps on parts and repair and distribution are becoming more difficult because we saw that recovery sooner. Of course, when COVID hit, the aftermarket was the one that took the biggest immediate hit because airlines really didn't need the parts. Specialty Products continued to ship according to the orders, and so their bottom came later. We do anticipate additional recovery in Specialty Products. We think we're doing very well in that section as well. Yeah. Thanks so much, guys. Thank you. We'll take our next question from Noah Poponak from Goldman Sachs. Hi. Good morning, everyone. Morning, Noah. Just wanted to go back to the ETG margin. I know earlier you discussed you know some of the drivers of how it can move around and what you expect moving forward and the EBIT versus EBITA. I just wanna make sure I fully understand what's transpired over the last year or 2 years. It's been 6 to 8 quarters or so where it's down year-over-year. If you just had to hone in on the 1 or 2 main drivers of that, what would that be? Noah Poponak, this is Victor Mendelson. I would say, the main driver would, you know, the biggest driver probably the defense mix and, you know, so it's in a sense, that's mix, right? And the mix of products that that we've been selling. If I look at it on a longer view where it's, you know, mid- to high-20's%, you know, if I'm just looking at what's happened over the last 2 years, it's sort of off of a tough compare from a mix perspective, and then the mix has just changed a little bit the last 2 years. Yes, that's correct. I think that. Which items into the mix? Like, what's better mix versus worse mix in the segment? Well, I've gotta be careful because I don't wanna give competitors a roadmap into the margins on particular products. I'd like to answer your question, but without breaking out what we don't disclose. I don't know, Carlos. I think, you know, Noah, the 1 thing I would say to maybe give you a clue is we have talked about over the last year or so that our other electronics, more industrial type products that are not as specialized as, let's say, space or defense, have grown very nicely over the past year and a half, and that has tilted the mix a little bit towards those products, which have a little bit lower margin profile. I think that's 1 reason why you've seen that. I think as ETG settles into the mix, once we get some of the really the defense outlet, as Victor mentioned earlier, seems to be one of the things that is driving the shift in mix for us at least this year. Because as Victor mentioned, we do have the orders. It's outlays and it's kind of the muck in the supply chain that's gumming everything up. I think that delayed order has sort of hurt the mix a little bit for the ETG, which when that happens, we do have a little bit of softening in the rate. I will tell you this, you know, as a management team, if the ETG's kicking out 20% operating margins, I'm standing on the desk doing an Irish jig because that, as Victor mentioned, if you add the amortization back, that's an ATM machine. That's a cash business. It's very strong. If we can continue that, from my seat, I'm gonna be very happy. Okay. I mean, is that where the segment's going over time with the acquired revenue or, I mean, in the past, you have kind of consistently pegged where you expect it to land within a range over the medium term. Is there an updated version of that? Well, we haven't. We've intentionally not given guidance, Noah. I do think that what I have said in the past, though, is if the segment falls between 26% to 30%, we're happy. I've said that during this time because we have had this, you know, this mix impact on the business. I think we probably stick with that view for now. We seem to be falling right in the middle of that range, at least this quarter, this fiscal year. You know, Okay. If you think about it from a perspective, that's fine. We'll give some thoughts in December after we get our budgets done as to what maybe the segment might look like at that time, I believe. For now, if you stick with that range, you'll be fine. Okay. Then Carlos, just, you know, on working capital, and it's pretty specifically in the inventory line. You've built that, as you've, I think, attempted to kind of smartly be ahead of what's happening with supply chain and all of these different pieces of volatility. How are you gonna handle that going forward? Do you need to keep doing that or can you reverse that? Is that a cash inflow next year? How does that change going forward? I think in the short term, we're gonna continue to tell our subsidiaries to invest in inventory. We probably spent, during the quarter, $18 million to $20 million more in inventory, use of working capital, in the quarter, just the 3-month period. I think that, you know, I would expect that maybe to continue into year-end. We'll see how things shake out. What we don't want, Noah, is to get in a situation where our customers somehow are not getting HEICO product because we didn't plan appropriately. Now, there's. Look, nobody's a magician or can see the future. I mean, we do our best, right? We are experiencing some supply chain challenges. I think for the most part, because we did go long on inventory, it's benefited our customers and our sales. We'll continue to do that probably sometime in 2023 when this mess clears itself up in the supply chain. We'll get back to a normal run rate. To your point, that may be a source of cash midway into 2023 or something like that. Okay, thank you. You bet. Thank you. Thanks. We'll take our next question from Michael Ciarmoli. Hey, good morning, guys. Thanks for taking the questions. Maybe Carlos, maybe I just missed this, but to stay on Noah's line of questioning with ETG margins. Has inflation, you know, been any headwind to the margins there for some of your defense exposed products that might be under, you know, kind of fixed price contracts that haven't necessarily reset yet? Is that a component of any of the margin pressure that you sort of commented on mix there? Hi, this is Victor, Mike. I would say it's in the noise level. I mean, as we've said in the past, there's a lag effect, which I think is what you're keying on, between inflation setting in and then new contract pricing taking effect. We don't have a huge part of our revenue Under long-term contracts, but we do have some, and we do have that lag effect. Now, that can be offset in turn by adjustments we make on other contracts where we are not limited. That's why I say overall, I don't think inflation has been a big factor in our margins. It's, you know, it's there, but it's not the big driver, I think. I think, Michael, as a practical matter, our subsidiaries have tried to preserve their margins with pricing. We have certainly not gone overboard with pricing, as some other companies have. That's why we haven't discussed during the year our margins being impacted from pricing, because I think our guys have done a good job, targeted price increases to cover our margins and maintain them. Got it. Carlos, I know you're not gonna give us guidance here, but, you know, looking at FSG specifically, I mean, you've sort of averaged, you know, maybe 8% sequential revenue growth over the past several quarters, realizing there's some acquisition growth in there. Y ou kind of still think if we're looking forward, you know, sort of a mid-single digit sequential revenue growth rate, you know? Then, I mean, obviously, you're running extremely high here and, you know, record levels for segment operating margins in flight support. I'm not necessarily asking if we can see further expansion. I s this kind of 21-ish% range kind of, you know, stable and good for the near term? What I've been really consistent on is that the segment, I believe, runs at a 20% operating margin, fully loaded all-in-GAAP margin. As Eric mentioned a few minutes ago, the margin in the FSG has been elevated the last few quarters because we have seen the mix settle into our normal run rate. We've seen different parts of the business come strong in different quarters, and that mix has amplified the OI margin a little bit. I think as we settle into our normal mix, as we get beyond Q4 and probably in the Q1 of 2023, I do believe that the segment will settle in. You know, we expect 20%. Could it be better? Sure. I wouldn't do long-term projections much higher than that. You can, you know, you can assume that we'll constantly eke out little increases to that margin like we have historically, but don't look at 2 quarters and get over your skis and assume that that line continue. We hope it does, but I think it's more in the 20% range like we've been talking about. Got it. Okay, perfect. Makes sense. Thanks, guys. You bet. We'll take our next question from Gautam Khanna, TD Cowen. Hi, this is Gautam. Can you hear me, guys? Yes. Good morning. Good morning, Gautam. Hello, Gautam. Hey, good morning. I was wondering if you could discuss supply chain at FSG. Has that been an issue, and if so, where are the pinch points? Yes, the supply chain has been an issue. You know, it's very difficult to get certain raw materials. Certain services are very difficult to come by. People are really, you know, suppliers are running, you know, pretty close to capacity right now. We've been able to manage it, I think, frankly, because our people work really hard and forecasted some of this stuff, combined with the fact that we've been able to hold larger inventories to make sure that we can satisfy the demand of our customers. Yes, that still is a huge challenge for us. Even though I don't call it out, it is a huge challenge. It's very, very significant. We've just been able to figure out how to get it done and not, you know, let it hinder the business. Okay. Can you talk a little bit about where geographically you're seeing strength in the aftermarket, on the commercial aftermarket? I mean, are we starting to see China come back? I'm just curious, you know, how that pattern has kind of changed over the last 6 months in terms of areas of strength. You know, if you look at where the flights are, so North America is doing very well and is, you know, pretty close back to where it was, you know, maybe at 90% level, followed next by Europe. Asia is significantly behind. China is way behind. South America is sort of in between Europe and Asia. If you look at it with regard to flights, I think that's probably the best way to look at it. Okay. You know, just stepping back and asking about Exxelia again, it looks like a very different type of profile, and I was curious how it fits. I say that because the number of employees, you know, is pretty high, over 2,000. To Carlos' earlier point on margins, it might be a little lower. I'm just curious sort of how does it fit? Then, you know, post that deal, which is fairly large, how bandwidth constrained do you think you are to integrate other acquisitions, if at all? Just give us some background on that deal. Gautam, this is Victor. Kind of taking it in reverse order. The question about constraints on management because of Exxelia. It actually is the opposite for us because it has a very strong management team, central management team. We pick up a lot of operations and a number of excellent product lines in 1 without having to devote the individual resources. Typically, we would buy whatever number of companies that would be, let's say 8 or 10 companies, in order to achieve the same results. That's, I think it actually is easier for us, given the quality of the management team. It's a team, it's not just 1 person who we're relying on. It's a number of people, fortunately. With respect to the product, what attracts us to it is really that product line. I mean, these are critical and mission-critical components, many used in high reliability applications, certainly in harsh environment applications. Their business in the capacitor segments and resistors, for example, in those products, they are not serving the bulk commodity market. They're serving the high-end market. That's a very, very nice fit with us. Some of their other products that they make that are slightly higher level integrations are also these mission-critical components that are used generally in more stable applications, right? We're not going after the consumer and the broad industrial markets, although they do have some exposure in those as well. Overall, that's what attracts us. Again, the margins are very good. I mean, if we're not going into exactly what they are, but most people would look at that and say, "Wow, this is well beyond the margin of a typical manufacturing company," for sure. A ll put together. It's a great, you know, we think it's a great cash generator. We also like the fact, by the way, that it expands our international presence in very important markets to be served locally by people in those countries and those regions, as opposed to just trying to serve them from the United States. That's important to us. The geographic manufacturing footprint that we get out of that, we like that as well. I think it offers us some opportunities as we go forward to be more nimble in production when there are disruptions. whether those are from future pandemics or supply chain issues or whatever. 1 other thing, this is Larry. They have approximately 3,000 customers, and that's a great market reach. The customers they have are among the top industrial companies in the world. This customer list, the ability to possibly market with other product lines that we have, plus the fact that I remind you that the average industrial company has an operating margin of 7% to 1%. This is basically significantly higher than that. In other words, one of the problems that we're getting dinged on is that ETG group is running in the 30s% in operating margin. If we pick a company that's in the 20s%, it reduces the margin. Still, that's a great return on our investment and very strong cash flow. We think it'll be a very strong acquisition. This is Victor. As an aside, you know, you saw in the announcement that they have production in some lower cost countries like Morocco, Vietnam, and generally, those are higher headcount, lower wage operations when you're producing those. Generally, that influences the number of people. The last thing, we mentioned it earlier, but I remind you, we think there is possibility of expansion, acquisition expansion within that group of companies. Overall, you know, this is not something that we just found and we acted upon, you know, just 1, 2, 3. We've been looking at this company for a number of years. I appreciate the thorough answer. I was curious also just in terms of non-US M&A. Are you seeing more such opportunities with FX and whatever else? Yeah, I mean. It sounds like this may be 1 or more. There are other opportunities we are seeing outside of the US. I wouldn't expect an avalanche of them, but I think we're seeing a few more. I think our primary acquisition supply, if you will come still in the US. Let me remind you too, that some of our acquisitions result from existing company operations introducing us to customers or suppliers that they use. As we have more foreign operations, those foreign operations will, in due course, introduce us to companies that they deal with outside of the US. I agree with what Victor says. The majority of our acquisitions, I would expect to be within the US. I think we're gonna see some more foreign acquisitions too. Some of these companies, these foreign acquisitions, are really extraordinarily competent people with extremely high technical capability. I mean, some of the companies that we acquire in France, for example, France has a serious industrial base and a very highly educated workforce. The companies that we own in France, we pay high salaries, and they generate strong profits. We have been able to expand those companies multiple times. They've worked out as very good acquisitions. Thanks very much, guys. Thanks, Gautam. We'll take our next question from Colin Ducharme from Sterling Capital. Hi, good morning. Thanks for taking the question. Maybe I'll start off with Victor, 1 clarification and maybe 1 more insightful question. Clarification just on your book-to-bill. That sounded like you've gotten a healthy uptick there. I don't know if you're able to quantify that, you know, any more for us, but if not, just maybe provide some color on what the drivers for that improvement are, whether by market, product, or geography. Then, question on the Exxelia deal. It's getting a lot of airtime today. Pretty exciting, your commentary. It sounds very much like a platform for further kind of building going forward. I just wanted to try to, I guess, clarify that that's indeed how you and the team are also thinking about it. You talked about opening aperture. You know, is this kind of an island, you know, much like Hollywood serves as your kind of central nervous system domestically and increasingly overseas, is this kind of gonna be a central nervous system for the European continent? Does it open the funnel for incremental deals that may make more sense with this platform in your fold that perhaps made less sense prior to the deal? Thank you. You're welcome. Colin, it definitely serves as a platform and a base in Europe for Exxelia to expand. I would expect that they will continue to make acquisitions. They have actually a history of making acquisitions successfully and including them, if you will, integrating into their system. I would expect that to continue. I don't think their plan is to do it at a breakneck pace. I think they'll do it at a reasonable pace. In terms of our other companies in Europe, I don't think our plan is to have them change their reporting lines and start reporting to Exxelia. Now, that doesn't mean that the businesses can't and won't collaborate in a lot of places. I think there's a lot of opportunity actually for that kind of thing to happen. Yeah, by the way, one other thing that we think gives us a good opportunity to expand Exxelia into the States. Exxelia, the majority of its sales are non-U.S., and it does have content in the U.S. It does sell in the U.S. We think we can increase. The U.S. is a huge market, of course, and we think that we can help them expand in the U.S. I think that'll be another good opportunity for us. In terms of your question about Colin, what you know, where we're seeing our bookings increase, our order flow increase, I would say it generally is following the pattern with our revenue to a certain degree. The biggest increases are coming in non-defense realms. Although we have within defense some pretty nice increases in some of the individual businesses there as well. Okay, thanks. Then maybe a couple follow-ups for the rest of the team. Eric, you talked a little bit about inventory positioning of certain Aero customers for FSG. I'm wondering, just stepping back, we've seen in certain industrial segments, you know, a change in ethos, if you will, on inventory, you know, willingness to carry inventory in certain industrial segments. I'm wondering if pre versus post-COVID, that's inherent in your Aero customers, meaning they want to run a leaner operation post-COVID versus pre, or are things relatively consistent? Then a final follow-up for Larry. You talked a lot about consistency of deal flow. Not a lot had changed there from a pipeline standpoint. One thing that has changed markedly is the cost of capital, and that changes the math for a certain segment of buyers. I just wanted to, you know, drill down on that point, if you could offer a little bit of color, if that's changing at all, the types of buyers, or the timing of getting deals done. Thanks for your time. To answer your last question about the timing, cost of money, and so forth, we have been told, as I said before, by many investment bankers, not just one, that, in terms of private equity, the banks have tightened up considerably. Private equity is paying more. For their borrowings, and we think because of our great liquidity and our ability to just draw on our credit line without going to banks for every approval for every acquisition, that it gives us a little bit of a benefit over some of the other private equity. I think some private equity is being stressed a little bit, according to what the banks tell us. I think the increased interest rate probably in the long run is slightly beneficial to us. Now, I don't expect that to be a major change, but you know, every little bit helps. I think that's good. Of course, we are also a preferred buyer because we can write a check and none of our deals are subject to financing. Of course, as you know, a seller, 1 of the 2 key things in a seller's mind, that is price and certainty to close. With us, the seller has certainty to close because none of our deals are subject to financing. I think all in all, this gives us a slight advantage in the marketplace over what things were before, when interest was very, very low. I mean, the banks were just throwing money at private equity. Does that answer your question? Yeah, that's helpful. Just to check up on the inventory positioning for- Yes. Colin, yes, this is Eric. With regard to the inventory, I don't see much of a change thus far in inventory strategy from our airline customers. You know, it's something that we're going to watch very carefully. I think they are, since lead times are getting pushed out, they're also, you know, taking that into account into their ordering. I think that's an issue, but we don't really. I don't think there's going to be a really pre-COVID, post-COVID change regarding airline inventory strategy or at least we don't see it at the moment. Thank you. Thank you. It appears there are no further questions at this time. Mr. Mendelson, I'd like to turn the conference back to you for any additional or closing remarks. Well, thank you very much. Again, thank you to all the participants on the call. I hope we've responded to your questions adequately. If you have other questions, of course, we are available. You know where to reach us. Otherwise, we will look forward to speaking to you after our Q4 and full year report later on in this year. Have a very good holiday weekend which is coming up, and we look forward to speaking to you soon again. Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.