Welcome to the HEICO Corporation Q2 fiscal 2023 financial results call. My name is Samara. I'll be today's operator. 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 public health threats, such as the COVID-19 pandemic or health emergencies. HEICO's liquidity and the amount and timing of cash generation, lower commercial air travel caused by health emergencies and their aftermath, airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services, product specification costs and requirements, which could cause an increase to our costs to complete contracts, governmental 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 or sales growth. Product development or manufacturing difficulties, which could increase our product development and manufacturing costs and delay sales. Our ability to make acquisitions and achieve operating synergies from acquired businesses, customer credit risk, interest, foreign currency exchange, and income tax rates. Economic conditions, including the effects of inflation within and outside of the aviation, defense, space, medical, telecommunications, and electronics industries, which could negatively impact our costs and revenues, and defense spending or budget cuts, which could reduce our defense-related revenue. 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, filings on Form 10-K, Form 10-Q, and Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required by applicable law. I will now turn the call over to Laurans Mendelson, HEICO's Chairman and Chief Executive Officer. Thank you very much. Good morning to everyone on this call. We thank you for joining us, and we welcome you to the HEICO Q2 fiscal 2023 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 Vice President and CFO. Before reviewing our operating results in detail, I'd like to take a moment to thank all of HEICO's talented team members for delivering another strong quarter. As I have said many times before, HEICO's strength comes from its people, our team members. Their commitment to our customers and the consistent delivery of high-quality products and services is what drives our excellent financial results for shareholders. I continue to be very optimistic about the future for HEICO and our over 9,000 team members. I'd like to summarize the highlights of the Q2 fiscal 2023 results. They are record results. Consolidated Q2 fiscal 2023 net sales represent record results for HEICO, driven principally by record net sales within the Flight Support Group. This arose mainly from continued rebound in demand for commercial aerospace products and services and the contributions from our fiscal 2023 and 22 acquisitions. Consolidated operating income and net sales in the Q2 of fiscal 2023 each improved by 28% as compared to the Q2 of fiscal 2022. These results mainly reflect 10% quarterly consolidated organic net sales growth as well as the impact from some acquisitions. Consolidated net income increased 24% to $105.1 million or $0.76 per diluted share in the Q2 of fiscal 2023, and that was up from $85 million or $0.62 per diluted share in the Q2 of fiscal 2022. Our total debt to shareholders' equity was 26.4% as of April 30, 2023, and this compared to 11% as of October 31, 2022. Our net debt, which is total debt less cash and cash equivalents of $627.5 million as of April 30, 2023, compared to shareholders' equity ratios was 21.9% as of April 30, 2023, and this compared to 5.7% as of October 31, 2022. Our net debt to EBITDA ratio was 0.4 times less than one as of April 30, 2023. That compared to 0.25 times as of April, I'm sorry, October 31, 2022. Both times were less than one time EBITDA. The increase in our debt ratio in the first six months of fiscal 2023 principally reflects the impact from financing the purchase of Exxelia in January 2023. Cash flow provided by operating activities was $77.8 million in the Q2 of fiscal 2023. That compared to $96.8 million in the Q2 of fiscal 2022. The cash flow provided by operating activities in the Q2 of fiscal 2023 reflects an increase in working capital, principally driven by an increase in inventory to support our increased consolidated backlog. We continue to forecast strong cash flow from operations for fiscal 2023. As a personal comment, I always consider increase in inventories an indication of future growth in sales, so the increase in the inventory does not concern me. I will now discuss our recent acquisition activity. In March 2023, we entered into an exclusive license and acquired certain key assets for the Aircraft Emergency Locator Transmitter, or as we call it in the industry, the ELT product line from Honeywell International Inc, and this will fit nicely with the business operations of a subsidiary of the ETG group. ELTs provide critical emergency transition signals in the event of aircraft impact on land or water to enable first responders to locate the aircraft. We expect this license and asset acquisition to be accretive to our earnings in the year following closing. Earlier this month, we announced that we entered into an agreement to acquire Wencor Group for $1.9 billion in cash and $150 million in HEICO Class A Common Stock, all to be paid at closing for a total of $2.05 billion in the aggregate. Upon closing, which is expected to occur by the end of calendar 2023, Wencor would be HEICO's largest-ever acquisition in purchase price as well as in revenue and income acquired. Wencor will become part of HEICO's Flight Support Group. Wencor is a large commercial and military aircraft aftermarket company offering factory new FAA-approved aircraft replacement parts and value-added distribution of high-use commercial and military aftermarket parts and aircraft, and engine accessory component repair and overhaul services. Wencor is based in Peachtree City, Georgia, and provides its parts and services internationally, employing approximately 1,000 team members in 19 facilities around the United States. HEICO recently entered into the financing arrangements to secure adequate funding for the Wencor acquisition. This acquisition is subject to government approval and customary closing conditions. The highly synergistic acquisition is expected to be accretive to HEICO's earnings within the following year after closing. This acquisition materially expands HEICO's aftermarket product offerings and will enable the combined company to offer even greater savings and greater capabilities to customers while expanding our new products and services development capacity. Wencor is an ideal and perfect, highly complementary fit with HEICO. At this time, I would like to introduce Eric Mendelson, Co-President of HEICO and President of HEICO's Flight Support Group, and he will discuss the Q2 results of the Flight Support Group. Thank you. The Flight Support Group's net sales increased 28% to a record $392.2 million in the Q2 of fiscal 2023, up from $306.3 million in the Q2 of fiscal 2022. The net sales increase in the Q2 of fiscal 2023 reflects robust 20% organic growth as well as the impact from our profitable fiscal 2022 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 Q2 of fiscal 2022. The Flight Support Group's operating income increased 51% to a record $99.9 million in the Q2 of fiscal 2023, up from $66.2 million in the Q2 of fiscal 2022. The operating income increase in the Q2 of fiscal 2023 principally reflects the previously mentioned net sales growth and improved gross profit margin and the impact from the amendment and termination of a contingent consideration agreement, partially offset by an increase in performance-based compensation expense. The improved gross margin in the Q2 of fiscal 2023 principally reflects higher net sales within our aftermarket replacement parts and specialty products product lines. The Flight Support Group's operating margin improved to 25.5% in the Q2 of fiscal 2023, up from 21.6% in the Q2 of fiscal 2022. The operating margin increase in the Q2 of fiscal 2023 principally reflects the previously mentioned improved gross profit margin and decreased SG&A expense as a percentage of net sales, mainly reflecting the previously mentioned amendment and termination of a contingent consideration agreement, partially offset by higher performance-based compensation expense. I would like to introduce Victor Mendelson, Co-President of HEICO and President of HEICO's Electronic Technologies Group, to discuss the Q2 results of the Electronic Technologies Group. Thank you, Eric. The Electronic Technologies Group's net sales increased 27% to a record $301.8 million in the Q2 of fiscal 2023, up from $237.4 million in the Q2 of fiscal 2022. The net sales increase principally reflects the impact from our fiscal 2023 and 22 acquisitions, as well as increased net sales of our other electronics, aerospace, and space products, offset by decreased defense products net sales. The Electronic Technologies Group's operating income increased 3% to $68 million in the Q2 of fiscal 2023, up from $66 million in the Q2 of fiscal 2022. The increase in operating income principally reflects the previously mentioned high net sales volume, partially offset by a lower gross profit margin and lower efficiency levels, mainly resulting from the impact of our January 23 acquisition. The lower gross profit margin in the Q2 of fiscal 2023 principally reflects decreased net sales of defense products, partially offset by net sales increases of our other electronics and aerospace products. The Electronic Technologies Group's operating margin was 22.5% in the Q2 of fiscal 2023 as compared to 27.8% in the Q2 of fiscal 2022. Keeping in mind that the ETG's non-cash amortization is about 5 percentage points, this performance equates to what we consider to be the real operating margin metrics by which to measure a business of around 27.5%, which is a strong performance at the operating level and consistent with my prior comments about the rough range where I expected our margins to be. The lower, yet strong, operating margin principally reflects the previously mentioned lower gross profit margin, and increased SG&A expenses as a percentage of net sales mainly from the previously mentioned lower efficiencies. Our defense sales remain lower than the prior year, as anticipated, and as I discussed on our last earnings call. This overall reduced operating margin despite the strong sales increases of our other electronics and aerospace products. In a little more detail on those sales, our commercial aviation sales and backlog have been particularly strong, I would expect that to continue for some time. Sales of our other high-end electronic components have been healthy, though I still expect some softening in those markets overall as the year wears on. Our commercial space sales grew, Overall, we have a good space products backlog, though deliveries are not linear over the course of the year. Exxelia, our largest ETG acquisition, has performed in line with our expectations, We are very happy with this acquisition. As we've often explained, Exxelia's operating margins are lower than the average ETG segment margin, operating margin. Consistent with our prior comments, we continue to anticipate that Exxelia will reduce the consolidated average ETG operating margin by approximately 2 percentage points going forward. On supply chain, we continue to make progress in reducing our sales that have been delayed due to supply issues with our subsidiaries now estimating that amount fell below $30 million, even into the mid to low $20 million if one strips out Exxelia. The majority of our businesses tell us that overall supply conditions are either the same as or better than they were, and they anticipate continued, though uneven improvement throughout the year. Of course, we remain very confident in ETG's outlook, both long and short-term, as our ETG companies are a remarkable and irreplaceable set of businesses that are managed by gifted leaders and filled with talented team members. Given the combination of the ETG's record backlog, the overall expected delivery timing for that backlog, and anticipated orders, we expect our defense product net sales to start to increase within the next year. Though, of course, we can never be certain of the timing and exact sales levels. I turn the call back to Larry Mendelson. Thank you, Victor. As we look ahead to the remainder of fiscal 2023, we continue to anticipate net sales growth in both the FSG and ETG groups, principally driven by demand for the majority of our products. Additionally, continued inflationary pressures and lingering supply chain disruptions stemming from the COVID-19 pandemic may lead to higher material and labor costs. During fiscal 2023, we plan to continue our commitments to developing new products and services, further market penetration, and an aggressive acquisition strategy while maintaining our financial strength and flexibility. We believe that our ongoing conservative policies, a strong balance sheet, and a high degree of liquidity enables us to continuously invest in new research and development and to take advantage of periodic strategic inventory purchasing opportunities, as well as executing on our successful acquisition program. All these collectively position HEICO for continued growth and market share gains. In closing, I would again like to thank our incredible team members for their continued support and commitment to HEICO. Their persistent drive and determination to win in the marketplace has resulted in another quarter of outstanding results, and we thank you for all that you do to make HEICO a great 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 are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Robert Spingarn with Melius Research. Please go ahead. Hello. Good morning, everybody. Good morning, Rob. Good morning. First, congratulations on the Wencor deal. I have a couple of questions on that. Eric, if it's okay, if I could just start with you. I wanted to ask if you could perhaps offer some color on the differences between the two companies' PMA distribution and component repair businesses and how those complement one another. Great. Thank you, Rob. I would be happy to. You know, we're very, very excited about the Wencor deal because of the complementary nature of the transaction. If you look at their various businesses, their product lines really complement HEICO's very well. You know, HEICO started out over in the PMA area focused on engine parts. Wencor has focused on non-engine parts. HEICO also does non-engine parts, but there are actually very little similarity in the product that we do. As a matter of fact, the HEICO component repair stations purchase all of the Wencor PMAs because HEICO doesn't offer those PMAs. We're very excited about the complementary nature there. With regard to component repair, Wencor overhauls a lot of components and is in a lot of market niches where HEICO is not in. We think that that's gonna broaden us. Likewise, in distribution, we focus in different areas. Wencor is, for example, has a very large position over in the bearings area, whereas HEICO basically isn't involved in the bearings business. We think that overall this is going to, you know, permit HEICO to become a more efficient and stronger competitor, you know, by giving more products to our customers at lower prices. So we're very excited about it. Eric, you know, this isn't based on what you just said, this isn't just additive, putting the two together, but it sounds like there's a pretty decent cross-selling opportunity where. We do. You know, Wencor's customers can buy some more HEICO parts and the opposite. Absolutely. We feel very, very strongly about that. you know, there's a whole product line that HEICO doesn't offer, that we're going to now be able to offer to the airlines and frankly give them more choice. Greater opportunity, greater savings, and it's really gonna work out very well. Also, Wencor's got a whole set of manufacturers that makes product for them, and frankly, a lot of those manufacturers, I think, can also make product for HEICO as well and vice versa. We think it's really going to create a tremendous amount of efficiencies. Sort of lastly, you know, HEICO has focused over the years more on, I would say, the airline market. Yes, we serve, you know, independent repair stations and brokers and smaller customers. Wencor really has a world-class, e-commerce, system, e-commerce platform, which, I think is going to be of really great value, to our customers. I mean, I know that our component repair stations like buying parts from Wencor. I think that, you know, as we bring, the best that both companies have to offer, I think it's really gonna be good for our customers. Okay. Just to close the loop on this, Eric, I think normally HEICO or FSG does about 300-500 new PMAs annually get added to the catalog. I'm not sure what that equivalent number would be for Wencor. Should we assume that the pace of product development and additions to the catalog won't change for either company, or is there a different answer there? Correct. I would say that it would definitely not go down, and it would probably go up. As we've got a more fulsome product line to offer to our customers, I think that there's going to be additional development opportunities, yes. We view it very much as additive. You know, in today's market, obviously labor is very tight. We've got a great workforce. Wencor's got a great workforce. We share a lot. Our DNA is very similar. You know, companies that view themselves as, you know, small compared to the very large companies in the industry, and we're really very much focused on product quality, turn time, service, and price. I think that there's really a great marriage and, you know, frankly, something that we've all wanted to do for quite a long time. I'm just happy that we were able to get it done. Rob, this is Larry. Hi. Just as a comment. Thanks ... to summarize. We really believe that this combination is a great win for our customers because with expanded capacity, and we believe that we'll be able to offer customers, better pricing, lower pricing, more products and more efficiency. We look at it not so much as a win for HEICO and Wencor, which I think it'll be, but really a big win for the customers and the industry. You know, HEICO exists because its pricing is below the OEM and that's the reason that they buy our products. We're 30%-40% below, and this will give us the capacity to give even more value. Larry, Eric, thank you very much. Victor, Carlos, I had a couple for you, but I'll step aside. Thanks so much. Thank you, Rob. Thank you, Rob. I'll take our next question from Peter Arment with Baird. Please go ahead. Yeah, thanks. Good morning, Larry, Eric, Victor, Carlos. Good morning. Good morning. Hey, Victor, maybe I can just start with you. ETG margins are now, you know, kind of fully reflecting the inclusion of Exxelia. How should we think about the progression for margins to go back towards kind of the 27%? You mentioned the 200 basis points or the 2% kind of impact, but how are you thinking about that progression back? Thanks. Yeah. Peter, this is Victor. It's a good question. Right now, I'm keeping our assumptions within close distance of where we are. I think you probably know we're always fairly consistent, excuse me, conservative, when it comes to this. I do believe that as some of our defense products pick up later this year, first part of next year, which tend to be higher margin, that it should bring the margins north of where we are. I'm more comfortable right now saying that we'll stick where we are. You know, you've always kind of heard me say that I think within more or less 10% of where we are is a healthy zone. Now, of course, that excludes acquisitions, right? Acquisitions could change that materially depending on the pipeline. Yeah, that's helpful. Then Eric, just another one on margins. Just seems like, you know, the margin performance here continues to be incredibly impressive at FSG. You mentioned the elimination of a contingent agreement, so maybe just a clarification that how big was that? You said it was partially offset by stock comp. Just how do we think about kinda FSG margins here going forward? I know excluding Wencor, but just, you know, you've had really strong performance post-COVID. Just any clarification there would be helpful. Thanks. Hey, Peter, this is Carlos. I'll take one. I'll take that one. The it was an earn-out on the 2021 acquisition that was basically two tranches of earn-out that we were going to pay, subject to operating performance levels. The company that has those earn-outs are the prior owners. We believe more than likely would have made that earn out. We had probability weighted the likelihood of that outcome to be a success for them. The seller requested a mechanism to get him his earn out sooner. What we wound up doing was renegotiating the earn out structure and paying them the $9 million of earn out basically this quarter versus paying it to them over the next... I think the first tranche would have been done at the end of next year and the second tranche at the end of 2026. We basically monetized the earn out today and gave up the upside on the back. I think, the earn out would have been the first tranche, $9 million, second tranche, $18 million. He took $9 million for basically $27 million in possible earnings. We felt that was a good deal for our shareholders, a good deal for the, our partner, the owners of the company we bought, and that's how it all came about. Also just to add, the proposal to do this was from our partners. This wasn't a HEICO initiated proposal. Our partner came to us with the suggestion. We said, sure, if that's what you want to do, we're happy to go ahead and do it. Company is performing extremely well, and we couldn't be happier with it and with our partners over there. It's I think as Carlos said, a win-win. You also asked with regard to the margins. You know, post-COVID, HEICO has done very well. I think that we have shown to our customers that we. You know, we started out as a very small company, and, you know, everybody's heard me say this 100 times. When you start out very small, you've got to make sure that you keep your customers happy. It's sort of obvious, because if you don't do that, you're out of business. Due to our approach of having inventory, we had inventory on the shelf and when, frankly, others ran out of inventory, and we continued to keep our people, we continued to work with the customers, and we added product lines, we added new parts, and as a result, we're doing really, really well. We also shrunk our footprint a little bit as a result of COVID, due to some changes in the market. I think we've become a lot more efficient. All of this coming through, I mean, obviously, the $9 million isn't going to repeat. Even if you pull that out, the operating margin was above 23%, which is really very good. You know, again, that's in a period of time where we're making our customers very happy and, you know, supplying parts to them and expanding product line at very competitive prices. I really have to hand it to our team because frankly, in the corporate office, you know, we just look to sort of make acquisitions, but the folks in the field were the ones who figured out how to do this, and the numbers just roll up where they do. We don't, you know, we don't tell them where to be. It's just that's what comes out of the machine at the end of the day. I really have to commend them for this. Appreciate all the color and congrats on that, Carl. Thanks again, guys. Thank you. Our next question comes from Larry Solow with CJS Securities. Please go ahead. Great. Good morning, guys. Congrats on a really, you know, strong quarter. Maybe we'll stick with you and just maybe some, a little more color just on the commercial aviation, just your markets. Obviously, you grew 20% this quarter, and I think that was on top of, like, close to 25% organic growth in Q2 last year at 23%. You've recovered pretty much from COVID, I guess, or at least the narrow body, right, has recovered. Maybe you can give us a little color, narrow body versus wide body, you know, and just recovery from COVID and where are we going from here? Have you seen any change in order patterns or airlines holding more or less inventory? Any color there too would be great. Great. Larry, thanks. I'd be happy to answer that. The sales, the organic sales growth has really been, frankly, amazing. In spite of work, we just had our eighth quarter of organic growth over 20%. You know, so it's one thing to have four quarters where you bounce back, but we've had eight. You know, the numbers are, you know, frankly surprised me to the upside every single quarter. You know, there's a lot of strength out there. I think that the airlines are getting ready for the summer season. They know that it's gonna be really tough this summer. Everybody wants to fly, whether it's for leisure or business, and they are very, very conscientious and very focused to make sure that they, you know, complete those that flying. As a result, they make sure that they've got the inventory. I keep on asking our people. I meet quarterly with our sales leaders and, you know, wanna understand where we are, and they just see, frankly, continued strength. Asia, you know, and is the last region, if you will, to recover. A wide body is also the, you know, the last of the fleet type to recover. We see, you know, added interest in the stuff that we're doing. We're able to, you know, bring on additional principals and develop additional parts and repairs. I think it just in general speaks to the market. I mean, ultimately, there will be a slowdown. We can't continue at this pace forever. I'm still very, very bullish that even when that, you know, slow down or a little dip occurs, which again, we don't see on the horizon right now, even after that occurs, we're going to continue to rise right through this, just as we have in the past. It's, like, impossible to time these things. That's why we're so committed to the market. Got it. How about just to follow up just on the margin question, maybe, and Carlos can chime in. I think your margin's extra the one-time benefit, like, for the segment year-to-date or in the Q1, close to 23%. Carlos, just how should we look at that going forward? Feel like you're operating close to, you know, also, and those are close to it. Is this a high watermark? Should we, you know, should we tail back a little bit, as we look out over the next couple quarters and even, you know, for a guess you're feeling in that? Thanks. I mean, look, it's, we're intentionally not giving guidance, I'll be careful about what I say. I do think that we are in a circumstance right now in the business environment where the segment's performing extraordinarily well. You've got high growth, you've got good product mix. You know, we would love this to continue. I think that, you know, I think where we fall out candidly is between maybe 22% and 23% as a run rate type segment margin. I don't wanna make too many promises right now because we still have to settle into our footprint from, you know, the disruptions that were caused by COVID. Got it. Great. I appreciate the color. Thanks, guys. Sure. I'll take our next question from Pete Skibitski with Alembic Global. Please go ahead. Hey, good morning, guys. Good morning. I guess maybe for Victor ETG. Victor, just within defense, obviously, there's been some supply chain issues, but kind of beyond supply chain, are you seeing areas where, you know, your defense sales are strong, some areas where it's weak? Is it just kind of a timing mismatch right now in terms of what the Pentagon is prioritizing, you know, for purchases? Hi, this is Victor. The answer is yes, and it's not unusual for us to have a variety of results in different businesses. It's maybe a little more pronounced between some of our higher and lower margin products and businesses now than it has been at other times. In some cases, we have backlog, but delivery is not due yet. In some cases, we're expecting some large orders, some of which have been delayed. Others are for foreign military use. They may be U.S. customers, or they may even go through the DoD, like an FMS or things of that nature. That's why we tend to have that optimism as we get a little bit further out. It is a, as you pointed out, it is a little bit of a mixed bag, which is not terribly unusual for us. You don't feel like you've lost any market share, or the competition has gotten particularly intense amongst, you know, suppliers? Definitely not. We feel strongly we haven't ceded market share on any, you know, products or programs. It's more, you know, in a sense, what they're buying at the particular moment. We feel pretty good about the backlog and the orders and the order estimates going forward. Again, I'm not anticipating it as a next quarter change or even necessarily the quarter after that. I think it goes a little further and deeper into time based on when I look at our backlogs, our delivery schedules, and some of the orders that we're anticipating. Am I right, you know, when you guys talk about Exxelia being two points of headwind, I think from a core perspective and some modest increase in amortization, it still seems maybe you're down a couple points year-over-year in underlying core margin at ETG. Is that basically all mix essentially, you really need, you know, defense mix to recover in ETG to get back to the core level of margin that you did, you know, the past year or two? Is that the right way to think about it? That's a good way to think about it. I think that's right. Mix on some of the other higher margin products that we have. Okay. Okay. Thanks, guys. It doesn't just have to be defense. Well, I think it's defense weighted. Right. Okay. Thank you. Thanks. I'll take our next question from Kristine Liwag with Morgan Stanley. Please go ahead. Hey, good morning, guys. Good morning. Good morning. You know, with the defense acquisition, once you complete this, I think Laurans, you mentioned that you expect net debt to EBITDA to be below three times. You know, this leverage is still higher than where you've historically operated. How do you think about the debt load for the business going forward? I mean, when you look at the other main after commercial aerospace, after market player, I mean, they could lever up as much as seven times net debt to EBITDA. One, you know, is this kind of this three times is the new normal, or do you anticipate to go where you've historically operated at below one time? Does this give you appetite, you know, for even further leverage, you know, maybe not as much as seven times, but maybe higher than three? To answer that question, first of all, I want to emphasize that according to our projections, when we close this transaction, Wencor, our debt to EBITDA will be under three times. I think the number is 2.8 times or 2.7, Carlos? Yeah. Net-net debt. Net-net will be under three times. The reason that we insisted upon giving HEICO A shares in the transaction was the purpose to keep the leverage under three times. HEICO has never been a highly leveraged company. Until now, we've never been above two times. We've been below. Excuse me. Our projections show that within a year, we expect to be slightly below two times again. To answer your question, at this point, we are not thinking about becoming a highly leveraged company at six or seven times. We felt that taking leverage on at under three times and being able to reduce it within approximately one year below two times is consistent with our past practices of being, you know, very conservative on the leverage side. The other thing that I wanna point out, that we don't give guidance, but we do tell The Street that we project, we try to grow 15%-20% bottom line on an annual basis in this compound. We have done that pretty consistently for the past 30 years. According again to our projections, we believe that we will be able to in 2024 grow within that 15%-20% increase. Now, of course, everything's dependent upon market conditions and everything else. Based on everything we know today, this acquisition will permit us to continue to compound at least in 2024, and our leverage will be below two times when we get to the end of 2024. I presume that we will continue to make smaller acquisitions, as long as the leverage does not go up. I don't know. Does that answer your question? Yes, it does. Thank you very much for the color. Okay. Our next question from Michael Ciarmoli with Truist Securities. Please go ahead. Good morning. I'm on for Mike Ciarmoli this morning. Thanks for taking our questions. First, just wanted to ask one on the Wencor acquisition. Given that historically you've operated acquired companies on more of a standalone basis, how are you thinking about the integration of Wencor into HEICO? Are there any preparations you're making that you can talk about that are perhaps different than for some of the acquisitions you've made in the past? Yeah, this is a great question, something we've been thinking about quite a bit. Wencor is a very, very well-run company. They've got a, you know, tremendous asset in their people. Frankly, our plan at the moment is just to acquire it and leave it as a separate standalone company, for the near term. Let's see what benefits could exist between the two companies over time. We'll share best practices, and we'll figure out how to serve our customers even better. I, you know, I think there's obvious, you know, areas where we can help each other, continue to grow and improve, but the plan is to leave it as a separate standalone company for the moment. All right. That's helpful. Just kind of as a follow-up on some of those synergies that you might expect from the Wencor acquisition. Do you expect that as a combined company, it might give you an opportunity to speed up development of new PMA parts, or do you anticipate there might be any benefits related to scale in terms of working to get PMA parts approved? Yeah. Well, that's also a great question. In terms of scale and getting PMA parts approved, we've got a great track record with the FAA to be able to get parts approved. I feel pretty confident that, you know, we'll be able to continue to add to that. Wencor has, you know, as I mentioned earlier, a product line that HEICO doesn't offer. I think that this is going to add to the portfolio. Yes, it will speed up the development because right now, if, for example, HEICO wants to develop the type of part that we haven't done in the past, whereas Wencor has done that type of part in the past, we would be able, yes, to develop it more quickly. I think that that's gonna be a benefit. When we go to customers, very often customers ask for a broader product line. By, you know, adding the two product lines together, we're gonna be able to cover a lot more of the waterfront. We're, we're very excited about the, you know, all the benefits that that's gonna bring. Great. Well, congrats on the acquisition, and thanks for taking the questions. Thank you. Thank you. I'll take our next question from Sheila Kahyaoglu with Jefferies. Please go ahead. Thank you guys, and congratulations. Larry, I wanted to ask you a question first. You mentioned inventory and supply chain a few times in your prepared remarks. You know, you guys have typically done very well with cash conversion. Maybe can you talk about that? Eric, you also referred to inventory and having supply ready for customers. Is this something new? Is it specific to a certain business? Maybe if you could talk about that? No, I think two things were happening. Number one, our backlog is larger. To fill that backlog to supply the customers on time, we have to have inventory. That went up. Number two, because of supply chain issues, our subsidiaries wanna make sure they have inventory on the shelf to meet the customer's demand. Those two things increased the inventory. That was the main increase, I think in inventory. Sheila, to add to that, we are anticipating additional growth in the businesses and in particular over in the distribution side, picking up additional principals, additional territories. We had to grow inventory for that. I think everybody's pretty aware of the extended lead times in the industry. Product that used to have 4-week, you know, 8-week lead times now can have anywhere from 26-52 week lead times. We wanna make sure that we are able to service our customer, and we've got the parts on the shelf. As a matter of fact, the head of our distribution business told me this morning that a very major industry player out there, who's a very big customer, we've got 98% on-time delivery in a market where we are having to place up to 52-week lead times for the products for which we, you know, to which we are distributing to them. The way we're able to get 98% in this particular business on-time delivery when others are, you know, dozens of points below that, is by holding the inventory. We wanna be there for our customers. We've never been cash constrained. We wanna make sure that we invest in the right inventory. It doesn't do any good to have the wrong inventory, obviously. We got the right inventory. We make our principals happy, and, you know, we're able to service our customers. I think that's really why inventory has increased, and we think it's the right thing to do. Okay. That's super helpful. Victor, maybe for you with Exxelia, I mean, obviously we all understand that it's lower margin, but is it lower margin for now? Is there something structural in the business, or is it just, you know, a factor of its footprint? It's a good margin business in absolute terms. It's just not as high margin as the rest of the business. The margins have been increasing over the last several years. I think that I would expect that to continue, but I don't anticipate it's gonna get to the same margin as the rest of the ETG in the near term, at least in the next couple of years, absent some acquisition or acquisitions which would change that story. We're very happy with the margins. They're very good, just not as high as the rest, and that went into our acquisition decision. By the way, Sheila, in past conferences, we have stated that the ETG group would acquire a strong company that had a lower margin than. I mean, when ETG was 28% or 33%, we always said if we bought a company that had close to 20%, it's gonna lower the average margin. The cash and profit generation and the size of the acquisition of Exxelia warranted us saying, "Fine, we'll take a lower operating margin because this is a very fine company," and it, by the way, has great management, and we believe it has the ability to grow. Those things overrode the desire to. It would have been great to have higher margin. We do believe that as we build in some efficiencies, that that margin can creep up. Okay, great. Thank you so much. Our next question comes from Josh Sullivan with The Benchmark Company. Please go ahead. Good morning. Good morning, Josh. Just on the comment of doing, you know, PMA parts you haven't maybe done in the past using possibly some of Wencor's expertise, you know, what is your appetite to expand the PMA waterfront? You know, where might you go with PMA you haven't gone in the past? Yeah, there's, you know, I it's a great question, and something that we've thought quite a bit about. We think that there's a whole set of parts that we just haven't been able to tap as efficiently. I-if you look at HEICO sort of developed a certain skill, engineering skill set to go after the types of parts that HEICO does, and Wencor has done the same for the parts that they've done. By being able to focus in each of those areas, I, I think there's going to be a lot more that we can do together. You know, a lot of these parts made up, so, you know, you can have a complex part next to a less complex part, but the two, you know, there's a certain interaction between them. This is really gonna help us develop a much, fuller product set because basically we'll be able to expand into areas that we haven't done in the past. Just on the growth of PMA in general, you know, just some thought, you know, PMAs have benefited from some of the struggling OEM supply chain issues. How should we think about that dynamic, you know, if and when OEM supply chains recover, do you still think PMA growth will be as strong in the others? Well, I sure hope so. We, you know, we think that there's really been a permanent shift and change in the industry. You know, we've been out there, both HEICO and Wencor have been out there preaching to the customers for, you know, whatever, 50 years about PMA. It's taken a certain period of time. You know the old saying, what is it? Necessity is the motherhood of invention. We've been out there with, you know, frankly, you know, as good technical product, if not better. And don't get me wrong, our, you know, or the OEM companies out there supplying the market, they supply very, very fine products. To supply products that are, you know, the same as the OEM is quite a technical challenge. Frankly, in order to have the products on the shelf, that really takes a tremendous amount of effort. I think we're in a very, very good position to continue to grow our sales. You know, we compete with the OEMs, and they are really high quality, excellent companies, and they're really, really tough to compete with because they offer a very broad product set at, you know, with outstanding quality. You know, we think that this is the opportunity to obviously bring multiple products together and be able to compete with the OEMs on a better basis. I have to say, I don't wanna mention which ones, but even OEMs have now moved to buying both HEICO and Wencor PMA products because if they don't have the parts on the shelf, and they've got to ship even their own repaired units. I don't wanna go into which ones or what they are, but they purchase our parts to go ahead and do that, and we're happy to sell it to them. I think it's really coming together, and there is a, you know, what I believe is a permanent market shift in how HEICO and Wencor products are viewed in the marketplace. Great. Thank you for your time. Thanks. Our next question comes from Tony Bancroft with Gabelli Funds. Please go ahead. Hi. Good morning, gents. Thanks for the taking my question. Well done on the quarter. Very nice. Just maybe could you, could you frame the maybe what else is out there in the PA market? Who, who else participates there besides the Wencors? It sounds like they're one of the I mean, small relative to you, but larger ones out there. Is that where you wanna focus going forward? you know, maybe just maybe talk about that. Yeah. Hi, Tony, this is Eric. I'd be happy to go ahead and go over that. You know, there's a long list of competitors who supply a PMA part. There are, you know, I don't wanna call them out by name, but they exist, and our customers know who they are, and they work with them. I think that, you know, that'll continue. Our area really for future acquisitions, I wouldn't say is in the PMA area. Our area for future acquisitions would be. You know, I mean, I wanna be careful not to, because we welcome our competitors to this call, but we don't wanna exactly tell them what we're gonna be going out after. We think that there are a lot of adjacent white spaces in which HEICO does not participate. Many, many. You know, HEICO is still, even though we've done quite nicely, we're still a very small company, and there is so much more to do out there. I think we're gonna grow and we're gonna focus in areas that are additive, and really broaden our product set so we can bring more, you know, we can become a more efficient and stronger competitor and, you know, be able to bring more products to the marketplace. Thank you, Eric, and Victor and Larry, Carlos. Thanks. Great job. Thank you. Our next question comes from Colin Deschamps with Sterling Capital. Please go ahead. Hi. Good morning. Thanks for taking my questions. Quick housekeeping for Victor Carlos on ETG. Did you give the organic sales number for that segment for the quarter? If so, I missed it. A follow-up. I'll just ask them all at the same time here. Follow-up on just pulling the thread for the Wencor deal for Eric and/or Larry. wanted to maybe pull that thread with using kind of two lenses, strategic and financial. Strategic, you talked about the marriage of both PMA franchises, but can you talk about perhaps marriage of distribution and PMA? What I mean by that is it sure looks like Wencor has put more muscle in recent periods into signing exclusive distribution agreements. I'm wondering if you can now bring to bear your larger PMA catalog and marry them with some of those distribution agreements. That seems like a logical strategic synergy there. Then from the financial lens, in your previous responses, you talked about not doing anything different or special with integrating this culture, and them having the same DNA as you all. You know, we kind of view the real asset of HEICO is your culture. One differentiator, if you look at this asset now, Wencor, in prior years, you're talking about a business that has borne the load of a debt load six, seven, eight times EBITDA. That burden is significant. It does, you know, inhibit some reinvestment. Now that, you know, they're gonna be able to benefit from a much stronger financial model. Can you just talk a little bit about that? That DNA looks and smells a little different in terms of opportunity and the capacity to reinvest. Would just love to hear you tee off with some opportunities there. Thank you very much. Yeah. Let me make one comment. Wencor was owned by private equity, and their model is heavy leverage. HEICO, when it closes, will own Wencor, and our model is low leverage. That leverage situation will totally disappear. Yeah. Eric wants to. Colin, I mean, these are really great questions, and I'm glad you're hitting on them. You know, both HEICO and Wencor are in the distribution market, and the unique benefits that we bring to our distribution partners is that we're able to First of all, we both very much focus on the details. Starting out as small companies, you know, we really focus to make sure that we get, you know, maximum benefits to the customers, making sure that they know what's available to sell and that we get the products sold. The other area of similarity is both HEICO and Wencor have been able to bring to distribution partners the ability to develop additional parts that they don't already offer in their catalog. You know, I'm glad you're mentioning this because this is something that we've been thinking about. You know, HEICO to date, we have distribution partners, and we've got the ability to develop certain PMAs, and we're known at the airlines for developing those PMAs. For the existing distribution partners that we've got, there's a whole set of additional parts that Wencor can bring to the HEICO distribution partners and really help them, and likewise, HEICO can bring to the Wencor distribution partners. I think that this is going to increase competition in the distribution aftermarket and make the product set going to the airlines just being that much bigger, so they're gonna be able to save a lot more money on it. That was on the strategic side. You asked also about, you know, financial and the culture side. The businesses, the people are really similar. Again, as I said, focused on the details, focused on quality, making sure that we're out there with the customers, whatever they need, when they need it, we move heaven and earth for them, and that is identical in both HEICO and Wencor. You're right that the, you know, the people are the real asset. I mean, that's the most important part of the business by far. Wencor has been constrained as a result of having, you know, being private equity owned, and they have been constrained. I think, frankly, HEICO's lower leverage is gonna free the Wencor people to be able to go out and sell additional product, take additional inventory positions, hold additional inventory if that's what makes sense, broaden what they do. Again, that's going to help our customers because the more we sell them, by definition, the more they make. I mean, we've got, by definition, competition on pretty much every single thing that we offer. Our competitors are these big, huge companies that do a phenomenal job and are really, really hard to compete with. Wencor, in a sense, has had one hand tied behind its back for the last number of years, and now we're gonna be able to go out and, you know, free that hand, and I think it's gonna work out really, really well for our customers. Then I think you had some ETG, Carlos, or... I gotta follow that? All right, you asked about the ETG. For the quarter, it was down 3% organically, most of that driven by defense. The other slips within the ETG organically were all up. They were either flat compared to the prior quarter or all up. That's the quarter. I think for the year, similar. Year to date, about 2% down for the segment on organic growth. Thank you. You're welcome. As a reminder, it's star one to ask a question. We'll take our next question from Noah Poponak with Goldman Sachs. Please go ahead. Hey, good morning, everybody. Good morning, Noah. Can you frame, your market share now in PMA and then where Wencor sits, in that respect? It sounds like you do not foresee any issue in terms of closing with that combined size in PMA. Is that because the combined PMA there would still be small as percentage of total PMA, or because it would still be small as a percentage of total aerospace broad aftermarket? The, we don't know specific shares because it's impossible to get that information. Our competitors, as we've always said, are the OEMs. When you look at the OEM aftermarket sales, I mean, we've always said that we are absolutely tiny compared to them. This is gonna give us the ability to compete better with the OEMs. We still view our market share as very small. We think the product into which we can grow is very, very considerable. That's why we're very optimistic for the future and, you know, why we think that there's really a lot of opportunity here. Were you able to, in the diligence process, you know, look into whether or not, market share and just PMA would be a factor? No, I mean, look, we study everything. The, you know, as I've always said, I've been asked on these calls for 20 years about, you know, what are the factors in the marketplace that affect us the most, it's always been the OE. It's always been. I mean, the OEMs, they have the home field advantage. They're selling the original product. They're in there, they got point of sale ability. When they sell the assets, they're able to tie up the maintenance long term. They offer a full product set. That's always been our competition. I mean, if you had to pin me down and guess, you know, what our market share, the combined market share against OE aftermarket parts, you know, I guess it's in the 2% area. I mean, it's very, very small. Okay. we think that there's a lot of opportunity to really grow. You know, frankly, look, it's 2%. We're never gonna be, you know, we're never gonna have the sales of some of these very large companies. I think we can continue to grow our product line and be able to, you know, offer more product at very good prices to our customers and save them a lot of money. I mean, the airlines are saving a fortune as a result of our products and, you know, if they're able to do that and we're at 2%, I think they'll be able to save, you know, even more as we move forward here. Noah, this is Blair. As you know, the OE generally has a monopoly position in replacement parts. He starts off with offering the only available parts. If they want to replace parts, they have to go to the OE. HEICO has a tiny share because of its PMA, but PMA has succeeded because of its price benefit to the airlines. We offer a much greater value to the airlines, and that's where our competitive advantage exists. You know, you know what the marketplace looks like, but we are very small compared to what the market is. We only, essentially, as you said, we only compete with ourselves, so we try to grow the bottom line 15%-20%, but that's a tiny share of the overall market. Okay. Appreciate all that. I just had two more. One, was the accelerated earn-out or the contingent consideration, was that in the FSG segment EBIT and EBIT margin in the quarter? It was, Noah. The $9 million was a liability on our balance sheet up through the middle of Q2, and then we reversed it when we renegotiated the transaction, and it went through EBIT in the segment. There was about 2.3% worth of benefit to the OI margin related to this matter. Carlos, I guess, you know, that's a pretty sporty margin if I adjust that. Yeah. Should I work from there going forward, or does that have some other favorable timing that doesn't repeat in the near term, or how should I think about the next steps there? You know, look, I'm always conservative when we talk about margins, because really, who knows, right? But, I would say, and what I've told people pretty consistently, is that we're in an extraordinary time right now where the business is growing and growing. We have product in our sales, as Eric pointed out, what was it? Eight quarters of 20% or higher growth- Yeah. Up, you know? When you're in an environment like that, you get tremendous leverage on your fixed costs, you get favorable product mix, et cetera. I am cautiously optimistic that the margins will remain high, you know, higher. Today, I'm more optimistic they would be higher than I was yesterday. What's that number? You know, if I'm modeling, I'm thinking 22%-23% might be the norm for the segment, I can't tell you that with great specificity because we need the business to, you know, calm down, if you would. The industry calm down, take a pause, et cetera. Once we see what the footprint looks like, it'll be an easier question to answer. Right now, all businesses within the Flight Support Group are firing on all cylinders. This is what you get in a period like this, and we'll see where it shakes out once the industry growth tames down a little bit. Interesting. Okay. Then what was the organic growth or decline in just defense within ETG revenue? it was double digits. It was in the low teens. That's been a little better than it had been in prior quarters. And I think that Victor pointed out, the trend is that we're starting to see a little bit of life in the defense segment, hopefully for the ETG. Hopefully that plays itself out towards the back half of the year. All right. Defense was down double digits in the quarter. in ETG. It was up quite nicely in the FSG by the way, but it was down in ETG. Defense electronics in particular has been soft for about the last four quarters. It sounds like you expect that to maybe be a little better in the back half, but probably still down year-over-year. Is that what you're looking for? That's what we're hoping for, yeah. You know, if you look at the backlog and timing of deliveries, as Victor talked about earlier, that's what we think is gonna play out. Yeah. Okay. All right. Thanks a lot, guys. I appreciate it. You bet. I'll take our next question from Louis Raffetto with Wolfe Research. Please go ahead. Hey, good morning, guys. Good morning. Good morning, Louis. Eric, you've provided some really good, you know, thoughts on, you know, the FSG business and Wencor. I guess, as we think about product development, you kinda mentioned, you know, you guys in some parts, Wencor did other parts, but you guys could maybe leverage each other. I guess, how do you think about HEICO wanting to do a part that maybe Wencor would have done in the past? How do you manage that going forward? In general, I would say that in the past, if Wencor already had a part, HEICO would not develop the part. They really sort of play, if you will, very much in two sandboxes. We think that we're really going to be able to get that to breathe here, whereby each business can focus on what it does exceptionally well. Also there's a lot of engineering and technical tools that each company uses, frankly, that can improve the process of the other company as well. I think all of this put together is just going to benefit the customer with, you know, a broader product set in going into areas where we haven't gone into in the past. I'm reluctant, as you can imagine, Louis, to get into specificity because we don't want to, you know, tip people off as to where we're going. We do think that there's a lot of stuff to be developed where no alternative exists now, and we're gonna be able to go tackle that stuff. All right, great. Thank you. I guess, Victor, one for you. In the press release and on the call, you kinda mentioned these lower efficiencies or lower level efficiencies due to Exxelia. I guess, I'm just trying to understand exactly what that means. Is that just sort of the drop through of the dilution or was there some other level of lower efficiencies as a result of the deal? Did something else happen? Yeah, I think it's just the drop through of the dilution. Okay. Good. Just wanted to make sure that was it. Just one last one for Carlos. The 2.7, 2.8 leverage multiple you kind of mentioned, Larry mentioned. To be clear, that's not pro forma, that's just kinda adding the, you know, the $1.9 billion. I guess technically, if you kinda give yourself credit for that EBITDA, I think it should be, you know, lower, probably under 2.5 times. Is that correct? You know, we'll see. I mean, I think the net leverage in our model shows it to be around 2.8. We'll see how much is outstanding on our line when we finance this thing. It'll all be dependent on how much debt we pay down between now and closing. That's what our best forecast is right now. Sorry, is that including any EBITDA from Wencor, or is that just sort of the HEICO EBITDA and then the Wencor debt? It would be the pro forma earnings for both companies. Okay, great. Thank you very much. You're welcome. Thanks, Louis. I'll take our next question from Gautam Khanna with TD Cowen. Please go ahead. Hi, good morning, guys. Good morning. Good morning. Oh, sorry, my Apple Watch is going off here. Okay, I wanted to ask a couple questions. First, on the Wencor multiple you guys are paying for it, maybe just a little bit of background on the sale process. Like, it seemed like a fairly low multiple, you know, all things considering. Was it an auction? If you could just describe then the background to how this acquisition came about. First of all, that's a good question. We have known about Wencor for many years. We were aware of it. In previous times, we tried to buy it at much lower prices. There was an auction. We were competing with some, what we consider pretty well-financed private equity groups. We don't feel that we paid a low price. We feel that actually, I feel that I paid a high price and much higher than we had really wanted to pay. The auction pushed us up, we paid what I consider and we consider a market price. Yes. I mean, look, obviously, we always try to, you know, do right by HEICO shareholders. We want to, you know, pay a most reasonable price possible. It was very competitive. you know, there was a lot of interest in the company. you know, we think that it was a fair price for this business. I mean, it's a large business, it's a large asset. It's much bigger than anything we bought in terms of earnings or people, revenue. I think overall it's a fair price for, it's a very fair price for the business. We're really excited going forward. There's, you know, as you said, great opportunities for our customers. Overall, we think it's gonna work out very well. Perhaps could you just frame, you know, on paper, you know, looks very accretive, but then there's amortization and other deal-related costs. What is your expectation for earnings depreciation in 2024 and then perhaps in 2025? Just to help frame it. I tell you what, be happy to answer that question for you when we close. You know, at the moment we've signed the deal, but we haven't closed it, I'd rather not get into forecasting that stuff until we've actually closed on the deal. Fair enough. Curious, Eric, if you could talk about mix within the quarter, specialized products versus the other two subsegments at FSG, if that helps kind of the margins in the quarter? Yeah. They, Look, all of the businesses had very similar organic growth between, you know, parts and distribution, specialty products, and the repair. I mean, they were all in sort of similar areas. Some parts of the business have higher margins than other parts of the business, but overall, we're really pleased with the development of each. We think that specialty products, there's still plenty of tailwind to cover because the OE cycle has not fully recovered. We think that we are, frankly, best of breed in what we do over in the specialty products area. I think that there's a lot of opportunity, a lot of opportunity for us here to continue to grow and do well as the business, you know, as the industry recovers. Also, when you specifically have, you know, talk about specialty products, Wencor doesn't have any manufacturing capability or relatively minimal. This is one of the other very complementary features of the deal because we've got some really outstanding, truly best-in-class manufacturing capabilities within our specialty products group. While Wencor will continue to be loyal to its existing suppliers as we develop additional product going forward, I think that there's going to be a very, very good capability for Wencor to use some of the HEICO specialty products businesses as manufacturers. Also we'll be able to create some redundancy, so we don't just have, you know, single sources for some of these products. We're really good at this machining, sheet metal fabrication and, you know, composites, various stuff that we do. I think that's going to provide opportunities for Wencor to grow their product set, to get into areas where perhaps traditionally they hadn't gotten into because they didn't have a supplier to be able to make something which is somewhat similar to what they've done, but different. I think specialty products is gonna be a great asset for the combined company going forward. Just one last. I was wondering if you could comment on whether there are any maybe regions that are still lagging with respect to demand that has, you know, could still have a big catch-up opportunity. If there's anything you can say by customer set or region or some other way? Yeah. We look at the sales and I mean, obviously in Asia, things have not fully recovered. Likewise in South America, I think that there continues to be opportunity, if you will, recovery, coming out of coming out of COVID. You know, frankly, in our other markets, we're way ahead of where we used to be, or where we were pre-COVID. We're doing extraordinarily well. I think, again, that's a result of just being able to sell more stuff. You know, I think that there's added recovery opportunity. Thanks. You know, in particular... Yeah. I think everybody is aware of the wide body in Asia. I mean, that's the last thing to come back. There's very good opportunity there. Appreciate it. Thanks. Thank you. There are no additional questions at this time. Thank you very much. I wanna thank everybody who participated on this call, people who asked questions and those who were just listening. I wanna remind you that if you do have questions, give us a call. We'll try to respond to them. Unless you have any other comments or questions, I wanna again thank the HEICO team members. They're the guys who make it happen, and they do a phenomenal job. We will, in another three months, we will have another Q3 earnings call. Thank you all. This is the end of our prepared remarks. Thank you. This concludes today's call. 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