Welcome to The HEICO Corporation Third Quarter 2025 Financial Results Call. My name is Samara and I will be your operator for today's call. Certain statements in this conference 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. Factors that could cause such differences include the severity, magnitude and duration of public health threats such as the COVID-19 pandemic, HEICO's liquidity and the amount and timing of cash generation, lower commercial air travel, 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 delivery sales, cybersecurity events or other disruptions of our information technology systems could adversely affect our business. Our ability to make acquisitions including obtaining any applicable domestic and/or foreign governmental approvals and achieve operating synergies from acquired businesses, customer credit risk, interest, foreign currency exchange and income tax rates, and 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. 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 statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law. I now turn the call over to Eric Mendelson, HEICO's Co-Chief Executive Officer. Thank you, Samara, and good morning to everyone on this call. Thank you for joining us, and we welcome you to HEICO's Third Quarter Fiscal 2025 Earnings Announcement Teleconference. I'm Eric Mendelson, HEICO's Co-CEO. I am joined here this morning by Victor Mendelson, HEICO's Co-CEO, and Carlos Macau, our Executive Vice President and CFO. Before highlighting our third quarter of fiscal 2025 record-setting results, I start this call by thanking all of HEICO's team members for their dedication and focus on delivering another outstanding quarter. We continue to experience high growth rates across the majority of our subsidiaries and are humbled by the hard work and commitment of our team members that they bring every day. To deliver these excellent quarterly results, our customers require seamless execution and demand excellence in everything we do. Our people are the only reason we continue to win in the marketplace and generate significant shareholder value. All of our shareholders should thank our team members for everything they do for HEICO and our shareholders. Our record third quarter results reflect robust double-digit organic growth in our core businesses, further enhanced by the momentum from our disciplined acquisition strategy. On behalf of the Board and our executive management team, thank you for another record-breaking quarter. As we look ahead, we see significant opportunities supported by a favorable pro-business environment that encourages innovation, investment, and expansion. Our laser focus on growth within the commercial, aviation, defense, and space markets, combined with the exceptional talent of our team members, gives me confidence that HEICO is well positioned to sustain strong momentum and capture additional market share gains across our diverse markets. We remain very optimistic about HEICO's future. In summarizing our third quarter of fiscal 2025 record results, we note that consolidated net income increased 30% to a record $177.3 million, or $1.26 per diluted share in the third quarter of fiscal 2025, up from $136.6 million, or $0.97 per diluted share in the third quarter of fiscal 2024. This is quite an achievement of which we are very, very proud. Consolidated operating income and net sales for the third quarter of fiscal 2025 represent record results for HEICO, increasing 22% and 16%, respectively, compared to 3Q24. The Flight Support Group set an all-time quarterly operating income and net sales records in the third quarter of fiscal 2025, improving 29% and 18% respectively over the third quarter of fiscal 2024. The increases principally reflect strong 13% organic growth from increased demand across all of its product lines and the impact from our profitable fiscal 2025 and 2024 acquisitions. The Electronic Technologies Group set an all-time quarterly net sales record in the third quarter of fiscal 2025, improving 10% over the third quarter of fiscal 2024. This increase principally reflects improved demand for the majority of its products, including double-digit organic net sales growth of other electronics and space products. Cash flow provided by operating activities increased 8% to $231.2 million in the third quarter of fiscal 2025, up from $214 million in the third quarter of fiscal 2024. For the third quarter of fiscal 2025, cash flow provided by operating activities represents 130% of net income. For over 36 years, a core tenet of HEICO's unique business model has been to fund our organic growth with cash generated by operations and not incur debt to grow organically. This doesn't happen by accident. Our operations are painstakingly designed and managed to generate excess cash that we use to make accretive acquisitions, thereby compounding our growth. I'm proud to report that cash generation remains exceptionally strong at HEICO. Consolidated EBITDA increased 21% to $316.4 million in the third quarter of fiscal 2025, up from $261.4 million in the third quarter of fiscal 2024. Our net debt to EBITDA ratio was 1.9 times as of July 31st, 2025, down from 2.06 times as of October 31st, 2024. I would like to highlight that our liquidity improves significantly even after deploying $630 million on acquisitions during the past nine months. We are very pleased with HEICO's strong cash generation, which drives our ability to delever quickly to support future acquisition opportunities. In July 2025, we paid our 94th consecutive semiannual cash dividend since 1979 at the rate of $0.12 per share, representing a 9% increase over the prior dividend paid in January 2025. We continue to be very busy with acquisitions and completed our fifth acquisition of fiscal 2025 in the third quarter. In July, our Electronic Technologies Group acquired 100% of the stock of Gables Engineering. Gables designs and manufactures advanced solutions for aerospace platforms, including cockpit displays and other avionics components such as navigation, audio surveillance, and communication panels for a wide range of aircraft. Gables is the third largest acquisition in HEICO's history, and we expect Gables to be accretive to earnings within the year following the acquisition. Finally, we take a moment to remember Frank Schwitter, a member of our Board o f Directors who passed away recently. Frank was a dear friend and CPA who served as a board member since 2006. He was a valued member of the HEICO family, with his expertise in financial accounting and reporting having been developed over many decades, serving as a partner in the national office of Arthur Andersen. We share our thoughts and prayers with his family and thank them for the many years of service and friendship he provided to our board. He will be greatly missed. I now turn the call over to Victor Mendelson, HEICO's Co-CEO, to discuss the third quarter results of our Flight Support Group and Electronic Technologies Group in greater detail. Thank you, Eric. As I discuss the operating results of our two segments, I join you in recognizing the extraordinary contributions of HEICO's team members. Your talent, determination, and innovative spirit have turned challenging objectives into real success. On behalf of our shareholders, thank you for the energy and collaboration that not only drive our performance, but also make these accomplishments especially rewarding. The Flight Support Group's net sales increased 18% to a record $802.7 million in the third quarter of fiscal 2025, up from $681.6 million in the third quarter of fiscal 2024. The net sales increase in the third quarter of fiscal 2025 reflects strong organic growth of 13% and the impact from our profitable fiscal 2025 and 2024 acquisitions. The organic net sales growth reflects increased demand across all of our product lines. The Wencor and legacy HEICO operations continue to exceed our expectations, and obviously this was an excellent combination which was completed around two years ago. Our customers continue to find great value in our larger aftermarket product offerings for the aerospace parts and component repair and overall needs, which has also translated into excellent growth and opportunities and success for HEICO. The Flight Support Group's defense business continues to present an excellent opportunity, especially as the current U.S. Presidential administration prioritizes defense and cost efficiency. HEICO is well positioned to support these efforts by providing lower cost alternative aircraft replacement parts, helping the government and taxpayers save money while expanding our market reach. Our missile defense manufacturing business is experiencing significant growth driven by increased demand from both the U.S. and our allies. With a substantial backlog of defense missile defense orders and ongoing shortages, we anticipate meaningful expansion from this pipeline, reinforcing our commitment to delivering cost-effective solutions with industry-best quality. The Flight Support Group's operating income increased 29% to a record $198.3 million in the third quarter of fiscal 2025, up from $153.6 million in the third quarter of fiscal 2024. The operating income increase principally reflects the previously mentioned net sales growth and improved gross profit margin and SG&A expense efficiencies realized from the net sales growth. The improved gross profit margin principally reflects higher net sales within our repair and overhaul parts and services and specialty product lines. The Flight Support Group's operating margin improved to 24.7% in the third quarter fiscal 2025, up from 22.5% in the third quarter fiscal 2024. The operating margin increase principally reflects the previously mentioned improved gross profit margin and an impact from a decrease in SG&A expenses as a percentage of net sales, mainly reflecting the previously mentioned SG&A expense efficiencies, given that acquisition-related intangible amortization expense consumed approximately 200 basis points of our operating margin in the third quarter of fiscal 2025. The FSG's cash margin before amortization or EBITDA was approximately 27.3%, which has been consistently excellent and is 210 basis points higher than the comparable FSG cash margin of 25.2% in the third quarter fiscal 2024. We note that we run the operations internally and evaluate our businesses based on EBITDA, which to us is a real cash number, not one that just takes account for a made-up amortization number required by accounting regulations. I'm very happy with the continued expansion of our cash margin, and we believe our efficient and decentralized operating structure has permitted us to expand these margins as we simultaneously delight our customers with cost savings and lightning quick turnarounds. For the Electronic Technologies Group, our net sales increased 10% to a record $355.9 million in the third quarter fiscal 2025, up from $322.1 million in the third quarter of fiscal 2024. The net sales increase reflects strong organic growth of 7% and the impact from our fiscal 2025 and 2024 acquisitions. The organic net sales growth is mainly attributable to increased demand for our other electronics, defense and space products. The ETG's defense organic net sales increased by over 6% during the third quarter of fiscal 2025 and are anticipated to continue steady growth during the remainder of the fiscal year as we again have significant order volume and a record backlog. The ETG's other electronics organic net sales increased 16% during the quarter, continuing the trend from the previous quarter increase in organic growth after following multiple quarters of lower demand due in part to inventory destocking and our customers for high-end industrial and electronic components. We're optimistic for continued growth going forward. The Electronic Technologies Group's operating income increased 7% to $81 million in the third quarter fiscal 2025, up from $75.8 million in the third quarter of fiscal 2024. The operating income increase principally reflects the previously mentioned net sales growth, partially offset by an increase in performance-based compensation expenses. The Electronic Technologies Group operating margin was 22.8% in the third quarter fiscal 2025 as compared to 23.5% in the third quarter of fiscal 2024. The operating margin was sequentially consistent with the second quarter fiscal 2025 as both periods had a similar net sales mix and growth. The lower operating margin compared to the third quarter of fiscal 2024 principally reflects an increase in SG&A expenses as a percentage of net sales, mainly driven by higher performance-based compensation expense. Very importantly, as we talked about with the Flight Support Group, before acquisition-related intangibles amortization expense, our operating margin was 26.6% as intangibles consumed around 380 basis points of our operating margin. Again, this is how we judge our businesses as that most closely correlates to cash on a true operating basis. These are excellent margins and we are v ery, very pleased with them. I turn the call back over to Eric Mendelson. Thank you, Victor. As we look ahead, we remain confident in achieving net sales growth across both the FSG and ETG segments, driven by continued organic demand for most of our products. Additionally, we aim to accelerate growth through our recently completed acquisitions while capitalizing on new acquisition opportunities. Our disciplined financial strategy continues to focus on maximizing long-term shareholder value through a balanced approach of strategic acquisitions and strong organic growth initiatives aimed at gaining market share while maintaining a strong financial position and preserving flexibility. Acquisition activity remains very strong across both operating segments, with a solid pipeline of opportunities under review. Our focus is on identifying businesses that complement HEICO's existing operations and strengthen our strategic position. True to our disciplined philosophy, we pursue only those transactions that are prudent, accretive, and capable of delivering lasting value to our shareholders. Thank you very much for attending this call. Those were the prepared remarks. Now I'd like to ask Samara to please open up 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. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Larry Solow with CJS Securities. Hi, good morning, it's Pete Lucas for Larry, congrats on another great quarter. Just wondering in the ETG segment if y ou could give us a little more c olor on how the Gables acquisition is performing relative to your expectations backing into it. It seems to be kind of in line with your historical EBITDA multiples. In terms of your current leverage, how does that set you up? I know you mentioned the pipeline for M&A, but are you comfortable if something w ere to come up in the short term? Sure, t hank you, t hose are good questions. This is Victor saying, you know, we closed on the acquisition about a month ago. It's early days, but so far, as we'd say, so good. It's doing almost exactly as we expected. I will caution I don't make a trend out of one month. So far we're very, very, very happy with how it's doing and pleased with the acquisition. In terms of the cost of the acquisition, we can easily handle many more acquisitions, of course, depending on size, both on our existing line of credit and I think what we would very, very easily raise beyond that if we needed to. We continue to have excellent capacity for acquisitions. Very helpful, thanks. Just last one for me, i t seems you saw a benefit from the tax rate this quarter due to R&D tax credits. Is that lower rate sustainable, and is that driven by the big beautiful bill? Do you see any other benefits from that bill that we should think about? Yeah, this is Carlos. The only benefit we saw in the quarter really related to cash. As you may know, the full depreciation of equipment that we buy that qualifies, they retro that back to January 25th. It helped alleviate some of our third quarter tax payments when the bill was passed. I think going forward for us, it's mostly a cash benefit. We should see a little benefit from some of the changes to foreign, the FDII regulations that came out. I think overall our rate, you know, it was around 18.9% for the quarter. I think that going forward, if we're thinking about a 19% - 20% rate, that's probably a good effective annual rate for HEICO for the year. Very helpful. Thanks. I'll jump back in the queue. You're welcome. Our next question comes from Anthony Bancroft with the Gabelli Funds. Yep. Good morning. Congratulations, gentlemen. Very nice quarter. You were talking about, you sort of talked about missile defense a little bit. Would you maybe expound on that and maybe also talk about potential M&A in that space? It just seems like there's just so much going on with missile defense, obviously with Golden Dome and just with, you know, all the kinetic war going on right now. Maybe you could talk a little bit more about that. Yeah. Tony, this is Victor. Missile defense has been a part of our business actually for many years, just about since we, shortly after we started the ETG. We are seeing opportunities, in fact, we are seeing some orders. I wouldn't call it yet major needle movers for things related to Golden Dome, which as you know, incorporate some existing technologies and products into something that sort of, I'll say, layers on top. We continue to see orders from what we've been doing and getting orders on new products in addition to where we make products that are used for foreign missile defense as well. Basically U.S. products that are then sold on to from the U.S. primes onto foreign countries, obviously U.S. allies. It remains a great opportunity for us. It's something we've been doing for a long time and I will emphasize we've been doing it in what you would consider people tend to consider legacy defense as well as new tech defense. I think that's very, very important. Always been very careful about serving all of the markets and not just playing to larger customers. Also, Tony, just to add, within the FSG, we also have a very big position in missile defense and are a leading manufacturer of rocket nozzles and other missile defense applications. The market is very strong. We do look at additional acquisitions. We have a lot of organic growth capability in that area, and I think both are going to continue to be very exciting for us. Thanks. Thank you, gentlemen. Great job. Thank you. We'll take our next question from Sheila Kahyaoglu with Jefferies. Good morning, guys. In Greek order, maybe if I could ask, just going back to FSG, if we could just parse out the 13% organic growth by subsegment and by market. I know there's been a lot of talk about engine versus airframe. Any context there? Carlos, you want to do the. Yeah, sure. Sheila, we had a very interesting quarter. The parts business as usual grew in the low, it was in the low teens this quarter. It's pretty much similar to what we saw last quarter where we saw some really nice, some growth was in the repair and overhaul and specialty products group. Repair and overhaul was up in the mid teens. That was driven by a really nice mix during the quarter, which elevated our gross margin a little bit. We were, you know, it's nice to see that. As you recall, the repair business is pretty much a parts play. It's a component repair. As you know, we don't have hangars and we don't repair airplanes, but we do components. A lot of that work is a channel for us to really filter a lot of our PMA parts through. That was a nice surprise during the quarter. As Eric just mentioned, with specialty products, that growth was in the low double digits. That's been driven principally by our defense business within the specialty products group. Although I would point out that now that we've seen some of the airframers getting a little bit better of a cadence, I do expect our commercial aerospace OEM work within specialty products to pick up a little bit or be a little more steady than it had been in the past. Eric, you want to. Yeah. Sheila, to add, you asked about engine versus non-engine. As you know, we are a majority non-engine and our engine, you know, it's hard to calculate because the businesses don't capture the information necessarily the same way, but I would say that our engine portion of our aftermarket business is probably around 25%, you know, roughly a quarter. That gives you, you know, HEICO historically had a higher percentage of engine. We've made a number of acquisitions over the last number of years, the largest of which was Wencor. The majority of those acquisitions has been non-engine. That's why our percentage of engine is probably roughly in the one quarter area of the aftermarket. Got it. Given news out this morning with the Pentagon thinking about taking equity stakes in defense contractors, any update on your end on PMA into the DoD? Yeah, that continues to be an area where we think the Pentagon can save a lot of money. The Pentagon is looking at a lot of things. They're trying to implement a lot of things right now, but we're very bullish on that. We think that that will be continued opportunity for us. There's no reason why they shouldn't get those savings the same way as the commercial aftermarket and business aftermarket does. We think that there's very good potential. Great. Thank you. Thank you. We will take our next question from Peter Arment with Baird. Yeah, thanks. Good morning, Victor. Eric, Carlos. Nice quarter. Hey, Eric. Talking about FSG, you talked about some market share, and I know Carlos just went through kind of what the drivers were on MRO and some of the repairs and parts, but where are you seeing the opportunities in market share? Is this still benefiting from kind of the Wencor synergies, or how should we think about that? Is it just new parts y ou're developing and introducing? Yeah, I think it's across the board. Yes, there are synergies with Wencor to answer that part of your question. We have very, very strong organic growth opportunities across the entire business. Specifically, if you look at PMA and repair, I just did the strategic annual sales meeting reviews I participated in and saw by subsidiary, the focus that they've got on developing new products, whether it's PMA or repair. It frankly blew me away. We have got such technical capability, such customer support and demand that I'm really excited about the opportunities here. I really see it very broad based and I think if you look a t our numbers. The organic growth of 13% with the fact that our aftermarket business is only roughly 25% engine, I think I was surprised, you know, after seeing where other companies reported, you know, 75% of our business is non-engine and we turned in 13% organic growth. I mean, frankly, I don't know how our guys did this. It's phenomenal. I think that really speaks to the competitive advantage that we have where we don't run a single big integrated enterprise. We run dedicated, targeted businesses that are really, excuse me for using the expression, but are killers in what they do. They are really good, really knowledgeable, they know all the details, and the organic growth pipeline is just tremendous. I think, you know, when you see 75% of our business being airframe and we're up 12, you know, 13% organic growth, I think that speaks to the depth and the breadth of our product line and capabilities. Yeah, that's super helpful color there, Carlos. Just on margins, you know, FSG I think was a really strong quarter for incremental margins. How do we think about, you know, this going forward? Is it just more mix driven that you for this quarter, or do you think that, you know, margins like this can be sustained? These guys keep making liars out of me. They're so good at what they do. I got to be candid with you. The margin that we posted this quarter exceeded my expectations. Is it sustainable? Look, I hope so. I still think that mix drove some of the growth in that margin, but it wasn't the super majority of the margin. I mean, our gross margin was up a point, and a lot of that was driven by some of the mix. You know, I'd love to see that continue, but mix is what it is, right? I think, if I had to project the segment, I do expect now that we're somewhere in the 24s. I had previously thought 23% - 24% was our range, but this year the guys have just outperformed and they've exceeded my expectations. Some more to come on that. I mean, I wouldn't project out a model or forecast at 25% margins just yet. I think you should let us bank a few quarters under our belt to see how this plays out. If you are modeling, if you assume around 24%, you're probably a good zip code. 24% OI margins. Appreciate it. Thanks, guys. Jump back in the queue. We'll take our next question from Noah Poponak with Goldman Sachs. Good morning, guys. Maybe just saying hi, Carlos. Does FSG have seasonality in the fourth quarter, up or down sequentially? You know, typically, if you look back over time, Noah, the fourth quarter is typically our strongest quarter in the FSG. The seasonality, I wouldn't call it seasonality, but what we do tend to see on the revenue side is our low points, typically Q1, and then it slowly builds throughout the year. That's kind of been our trajectory. Okay, so we can marry that with kind of how the incrementals are putting on HEICO where they make the year of 2024. Your point previously has been you can expand a little bit from there next year with a normal incremental. Yeah, I mean, I would think, as we said in the past, Noah, we do expect, you know, absent big mix swings within the FSG, we do expect, you know, the normal cadence of 20- 30 basis points improvement. A lot of that's just leverage on our SG&A spend. Those are the kind of things that we sort of count on and look to achieve. Things like this quarter where we, you know, you can't control mix. When we have, you know, good mixed quarters in particular, like Eric pointed. Out with the growth and repair and o verhaul, that's hard to predict in any one given quarter. I wouldn't take, you know, almost 25% operating margin and sort of parlay that into the next future quarters. I'd mentioned to the other analysts. Let's see how the next couple quarters play out before we start getting into that zip code. You could probably count at 24%, and let's see where we go from there. Yeah, that makes sense. Maybe you could similarly speak to how you're thinking about ETG, which, you know, I know you've explained why that's a little bit more volatile. Third quarter was up, in the first quarter, down in the second, and third usually has some stronger seasonality in the fourth quarter. Do you expect that, and sort of what are you just thinking of the. Yeah. Look, I was pleased with the ETG's performance this quarter. I think I'd mentioned to you and other folks I've spoken to that the third quarter to me always felt like a repeat of Q2. It looked that way in our forecasts, and the margin sequentially was the same. I expect that segment on any given Sunday is going to run between 22% and 24% operating margin, and we sort of split it right down the middle of the goalpost this quarter. From my perspective, this is kind of the area you can count on. The numbers will move up and down from there, and it will be dependent on mix. I think volume-wise, similar to the FSG, as we continue to grow that base of business, we will see some operating leverage in the expenses. From a profitability standpoint and a go forward perspective, not much has changed in my view. I think that 22% to 24% range still holds true. Okay, did you guys say Gables was your third largest ever acquisition? If so, is that on enterprise value or is that on revenue or EBITDA? Can you give us any sense for the revenue and EBITDA? Sure. That was on enterprise value, purchase price, purchase consideration. I don't know that we're breaking out other numbers, Carlos, so I'm going to. No, we're not. Look, you'll see it, we're going to issue in the 10-K. You'll see the cumulative acquisitions for the year. Gables on its own doesn't really cross any materiality threshold. We won't be breaking out their specific numbers, but you'll be able to tell. It was the big acquisition we had in the quarter. You'll be able to see in our cash flows what we paid for it. It's no big secret. As far as the numbers go, we've gotten so big, Noah, that some of these acquisitions, even though they are large from our historical standpoint, to our numbers aren't significant or material to the overall picture. We don't give a lot of details in that regard. Yeah, this is Victor. I will note that that acquisition is a growing company, it's a growing business. There's a lot of new stuff, new programs, new things that they've gone on which are quite significant to it. We expect that to be a nice growth story internally as it unfolds. Over the next few years, it's a major, major motivator for us. It wasn't just, you know, sometimes we buy a great value position, a good price. This is, it's a great business. I think we bought it more for the growth than just where it is right now. Okay, interesting. All right, thanks so much. Thank you. Thanks. We'll take our next question from Kenneth George Herbert with RBC Capital. Yes. Hi. Good morning, everybody. Good morning, Ken. Morning. Maybe Eric, just start. As you look at the, I think this third quarter, you were up against some of your more challenging comps in terms of FSG organic growth. Can you comment specifically within FSG on the commercial side with your airline customers? Has anything changed in the third quarter in the pricing dynamic or specifically your outlook for airline inventory levels as you move into fiscal 2026? Are you getting as good a pricing as you've gotten in prior quarters? Is there any risk on the inventory side at airlines that you'd call out in the next few quarters? Got it. To take the first part of y our question with the 13% organic growth, you're right. I mean, it's great numbers, especially considering that it was on top of 15% organic growth a year ago and 19% organic growth in 2023. I'm very happy with the sustained organic growth. We are getting pricing, but again, it is commensurate with our cost increases. Our philosophy always has been, and our customers understand, nobody wants a price increase, but we must pass along our cost increases in order to be a viable, sustainable business. We have been able to do that. As far as I think you're probably also asking about inventory levels and what's going on at the customers, it's really a mixed message. There are, as you know, when we all went through the pandemic, there were some significant shortages that occurred afterwards and there was a certain amount of over ordering in particular areas. We are seeing some destocking in some areas, yet we continue to see huge shortages in others. Therefore, the way I sort of look at it on the HEICO portfolio is they net each other out and we, you know, overall we are not seeing destocking. That is, you know, again, there are pockets of destocking and pockets of, you know, customers just clamoring and can't get enough because the supply chain is just too thin for what they need. I would sort of characterize it that way. That's helpful. Thanks, Eric. On the destocking comment, is there any more granularity you could provide on that, either with reference to your engine versus non-engine exposure or any other parts of the aftermarket, maybe specifically where you're seeing more inventory pressure from your customers or destocking? Yeah, I would say I think in the areas of destocking are probably less on the engine side. There are some and are probably slightly greater on the non-engine side. As I said, for us, it sort of all nets itself out and we don't see a destocking phenomenon on our parts on average across the board. We continue to see extremely strong demand, a tremendous demand. Frankly, sometimes it's a little hard for me to understand and to parse out where the market is growing versus where our market is going. Our people are very focused on growing organically and gaining market share and they do that in, of course, the PMA and repair, but they also do that in the distribution. I really believe that HEICO has increased market share over in the distribution side and frankly is so good through our distribution businesses in selling our principals' product that it can hide what can be going on in the marketplace because our folks are so good at bringing on additional principals and making sure that we operate with a small company mindset where we get very high market share and we don't drop the ball. At HEICO, there's never an excuse that oh, that fell between the cracks. That just doesn't happen. Our distribution businesses are very focused at picking up all of the sales that they possibly can. I think that also could be a reason why we don't see destocking because our folks are just out there picking up every single thing they can. I think that's somewhat uncharacteristic of the industry. Thanks, Eric. Nice results across the board. Thank you. Thank you. We'll take our next question from Jonathan Siegmann with Stifel. Good morning, Eric, Victor and Carlos, thanks for taking my question. Good morning, Jonathan. Could you maybe comment a little b it on how Europe is trending? The company's got a larger exposure there with the acquisitions. Are you seeing any impact from the headlines of stronger defense spending there? How is the business faring? Thank you. Sure. John, this is Victor. So, Europe is doing quite well for us. It's been a success story. As you know, we expanded in Europe through what was then, I guess it still is, our second largest acquisition, Exxelia, which has done very well and in part because of defense that has really shined for them and for us. Other defense sales, including in the Flight Support Group on missile defense, which Eric mentioned a little bit earlier, as well as sales from our other businesses, by the way, that we've owned in Europe for much longer and some U.S. based. Right now that's good for us. We are also mindful of nationalism issues and things like that. We understand where the limits might be in U.S. based businesses selling into Europe as we get a little further out into the future. Hence our appetite for acquisitions on the continent. I can tell you as far as the Flight Support area, we're doing extremely well with our customers over in Europe. Whether it's TMA repair or distribution, in particular our distribution businesses have a very large European network. We've got many, many people on the ground over in Europe focused on distribution, hundreds of people. I think our market share is very good and that remains a critical and important market for us. It's doing very well. Great to hear. Within this favorable environment, are there new opportunities to organically invest or should we expect just acquisitions being the p rimary use of cash? Thank you. I think it's both. We have been expanding in Europe, both our footprint. We just completed, I s till consider the U.K. part of Europe a lthough it's not EU, and we just completed a new facility in the UK in one of our businesses, we're starting on another outside of Paris in another business, as well as some capital improvements, facility improvements, and additions in other places in Europe. I would expect it to be both organic and acquired. Jonathan, as I mentioned in the beginning of my prepared remarks, our cash flow remains very strong. One of the unique things is that we're able to grow in all geographies, also in Europe, and still generate cash from that region that we're able to use in acquisitions. We're able to grow organically. We don't have to tie up all sorts of capital in order to grow organically. We can actually take additional cash that comes out of the businesses and use it for acquisitions. That's really what creates this whole compounding effect at HEICO. Fantastic. Thank you again. Thank you. We will take our next question from Ron Epstein with Bank of America. Hey, good morning, guys. Good morning, Ron. Maybe just a quick question on capacity. With all the growth you're seeing across both your commercial businesses and your defense b usinesses, is there anywhere where you're just k ind of squeezed on capacity? Yeah, there are a number of areas, there are a number of facilities that we've got to expand. It is still hard to hire people in certain geographies, although that is getting easier. I think AI and what's going on in the economy is helping in that area. Overall, I would say we're very well positioned. We've made the investments to be able to handle future growth. I think the other unique thing in HEICO is we haven't squeezed the fruit in terms of operating at our various facilities at that's in excess of their true ability. We've got plenty of capacity to be able to continue to grow and expand. I think we're good in that area. We're always very mindful of that. I could use a few more deaths for my accountants, but other than that I think you're right. Gotcha, gotcha, gotcha. And then, h ow are your supply chains doing? Right. I mean the supplier to you, maybe o n raw materials and other things. In general, things aren't much improved. There are still some. There are a number of areas of continued shortage and where we've got parts on backlog and we're dying to get parts and our sales could be considerably higher if we had those parts. That still remains a challenge. There's no question that the amount has gone down significantly. One of the other things that we watch is, you know, we do a tremendous amount of incoming inspection at HEICO and we don't just go dock to stock, we instead inspect the parts and we've got a very robust inspection process. I can tell you that 1.5 years ago, 2 years ago, the backlog in incoming inspection was quite large. Our folks have done a great job in working that down. I think that speaks to the capacity issues, adding people, adding facilities to be able to get all this stuff through. We've made very good progress in that area. Carlos, I was just going to add to that. I do think I'm a big believer in this. While administratively it's a little challenging, we don't have centralized purchasing. The ability for our, you know, we probably have 100 supply chains and the ability for our guys to bob and weave and negotiate and beg and whatever they need to do to get product. In times where we've experienced shortages, I think it allows us to be a lot more flexible and meet our customers' needs. It's probably a more expensive process at the end of the day. I think it's less efficient than centralized processing. The truth of the matter is, from a customer perspective, as to Eric's point, we don't tend to run out of things because our guys are able to negotiate locally for raw materials and supplies. I think that does give us a competitive advantage. Got it. Got it. Have you, I mean, Carlos, have you guys had to keep a little more inventory around, j ust to kind of smooth any gaps? We have always given our subsidiary sort of the green light to make sure they have what they need for their customers. I mean, candidly, a few years ago, post Covid, it got a little out of hand, in my judgment. I think we invested a little too much in inventory. What you've seen and you saw in our cash flow statement probably was our investment in inventory has come down. You know, the ETG, candidly, has done an excellent job this year on managing inventory. They had very little use of working capital for the first nine months of the year. As it relates to investment in inventory, FSG's investment in inventory has been commensurate with our organic growth. I think the situation on the inventory side for us this year is pretty positive. Got it. Cool. Thank you, guys. Thank you. We will take our next question from Gavin Parsons with UBS. There we go. Thanks, guys. Morning. Good morning. What would you say is the average p rice gap now between one of your PMA parts and the OEM parts? Oh, yeah, that's really a hard number to estimate. I think that if you were to look across the entire business, it's, of course, depends on how long somebody's been buying a product. Because if a customer has been buying a product for a very long time and has it on contract, then we give them some form of price protection. I can't tell you what our average is. I can take a guess, but I can tell you that I would say the range is from a 20% discount on the low end, and on parts where customers have been buying them for a long time and we've been able to control our cost, it could be as high as a 70% discount. If you want to say, probably on average, we're probably 1/3, 40% below the OEM price. I would say something like that, but I don't have a number across the board. The other thing is, of course, in our repair business, we have a lot of proprietary repairs which save our customers considerable dollars. There the savings can be easily north of 50%. That's really helpful. Maybe this is a range question, too. Is there anything that you could share on? What your average market share is, or customer wallet share is across the portfolio? We're careful over on the PMA side. We never want to take a majority market share in any particular part that we go after. It would be hard to come up with that number, depending on what the denominator is. I do believe that there is still plenty of, if you will, unsold potential. I'm very confident of our continued growth and market penetration. Got it. Thank you. Thanks, Gavin. I'll take our next question from Peter Skibitski with Alembic Global. Hey, good morning, guys. Morning, Pete. I just want to circle back to the Gables Engineering deal just because, you know, it seems like you guys have made a number of avionics acquisitions at this point. I just wonder if you could speak to the strategy, if they're just kind of, you know, one-off deals, or if there is a deeper strategy there in terms of maybe moving up the value chain in the commercial OE world, or just, you know, maybe these deals are mostly aftermarket. I'm not sure. I wonder if you can just speak to the strategy after a number of avionics deals. Thanks. Sure, s ure. We have been active in avionics and cockpit electronics actually since 1999, I think, when we made our first two acquisitions in this space. One was in our repair and overhaul when we started with an acquisition called Air Radio and Instrument, and at the same time, our Radiant Power business with emergency backup power supplies and some other things and panels that are used in cockpit. It has always been an attractive sector for us. We have expanded in that over the years in 2001 with another acquisition and then beyond that with a series of others, mostly in repair and overhaul, but also adding other things like emergency locator transmitters, which are related, and panels and displays over the years. It is an attractive area where we have been able to expand somewhat opportunistically. We are not just, I would not say we are looking to rise in the food chain. That is not our objective. We are really looking to go where there are excellent opportunities and excellent both OEM opportunities as well as aftermarket. Aftermarket is a big part, of course, of the strategy and in the case of Gables Engineering. It is, as we talked about in the press release, a storied company founded in 1946, which had a wealth of suitors. Many, many, many people wanted to buy this company, would have loved t o have acquired it. Ultimately, we had established a relationship over a fair number of years, also being a local company here in South Florida, located near a number of our other facilities, including our offices where we're sitting right now. The opportunity presented itself. They were ready to do something, but most importantly, they wanted a good home for the business. They wouldn't sell it to just anyone. They did select us out of many other opportunities. It wasn't just based on economics. It was really based on what they thought we would do with the business, how we could grow it, and that we would be a great steward. The answer to your question is it's a combination of things, which is very typical of our acquisitions. That is very often the case. We may target something, but we may not be able to make acquisitions in it, either affordably or sensibly. That's how we've grown the business. We don't just stop there and say, okay, we can't get what we want on a path, on a product roadmap. We're going to look beyond that. We're going to take adjacencies and move now. I think that's been a big part of our success, is our willingness and ability to bob and weave over the years. We're very happy to have that acquisition, again, being a very unique company in the industry. In fact, I'll just add that their terms are like Kleenex is sort of a generic term, or Xerox. People refer to panels in cockpits as Gables panels. That is a term in the industry. It's a really special business. That's great. Yeah, very helpful. Just Victor and you, you know, all these deals that you've done in the avionics world, you continue to run them separately. You're not kind of integrating them into one big avionics company, is that right? Yeah, we're not integrating them into one large avionics company. However, the businesses do cooperate. I think that's where HEICO has been particularly successful over the decades, is being able to get what I call soft synergies, where they cooperate going to customers for new programs. They cooperate technically, they cooperate on production quality. Others will use other HEICO companies as suppliers, which is very common and increasingly common. Of course, a major, major benefit has been and continues to be distribution. We have an amazing distribution business led by some really remarkable people who have built that business over time. Really absolutely stunning. A unique distribution business which I don't know if Eric cares to comment on, but over the years we have put a lot of distribution with that business. I think that's been a big part of our success in the cockpit and avionics and electronic space. Yeah, I would agree, Pete, that the distribution has been very key to making a number of these acquisitions more accretive and significantly more successful. Because we do have a unique position with our customers, we're able to increase our market share and do exceptionally well, and I think provide a very, very strong outlet. That's been a big key to your question as to whether there's a broader strategy. You know, HEICO started out life as a JT8D engine parts manufacturer, and then we got into other engines and components, and as time has gone on, into structures and avionics. We're looking to continue to build out our capabilities yet leave them very entrepreneurial. Everybody is very much focused on their unique technology. Our thought is if we're very good at the details, there'll be a very good solution. We do have, as you pointed out, avionics, we did acquire Gables Engineering. We acquired some wonderful Honeywell International product lines and display units and aircraft information management systems. We bought Millennium Avionics. We do have a very, very strong avionics business within HEICO, and t hat's been built over a long period of time. It's something we have a lot of experience. Yeah, that's great. I appreciate it, guys. Thanks, Pete. Thank you. We will take our next question from Scott Stephen Mikus with Melius Research. Morning, Eric, Victor, and Carlos. Nice results. Thank you. I'm ready, Scott. Eric, I have a quick question on the organic investment opportunities, particularly in the PMA business. When you're evaluating what parts to pursue, how do you form that business case? Are you looking for a payback over 1-2 years, or does the part eventually have to be able to generate, say, $3 million + in revenue with accretive margins to make it worthwhile? How do you think about evaluating that process? We look at a lot of things. We look at how similar it is to something that we've done before, how much the customer wants it, what the payback looks like, what the investment is, how quickly we can get it from the vendor. I mean, all of that stuff is put together, and basically that goes into an IRR analysis. We've got to evaluate that because obviously that's important and sort of pull it all together. I would say it's sort of a complex process, but we want to continue to develop as many parts as we possibly can. We plan on being everywhere, so we tend not to exclude things. Okay. Syncing up the margins at FSG, they're very good a gain, is there still more margin expansion opportunity from insourcing more work that when core had previously used build-to-print shops for? The answer is yes. I think that there is additional opportunity for the Wencor companies to continue to grow with the other HEICO companies. As far as resourcing product that's already made by an existing vendor, we do have the capability to do that and we have done that, but that's probably not our preference. Our preference would be to be loyal to our vendors and give our other family companies the opportunity to bid on new product going forward. I think that's more of the focus. As far as the margin, of course in the third quarter FSG was 24.7% operating margin, which frankly is beyond any number I thought it could be. The thing which I think we're even more impressed with is that our EBITDA margin was 27.3%, which is really more than we ever thought that could be. That's done while we continue to deliver great value to our customers and we don't take advantage of them. If you would have asked me 10 years ago when we were roughly 10% below this number in that area, if we could ever get to this number, I would have told you not in the foreseeable future, not something that I'm really thinking about. We just put one foot in front of the other and work hard every day and the numbers don't lie and they are what they are. So, I think that there is additional insourcing opportunity, and we'll just sort of have to see how that plays out. All right, thank you. Thank you. We'll take our next question from Kristine Liwag with Morgan Stanley. Good morning, everyone, and thank you. Taking my question, you know, Eric, Victor. Talk about the supply chain. It sounds like, you know, during a disruption [audio distortion] Christine, I think unfortunately your connection is not good. Can you repeat that? You may have to call back in if the connection is not good. I'm sorry, we can't hear you. If you call back in, we'll get to your question very quickly. In the meantime, we'll take the next question from Gautam Khanna with TD Cowan. Hey, good morning, guys. How you doing? Good morning. Good Gautam. How are you? Excellent. Doing well, thank you. I was curious, Carlos, you made that comment about FSG profit rates kind of exceeding even your expectations and mix is a part of it. I'm curious, has the profitability of the various product lines themselves just increased? Aftermarket replacement parts, repair, etc. Have you seen an increase in profitability just in the baseline PMA business or the repair business? I would say that. Yeah, look, I would say, you know, I highlighted repair because it has, it did have a positive impact on the quarter and it was due to mix. Honestly, with the repair business, you kind of eat what you kill every week. It's very difficult to predict, you know, what we're going to repair next quarter. By example, I mean, you know, you get our fees to do jobs. What we have seen in the repair business is the one thing that is helpful to profitability is the PMA friendly side of those repairs. So, w e had a nice quarter where there's a lot of PMA-friendly repairs that we did. Our guys, to Eric's point, continue to develop new DER repairs every day. I think if that continues, it does have a very positive impact on our margins. Not every quarter feels like this one. You're with me on the repair side. It is kind of hit or miss, but I was very, very happy with that. Also, don't forget we mentioned specialty products, you know, that defense business we have there. We've banked, gosh, three years' worth of firm backlog there and those guys are working super hard and we're expanding that business and that is good business for us. I think those two factors coupled with the very strong parts business that we've seen all year is really what's driving this margin. And Gautam, I should also add that, while Carlos is absolutely right on the, our independent proprietary repair business does have very strong margins. I should also add that we are doing exceptionally well on OEM-aligned, OEM license repairs as well. Those continue to be of great value to our customers as well as to HEICO, as well as to our OEM partners. HEICO is really agnostic when it comes to what product we want to sell. We want to be out there. There are some customers who want an alternative product and we're obviously the largest in that space and we'll deliver it to them. There are other customers who want an OEM product and we are absolutely there in a line to develop that OEM product, whether it's through our repair business. Even our PMA business has OEM-licensed product. Our distribution is all OEM, all OEM. We're really very strong across the board and it's whatever our customers want. It's not so much us pushing one thing or the other, it's responding to their needs and requests. That makes sense. I'm curious on the Wencor integration, or maybe said differently, cross selling opportunity, how far along you are there? The basis for my original question was, you know, on the PMA just aftermarket part side, given the OEM equivalent products seem to be getting a lot of pricing each year, I would think we would start to see the base level of the PMA aftermarket sales, just the profitability continuing to rise just because you get, you know, a discount off of the OEM list price which keeps going up at a rate well above inflation. Are you seeing, you know, maybe if you could speak to both of those. Are you seeing the base PMA aftermarket business profit rates increase perhaps because of that, that lift as they're linked to OEM prices? Secondly, where are you on that Wencor cross- sell opportunity? How far along are you in that journey? Thank you. Let me start on the Wenc ore cross- sell opportunity. We've made good progress and I'm glad you use the term cross sell opportunity and not consolidation because we do operate these businesses separately. There is an opportunity where a customer comes to us and they want a bigger product line of a particular area and we're able to deliver it. The Wencor combination has been incredibly successful. The DNA of Wencor matches HEICO beautifully and we're able to really satisfy our customers. You can see for after two years of this how well we are doing and how happy our customers are. That's a given. As far as the margins, you know, we've always said that we're going to need to pass along our cost increases and we've done that. We have not used increasing prices as a profit grab. We're continuing to make sure that we deliver value to our customers in all areas that we provide whether it's independent or whether it's OEM aligned. I think that's why we're capturing so much market share. Frankly, I think the margins are getting better because our people just work exceptionally hard and they really go the extra mile and they figure out how to get the customers what the customer needs while we make sure we take care of our suppliers. As I had mentioned in the prior question about Wencor and their suppliers and how we're loyal to them. I think it's just doing good business and there's just a general efficiency increase. As we put more volume across the platform, we're able to drive higher operating margins. Do you mind if I energize? One thing that's helpful, this is. Carlos, one thing that's helpful in understanding some of what Eric just said is that a lot of our large PMA relationships are done on long term contracts. We continue to commit to our customers anywhere from 3-5 years in these contracts. More often than not we will lock in pricing with either a CPI inflator or flat pricing. There are a lot of reasons strategically to do that. It's additive to our business. They add more parts every year, but it does guarantee pricing for them. That's part of the reason why when you start thinking about price in our PMA business, many times we are locked in. Now we are able to go back in inflationary times, as we've shown over the last five years, to get a little price to cover our costs, even when we have these type of arrangements. To your earlier question about the OEM prices rising at much faster rates, even if those prices go up, maybe our standard price list mirrors that growth. Our true net revenue or net sale is based off contractual relationships which more often than not in the PMA space is going to have a fixed price component. It's not really impacted by that type of movement in the market. Right. Thank you very much, guys. Appreciate it. Thanks. Thank you. I'll take our next question from David Strauss with Barclays. Good morning. Thanks for getting me in. This is Josh Korn on for David. Lots already been asked. I just wanted to ask how much o f a headwind will intangible amortization be from Gables on the margins for ETG? I mean, look, we're probably looking somewhere around $1 million a month in amortization right now. You can do the math there and figure out what it is on the OI margin. Okay, thank you. I'll just stick to one. Thanks. All right, thanks. By the way, just to add on, as you know and I just want to make sure we reiterate, the intangible amortization is really, as far as we're concerned, an accounting made up number and it really doesn't impact the performance of the company. The performance of the company is outstanding. The way that we look at these acquisitions is EBITA and it's sort of a little frustrating because a lot of people in the industry look at acquisitions via EBITDA and to us depreciation is a real expense. This is something that if you're going to be in business long term, you've got to make capital expenses which typically equal or are similar in the same range as depreciation. It's really the EBITA number that's important and especially when you look at EBITA, Gables is really outstanding. It's just simply an outstanding company. Thank you. Thank you. We will take our next question from Michael Ciarmoli with Truist Securities. Hey, good morning guys. Thanks for sticking around to take the questions. I'll try and be quick here. Just Carlos, on the FSG margins, I think you called out SG&A efficiency as well. Are there any other actions you guys are taking to strip out costs or consolidate? Maybe it dovetails in with kind of the Wencor ongoing synergies? No, we're not, Michael. As you know, we run all these decentralized operations, so there's no real corporate program. I think what you wind up having with HEICO is you have a lot of very efficiently run subsidiaries that, when you add revenue growth on top of that, they don't often need to expand their SG&A footprint. You know what I mean? They can handle the additional volumes, or maybe it requires a few more salespeople. The truth of the matter is there's not a big band on overhead and SG&A type activities that aren't directly related to a sale that we typically incur. That leverage that we're getting, it's been the story at HEICO ever since I've gotten here. We seem to always have the revenues outpace our SG&A spend, and we get a little leverage off it. I expect that will continue. Got it.And then Eric, just real quick on t he destocking on your specialty products, are you seeing anything specifically related to Boeing to the MAX? We've heard that specifically on the destocking, and potentially it could be a drag into next year. Anything on from that customer or that program? Talking from an OE basis or an aftermarket basis? Sorry, on an OE production basis? On an OE basis? No, I mean, we've seen a little bit of it in certain areas. We've seen a little bit of it, but we're very confident that Boeing is going to be extraordinarily successful with the MAXs and we feel very well positioned there, you know. I think anybody who's buying into that program is going to do very well. You know, the whole industry, all of the OEMs. Yeah, perfect. Thanks, guys. Thanks for sticking around and taking questions. Thank you. Thanks, Michael. We'll take our next question from Louis Raffetto with Wolfe Research. Hey, good morning, t hank you, guys. Morning, Louis. Maybe just on M&A, as we think about future deals, are you focused on remaining sort of a designer manufacturer and providing repair services, or are you open to some of these more software-oriented product offerings? Yeah, we're open to that for sure. In fact, some of our businesses have software products and sales and offerings. It's not a huge part of what. We do, we would be eager t o grow in that and I suspect we will over time. Again, as I was talking about earlier in avionics when we started, we get a foothold and we try to grow affordably and sensibly. I would imagine over time that will happen. Very appreciate it. Maybe just one more on Gables. I guess when you guys did Exxelia. You were pretty open abo ut that it would be dilutive to margins, whether that was operating margins or even our margins. Is there just no sign, no impact from Gables, just given how, you know, the size of it or it's relatively within the overall segment view. Louis, it's Carlos. I mean we bought that thing the last week of July, the last week of our quarter. There wasn't any impact obviously to Q3. We're still studying the business and we're still integrating, doing the things we need to do. There'll be more on that topic in Q4. I think it was mentioned earlier, it's a very unique business with incredible demand and really nice positions on a lot of OEM platforms. More to come on that. I don't think it will be dilutive to the margins. I do think that in the early years we will have some heavy amortization. That will dampen the OI margin a little bit on the business. I don't think it should be as pronounced as the Exxelia deal was when we did that back in January of 2023. Appreciate it. Thank you. We'll take the next question from Kristine T. Liwag with Morgan Stanley. Hey guys, sorry about earlier. Can you hear me now? Perfectly. Okay, great. Hey Eric, Victor, Carlos. I just want to touch o n a supply chain question. You guys mentioned earlier that the approach that you have for bobbing and weaving and not having a centralized supply chain has been very helpful in getting you the parts that you need in this period of supply chain disruption. I guess at this point, we're seeing demand for aerospace and defense continue to be strong, things to be moving in the right direction and supply chain stabilizing. Compared to pre-COVID, you're a much bigger company now. At some point would you consider going to a more centralized supply chain? If you go in that direction, how much could you potentially save? I think, Carlos, you mentioned that your current approach does probably cost you more money, but as things stabilize and you move in that direction, how much in margin could you potentially capture? I'll give you my two cents on that. I don't think culturally at this point that in the next 3-5 years, I don't see that as being a direction we head. Look, as the company matures and we get larger, maybe those things will come into play. Right now I don't think it's necessary. Like I said, over the next 3-5 years, I don't think, I don't think that strategy will work. There could be, we could migrate to pockets of purchasing where we have businesses in similar end markets or similar product areas where they might, you know, co source together on certain products. By the way, we do some of that now, but it isn't housed in what I would call centralized purchasing or anything like that. I think, Kristine, I think that's where we're at right now. To be honest with you, I haven't done a study to give you a precise number. Obviously if you consolidated everything from a pure SG&A spend, I think it would be cheaper. I do think that the potential for lost customer revenue and for disrupting our happy customer base is probably not worth it for HEICO at this point in our life cycle. Yeah, that makes sense. If I could follow on, Eric, you mentioned earlier for PMA you have some products that are maybe 50% or 70% discount to the OEM. Some of this are due to your long standing, you know, p rice guarantees with customers? I guess broadly speaking, I mean, because the OEMs have raised prices so much in the last five years, those are probably parts you could potentially increase pricing. You know, your customer is still getting a significant savings. How should we think about potential margin opportunity there? Are you seeing some of those c ontracts roll off in the near term, t o give you a little bit of tailwind on margin? That's a great question. We do see contracts rolling off over time. When the percentage savings is that high, it's typically after somebody's been purchasing from us for a long time, which would in many cases imply that they are more mature products. If we wanted to maximize short term margin, yeah, we could absolutely increase prices substantially. These are products that are at, y ou know, the longer end of the tail of their lifetime. Our customers have been very loyal to us. Yeah, around the fringes, we do have to obviously increase our price to cover our increased costs. Some of those costs have been substantial, and we will do that without a question of a doubt. In terms of really resetting and doing a profit grab, that's really not the HEICO world. I would not, you know, model that kind of activity. Well, great. Thank you very much, and thanks for taking my questions and getting me back in queue. Great, Thanks, Kristine. Thank you. Thank you. We thank everyone for participating. I think that is the end of the questions. Samara, do we have anybody else with questions? There are no additional questions. Thank you everyone for participating. We will have the fourth quarter results call in late December and we look forward to your continued interest. We thank you for your continued interest in HEICO. If anyone has any additional questions, of course, as always, feel free to reach out to Carlos, Victor, or me, Eric. We'd be happy to fill you in. We wish you a pleasant end of the summer and thank you for your support of HEICO over the years. That concludes today's call. Thank you. This does conclude today's call. Thank you for your participation. You may now disconnect.