Good day, and welcome to the Innovative Solutions & Support Third Quarter Fiscal Year 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Paul Bartolai, Partner at Vallum Advisors. Please go ahead. Thank you. Good morning, everyone, and welcome to Innovative Solutions & Support's third quarter 2024 results conference call. Leading the call today, are CEO, Shahram Askarpour, and CFO, Jeff DiGiovanni. Earlier today, we issued a press release detailing our third quarter 2024 operational and financial results. This release is publicly available in the investor relations section of our corporate website at www.innovative-ss.com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the press release issued earlier today. Today's call will begin with prepared remarks from CEO, Shahram Askarpour, who will provide a review of our recent business performance and an update on the progress we have made on our strategic initiatives, including the ongoing integration of the products acquired from Honeywell last year, and some detail on our recent acquisition from Honeywell. This will be followed by a financial update from our CFO, Jeff DiGiovanni. At the conclusion of these prepared remarks, we will open the line for your questions. With that, I'll turn the call over to Shahram. Thank you, Paul, and good morning, everyone joining us on the call today. We are pleased that our recent positive business momentum continued during the third quarter, as growth from our existing platforms and execution under our Honeywell product lines contributed to 48% year-over-year revenue growth during the third quarter. It has been just over a year since we completed our initial transaction with Honeywell. At that time, we laid out our expectation that once fully integrated, we expected these new products, combined with our legacy business, to drive consolidated revenue growth of approximately 40%, with an even more significant impact on EBITDA, where we expected EBITDA to increase by 75% with accretive EPS. Today, based on our financial results over the trailing twelve months compared with the prior period, we generated 54% growth in consolidated revenue, 75% in Adjusted EBITDA, and roughly 28% in EPS. These results demonstrate our success in the integration of the Honeywell assets, combined with the benefits of our strategic organic growth initiatives. But we have more opportunities ahead in regards to our Honeywell product lines, and we continue to further execute on our integration plan. We made progress during the quarter, which should drive additional benefits in the coming quarters. We continue to increase the proportion of maintenance and repair work that is being handled in our Exton facility, which was a nice contributor to growth in the quarter. Another important aspect of the Honeywell transaction is the opportunity to leverage the customer base of these acquired products. The transaction brought us several new relationships with key customers. We are focused on cross-selling opportunities with these new relationships, particularly with some international customers and end markets where we did not have a strong presence previously. As an example, we recently completed some radio sales to a European customer during the quarter. We're also happy to report that the majority of the test equipment and inventory has been delivered, and we expect the balance to be delivered in calendar 2024. At the end of July, we announced the acquisition of additional product lines from Honeywell. This most recent transaction builds on our deal from last year and includes communication and navigation radio product lines from Honeywell. While this deal was smaller than the initial transaction-... The acquisition will help strengthen our offerings in key military and business aviation markets, establish new relationships with new key customers, and importantly, enables us to further leverage the capacity in our Exton facility. We are pleased with the progress we have achieved thus far under our Honeywell product line, and we are looking forward to realizing additional synergy benefits and incremental growth opportunities in the coming quarters. We continued to generate stable revenues and margins from our large OEM contracts, including Thales, for Utility Management System or UMS, Textron for our standby instrument and our autothrottle, and Boeing for the KC-46 and the T-7 products. Further to our focus on the military market, we were recently awarded a multimillion-dollar contract on a foreign military platform from a major aerospace company. We will supply multifunction displays with an integrated mission computer for a foreign military platform. This further validates our strategy to focus on business development efforts in the military market. I would now like to provide a quick overview of our strategic growth priorities and highlight some of our key accomplishments during the quarter. Our long-term growth strategy is focused on generating sustained revenue growth through the following five initiatives: expansion of our existing platforms, new OEM and retrofit programs, pipeline opportunity growth, new market opportunities, and acquisitions. Our existing platforms provide meaningful growth opportunities through unit expansion on several key platforms. This is a highly predictable growth driver and is driven by scheduled unit growth at key customer platforms. For example, the PC-24 aircraft has been and will continue to grow, providing growth opportunities for IS&S. Building on our history of innovation, new potential OEM and retrofit programs provide a significant long-term growth opportunity. In particular, we are focused on growing our OEM business, given the more stable and predictable nature of these contracts. We benefit from deep customer relationships, which has further strengthened following the Honeywell transactions. This gives us the opportunity to cross-sell a broad portfolio of existing products to customers. As an example, some of the radio products recently acquired from Honeywell will couple nicely with our cockpit offerings in the C-130 platform. A significant growth opportunity in the coming years will come from the potential to expand into adjacent markets. One market we are particularly excited about is the military market, which is a market we are under-penetrated in today, but is a tremendous long-term opportunity. We have several product platforms that are ideally situated in the military market. As we already discussed, our recent contract award highlights this opportunity. Additionally, our increased focus on cockpit automation that helps enhance safety and reduce pilot workload represents a significant market opportunity for IS&S in both military and air transport applications. We continue to generate incremental revenue by adding automation features to our military and air transport cockpit solutions. We believe cockpit automation represents a multi-billion dollar addressable market opportunity. Finally, an area of increasing focus is growth through strategic acquisitions. We are ideally positioned to pursue acquisitions, given we have developed a growing base of recurring revenue, have strong cash flow generated from business, and have a strong financial profile. Our acquisition strategy remains focused on product lines in the electronic and electromechanical space, with a similar margin profiles to our existing business, which enable us to leverage our manufacturing capacity. We look forward to updating you on our progress under our strategic growth initiatives in the coming quarters. Before I turn it over to Jeff, I would just like to conclude with a few final thoughts. Overall, we are pleased with our third quarter results, as our growth in our existing platforms and contributions from the Honeywell products enabled us to generate growth in revenue and EBITDA. We continue to execute at a high level, and based on our results during the first three quarters, together with our continued business momentum, we remain well-positioned as we look towards 2025. With that, I turn it over to Jeff, who will provide a more detailed review of our third quarter results and our financial outlook. Jeff? Thank you, Shahram, and good morning, everyone. I will provide some additional details on the quarter, give an update on our working capital and free cash flow, and conclude with commentary on our balance sheet and liquidity. Before we begin, I would like to remind everyone we will be discussing non-GAAP measures, and you are encouraged to refer to the earnings release, which includes the definitions, the rationale for using them, and the reconciliations to GAAP in it. Looking at the third quarter, total net revenues were $11.8 million, representing a 48% increase when compared to the third quarter last year. The increase was driven by contributions from the acquired Honeywell product lines, as well as growth in existing lines. We continued to see some weakness in the cargo market, but trends appear to be stabilizing, and we saw some sequential growth in this market relative to the second quarter. Product sales decreased to $5.1 million during the third quarter, primarily attributed to a large order from a year ago to the commercial air transport customers. This was partially offset by an increase in shipments to general aviation and military customers. Customer support revenue was $6.4 million, an increase from $1.3 million last year, owing largely to the customer service sales from the product lines acquired from Honeywell. Gross profit was $6.3 million during the third quarter, up 33% from $4.7 million in the same period last year, driven by the contribution from the Honeywell products. Overall gross margin was 53.4% during the third quarter, up sequentially from 52% last quarter, as we continue to make progress on our Honeywell integration initiatives and further gain operating efficiencies, which will continue to improve our margins. As a reminder, typically, our customer-funded engineering programs erode our gross margins, given this is largely a pass-through item, and this quarter it was roughly 150 basis point headwind. As Shahram discussed, we continue to make progress on the Honeywell integration, and we did see some improvements sequentially from the second quarter, with less of a drag from delays in inventory and testing equipment shipments. We are looking to gain additional efficiencies as we continue the integration of the Honeywell products, including the additional recently acquired lines, and we are targeting a return to the gross margin levels witnessed prior to the Honeywell acquisition. Research and development expense during the third quarter of 2024 was $1.1 million, an increase from $850,000 in the comparable period last year. This increase was driven by headcount growth to support our product development efforts. As a percentage of net sales, R&D expense during the third quarter decreased to 9.3% of net sales, versus 10.7% last year as we gained scale benefits. Third quarter 2024, selling, general, and administrative expenses were $3.1 million, an increase from $2.4 million last year. The increase in SG&A expense in the quarter was primarily the result of one-time expenses related to the acquisition and CFO transition costs of approximately $400,000, along with amortization expense related to the customer intangibles as a result of the acquired Honeywell product lines of approximately $600 thousand. Adjusted EBITDA was $3.1 million during the third quarter, up from $1.9 million last year, due to the contribution from the Honeywell products and operating expense leverage. Adjusted EBITDA margin was 26.1% during the third quarter of 2024, up from 24% in the same period last year, owing to the operating expense leverage, partially offset by lower gross margins. The third quarter net income was $1.6 million, or $0.09 per share, compared to net income of $1.4 million, or $0.08 per share in the year ago quarter. Moving on to backlog. New orders in the third quarter of fiscal 2024 were approximately $10.6 million, and our backlog as of June 30, 2024, was $9.3 million. As a reminder, backlog includes only purchase orders in hand and excludes orders from our OEM customers under long-term programs such as Pilatus PC-24, Textron King Air, Boeing T-7A Red Hawk, and Boeing KC-46A. IS&S expects these programs to remain in production for several years and anticipates they will continue to generate future sales. Further, due to their nature, the product lines from Honeywell do not typically enter backlog. Now, turning to cash flow. In the first nine months of 2024, cash flow from operations was $5.4 million, up from $900,000 in the year ago comparable period. The improvement was driven by higher cash earnings and improved working capital efficiencies. Capital expenditures were $500,000 in the first nine months of 2024, versus $200,000 in the same period last year. As a result of these factors, free cash flow during the first three quarters of 2024 was $4.8 million, up from $800,000 last year. Total net debt as of June 30, 2024, was $9.3 million, down from $16.4 million at the end of 2023, as we utilized our strong free cash flow to quickly de-lever following the acquisition from Honeywell. Our net leverage at the end of the third quarter declined to 0.8 x, down from 2.1 x at the end of 2023, and a peak of 2.9 x immediately following the Honeywell transaction. Our total cash and availability under our credit line was $20.7 million at the end of the third quarter, which provides us ample financial flexibility to support our ongoing operations and strategic initiatives. That completes our prepared remarks. Operator, we are now ready for the question-and-answer portion of our call. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Sergey Glinyanov with Freedom Broker. Please go ahead. Hello, everyone. First of all, my congratulations about the Honeywell transaction. As far as the concerns regarding to previous deal, you had to complete the movement of the equipment to the IS&S facility in August, right? Is it completed? I'm sorry, can you repeat that? I apologize. Oh, as far as the concerns regarding the previous deal, you had to complete the movement of the equipment to the IS&S facility in August. Is it completed or you are in the process of that deal? So, it is substantially completed. I think in one instance, where we are destined to get four identical stations. We have three of them completed, and there is one that's gonna come in November. These are new test equipment that are being built for us. So I would say substantially we're there, as well as, you know, substantially the inventory that we need to perform on. Okay. And, will it affect the margin, October and next quarters? It really shouldn't impact us, because we are also training more technicians and building on them. So just having this equipment here without having trained people to run it is, doesn't necessarily help you that much either. It's, you know, we continue increasing the team as we plan on bringing more and more of these projects in-house. As we talked before, Honeywell had a lot of channel partners. They did a lot of outsourcing of their business to third parties. We plan on bringing all of that in-house to help increase revenue and profitability. And so this kind of, right now we have, right now we've got enough test equipment to do to deal with the matter in hand. And the other one would help us for future growth. Okay. And during the call, regarding to new Honeywell transaction, you mentioned that I assume there's great opportunities to further net income growth after 2024 fiscal year. Do you have any thoughts about base of sales, organic growth? So we're gonna continue with our organic growth. I mean, we were prior to acquisition, I think we were running at about CAGR of 15%. You know, definitely we're gonna be in double digits. We had some rough air ahead of us with the air cargo slowing down. We're kind of recovering from that through the military initiatives that we put together. This is the game that we've been playing for you know, 35 years. It's you know, when one market suffers, we put our focus on another market to recover from it. So going forward, we're gonna continue growing organically in double digits. Going beyond this third quarter, we consider the Honeywell acquisitions that we've done as part of our organic programs as well. Because they get intermingled with our own initiatives, as well as the growth is gonna come from the combination of both product lines. You know, definitely, we're gonna continue to grow the business, you know, without doing any more acquisitions as well. But, you know, we're constantly evaluating other acquisitions, and we're gonna move forward with that. In terms of product development initiatives, we're focused on that part of the business. As you saw, we saw an increase in R&D expenses, not as a percentage of sales, but in materiality. We continue growing our team to allow us to develop further new products. Again, as I mentioned, cockpit automation is a significant market that we're looking at over the next several years. And there's incremental revenues to gain from that, and we're continue to develop products that would help us get there to that goal. And that gives us further organic growth. Great. How additional acquisition could reflect in CapEx? How would additional acquisitions impact CapEx? Yeah. Beyond, yeah. So, you know, if you look at beyond what, where we are and kind of the matter at hand on maybe the next acquisition we do, to do further acquisitions beyond that, we would have to increase the size of our factory floor, which we've been putting plans together. We have planning permissions here to build another 40,000 sq ft of a factory space. And we're looking at doing that in order to get us beyond the $100 million revenue in the next several years. Great. And last question, when a decline in product sales could turn into a growth path, could it happen in the next or first quarter of the next financial year? So it's hard to predict the future. As you know, we're in a funny year this year with all the elections going on and several things that are happening internationally. We've managed to navigate those waters, you know, year after year. We've developed new products that haven't hit the market yet, and we believe that the cargo market, we're seeing signs of it. Yeah ... picking up a little bit as well. So, I mean, last quarter, we had, we actually shipped in air transport, products in air transport. And so, you know, we're optimistic that things would continue on the path of recovery. But, you know, hard to predict the future. Okay, thanks a lot. Our next question comes from Doug Ruth with Lenox Financial Services. Please go ahead. Good morning. I wanna offer my congratulations on the order that you announced yesterday. I was wondering if you could provide some more details. Tell us, tell us, you know, tell us more about it. So, I guess the announcement we made, we were gonna put a lot more in that announcement. Obviously, our customer was reluctant to agree to us putting a lot more color into it, and it's because they haven't announced the program themselves. But it is a very large aerospace company that we got the contract for. It's a military product. It's a mission display integrated with a mission computer in one unit. And I guess the award value is another thing that they didn't want us to announce. But it's, you know, well into the several million dollars. All right. You will see that- Is there any way to suggest, like, how much might flow in the fourth quarter, for example? We intend to deliver on some of it in the fourth quarter. Right. But you will, I guess you will see that number. It will reflect in our backlog, because once we've booked it now, so now it's in our backlog. Right. So, Doug, we booked it, you know, this period being Q4, so when we put out the K, it would disclose in the backlog period. Okay. All right. Unfortunately, yeah, our customer didn't really want us to put too much details around it. I think they're still negotiating with their customer, my guess. Okay. One of the other parts of the Honeywell acquisition was that you had acquired quite a bit of inventory, and how is that going. It seemed like you indicated that maybe it was more inventory than maybe you desired to have. How are you doing with what was acquired, and how are you doing with, you know, in effect, using it in your operations? So, I don't know why you think that we indicated we have more inventory than we deserve to have. But they... So the second acquisition that we did has about $2.5 million worth of inventory in it as well. A lot of these, a lot of the inventory that we get on these programs is what they call the SPEX units, which are units that we would own, but when things fail in an aircraft, we will rent it out as a loaner, and we get the income for it. So if you can look at it like you're the Hertz Rent-A-Car, and we rent out these units, and we get the revenue for it. And some of it, some of it is inventory that we can go ahead and sell. For example, in the Q2, we sold some of that inventory to a European customer; we sold some radio inventory to them. And we have, we've got an international sales team now that that's supporting all of these activities. That sounds positive. Now, you know, look, you deserve a lot of credit for the sequential improvement in the margins. Do you have some internal goals for what might happen in the fourth quarter? Yeah. So, Doug, I mean, we're always constantly looking at the margins, how to increase it. I would think a couple of things would happen in the margin. We talked about the little headwind around the NRE, so that's about 150 basis points. Also, when you look at our margins quarter or year over year, what was impacting it was our increase in depreciation expense because of our PP&E went up and also with the Honeywell transaction. So there was another, I would say, roughly 150-200 basis points there. So when you look at those two factors, the NRE and that, our margins are getting to 56-57% margins. Keep in mind, as now the test equipment's here, the efficiencies will start coming in, too, further with our workforce to repair and fix these units more efficiently, effectively. Our goal is to always look to increase those margins. I mean, always when you're hiring new technicians and training them to become effective, and these are the equipment that we acquired from Honeywell. Very sophisticated equipment, like, the initial reference units are like... They're as sophisticated as you can get in the aerospace area. It's not like you're gonna get technicians off the street, and they're gonna hit the ground running. You'll have some... You do your hiring, some of them you get rid of within the next couple of months because they don't hack it. So there is inefficiency, that all of that reflects in our gross margins. Well, you also had talked about that there was this new product development, and that was affecting the gross margins. So are some of these products that were developed, are they being marketed for sale? So that would seem to help the margins going forward as well. Yes. Now, but what Jeff was referring to, and I'll be a little bit more specific. For example, we're developing a second generation of our flight control computer, or what we call the UMS, for the PC-24 aircraft. That would establish us for the next 30 years of developing the next generation of these computers to Pilatus. In a lot of instances, we would go ahead and do that development in-house, and because we're investing into the future. In this case, Pilatus was. They were nice enough to actually give us some funding to help with the development of it. And then when it comes to the minute you get some funding from a customer, you get into revenue recognition, and if the engineering cost ends up going a little bit more than what you had estimated, then it starts getting into eroding your margins. As if you weren't getting paid from the customer, you would have seen all of those in our high R&D, and it would not affected our margins. So I'd still rather get some money from the customer if we can. Yeah. So, Doug, it's really the way we recognize the NRE contracts, to Shahram's point. You look at your cost to complete, and if any changes in terms of sometimes you might hit a snag, the engineer might hit a snag, and the estimate changes, you kinda have to look at the contract and revalue it, and that's what happened this quarter. Okay. I think you deserve a lot of credit. There's a material improvement, you know, in the one-quarter results, and I appreciate you answering my questions, and I'm excited to see what happens in the next quarter. Thank you, Doug. Thank you. Our next question comes from Andrew Rem with Odinson Partners. Please go ahead. Morning, gentlemen. I really appreciate the additional color on the gross margin. That, that's kind of where I was going. But I did wanna ask maybe just one follow-up to beat the gross margin, of course, here. But so you've got three test units in, and do you have all the technicians you need for those three? Is that correct? Yes, and we continue to hire more technicians and train them, as well as putting in a second shift. So, our goal is for 2024 to have the second shift up and running. Yeah. You know, we have to have a supervisor, we have to have a quality person on that second shift, so they have to really be trained during the first shift to able to move over, which just takes some time. Okay, so then when you get the fourth test unit, can we assume that you'll have the technicians necessary to staff that one as well? Yes. That, that's our goal. Okay. And then, looks like on the prepaid inventory, that's come down nicely from the beginning of the year. Will that go up with the recent Honeywell acquisition, or is that heading to zero? No. So a couple of things with some prepaid. It's really the inventory that we paid, and we're still, you know, waiting to get back, and that's where you see it went down because we got a lot of that inventory in today from when the quarter closed. So our goal is really to keep working with Honeywell to get the new contract in, that inventory in before September thirtieth, but if it doesn't happen, you'll see some of that amount in prepaid inventory. If I was understanding your commentary correctly, Shahram, it, you basically have a rental fleet, and that part of that is what's considered inventory. Is that correct? So we have some of the units. I would say a good size of the units that we receive in the finished goods units are used in the kind of the spares pool, where if somebody's equipment fails on the airplane, we will send them a loaner while that unit comes back and gets repaired. And that's typically something that you charge for that service. And so that's kind of what I was describing. Yeah. So, Andrew, so we typically always have those units. They're in fixed assets. They get depreciated, what we call rotables. So right now, too, we're also assessing the amount of volume we need with these customers so we can have the efficient, a number of units on hand. We don't wanna have too many and not too little. So if there's excess in some part numbers, they are the ones we're gonna try to sell in the marketplace with our international sales teams. So more to come, as, you know, we learn more and assess these units. All right. And then on the multimillion-dollar military contract, what is the duration of that? That's another we were told not to, but it's some of it's been two and three years. Okay. So several million dollars over two to three years? Sounds about right. Okay. And then in fourth quarter last year, you guys did basically $13 million in revenue because that was the first quarter you got Honeywell. Honeywell came in much stronger than expected. Is it fair to assume that that will be a difficult comp, and as a result, we shouldn't look for kind of year-over-year growth in the fourth quarter? ... So it's the, again, as I think we've talked about this every quarter. That fourth quarter had a lot of pull-ins in it from Honeywell. I mean, we got about, I would say, roughly $6 million revenue in a quarter from Honeywell. Because of the anticipation of the transition period, they pulled in and delivered a lot to the customers. So I wouldn't want to set any expectations that there's nothing else to pull in. Right. Okay. Okay. Our next question comes from Chip Rewey with Rewey Asset Management. Please go ahead. Good morning, and thanks for taking my call. Congratulations on the execution and the cash flow and the deleveraging. It does really set you guys up for growth, which is where my two questions lie, and I'll ask them both, and then you can address them. One, the military is encouraging to see, and especially the contract that you got, and I'm just curious, typically, military takes a long time. It takes qualification, maybe it's design in. So maybe you could talk about, is this order that you got more of a one-off, or do you think you can take some takeover business like this as you look to grow military, and we could see significant growth from other deals in the military? Or will it be longer kind of designed in type business? And so that's one, the military. Two, you mentioned more M&A, and you've been successful, so just wondering what criteria you might look at for as far as size of deals. Do you think you'll buy product lines like you did with Honeywell, or whole companies? And do you... Will you maintain the accretive nature of deals like you did with Honeywell, the significant accretion? And I'll leave it at those two. Thanks. So with regards to the military, we put the focus on about... I guess it was about the time where I took over from, as CEO, I started putting a lot more focus into the military market. We actually went and hired a retired Marine, U.S. Marine pilot, to help us sell. And then as we moved on, we kept on additionally strengthening the sales and marketing efforts on the military military platforms. We've got a lot of pokers in that fire. So this was the first one that bear fruit. I'm hopeful that, you know, we will be getting additional... I mean, there's a lot of spending internationally on the military market, and, you know, hopefully we get our fair share of that. With regards to the strategy for acquisition, as I articulated earlier, our preference is to get product lines in the, you know, similar product lines in the electronics or electromechanical field that we can integrate here in our factory floor. Not necessarily just from Honeywell, but from other large companies. They tend to be less risky and more predictable. However, we also look at whole businesses, kind of smaller businesses. I like to see an accretive business. I don't like to buy into speculations. So that's my view of it. And if we can find small bolt-on businesses that would immediately generate revenue, EBITDA, and are accretive, we will move on with them and with their integration. They're just harder to come by. Yeah, we're being very disciplined on, you know, our capital, what we're using, to make sure that any kind of product acquisition or business is accretive. So that's really our goal. So it's a very diligent process. Yeah, I like the sound of that. So and then the last question, you talk about bringing more lines into your existing facilities and then maybe putting some CapEx out in the future. Do you have or how do you think about where you are in capacity utilization today? You know, how much can revenue grow with your current footprint? I know you're talking about doing a second shift in some of your lines. You know, how far can we grow before you really need to put more brick and mortar in the ground? I think in terms of so there's two ways of looking and growing. If we do bring in product lines which are completely new, now, we did two completely new product line acquisitions from Honeywell. That takes footprint. Mm-hmm. So we can probably bring in one more product line, brand new product line, and handle it with our existing footprint. But we can grow our existing product lines that we have, and even if we do, say, if I do an acquisition of a product line of cockpit displays, which is similar to cockpit displays that we have, I don't necessarily need a lot more footprint. So the answer is, it really depends. And because of that, we've put in planning permission to expand the building, both in terms of holding larger amount of inventory and as well as expanding the factory floor, where we could bring brand new product lines in here. If we move ahead with that, it will probably be about a year before we can have the addition here up and running. The CapEx requirement for that is roughly gonna be around $5 million, which—and we will get some help from the state of Pennsylvania as well as our local government to help towards some of that. Nothing significant, but there's stuff that we've been talking to. So we're seriously looking at that, to in order to help us grow. I mean, I like to grow this over the next several years, well beyond the $100 million in revenue. So we need that expansion. Yeah, so just the way we even looked at the expansion too is, you know, we have some redundancies out and, you know, various facilities, we can consolidate them into one place. And I see, you know, those redundancy storage units and things like that to kinda get the cost reductions down. And when you look at this, the money spent, how do we finance it? You know, we're working with the state and locals to get, you know, preferable financing in our current bank to work with. Great. Sounds good, guys. Thank you. Again, if you have a question, please press star, then one. Our next question comes from Gowshihan Sriharan with Singular Research. Please go ahead. Good morning. Can you hear me? Yes. Thank you for taking my questions. The first question is regarding the military retrofit opportunities. Could you provide insight into whether the margin profile for these contracts are comparable to those in the commercial sector? I know you've talked about the kind of initial investments you've made in terms of hiring and staffing. And also, if the new administration decides to scale back on its commitment to NATO, would that have any impact on your near-term operations? So, in terms of margin profiles, they are similar to our margin to our existing product margin profiles. With regards to a changing administration, I mean, I don't foresee a reduction in military spending based on, you know, what you see is happening around the world. But we also have tapped into a lot of foreign military organizations with the new. You know, we again, we hired a sales team from Honeywell that dealt with the international business, and we're seeing a lot of opportunities coming in from foreign militaries as well. So I remain optimistic on the military side. Okay. I know you mentioned on your last call about some delayed information from Honeywell. Could you give us an update on the status of the drawings and design information from Honeywell, and how is that affecting your timeline for initiating in-house assembly production? And is that fiscal 2025 timeline still kind of a realistic timeframe for transition? I believe so, yes. I think all the transition is gonna happen in calendar 2024, based on what I've seen so far. And so, you know, we should be able to, in calendar 2025, be able to be fully operational and be able to take care of all the advantages we can. Okay. And I know, in the past, in your, one of the interesting or the most exciting part of your growth story is the, the autonomous flight opportunity. Could you outline the kind of key industry milestones that investors kind of should be aware of, along with the timelines for those milestones to, for this opportunity to transform into a significant growth engine? Well, I think right now, in terms of industry, and, you know, as always, NASA is ahead of the FAA with these things. They, there were whispers that maybe by 2030, that they would go into the first phase of autonomy on the air transport side of it. So, that's kind of where we're looking at potential, you know, over the next five or six years, that we'll see some of that materializing. In terms of IS&S, the opportunities that we have, which are kind of closer in terms of the vision, is one on the military side, because there is movements and developments within the military side of things, where they could benefit from some of these. And we continue communicating and spreading our vision with those folks to be able to utilize some of these capabilities in some of the aircraft. As well as, as I said, the roadmap to getting there includes a lot of small steps of incremental automations in the cockpit. Those features, as we develop, we offer them to our baseline of customers, and that brings in revenue for us. Okay. Thank you, guys. That's all I had for now. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Thank you, operator, and thank you all for your time and interest in IS&S. If you don't speak during the quarter, we look forward to speaking to you again on our next quarterly call. Have a good day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.