Greetings, and welcome to the Astronics Corporation Third Quarter 2017 Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Deborah Pawlowski, IR for Astronics Corporation. Thank you. You may begin.

Thanks, Latonia, and good morning, everyone. We certainly appreciate your time today and your interest in Astronics. On the call with me today are Peter Gundermann, our President and CEO; and Dave Burney, our Chief Financial Officer. Pete is going to go through his prepared remarks, and then we'll open it up to take your questions. You should have in hand the news release across the wire this morning, which is available also on our website at astronics.com. As you are aware, we may make some forward-looking statements during the formal presentation as well as during the Q&A portion of this teleconference. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in the earnings release as well as in the documents filed by the company with the Securities and Exchange Commission. You can find these documents both at our website and at sec.gov. So with that, let me turn it over to Pete to begin the call. Peter?

Thanks, Debbie, and good morning, everybody. My comments will follow the usual format. We will talk about the third quarter in some level of detail, which was not a positive quarter for us on the surface. We will talk about year-to-date results, which was the continuation of the trends we have been seeing all the year. And then the table and talk about a more positive set of topics from my opinion, which is our expectations for the near future not only in Q4 which we expect to be a very strong quarter for our company, but also look at our preliminary look at 2018 expectations. Number of things are changing for our business and most of the headwinds we have been fighting recently, we believe are about to turn the tailwinds for next year it’s going to be a fundamentally different year, so we will spend a little bit of time talking about our initial look at those set of expectations. So for Q3, revenue was $149.7 million, that's lower than we expected and below our comparator quarter of a year ago by 3.5%. Aero sales were $129 million, up slightly from the comparator period and kind of in the middle of the range of the recent four quarters. Test sales were $21 million, down 30% over the third quarter of 2016, but pretty consistent with what we’ve seen overall in 2016 and 2017. Our third quarter, our comparator quarter for test was pretty strong with lots of semiconductor sales a year ago. Given the lighter volume, our bottom line results were also light. Net income was $6.1 million, or 4% of sales, down substantially from $12.1 million a year ago, 0o 7.8% of sales in the third quarter of last year. Our diluted earnings per share in the…

Thank you. At this time, we will conduct a question-and-answer. [Operator Instructions] Our first question comes from Ken Herbert with Canaccord. Please proceed with your question.

Hi, good morning Pete, Dave and Deb.

Good morning.

Pete, I just wanted to start off. You've made a comment around pricing and obviously great news on the backlog and the bookings. But as I look at margins within the aerospace segment, can you help us just quantify maybe what pricing relative to volume has been for you as a headwind this year? And just to follow up on your comment that you see it sort of stabilizing as you get into 2018. Just any more color around that and maybe obviously some of the upside you've won through that through maybe better guarantees on volume or longer-term horizons or predictability. But a little more color on that as we think about margins as volumes start to turn in aerospace or increase that would be helpful.

Sure, I'll take a stab at that. Dave, I’ll turn over to you in a minute for your comments. But we have a number of various significant customer relationships that mentioned something we’ve – I don't think we've talked about before in that. Our top five customers this year are about 50% of our business. And they've grown pretty substantially over the years. And we have solid long-term arrangements we feel with all of those customers. In some cases, we have exchanged lower margins or lower prices, which results in lower margins in the short-term – for longer-terms. And the challenge for us is to become more efficient and to execute better. And I think we were fairly optimistic that we can cover a lot of those giveaways, but at this point this year I'd say it's been a couple points at least. So that's how I would phrase it. Dave, how would you cover it?

I think that summarizes it pretty good. If you look at us historically, we tend be able to squeeze out some decent operating margin with sales growth and looking into 2018 if we can hit the top line numbers that we're expecting for 2018, I would expect to see some – to see margin improvement on the aerospace side there for sure.

And that's helpful. And just as I look at aerospace in at 2018 as you get the volume growth. Dave, can you just quantify maybe what you see is an appropriate incremental margin? Or how much can you get back next year to sort of your legacy aerospace markets?

I won’t give specific guidance, but qualitatively I think we can start heading back up toward the margins that we were starting to see back in 2016. Our margin profile was extremely high if you go back to 2015, 2014. We were up in the 15% to 17% range. The profile of the company has changed a little bit since then. We've had a number of acquisitions. We’re growing the top-line. I don't know that we'll expect to grow the operating income and add businesses that are going to produce 20% operating margins. But I think for sure as our top-line grows, we can start to go towards that mid-teen level that we had before. At least that's what our goal would be.

Okay, that's helpful. And just finally if I could on the recent contract announcement for the narrow-bodies for In-Seat Power. Obviously, I think you said, Pete that's not in the backlog yet. Can you just provide any more detail on timing and some of the variations? You've got a pretty wide range here in terms of the number of aircrafts. Maybe over what time do you expect to start to see some of this work? What are some of the issues around the sort of 700 to you know the much higher number in terms of timing of those contracts or some of the put and take as we think about that particular opportunity into 2018 and 2019 because it looks like that could be a pretty significant source of the upside into 2018 once you’re able to put that in the backlog.

No doubt. And as we're starting to see that, there are orders coming through against these agreements, but that press release was largely based on agreements we've made for pricing and delivery and services with some major airlines in North America. And in general, you don't make agreements. Airlines don't bother making agreements of this nature unless they have intentions of following through on this business. But some of these programs are a ways out there and some of them are a little bit more preliminary than others and that's what – that's what resulted in the range being so wide. We think that there are 1400 airplanes out there that we're going to do that are covered by these agreements. But in some cases, you know, our customers don't have the formal approval yet to proceed with, but some of those fleets and some – and they may not have for maybe even another year. So it's a little bit preliminary in that sense, but we think it's very likely that the lower end of that range, those 700 airplanes will happen certainly in the next three years and probably consolidating more to two there. The trends that we've seen for a desire for In-Seat Power, despite our revenue performance this year, continues to be very strong. I mean, you know, nobody is taking power off their airplanes, most are deciding that they need to have it and if not now then when. There are some holdouts of course. People who – airlines, who haven't tried it and are not at this point committed to trying it, but those airlines are increasingly in the minority. The trend is more and more, not only putting power on, but putting it on nose to tail and that's what we're seeing certainly in the North American narrow body market.

Okay, that's very helpful. I just wanted to ask one follow up, one final question. I mean you've obviously seen significant timing risk this year as some programs and projects have slipped to the right you you've gone out on a bit of the limb here with a very bullish sort of Q4 and of course initial 2018 outlook. How do you as you look at your 2018 outlook, relative to prior years, do you feel like you maybe captured a bit more of the timing risk heading into 2018 relative to prior years? Or how would you just characterize the timing risk around some of these initial comments into 2018? And I'll stop there and pass it back. Thank you.

Sure. Let me take a stab at that. We think we've derisked our 2018 forecast unlike what kind of the trap we've fallen into in some previous years by keeping our initial forecast based on booked business. So I'm not sure that I think 2018 will be weighted towards the second half because there are certain parts of our business that that work on that way. But at this point, we're going to take the approach instead of telling you all at once what we really think we're going to do. We're going to take it as that – as kind of some of the – some of the more tentative parts firm up. So we've derisked that in that sense. And as far as some of the major chunks of business moving around and delaying that's a frustrating part of our business and it's a little bit of a judgment call. But for a company our size $4 million, $5 million pieces of business moving around in any particular quarter can have pretty drastic repercussions. So we feel like there's a good chance that – that half of them or all of them will hit in the fourth quarter, but we've given you a range to try to de-risk it on the low end such that if we've got one of them, we should be pretty comfortably in the low end of that range. So that's why we're within a month and a half or two months here at the end of the year and we're still giving you a pretty wide range because we need to have these things happen. But even if they don't happen, even if we're at the low end of that range, that's a very good quarter for us. Like I said, the best quarter we've had and it will be the best quarter we've had in two years. So we think that it combined with the bookings strength and be the positive things we continue to see in the market. Along with the acquisition of Telefonix, which I'm personally pretty excited about, promises to make 2018 a pretty good year for our company.

Thank you very much.

Sure.

Our next question comes from George Godfrey with CL King & Associates. Please proceed with your question.

Thank you. Good morning Pete, Dave and Deb.

Good morning.

I want to ask about the test bookings $29 million this quarter and then the $15 million that’s already come in from fourth quarter. I think I heard you say it was new platforms. Are those new customers as well are new products – new platforms with existing customers?

Well, I'm going to duck that question, George, simply because customers in this line of work are extremely sensitive as it turns out. So all of our agreements say we can talk about things that we legally have to talk about, but beyond that we have to be a little bit unclear. So the way I'd prefer to talk about it is more programs within customers because I think that's actually the more relevant thing to focus on anyway here. And we have – our semi business is largely based on one legacy program today. But, yes, you heard it right. The bigger booking in Q3 was for a – was for a new program. And it's one of these which is a – we think an important step forward and potentially can become quite a bit more valuable than that initial order if the performance is as our customer expects. So more on that as it happens as I legally can talk about it, but the other important detail not to miss here is that the legacy program that our business has been based on that was largely dormant in 2016 is showing signs of life again as we approach the end of 2017 in anticipation for 2018. So, we expect when I talk about the target rich environment, there's certainly an element there also for semiconductor with a legacy program.

Got it. And then my second question is you talk about the tail-mount antenna systems and that’s starting to ramp up here and had an – the avionics segment that really had nice growth this quarter. Can you talk about the issues just so I'm clear in my head what – how that momentum back and now that we're seeing that momentum – is that’s something that can really ramp as part of the nice guidance for 2018? And I will leave it there. Thank you.

Sure. It's – nobody – the antenna by itself doesn't do anybody any good. You have to have a network along with that you have kind of a service provider along with it and we're teamed with a couple of prominent companies, Panasonic one of our near and dear customers is providing the network for this. And Panasonic and Astronics are working with a third company called Satcom Direct, which is a very prominent marketer and consultant of these kinds of services to the industry. So one story short, we can't – nothing can be sold and nothing can be done really until all three companies are ready to go. And it took us longer to get our wagon is hitched up and coordinated the way they need to be coordinated for the launch of this thing than we anticipated. So but we're finally there and there are some improvements that needed to come down the pipe here shortly, but we think we have line of sight to that too. So the delays have largely been driven by that set of mechanics just making sure we have these three companies all doing their job at the right time and getting everything coordinated. We think we're there now. And we do have a pretty sizable piece of business planned for that effort next year, but those assumptions and those goals are being reality tested right now and you know as we move into next year and as we see what our experience base is we’ll refine accordingly our budget. And you know probably talk about it in more detail then I'd prefer to – we prefer not to go into too much more detail about it right now.

Understood, thank you for taking my question.

Sure, thank you.

Thank you. Our next question comes from Michael Ciarmoli with SunTrust. Please proceed with your question.

Good morning guys. It’s actually Les in for Michael.

Good morning.

Question on the wide-body, you mentioned wide-body was bothering out. Is this more of like a slowdown than bottom and you’ll see some improvement here from here on? Or do you see this more as like a study forward?

I think we view it as a studying. We do have some things to absorb yet like you know a little bit of a step down in 777 new builds towards the tail end of this year, but we're thinking that things will stabilize kind of at the current level for wide-bodies and particularly in the area of In-Seat Power. We're thinking that most of the kind of upside potential here in the short-term will be more narrow-body focused.

Got it. And also perhaps maybe a little bit more comment on the business jet.

Well, the business jet is our – we have a pretty major lighting franchise in business jets most of the industry is not anticipating a pickup in production volumes, but we are making steady progress in putting more content on airplanes and we're doing that in two main areas one is our Airborne Power side, where you know – and commercial transports were known primarily for in-seat power, which is at the end of the day a passenger amenity. It is not flight critical. But on the smaller aircraft side, we're building a pretty good franchise for flight critical electrical power generation and distribution and it's a longer thesis than I think we can afford it here, but as a fan of the industry and as a pilot myself I'm – it’s one my favorite product lines. And it's a system that's really based on high reliability generation and electronic circuit breakers, which offers substantial flexibility and performance and weight advantages over traditional thermal type systems. And we're making a lot of headway winning a lot of programs. So it's not a major driver of our income statement at this point, but it is picking up speed. We've won a number of platforms, which I might advise people to go to our investor deck and they’re spelled out there, but we're casting a pretty wide net and we're really leading that industry with some pretty good stuff. The other thing we're doing is on the entertainment side with the addition of CCC. In particular, we're picking up some cabin management, cabin entertainment volume in the VVIP market. And we think we’re making some inroads into expanding not only at CCC, but PGA, one of our other companies active in this market, expanding into the business jet world. So traditionally, PGA and CCC have done cabin systems for bigger aircraft. We're moving in the smaller aircraft. And those two initiatives I think we expect will increase our volume in the business jet arena.

Thank you for that additional color and it’s great.

Sure.

I guess one last one for me and come back in the queue. Any further discussion by the board on the expansion of the share repurchase program?

We have not had discussions to that effect, but we do meet regularly as the board. I expect it will be an agenda item. I don't know where it'll go for sure at this point, but yeah I expect we will talk about it.

Great, thank you.

Sure.

Our next question comes from Jon Tanwanteng with CJS Securities. Please proceed with your question.

Good morning and thank you for taking my questions. It’s nice to see movement on the orders, finally.

Thanks, Jon.

Yep. My first question just to clarify on the new semi test business. Is the new program, a new or next generation application of product that that you're doing here or is that’s similar to the legacy program that you've been doing already?

We would – how do I answer that. I’d say it's a different initiative. It's not a next gen related to the legacy program in that way.

Okay, got it. And then any preliminary thoughts on the transaction and one-time expenses related to Telefonix, semi that closes in the potential for accretion and either cost or revenue side synergies from the combination if any?

Sure, I’d like – Dave, I could throw this to you in a minute, but I would answer the question by saying this is not a synergy play in the sense of consolidating or lowering our cost base. Those are combining product lines or any such initiative. The company is headquartered in the Chicago area. We already have an operation in Chicago area. So geographically we don't view it as much of a difficult expansion. The real issue is one of strategic similarities in my view. I think we have strong franchises in some of our core markets, which revolve around the IFE entertainment world for commercial transport airplane. They’re similarly situated company obviously smaller than we are, but the things that they're focused on have and successful with. Have a pretty uncanny fit with things that we don't do. There's not much overlap. In fact hardly any overlap at all. So as an aside, we would expect and anticipate the HSR process to go pretty smoothly and pretty quickly although that’s probably early dangerous thing for me to say. There's not – there's just not much overlap. So the beauty of it is the strategic combination and the ability to go to market and offer bundled packages of hardware and to be able to do a one stop shop to customers, who are current customers of theirs and of ours. And there's a lot of overlap in that customer base. It is not a movement towards entering the kind of the retail end of the IFE market. We don't anticipate going to compete with our major customers as part of this initiative. But it does allow us to go in and say here is a kind of a buffet of products and you know us for this, but we can also do this business for you. And thereby make it easier and potentially make more competitive offers, but then our separate set of competitors could or would do for those same pieces of business. Dave, do you want to take a crack or add anything?

Sure because of the timing of this being late in the year, I expect there’ll be minimal income statement impact to 2017. So as we get into 2018, beginning of the year we’ll expect we’ll have the usual purchase accounting expense flush throughs such as the writing up of opening inventory to market and some other short-term intangible asset amortization. We have not completed the purchase price allocation or valuation. So until we get an idea of what the amortizing intangible asset run rate is going to be, it's difficult to predict. But I would say that we absolutely expect it to be positive on the EBITDA side next year. The question is the allocation of the intangible assets, portion of the purchase price, but I do think ultimately in 2018, it's accretive. The question is it won’t have a really good picture on that until we complete the final valuation process here.

Okay, fair enough. Pete, I think you went over Q4 pretty well, but how should we think about how you de-risk 2018 especially on the aerospace side in terms of the potential for other projects to push out of the year or into further the second half or later?

I guess we're – based on the agreements we have in place with major programs, we're pretty comfortable with 2018 on the aerospace side probably the Telefonix acquisition obviously you don't always know what you don't know until you know it, but you know I suppose there's some element of risk there, but we think we've done a reasonably good job of diligence. And we think their book of business is pretty sound. I think our business always has a little bit of risk involved in that. Compared to most aerospace companies we’re a little bit more aftermarket oriented and a little bit less OEM line fit oriented. So there's always kind of the major market disruption or financial problem, but could affect us pretty quickly in that way. I think the new product launch is one and the tail mount is one that we – where we've been spending a lot of time and a lot of effort and we think we have strong market support, but that's one area where obviously you don’t know, so you’re start selling it and we're starting to sell it now. So we'll watch that one pretty closely. And as I said earlier, refine our estimates there based on what our experience is as other things firm up and we released new revenue guidance. So kind of more on that as it happens, but beyond that I'm not sure I'd point you to any major risk items in our portfolio. Dave, am I missing anything that you would want to highlight?

No, I think that that hits all the point.

Okay.

Okay, great. One last quick one, any thoughts as to when CCC becomes profitable?

We would hope for CCC to become profitable sometime in 2018. Without going into too much detail that company has launched into a pretty major product development geared to a pretty major program and therefore we've seen a little bit more of an expense load than we were anticipating. But it's a good deal and it's one that that I think will be worthy of some headlines as it matures here a little bit. And so, we view that as and not by any means a negative experience thus far. It's – the VVIP market is not turning around particularly quickly, but we think we've got a good position there with PGA and CCC and we think some of those development works that is going on at CCC will be very valuable.

Great, thanks.

Sure.

Our next question comes from Dick Ryan with Dougherty & Company. Please proceed with your question.

Thank you. Pete, just a couple of cleanup questions. You talked a little bit about EPDS. When do you see that’s starting to contribute?

I think it's going to start contributing over the next year or two. We've, as you know Dick, spent a lot of time developing the science there. But some of the platforms that we've been working on are going to start hitting production volumes over the next year or two. I'm thinking specifically about the Pilatus PC-24 and some of the new Bell programs. We have our first Textron program the new single engine turboprop that they're working on that's a little bit further out. But we think there's pretty strong enthusiasm and support. And our experience has been that once customers try it, they stick with it and they come back and they build it into their platform. So this is going to be one of those kinds of slower ramps just because the airplane development efforts are kind of long and painful, but the tails should be pretty long and we think the customer stickiness that we're experiencing is very promising. So at some point, I would say over the next three, four, five years, it's going to become a much more significant portion of our income statement.

Okay, great. And Dave, what was stock based comp in the quarter and how many 10% customers did you have?

Oh, boy, I don't have the stock-based comp number for the quarter. For the year, it was about $2.2 million.

Okay, that's good.

So you can go back to the last Q and you can do the math there.

And 10% customers…

Yeah, give me a second on that one.

I think the answer is two. So…

Yeah.

But we will wait for Dave to firm it up.

Okay, Pete, just – and one last one as you were wrapping up your prepared text, you were talking about $25 million to $30 million with the opportunity of that being two to three times that. I didn't catch what you were referencing? Was that your total test opportunity?

Yeah, I was referring to a target, what I call a target rich environment, especially on the test side. And test, you know, piece of the business tend to come in bigger lumps both on the semi side and A&D side. And we go through these exercises where we try to quantify opportunities and we try to probability weight them. And it's a pretty big number. So for this initial guidance given the questions and some of the history, we kind of took it all out. It's just not in there. We're not including these targets, but realistically we expect we will win some of them. And I think they're going to be – the ones we win will be meaningful. So I was trying to bracket it for where the low end might be and where the higher end might be.

Okay, thank you.

So, Dick, there were two 10% customers, one was 20% and one was 17%.

Okay, great. Thank you.

Both in the aerospace.

Aerospace, great, thanks.

Our next question comes from David Cohen with Midwood Capital. Please proceed with your question.

Yeah, I was just trying to get some sense of you know given the amount of backlog you have relative to your fourth quarter forecast. What is sort of a typical book and ship magnitude for a quarter and is there any particular strength usually in the fourth quarter things that aren't in your backlog, basically you have to recognize into revenue in the fourth quarter to make sense.

This is…

Go ahead.

If you’d look back at our typical book and ship, I don't know that there is a typical. It's kind of all over the map. To get to the lower end of our guidance for the fourth quarter, I think we need to hit about $20 million in book and ship, which is certainly within the range of book and ship that we win in almost every quarter. It's at the low-end actually.

Okay. And just to clarify some of the comment you may have made, Peter, in your prepared remarks. The business jet that’s just shifted that is – those chunks of five million, those are not in backlog?

Some of them are. One of them in particular is an order we’re waiting for, which could have pretty quick repercussions just based on the nature of it, but most of them are in backlog. It's in most cases a matter of getting – frankly it’s a matter of getting customers to either sign off on some of the technical requirements that we need to have firmed up in order to do our part of the job or in some cases we need customers to sign off and accept product and a lot of times there's a certain portion of a program that is dependent on customers final sign off. So we got a couple of those flown out there too. Those are all in backlog.

Okay. And last question, you’ve made reference to this, but maybe you could provide a little more understanding for folks. So if you could describe just from a methodology standpoint, how your approach to guidance that today is different from prior quarterly targets that you’ve – well, I mean, their annual targets? But going back several quarters in a row, what is different about your methodology that alters your confidence level today versus past quarters?

I think we're getting a little bit more conservative primarily on the test side than we have been in the past. Forecasting is always a little bit of art and it's easy to pick up the Wall Street Journal and see how many 737s are going to be built and multiplied by our known ship set quantity. It's much harder to figure out what an aftermarket program might look like, but we’re reasonably good at doing that. On the test side, it is often an all or nothing kind of situation and we've seen on both sides of that of our test business. Programs that that we may have thought we were kind of perfectly aligned for all the sudden disappear or slide out for a year. So we're going to be a little more conservative there. And that's what I was trying to say earlier. I think the good news is that the initial guidance that we're putting out there for next year doesn't have any of that and it's basically booked business or you know highly confident business with upside potential and I would say probability based on you know when these other important targets are actually come our way.

Okay, thanks guys. Good luck.

Thanks.

Next our next question comes from Mike Wallace with White Pine Capital. Please proceed with your question.

Yeah, hi, Peter, David. How you’re doing?

Good. How are you?

Good.

Good, all day here in Minneapolis today. Hey just a kind of high level question. Revenue has peaked at about $690 million in fiscal year 2015. And just wondering with some of the changes in the business and the acquisitions if we stacked on what were the amount of revenues that we've acquired over the past – since that time.

Since, 2015?

Yeah.

Well, this year the only acquisition we've done to date was CCC, which is a smaller business and not a major driver of those kinds of things. And the other one that would have happened in that timeframe although I think it was…

Armstrong was January of 2015…

2015…

Right, that’s what I was going to say, the early 2015. So that wouldn’t really play into there since then.

Okay. How much should CCC bring?

Oh, we’re still trying to figure that out, but it’s – this year been under $20 million.

$20 million, okay.

In…

And then in terms of revenue…

For the second and third quarter, it was about $7 million combined.

Okay, maybe $20 million for this year or maybe more.

And the tech – what’s the most recent one we’re going to close by year end?

Telefonix.

What’s the revenue run rate there?

No, we’re thinking next year, it'll be somewhere in the $70 million to $80 million range.

Okay. So we might stack about $100 million on top of that $692 million just acquired revenue rate this cycle that seems fair.

Well, the $692 million is a number from a couple years ago.

Right, yeah, you're now – but you’re in a cyclical business and you’re going through a cycle here that looks like things are starting to really turn. You know I am trying to think about what revenues could look like two years out for you with these businesses now attached to the company? And then what that revenue and margin profile could look like two years…

Yeah…

You know and if we're looking at – I mean is this – do you think this cycle that you're going through is stronger than the last cycle? What you're feeling on that?

Well, I just you know – if you're talking about the aerospace cycle, it's a tricky thing to try to navigate. Our feeling has been and continues to be that but it's a really strong base of business cycle and it hasn't been a two or three years cycling. I think the one thing that's been really hitting us is compensating for the fluctuations in our test business over the last couple of years. So that's would appear to be a cycle. I think it's more just the ebb and flow of orders on our relatively small size. I think the market is pretty strong, has been strong and we're going to get a bigger piece of it going forward over the next certainly in 2018 and we'd like to think beyond that. I think if you want to know where we're going to be the best thing to do would be to pick the range we just published for 2018 and throw an allocation on there for Telefonix and throw an allocation on there toward the target rich opportunities we see and see where that total gets because I think that's where we're going to be in 2018 and then we don't typically get too involved with two or three year guidance on that.

Yeah, I think, it really could be in terms of peak earnings and it looks like this cycle will be higher than last. This $29 million shares held is that the fully diluted share count in the quarter?

Yeah, that’s right.

Yeah, okay, good. Okay, I think that gives me some color to work with. I appreciate that. Thank you.

Sure, thanks.

Okay.

Thank you. Our next question comes from Scott Louis with Louis Capital. Please proceed with your question.

Thanks. Good morning Pete, Dave and Deb.

Good morning.

Well, I’ve got a Telefonix question. Can you talk a little bit about their current market share in the Wi-Fi equipment market share and maybe a little bit about the current penetration rate of Wi-Fi and we think that may go.

Sure, that’s a big question. I think the way I would answer it is you know where are we and when you say Wi-Fi, Scott is you’re talking about get into the access or you're talking about streaming content or kind of both?

Well just depending on what Telefonix is selling. So you can talk about for In-Seat Power where your kind of market share is and what penetrations are and what would be the equivalent for Telefonix?

Okay, it's a really tricky question because they have some products that they are very, very high market share like what we are probably 90% or higher and they have others that are relatively new and they're taking share away from more established companies. I'll go out on a limb and tell you that overall I would guess they're in the markets they compete in, maybe a 25% market share and our reality check that with them afterwards and offer corrections and apologies later. But just to give you a scope of answer there that the one thing though that I think it's really important to understand when it comes to IFE and comes to power, but especially comes to the kind of products that Telefonix builds is that once an airplane is equipped with something that's not the end because the technology is changing and continues to change very dramatically. I mean in the power world USB is increasingly common today. It wasn't there five years ago, frankly. And in USB as we know it today will be obsoleted by a new USB over the – it's happening right now with the latest generation of products. So there's evolution even when it comes to something as tried and true as electrical power. When you start talking about communication protocols or antenna systems or file servers or access points, the technology moves even more quickly. So it's kind of like we would look at the market not only out there of untapped airplanes, but the likelihood that technology gets changed and replaced over the course of an airplane's life. A lot of times I get this question put to me in terms of where are we in the ballgame and I guess I would say we're somewhere in the second third inning. There are a lot of airplanes that have nothing on them yet in terms of power or Wi-Fi or internet access. And even those who do are likely to get upgraded and substantially rebuilt, I think a timeframe five, seven years, this is a relatively short life cycle business. And one of our challenges and opportunities is to stay on top of that way of obviously, but it's different than maybe some core aircraft systems like brakes where you put something on and it kind of largely will work as it was originally designed for thirty years.

Got you, okay. Thanks, Pete.

Sure, thanks.

At this time, I’d like to turn the call back over to management for closing comments.

No closing comments. Thank you for your interest. Obviously, we got our hands full in Q4 here. We look forward to updating our expectations for 2018 when the time is right. Have a good day. Good to be with you. Bye.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.