Innovative Solutions & Support - Earnings Call - Q4 2019
December 12, 2019
Transcript
Speaker 0
Good morning, and welcome to the Innovative Solutions and Support Fourth Quarter twenty nineteen Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference call over to Chairman and CEO, Jeffrey Hedrick.
Please go ahead.
Speaker 1
Good morning. This is Jeff Hedrick. I'd like to welcome you this morning to our conference call to discuss our performance for the fourth quarter and full fiscal year 2019 current business conditions and our outlook for the coming year. Joining me are Sharon Mas Kapoor, our President and Rell Ann Wenand, our CFO. Before I begin, I'd like Rel to read our safe harbor message.
Thanks.
Speaker 2
Thank you, Jeff, and good morning, everyone. I would remind our listeners that certain matters discussed in the conference call today, including new products and operational and financial results for future periods, are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially, either better or worse, from those discussed, including other risks and uncertainties reflect in our company's 10 ks, which is on file with the SEC and other public filings. Now I will turn the call back to Jeff.
Speaker 1
Thanks, Ralph. The company's revenue, operating results and operating cash flow showed significant improvements from both a year ago and a quarter as well sequentially from the third quarter of this fiscal year. Fiscal twenty nineteen results reflect cost controls and marketing focus I initiated initiated in fiscal twenty eighteen. This strong finish enabled us to record a significant increase in all our key financial metrics this year with revenues growing 27% over fiscal twenty eighteen. We ended fiscal twenty nineteen with the best quarter of new orders and the highest quarterly intake intake in more than two years.
And that only includes a portion of the orders we expect to get from Pilatus for their production of the very successful successful PC-twenty four. And in 2020, they have indicated they intend to increase annual production by 25% from the 40 aircraft they will deliver in 2019. I attribute these results to our disciplined commitment to better leverage our core technologies and innovation in our designs in both the commercial, general aviation and military markets. Driven by the growth of production sales of our flat panel displays, utility management systems as well as ongoing contribution of our repair operation, we expanded gross margins to over 56% this year. Our primary focus is production revenues, developing new products has been the foundation in which the company has built.
It is why, compared to many other companies like ourselves, we believe we have a higher proportion of investment in research and development. So we're open to opportunistic funded development contracts such as new air data computer being developed by the for the Navy aircraft, which we believe has both domestic and international production sales potential. Our focus on innovation is why we have adopted a strategy of investing in a fewer but more promising markets and products. One of the more promising technologies we have developed is a patented Thrust Sense autothrottle. With autothrottle STCs for both single and twin engine aircraft secured, we have products that address a market that is estimated to be over 5,000 aircraft.
The FAA's certification of engine out loss of control mitigation function is a breakthrough and a major milestone. This service this certification autothrottle technology on the market and is certified to mitigate uncontrolled catastrophic accidents in engine out situations of multiengine aircraft. Loss of control mitigation is a major safety feature of the autothrottle. So it required a separate special FAA certification which took us over two years to complete, principally because it's never been done before. We are humbled to bring this new technology that has has potential to save lives.
In order to make the the ThrustSense more cost effective, we are also developing means and methods to reduce installation time, which not only helps get the aircraft operational sooner, but can reduce costs to the aircraft owner and operator. Right now, our plan is to continue to pursue additional STCs in the retrofit market on aircraft with large existing fleets. We are also talking to a number of OEMs who have expressed interest in our autothrottles. Expanding our OEM business should, we believe, provide an additional stability in our revenues. We see a large market opportunity for the ThrustSense, and we continue to increase its function by adding new enhancements.
So in the fourth quarter, revenues up sequentially for the seventh time in eight quarters and an improvement in bookings. We have a solid foundation to build our Autothrottle business. Let me turn it over to Rell for a discussion on financials.
Speaker 2
Thank you, Jeff, and thank you all for joining us this morning. For the 2019, the company reported net sales of $44,800,000 a 33% increase from $3,600,000 in the fourth quarter a year ago. That is our fourth consecutive quarter of revenue growth, the seventh quarter in the last eight, we have generated sequential revenue growth, and follows the 35% growth of revenues achieved in the third quarter. We had another strong quarter of product sales and customer service revenue, which led to a very strong 59.5% gross margin, our best quarterly gross margin in several years. Margins are benefiting from the steady increases in revenue, which has enabled us to better leverage our fixed manufacturing costs and lower material costs due to product mix.
In addition, the company also benefited from reduced warranty costs in the quarter, reflecting both reduced warranty costs being incurred and reserves that were required for longer term warranty periods ending. Total operating expenses for the 2019 were $2,000,000 a decrease of $300,000 from the same quarter a year ago. Total operating expenses are also down sequentially from the third quarter. Research and development expenses in the quarter were $522,000 which is less than that of a year ago, reflecting our strategy to narrow our new product development efforts on fewer but more promising new technologies. Selling, general and administrative expenses in the quarter were down approximately $200,000 from the 2018.
Since the workforce reduction in late fiscal twenty eighteen, general and administrative expenses have normalized at this quarter's current rate. In the quarter, we earned $118,000 of other income, primarily in interest from our cash balances. In the fourth quarter, we recorded a small income tax benefit reflecting the utilization of some of our available tax loss carry forwards. The company reported its most profitable quarter in several years, nearly doubling our net income from just three months ago with fourth quarter net income of $1,000,000 or $06 per share. In the fourth quarter of last year, we reported a net loss of $414,000 or $03 per share.
Quickly looking at the results for the year, Total revenues were $17,600,000 up 27% from $13,900,000 for full year 2018. The company reported fiscal twenty nineteen net income of $1,900,000 or $0.11 per share, a significant improvement from a net loss of $3,700,000 or $0.22 per share for fiscal twenty eighteen. We believe that the company remains in a strong financial position. We generated over 2,000,000 of positive cash flow in fiscal twenty nineteen and had $22,400,000 of cash on hand at September 3039. The company is debt free.
We believe the company has sufficient cash to fund operations for the foreseeable future. Now I'd like to turn the call over to Sharon.
Speaker 3
Thank you, Rahul. Good morning, everyone. As Jeff related, we had good performance in the fourth quarter, which led to a significant year over year increase in all of our key financial metrics: revenue, margins, earnings and cash flow. Many of the factors that drove our success over the last twelve months are holding pace, in some cases improving. But headed into the new year, we believe our greatest growth opportunity lies in our latest technology, our ThrustSense autothrottle.
So let me take a minute to elaborate on some of our comments to provide a better appreciation of why we so strongly believe in this technology. We now have STCs on both single and twin engine general aviation aircraft, And we are working on additional STCs as well as developing additional features that enhance the value of our existing certified autothrotters. Included in the new technologies in our proprietary is our proprietary VMCA mitigation technology, which we believe is by far the most valuable. The VMCA mitigation is the first of kind STC. And since this catastrophic loss of control mitigation feature has never been done before, the FAA had no reference certification background to consult when evaluating our technology.
Three separate organizations within the FAA being our Aircraft Certification Office, the small airplane standard branch, and small aircraft evaluation group, had to come to terms and develop acceptable means for certification of this safety critical system. Since the announcement and demonstrations made by ISNS to mitigate the fatal condition caused by lumps of directional control during an engine out condition, the industry experts and media have published various supporting articles for our technology. Consequently, you can appreciate why the recent receipt of BusinessTC has us greatly excited by the prospects for autothrottle, especially installed in multiengine aircraft types. While VMCA mitigation is the biggest new feature of our autothrottle programs, we are making other valuable improvements as well. Previously, we had emphasized on the importance of reducing the installation time, and we have cut our King Air autothrottle installation time almost in half by including our standby instrument within the same unit that performs autothrottle functionality as part of this recent SDC.
Our final note on the autothrottle is that we are in negotiations with some OEMs for inclusion of our auto throttle as standard equipment in their production aircraft. We believe that all these efforts will lead to a strong demand for this technology that not only reduces pilot workload but is believed to be potentially life saving. And as previously mentioned, while we are investing heavily in the growth of our autothrottle business, it comes at a time when the performance of our base business remains solid. Just quickly reviewing the program's driving current results. The PC-twenty four program has been running at a fairly healthy level in support of the 40 aircraft Pilatus expects to deliver this year.
That should jump to around 50 next year to meet the increasing demand for what has been quickly recognized as one of the most successful new aircraft launches in recent history in recent memory. Again, since this is a long term contract, which we believe will span multiple years and generate demand for thousands of units, only a fraction of that ultimate value is in our backlog. In the commercial air transport market, we are experiencing steady demand for our Boeing seven fifty and Boeing seven sixty seven portfolio of cockpit technology. As I mentioned last quarter, we believe, in part due to the sunsetting of support for the remaining CRT displays in service. Many of the domestic and international owners flying these aircraft tend to be smaller operators that typically rely channels for upgrades, and therefore, we continue to support our distribution channels.
Many of these sales are of products that are close to off the shelf, making them more profitable. In the military market, our production KC-forty six program continues forward as new orders are being received. The Navy F5 engineering contract to develop a new air data computer has been completed. We anticipate a production order will be awarded to us to retrofit the U. S.
Navy F5 fleet with the new air data computer. New orders in the fourth quarter were our best in two years. And at September 30, we had the highest year end backlog in three years. We have also seen a steady flow of repair and maintenance revenue. As the company continues to ship more equipment in the field, it follows that the need to support and maintain that equipment continues to grow.
Let me turn the call back to Jeff for some closing remarks.
Speaker 1
Thank you, Charm. Fiscal twenty nineteen was a year of strong financial performance as well as a year of encouraging progress creating virtually an entirely new market. As we previously discussed, we are taking a very measured and deliberate approach to a approach in maturing an autothrottle market. At the same time, we're committed to leveraging our existing technologies to generate profits and provide the time we need to make sure that our new technology has the greatest opportunity for success. The new certification currently awarded for BMC A mitigation is really a pivotal event in the evolution of this emerging market.
We continue to invest resources as needed to cultivate the market and believe over time this investment will be rewarded. I'll turn it over to the operator.
Speaker 0
You. This time, we will open the floor for questions. If you are using a speakerphone, please pick up your headset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster.
Our first question comes from David Campbell of Thompson Davis and Company.
Speaker 4
Morning, everybody. Morning, David. David. Morning, Good. Thanks for having such a good quarter.
And you're beginning to be substantially profitable again. I take it the PC 24 production increase projected for next year, now is that any of any of that in the backlog of $6,000,000 No.
Speaker 2
Some of it is.
Speaker 1
Some of it, well, virtually none.
Speaker 4
Virtually none? So so the backlog then is is for contracts for for for the KC 46 and and some other military applications?
Speaker 2
That's correct. C one thirty.
Speaker 1
We have we have remember, our fiscal year is offset from the from the calendar year. But there's very there's not a lot of p c 24 in there. The p c 24 has been probably the most remarkably successful new airplane program we've seen in a long time. They've done a great job, and we're fortunate to be on The the KC 46 is an ongoing program that we continue to support and have a pretty much a a planned revenue stream continuous for a long time.
Speaker 4
Right. The auto throttle, however, did have you received approval from the FAA, but you had revenues from it in the quarter. Is
Speaker 1
we that was look. We we we received a number of STCs recently, but the most important, most significant is the one for multiengine aircraft. This business about mitigating an engine out, which sadly ends up being a catastrophic event. So the FAA has approved that, and that will go into production this coming calendar year. And we are optimistic because it's it works.
It's probably the the best part.
Speaker 4
That is that what you're is that your what you're principally negotiating with original equipment manufacturers?
Speaker 1
Oh, yeah. We've had as you could expect, there have been a number of OEMs that have expressed interest in it. It has application also in the military and and commercial markets as well. It is applicable to any multiengine aircraft in which a loss of a single engine can cause an out of control condition that sadly doesn't end well, typically. So at any rate, that's what it's there for.
It works, and the FAA has has approved it. And they showed, you know, really very good thorough judgment and investigated. As they said, this is new technology, and it requires a great deal of review before certification is is approved.
Speaker 4
And and this will be primarily for manufacturers of business aircraft? No.
Speaker 1
No. It's applicable it's applicable to military aircraft, lift aircraft for a broad number of aircraft.
Speaker 3
As well as air transport.
Speaker 1
Any air transport. Any I mean, there was an airplane. What happens is if the airplane slows down a little too much with an engine with an engine out or folding, it it rolls over on its back. And when it does, it's extremely difficult to recover from. And what our system does is it anticipates that condition and makes modifications to the thrust to to allow the flight crew to maintain control of the airplane.
Speaker 4
Which and this the the none of this is in the backlog. Right?
Speaker 1
None of it's in the backlog. No. We didn't we don't take orders until we have the certification, and it's been a long road. But we've tested it a lot. I can attest to that, by the way.
It's exciting when it works to when it doesn't work. Let me tell you.
Speaker 4
Now this is not the PC 24 is not does not use this equipment. Is that right?
Speaker 1
PC 24 right now, we focused on turboprop aircraft, and that's a turbofan aircraft. The PC 24 has has its own mitigation system that does something similarly.
Speaker 4
Okay.
Speaker 1
It doesn't do the same thing, but but because we have some patents on on the the patents pending on this mitigation technology.
Speaker 4
Right. Right. So at at this point, as far as revenues are concerned for fiscal twenty twenty, I mean, you don't really know what they're gonna be. But if if this program is successful, they ought to be up from 2019. Is that right?
Speaker 1
That's true. Depends on how fast it swings into production. But we'll I guess the truth is we're optimistic. We know there's a we know there is a significant revenue and profit opportunity out in the future. The exact timing, again, is a little uncertain because it's all new technology.
Speaker 4
Right. Right. And you're not competition can't take the business from you?
Speaker 1
I never say that. I never say that. I can only tell you that there's nobody else that's doing what we're doing. It's taken us two years to get it certified, and we have a number of patents and patent spending. So other than that, I can I can only say that that if we do our job, we'll run like like beavers and work our butts off to make it happen?
So if we do that, we have a wonderful opportunity.
Speaker 4
Alright. Right. Well, thank you very much, Jeff and Shrum and Ralph. Appreciate I appreciate the help.
Speaker 1
Our
Speaker 0
next question comes from George Marrama of Pareto Venture.
Speaker 5
I have some questions regarding the the auto throttle. I'm trying to understand better the cadence of the go to market on this. So is it ready for sale today, or do we need one more clearance, or is it ready to go now?
Speaker 1
I I it's it is, in theory, ready for sale today. We have developed a couple of improvements, which we believe should be included in the production installations. So the answer is yes and no. It's yes. It's ready to go, and we can sell it today and install it as we are.
But the we we expect a couple of improvements, which we will have implemented within a month or so. So it's on track, I guess, is a more accurate explanation.
Speaker 5
And then on the go to market for 2020, I hear a lot of talk on OEMs. Walk me through the cadence of your strategy. Is it mostly OEM stuff? Are you trying to go more to the MROs and the aftermarkets? Or how are you going to market on this?
And what's the cadence of it?
Speaker 1
Well, you equipment manufacturers, multi engine equipment manufacturers that have expressed interest. We've had ones from in Europe and in The United States. And we're we're talking to them about them implementing it in their production aircraft. And but but the unit was actually intended and designed for retrofit application where there's an enormous existing market, much bigger than even sustained production for the next ten years would look like. And that market is continues to look very strong, and we're expanding in that.
So the way we do it, we go after it is we've been pursuing the aftermarket FBOs and certified installers. And depending on the aircraft through MROs, in some cases, there may be military aircraft where you have military installers. It's got a it's got a because it's very cost effective. It's the the auto throttle system is typically a half or a third the cost of of of previous competitive systems, and it has the added feature for this loss of control mitigation.
Speaker 5
So have have MROs and installers started placing orders yet for this for 2020?
Speaker 1
They haven't because we haven't had it certified. It literally became certified, four days ago. So
Speaker 5
Oh, oh, okay.
Speaker 1
So so so we we could sell the auto throttle, but we knew the auto they knew that we were working on BMCA mitigation. And until that gets STC, we can't install it in an airplane. So it's the markets where we quickly, it's something new because it's never been done before. So we don't have any historical reference.
Speaker 5
Okay. So I would expect a lot of pent up demand given the recent crashes The and all the
Speaker 1
older I get, the more prudent I become. I I I'm I'm delighted and excited about it. It's it's really almost humbling. But I think we need to do our job and work hard and see if we see if it matures into as big an opportunity as we initially believe.
Speaker 5
Okay. Thank you.
Speaker 1
Thank you.
Speaker 0
Our next question comes from Charlie Pine of Van Clemens and Co.
Speaker 6
Hi. Good morning, everyone. And first of all, congratulations on a great quarter and congratulations on a wonderful turnaround year. You the hard work is starting to pay off and delighted to see it.
Speaker 1
Well, thank you for that. It's but it's been very rewarding as you can imagine. And Yeah. And and Sharon and the team have done a great job. So we're we're we're delighted.
We we've we've been able to develop new really innovative technology while we've been able to produce a profit and and and show some reasonable growth in the business. So we're we're pleased. We need to keep it up, I guess.
Speaker 6
Well, hopefully, it will be even more rewarding in the next couple of years.
Speaker 3
We hope so.
Speaker 6
Okay. I have a couple questions, and it's I wanna scratch the surface a little bit more on this on the recent developments with the autothrottle. So I understood, I guess, from your answer to the previous question that you just got the engine out certification on on December 8. Is that correct?
Speaker 3
Monday. Whenever that was. Okay.
Speaker 6
It's been a long
Speaker 1
time between drinks. Trust me.
Speaker 6
Okay. Yeah. It has been. Do you anticipate putting out a separate press release for that?
Speaker 1
Alright. We will. Obviously, because of the timing, it was you know, which do we release first? And because we have great respect for the SEC, we thought we'd be approved.
Speaker 6
Okay. I totally understand. The other thing, I guess, I'm a little bit confused about, you said that there's a few little niffs and talks that have to be done to really get this to the point where you're gonna actually start putting it into aircraft like the King Airs. So, Jeff, when do you actually really believe that you'll start to get the you know, to actually recognize some revenue and do some of the first installs? It doesn't sound like it's gonna happen in the current quarter, but do you think we'll start to see some of this in, in the January, or is it gonna be pushed back into the March to June?
Speaker 1
Well, for sure, not this quarter because we don't have time to do anything. But
Speaker 6
Yeah. I get that.
Speaker 1
We would expect that the the market to start an installation to start in the in the first or second quarter of next year.
Speaker 3
Gonna start slow because they start to come to terms with with the installation. I mean
Speaker 6
I'm sorry, Sharon. Can can you say that? Didn't hear you. Can you say that again, please?
Speaker 1
Was explaining over his bagel. It was that he that that that the you have to schedule it in. You have to have time with the the equipment equipment delivered on on the
Speaker 0
next to to
Speaker 1
acceptance per se of the of the equipment.
Speaker 6
Okay. So we should we should factor a fairly deliberate and slow ramp then at least over the over the next few quarters, though, with the with the idea, though, that we will begin to see installs, in 02/2020.
Speaker 1
Yes. Yes. And and and importantly, you just have to watch this climate as it as it this is one of those programs, I believe, that will generate momentum behind it. And so as it proceeds, you'll see it proceed more rapidly, and the growth will be more exponential rather than just linear.
Speaker 6
What about the what about the uptake with with the ThrustSense, the SCC that I guess you got for what was it? The PC 12. Are you getting any installs in that?
Speaker 1
Yes. We're starting with that as well. So both areas are going well. We're looking our focus right now, just to let you know, is to look at a number of new of of new aircraft, primarily multiengine because most new airplanes are multiengine. But but it it offers, for both aircraft, the engine protection, which is important.
If you over temperature an engine, you're talking about probably a $100,000 check just to make sure it's okay. So things like that really pay off so they can be quantified besides the obvious performance
Speaker 6
Alright. Finally, the last thing I'd like to get clarified, can you refresh my memory again for what the what particular aircraft that you have the the computer contract with the Navy for, what was that?
Speaker 3
F five.
Speaker 6
The f yeah. You said the f five?
Speaker 1
That's correct.
Speaker 6
Okay. And I if I heard you correctly in you said that that that that that air data development computer, that that has been completed at this point. Is that did I hear correctly?
Speaker 3
That's correct. That that test flight test.
Speaker 1
So We're we're not waiting for the go ahead to the it's a it's a retrofit program. We're waiting for that to to start. I'm more prepared to do it. But we've made a lot of, as you know, we've may not know. We've made probably eight, six thousand computers of various types over the years.
So it's nothing new, but it's probably one of the reasons we won the program.
Speaker 6
I see. Well, that's great. What about, when when you think that you you indicated that you're expecting to get production orders. What what would be a reasonable time frame for receipt receipt of such?
Speaker 1
As I've said before, I don't wanna speculate. I mean, there are a lot of pieces that got that get started, but we would hope early next year, we would start seeing influx of production orders. And it's a limit on how many we can take. Remember, you got to get installers lined up and trained, etcetera, so that the lead times all stretch it out. As Sheriff commented, we start slowly and build from there.
Speaker 6
Okay. Well, thank you very much and for providing this additional color to me and to other people, I'm sure, that are listening. And, once again, you know, we're really pleased to see, to see the results for this year and looking forward to what's gonna be occurring over the next couple of years. So I'll get off and let somebody else take take
Speaker 1
Thank you for your interest. And and and I'm glad I now know that I'm here to provide color. I'm telling the directors that.
Speaker 6
Well, don't get too colorful, though.
Speaker 1
I'm too old to be colorful. Go ahead.
Speaker 0
Our next question comes from Irwin Goldman, a private investor.
Speaker 7
I'm the old guy. You remember me?
Speaker 1
Yes, yes, yes. You keep doing entrepreneurship on me. I understand.
Speaker 7
Actually, I'm just out of the hospital, and I'm in a rehab.
Speaker 1
To hear that, but but and I hope you're recovering well.
Speaker 7
Thank you. I've always been curious about the employment level. How many people are working, and are we hiring?
Speaker 1
We're hiring, and I won't tell you how many people, but we're hiring.
Speaker 7
Okay. The other thing, I think the questions got answered. We have not sold any autothrust yet, and we do not expect to for a number of quarters. Is that correct?
Speaker 1
No. That's not correct. We have sold a number of autothrottles to the PC 12 market.
Speaker 7
Oh, you did. Very good.
Speaker 1
And continue to do that. The product has been an evolution. We're we're spending time now trying to optimize its installation, which ends up being an important issue because the installers have a limited throughput capacity. So if we can reduce the time to it takes to install it, we can put in more at at a higher ready, obviously.
Speaker 7
Secondly, we
Speaker 1
continue to find improvements and and enhancements to its function, so we add those as well. But Okay. Yes, we've already installed them. We've gotten very good results in in the field. No problems.
And the the the latest installation and approval by the FAA will start opening up an additional channel. In addition, we're gonna look at a number of new aircraft, a number of aircraft, different aircraft, and some much larger aircraft that we can provide what is a really strong improvement in in aircraft safety and crew workload. So
Speaker 7
Alright. My last question is, has Pilatus notified you to increase production for them for the next couple of quarters? I understand the aircraft is extremely successful.
Speaker 1
On the PC 24. Yes. It's a it's a wonderful airplane. Pilatus has always done a great job. As you know, we we bought a a PC 12
So I've been extremely extremely happy with the the the aircraft and the the the support. The PC 24 is a wonderful airplane. And they've announced to us they're increasing production by twenty five percent year over year, which is pretty remarkable.
Speaker 7
All right. And Jeff, I thank you very much. I wanna congratulate you guys for doing such a wonderful job and giving us such a future of ex extremely exuberance. Okay? So thank you.
I hope next spring I'll yourself.
Speaker 1
I'm glad to hear you're out. I wanna make sure you're on the next phone call. Alright?
Speaker 7
I thank you. I hope to see you at the next annual meeting.
Speaker 1
Be great. Look forward to it.
Speaker 7
Thank you.
Speaker 1
Bye bye.
Speaker 0
You. Our next question comes from Michael Fredrich, a private investor.
Speaker 8
Good morning, gentlemen. I had just a question about the flat panel quarter. Of question comes
Speaker 1
B. 6000 go '24
Speaker 3
was also a We big driver of growth last expect that the revenues from the Air Transport side of the flat panels, And that would that would stay at this level for for the near future, at least.
Speaker 8
Okay. And I know you've been installing these for quite a while. I mean, what is the life of of of this installation? How often does it need to turned over, or is it just something that requires a software upgrade every once in a while? Is there any repeat business on this on this installation?
Speaker 3
Once once they actually get once it gets installed in an airplane, one of the remarkable things we've seen, we looked at the American Airlines fleet, for example, and we were getting over one hundred thousand hours of mean time between failures. That's many years going without any failures, which is remarkable. And so so this is this is why we have a very good name in the industry with with with reference to those air transport displays. And and we get repeat business just by other people coming in and and buying our system despite, you you know, the the OEM and is is one of our competitors, and they provide the retrofit solution for the same airplane. But people tend to buy ours for because of our quality and
Speaker 1
a long history. And and our and our focus toward minimizing the cost and time to install the equipment. If you take a commercial air transport as an example, our system installs in a matter of three or four days. Competitive systems are as much as thirty days. And when an airplane sits on the ground, it loses revenue of somewhere, depending on the aircraft, from 50 to 75,000 a day.
Speaker 4
Wow.
Speaker 1
The the installation becomes, almost virtually an order of magnitude more of an impact, the delay than the cost of the basic equipment.
Speaker 8
Okay. Great. Great. And just one quick general question, and that would be, if you talk to any of the installers right now, I think most of them are still pretty busy with the, the FAA mandates for this year. But can you give a little bit of an idea of once this once the next gen installations go into play, how much more valuable is something like ThrustSense in that world than sort of the world we're leaving behind?
Speaker 1
We we have, with our ThrustSense, been able to provide potentially the ability to do what is becoming increasing demand for required navigational performance. That is ADS B and NextGen Jet is trying to keep the aircraft positioned very well controlled and the timing of the aircraft in as it goes through its flight phase very, very carefully defined. That enables them to put more aircraft in in play or in in service over the same airspace. And the autothrottle is, in in many of those cases, invaluable. It's been proven in the necessity for the system in flight management systems in commercial and military aircraft.
It was proven even forty years ago when we first did performance compute job skills. So anyway, it's not it it I believe that that it will have the the next general put an additional demand in, demand on ThrustSense.
Speaker 8
Great. Great. And just one more quick question, and I'll let you go. And that is the newly certified FTC. How much will will that make a material change in the cost of the purchase of an autothrust?
In other words, will that be an additional purchase that goes with the existing autothruster? Is that part of the overall package?
Speaker 3
If if I understand your question, you're saying that the the new STC for the VMCA, is that gonna increase the cost of installation?
Speaker 8
The cost not the cost of installation, but the actual cost of the of the purchase.
Speaker 2
Correct. So
Speaker 3
Yeah. I mean, we we have a pricing strategy to to potentially offer that as an option. But but we believe that everybody's gonna take that option. Okay. Okay.
Speaker 1
It's not it's it's not a huge cost increase. But, obviously,
Speaker 4
when you need it, it's
Speaker 1
a very nice thing to have. Okay. Family, there have been have there have been accidents most recently in places like like Texas and Hawaii and and even and this is applicable to even Piston Twins, like, went down right in our neighborhood. You don't know exactly what the cause was, but it is well understood that if you end up with a single engine with a with an engine out, then you you risk you have to keep the speed up. If you don't keep the speed up, it can end badly.
Speaker 8
Yeah. Yeah. Yeah. The Texas one certainly sounded like that's what or at least that could have been the cause of what happened anyway. So alright, gentlemen.
Well, thank you for your time, and, good luck.
Speaker 1
You're welcome. Thank you for your interest. I guess that's the end of it. I I, appreciate everybody's interest today. Thanks for attending.
Speaker 0
This concludes the question and answer session and concludes the Innovative Solutions and Support fourth quarter twenty nineteen earnings call. We thank you for attending today's presentation. You may now disconnect.