Greetings, and welcome to the Astronics Corporation Third Quarter 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Astronics Corporation. Thank you, Ms. Pawlowski. You may begin.

Thank you, Jen. And good morning, everyone. We certainly appreciate your time today and your interest in Astronics. On the call, I have Peter Gundermann, Astronics' President and CEO; Dave Burney, Chief Financial Officer; and Mark Peabody, Executive Vice President. Pete and Dave will discuss the results of the quarter; our recent acquisition that we just announced last night, PGA Electronics; the AeroSat acquisition that we announced earlier this month -- or in October, I'm sorry; and as well as the company's strategy and outlook. Then we'll open the call for Q&A. If you don't have the news release that went out this morning, or the one that went out yesterday evening, it is -- they are available on the company's website at astronics.com. As you are aware, we may make some forward-looking statements during the formal presentation and the question-and-answer portion of the teleconference. These statements apply to future events, and are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the earnings release, as well as in documents filed by the company with the Securities and Exchange Commission. They can be found at our website, or at sec.gov. So with that, let me turn the call over to Peter to begin. Pete?

Thank you, Deb. Good morning, everybody. As Debbie said, we'll talk about our third quarter first. It was a pretty good quarter. And it was the first quarter where we had a pretty prominent impact from our PECO acquisition of July. We will then talk about some subsequent events, specifically the acquisitions of AeroSat, PGA, cover those in order. And then we'll turn and talk about what our forward expectations are as the dust settles from all this acquisition activity through the fourth quarter and into next year. So the third quarter, from my perspective, was a very exciting quarter for the company. We reported revenue, as you know by now, of $89.7 million, which was a new record, easily; up 30% over the comparative quarter from 2012, and up 27% over the sequential second quarter of 2013. We were 97%, 98% Aerospace, 2% or 3% Test Systems. And we had pretty good bottom line contribution, net profit of $7.2 million or 8% of sales, that's $0.39 per diluted share. Net income was up 45% over the comparative quarter in 2012. Buried in those numbers were some purchasing accounting inventory step-up values of approximately $2 million or $1.3 million net, $0.07 per diluted share. So, without that inventory step-up, our earnings per diluted share would have been $0.46. We expect in the fourth quarter to have another $3 million of inventory step-up expense related to PECO, and then we should pretty much be finished with that aspect of the purchase accounting. Depreciation and amortization for the quarter was $3.1 million, up from $2.1 million in the comparative quarter in 2012. Our Engineering and Development expenses were $12.4 million, down slightly from $12.8 million in the third quarter of 2012. A very exciting thing with the quarter had to do with…

[Operator Instructions] Our first question comes from the line of Tyler Hojo with Sidoti & Company. Tyler Hojo - Sidoti & Company, LLC: So Pete, just first question, I guess. I mean, we look at these results, and certainly, it's hard to complain. But when we look at the top line, I'm just kind of looking at quarterly progressions here, and it looks like this is the third consecutive quarter where Panasonic revenues have been down year-on-year. And just wondering if you could perhaps comment on that. Is this kind of inventory fluctuations, or how do you see things with that customer?

Well, we think our -- Panasonic is obviously is an important customer of ours. We fully expect Panasonic to continue to be an important customer of ours. But there are a couple of things going on in this market. First of all, if we were to breakout widebody sales, and we're still trying to figure out how to do this efficiently, break out widebody and narrowbody sales, we think you would still see good growth in widebodies because we're picking up shares of other customers that are more than offsetting some of the decline that we have seen with Panasonic. That being said, we don't think Panasonic sales are in trouble at all, or destined for long-term decline. We think it's just the way the market is evolving. And we've talked a lot about narrowbody growth, and we expect that as we continue to develop this in-seat power marketplace, that it will become more and more weighted towards narrow bodies and less and less towards widebodies. So, we don't view this as much of an issue. I mean, it could just be timing and fluctuation and workloads or jobs that they have won versus their competitors. We think we continue to be pretty well-positioned in terms of widebodies in general. But we expect narrowbodies to become more and more of the market as we go forward. Tyler Hojo - Sidoti & Company, LLC: Yes. And I mean, I -- go ahead, Pete, I'm sorry.

No, no. Go ahead, if you're going to expound on that. Tyler Hojo - Sidoti & Company, LLC: Yes, I was actually just wondering, because I know they provide you kind of a full year forecast, are they still within the range that they've provided you in terms of shipments, or is it kind of coming a little bit?

No, I think they're in the range. They're in the range. I've got Mark Peabody online. Mark, I don't know if you want to fill in anything that I talked about here?

Well, I think you're right on. And we get an annual forecast and -- from Panasonic, and they're right on where t where we expected them to be. Tyler Hojo - Sidoti & Company, LLC: Okay, wonderful. And maybe if I could just follow on to that. When we look at the booking strength in the quarter, I'm just trying to look at how to think about that in terms of narrowbody. Are you starting to see some of the orders that have been announced to kind of hit in your bookings number? And mainly, I'm talking about JetBlue and Alaska. And I guess the follow-on to that is, I'm just wondering, since those announcements have been made, if kind of the pace of conversations with narrowbody fleet operators has kind of picked up?

Yes. I'll let Mark answer that again, too. But I want to remind you first that those announcements you're referring to aren't our announcements, and it could just be purely coincidence that those products in the pictures look like ours. But Mark, you want to talk about narrowbody development?

Sure. I can talk about that. Yes, we've got significant interest from the narrowbody market. And 2 or 3 major operators of over 100 aircraft have announced that they're installing it, and I think these comments are appropriate in that area. Interestingly though, the installations of those systems are really more in the 2014, '15 timeframe. So as far as revenues, we're not seeing significant numbers right now. I do expect to see those grow. The backlog for us is more when we get the purchase orders and those we're just starting to see. As far as interest from other airlines, it's become significantly competitive. And the general feeling is that, now, with the FAA introducing the new, I guess, legislation might be the word, that they are going to allow use of the personal electronic devices on board the aircraft earlier below 10,000 feet, and also later, and the advent of more of the wireless access as more and more airlines, including the narrowbody operators, are putting Internet access on board the aircraft. There is more and more demand on the narrowbody side for having power to power these electronic devices. So yes, we're getting significant interest as we go there. Yes.

Our next question comes from the line of Kevin Ciabattoni with KeyBanc Capital.

Looking at the commercial trend for organic growth number in the quarter, if my math's right, it looks like it was right just above 5% or so, 5.5%. Just -- and that's the lowest level we've seen in a while. Just wondering if you could give some color on some kind of why the growth with was so muted this quarter?

I don't know if there's any really specific reason why. You mean if you backed out PECO and you looked at the organics business? Yes, I guess I would just say, Kevin, it's just fluctuations over the course of the business. A lot of our revenues, in Commercial Transport in particular, is kind of aftermarket-oriented. So it can go up and down a little bit. But we don't see anything substantially changing to be concerned about.

Okay. And then on PECO, obviously, last quarter, or following the acquisition, you said you're expecting about $35 million to $40 million from PECO for this year, which obviously, leaves a pretty big fourth quarter number in there. Is that typical seasonality for that business? And what can we kind of expect going forward, even into next year, in terms of a -- on a quarter-to-quarter basis? How does that PECO business typically shake out?

Yes. I guess we'd say that it's not really is seasonal business. It is primarily related to production rates at Boeing, which don't vary a whole lot from period to period. We'd expect to perform kind of in that $1.5 million range. And we're thinking it's going to come in somewhere in $34 million or so for the year, which is in the range of where we thought it would be. The wildcard there is the aftermarket opportunity, which is something that business hasn't fully pursued in the past. You may remember me talking about the Boeing Sky Interior, primarily on the triple -- on the 737 and how that interior has been pretty popular, such that operators, 737 operators, are considering, in some cases, retrofitting their older airplanes to have this new interior. And we believe PECO is pretty well-positioned to take advantage of that trend. And also, operators of 757. It turns out the 757-2 diameter is the same as the 737. So there could be some lumpiness in the PECO production rates based on aftermarket opportunities. But for the most part, it should be a pretty steady, production-oriented business, moving lockstep with Boeing's production rates.

Okay. And then just one last one for me and then I'll jump back in queue. It was nice to see a strong bookings quarter from the Test Systems business there. And I know you touched a little bit on it. Is that -- is there more to the expected there? I mean, was it kind of a first tranche of a larger order? How should we be looking at that going forward? And maybe if you could talk a little bit about kind of what the break-even for that business looks like at this point?

Okay. Well, the -- we will be issuing a press release on it as soon as we get, kind of, customer okay. I'm not sure if by itself is an order that has tons of follow-on potential. But it is an area of expertise that the company has developed and done before. We've -- the company has done some F-22 trainers that are kind of unique in nature. And this F-15 order will be similar to what we've done in the past on the F-22. And there are, of course, new airplanes being developed, and feel that primarily the Joint Strike Fighter, and there are opportunities that we think we're well-suited for related to that platform. So -- but this order itself, we don't expect to build into something much bigger right away. Although, I should say that the specs are moving a little bit, as I understand it. So there may be some adjustment to the value of the contract here as the specifications get solidified. I'm going to guess that the break-even on that business is somewhere in the $15 million, $16 million per year range. And with the things we see on the horizon, we're hoping we can be in that range for 2014, certainly approaching it in the second half of 2014. But we're currently going through our formal budgeting process for 2014. I made some comments earlier about our expected shipment rates in 2014. Those are in advance of our formal process. So, we'll come back more definitively on that in our next conference call.

Our next question comes from the line of Dick Ryan with Dougherty and Company. Richard A. Ryan - Dougherty & Company LLC, Research Division: I got disconnected, so I hope I don't repeat my question here, Pete. You got the -- you gave the Panasonic level. Did you give -- and Boeing. Did you give Thales at all?

We did not. They were under the threshold. But it's growing nicely. It's doing well. Richard A. Ryan - Dougherty & Company LLC, Research Division: Okay. And on the E&D level, it looks like you're maybe kind of pointing to 13.5% to 15.5% range for Q4. Does these all -- is there any expectations for E&D levels in 2014?

We're still working those numbers up, Dick. I would view this more as just kind of an ebb and flow kind of issue, as a minor downward adjustment. But I would expect -- I wouldn't expect them -- I'd expect the trajectory to remain unchanged next year. I don't think it's going to ramp proportionately with revenues, but we have plenty of opportunities to spend money in various places, no doubt. Richard A. Ryan - Dougherty & Company LLC, Research Division: Okay. And to stay on kind of the gross margin trend here. I mean, if we look at non-PECO, it kind of look like COGS went from just under 55% to a little over 57% quarter-over-quarter. When you look at the numbers, PECO had kind of a COGS level in the kind of low- to mid-60% range. So where should we kind of think about the COGS kind of going forward? Maybe that's one for Dave.

Definitely one for Dave. And going forward is a tricky business these days, that he understands.

There's a lot of moving parts in this. But if we want to normalize the third quarter cost of goods sold, gross margins, we need to add back that $2 million inventory fair value to light up the flush-through in the quarter from the opening inventory for PECO. I expect, in the fourth quarter, there will be another $3 million that will flush through for the same reason, and then we'll be done with that. So, I would look at the third quarter and normalize that -- and add $2 million to margins -- gross margin for that. The other 2 moving parts that are going to kick in, though, in the fourth quarter are going to be AeroSat and a little bit of PGA. Richard A. Ryan - Dougherty & Company LLC, Research Division: Yes. Okay. Where do you think the FAA certification sits on the first program, Pete? Is that still something that can come up by the end of the year?

I hope so. There are complexities. As you know, the government took a little holiday there, which didn't help things at all. And one of the things that -- we're not driving this STC process. We're certainly involved. But the -- Gogo has a number of STC initiatives underway on various aircraft. We're involved in all of them, and some of them seem to be moving a little bit more quickly than others. Some of them are assuming that they're going to be able to use information generated by others. It's not clear how that transfer process is going to work with the FAA. We are still hoping that at least 1, and maybe 2, STCs are granted by the end of the year, and the others are kind of done through the first quarter. But we don't have perfect clarity on that at this point, Dick. Richard A. Ryan - Dougherty & Company LLC, Research Division: How many are in process?

Well, I want to say 5. Richard A. Ryan - Dougherty & Company LLC, Research Division: Okay.

4 or 5. Richard A. Ryan - Dougherty & Company LLC, Research Division: And maybe switching over to Military, that was a little stronger than I was expecting. What was going on in the quarter and kind of the expectation for Q4 for the Military side?

Well, the Military picked up some revenue from the PECO acquisition. So, there's some of the boost there and...

Timing and some of the bigger programs, some engineer NRE charges in there to our customers.

It's probably safe to assume that it's going to continue in that level through the fourth quarter, Dick. Richard A. Ryan - Dougherty & Company LLC, Research Division: Okay.

[Operator Instructions] We have another question from the line of Tyler Hojo with Sidoti & company. Tyler Hojo - Sidoti & Company, LLC: Yes, I just had a follow up on the PGA deal. If we look at your commentary in regards to margins, I mean, it would assume that you paid something sub-4x EBITDA. Is that the right way to think about it? And if so, why so cheap?

Yes. I think you got the numbers right. The margins may be a little bit lower than that, but we think it's a pretty good value. I think we've talked about this before. We've known this company for a long time. The primary shareholder, somebody who we have had a relationship with through trade shows and through the industry for a long time. And when the current group of shareholders, there are 3 of them, primarily, came to -- came time to sell the business, some sellers look for nothing but the best bid, the highest bid, and want to maximize their value in the business. Others take a little bit of a different role, prioritize some other things, including who would be a good parent for the company. And I think in this case, that factored in, to it. I mean, I can't speak for the sellers exactly. I know that we were -- they reached out to us very early on in the process directly, and we were involved in at the whole time. I know that there are other bidders. I know that were other people who wanted to get a hold of this business, but we -- the sellers, decided to look to us. And frankly, from my perspective, that's the kind of business that tends to fit well with us when you have an ownership that is -- has, kind of, more character to it than which you might expect from some sellers. So -- but I can't speak for the sellers. You must understand. Richard A. Ryan - Dougherty & Company LLC, Research Division: No, that's very helpful. And then maybe just moving on to something else. You guys put out a press release, I think, 1 week or 2 ago, in regards to the EPDS product line. I think you're now up to 5 OEM platforms. I was just hoping that maybe you could just give us an update on where you see that business. And Pete, I think in the past, you've talked about some aftermarket or some retrofit opportunities for EPDS. Anything hit on that front?

Well, we do have -- we have 3 programs actively in development, 2 of which we're under firm contract or -- and I expect we'll be able to publicly announce, maybe even yet this year. We've got efforts underway to get those statements released. One of them is a little further behind and it may take a little bit longer. But we remain quite encouraged. We think that, that technology that we're bringing to market is gaining reputation and gaining acceptance, and we are creating a market niche that we think will be valuable for a long, long time. One of the aspects of it were to tie the loop back to our E&D spending, is that it's a modular system and when we get a new aircraft, to the extent possible, we try to use hardware we've already developed various components, and that minimizes, what I call, the science cost. And so to the extent that our E&D expenditures next year are driven in part by these new programs, we're assuming a certain level of commonality and efficiency relative to the programs from the past. So as -- and so far, I think we're pretty pleased with how these efficiencies, so to speak, are working out. As far as aftermarket opportunities, those are specific to starter generator technologies, which we are under contract to do starter generators for the Pilatus PC-24. Our primary focus at this point is being successful on the program and getting through the certification process. And we will -- as we get towards the other side of that process, start to look at aftermarket opportunities. But, as you can imagine, we -- it takes about as much work to certify a starter generator on a single, older airplane as it does for the beginning stages of a new airplane. So, we definitely want to prioritize the PC-24 first. But as for the EPDS architecture specifically, it does not really lend itself outside of the starter generator to retrofit opportunities. It's primarily a new aircraft opportunity. Tyler Hojo - Sidoti & Company, LLC: Yes. Sorry, I misspoke on that. And then just lastly for me, and this is a follow-up to, I think, Kevin's question. In regards to PECO, I know the bulk of that is Commercial Transport. But can you just give us the break between Transport and Military in terms of PECO revenues?

Well, I'm going to say 95-5, but I don't know that for sure. David's looking through spreadsheets. We don't have anybody from PECO on the phone. But I got -- if it's different than 95-5, we'll try to bring that up next. David's nodding, and -- so I must be right. It must be right, 95-5.

Our next question is a follow-up question from Kevin with KeyBanc Capital Markets.

Just a clarification, Pete. You talked about that $450 million to $475 million for next year on the topline. I just want to clarify, does that include the PGA acquisition?

It does. We don't view that as -- the diligent side instead remaining are not substantial in nature. We don't view that as a highly risky step.

Thank you. Ladies and gentlemen, there are no further questions at this time. I would like to turn the floor back to management for any closing comments.

No closing comments. Thanks for your attention, and we look forward to talking to you, all, after the next quarter. Have a good day.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.