Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne Technologies Third Quarter Earnings Conference call. [Operator Instructions] And as a reminder, this call is being recorded. I’d now like to turn the call over to our host, Mr. Jason VanWees. Please go ahead.

Good morning, everyone. This is Jason VanWees, Vice Chairman of Teledyne and I’d like to welcome everyone to Teledyne’s third quarter 2022 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne’s Chairman, President and CEO, Robert Mehrabian; Senior Vice President and CFO, Sue Main; SVP, General Counsel, Chief Compliance Officer and Secretary, Melanie Cibik; and also Edwin Roks, Executive VP of Teledyne. After remarks by Robert and Sue, we will ask for your questions. Of course though, before we get started, attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings. And of course, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay both via webcast and dial-in will be available for approximately 1 month. Here is Robert.

Thank you, Jason. Good morning and thank you for joining our earnings call. I am very pleased with our performance this quarter as well as Teledyne’s long history of navigating challenging markets. Despite the strong dollar, supply chain constraints and inflation, we achieved record third quarter sales, earnings, operating margin and free cash flow. Excluding foreign currency headwind, which negatively impacted third quarter sales growth by approximately 3% or $39 million, core growth in local currency would have been 6.9%. In addition, year-over-year reported sales increased in all segments despite the FX headwind. Non-GAAP earnings of $4.54, was a third quarter record and just shy of our all-time record. And our earnings quality was also very high given our largest effective tax rate in several years. Overall, orders and demand remained strong, which is a testament to the strength of our balanced business portfolio. Total company book-to-bill was 1.06x and while orders remained reasonably healthy in our short-cycle commercial businesses that were particularly strong in our longer cycle government, marine and aviation businesses and quarter end external backlog of approximately $3.2 billion was also a record. Record third quarter free cash flow of $252 million improved for the second consecutive quarter and was 116% of adjusted net income. Our acquisition pipeline is growing and we are pleased to announce – we were pleased to announce the pending acquisition of ETM earlier this morning. Turning to our 2022 full year outlook, with our strong operating performance in the third quarter, we were able to increase our full year earnings outlook while derisking the prior heavily weighed Q4 forecast. On revenue, given our current exchange rate and the U.S. government’s continuing resolution as well as the evolving semiconductor and technology export controls, we are a bit cautious at this time and now…

Thank you, Robert and good morning everyone. I will first discuss some additional financials for the quarter not covered by Robert and then I will discuss our fourth quarter and full year 2022 outlook. In the third quarter, cash flow from operating activities was $268.9 million compared with cash flow of $192.8 million for the same period of 2021. The third quarter of 2022 reflected stronger trade receivable collections compared with the third quarter of 2021. Free cash flow that is cash from operating activities less capital expenditures was $252.2 million in the third quarter of 2022 compared with $163.6 million in 2021 which included $2.1 million of after cash – cash payments related to the FLIR transaction. Capital expenditures were $16.7 million in the third quarter of 2022 compared with $29.2 million in 2021. Depreciation and amortization expense was $80.8 million for the third quarter of 2022 compared with $90.2 million. In addition, non-cash inventory step-up expense for the third quarter of 2021 was $35.2 million with no comparable amount recorded in the third quarter of 2022. We ended the quarter with approximately $3.44 billion of net debt. That is approximately $3.9 billion of debt less cash of $479.3 million. Stock option compensation expense was $3.7 million in the third quarter of 2022 compared with $5.8 million in 2021. Turning to our outlook. Management currently believes that GAAP earnings per share in the fourth quarter of 2022 will be in the range of $3.67 to $3.80 per share with non-GAAP earnings in the range of $4.46 to $4.56. And for the full year 2022, our GAAP earnings per share outlook is $15.46 to $15.60, and on a non-GAAP basis, $17.70 to $17.80. The 2022 full year estimated tax rate excluding discrete items is expected to be 23.1%. I will now pass the call back to Robert.

Thank you very much, Sue. We would now like to take your questions. Operator, if you are ready to proceed with the questions and answers. Please go ahead.

Thank you. [Operator Instructions] We will go first to Greg Konrad with Jefferies. Please go ahead.

Good morning.

Good morning, Greg.

Maybe just to start, Digital Imaging had a nice margin pickup and recovery from kind of H1. Can you maybe talk about the margin dynamics around price mix and how you think about the recovery there or maybe expectations for the year?

Well, let me start with expectations for the year and then see if I can answer the rest. Actually, if you look at the year, we have net pricing improvement across all of our businesses of about 3.6% of sales, but that includes Digital Imaging. On the other hand, we have also against that, we have inflation, Greg, and price increases in the products that we buy. The price increases in the products that we buy have been about 3.4%. We also have salary increases of about 4%. So our net pricing increases have kind of offset the headwind that I have – that we have from price increases to us, that is inflation. The flipside of that is that we have had to pay a little extra for scarce products like complex FPGAs and others that we could not build into our price. So that we have had a headwind there, I am going to say about 2%, about $50 million. So fundamentally, Digital Imaging has done well. They have improved their margins, but it’s been a relatively tight year up to now.

And then can you maybe comment on just the Defense business more broadly? I mean it seems like you’re getting quite a few of contracts, some at FLIR, some in the broader business. I mean broader market commentary seems to think that demand outstrips supply right now. I mean how do you think about the timing of some of these new defense opportunities and kind of the outlook there?

I think the – in general, what we’re finding is that in our Defense businesses, our book-to-bill has improved significantly. Now for the third quarter, actually, our government businesses were down slightly, but the book-to-bill, which is an important part for us, has improved both in FLIR, it’s close to 1x, but in our Aerospace and Defense Electronics is closer to 1.5x and in Engineered Systems to 1.35x. The – what we’re finding is that the demand for electronic components and systems, including parts that are going to Javelin and other weapons that are being depleted, those are coming back strong. We also have really good orders in systems that are being developed like a wide field of new tracking layer, which is for missile tracking basically. We’ve had orders – good orders, and we will have programs of about 60 million over 2 years. And that goes across a lot of our products. So in general, you’re right. We’ve had – we’ve seen strength in our Defense businesses and some moderation in our commercial businesses as time has gone on.

And then just last one, kind of a clarification question. I mean you called out the 3% headwind from FX. Just want to clarify, is that only a translation headwind? Or are you seeing any changes to competition just when you’re competing with maybe a local currency competitor?

No. It’s really a headwind from FX. It’s a translation only. It started the year at about 1%, went to 2% in Q2, 3% in Q3, and we’re estimating about 2% in Q4, for a total, Greg, of $110 million hit that we’re taking to our revenue for the full year. So if we didn’t have this translation only, we would have revenues – another $110 million in revenues.

Thank you.

Thank you, Greg.

And next, we can go to Joe Giordano with Cowen. Please go ahead.

Hey, guys. Good morning.

Good morning, Joe.

Last quarter, very modest cut, I think, took some people by surprise. Now a bit of a raise here. We’re kind of in the same zone at the end of the day, despite all of that. So kind of like what are the big changes? Did some kind of key risks that you were thinking about next – last quarter maybe not materialize to the same extent? Because it was kind of like a lot of movement to get to the same place, I guess, at the end of the day.

Yes. Well, when we started the last quarter, we weren’t sure how much prices we could – of our price increases would stick. And obviously, we were also concerned whether we could manage our margins that take cost out to improve our margins. All of those coupled with the fact that our commercial orders held up pretty well, like in the Imaging businesses, helped us along the way. So in a way, yes, we were looking at – we weren’t in trouble in any way. We were just kind of very cautious because the headwinds were unpredictable. But as we took some cost out and increased prices, and we had good cash flow, by the way, it’s given us a lot more confidence. So we raised our outlook and de-risked Q4 at the same time.

Yes. No, that’s fair. I think when we spoke last quarter, your view for Digital Imaging margins was something like 22% ish for this quarter and then maybe 23% for next quarter. It looks like you’re 3 months ahead of that, so you’re at 23% now. Should we expect Digital Imaging margins to increase further in the fourth quarter?

A little bit, yes. I think overall in the fourth quarter – well, let me go talk to the year, which is easier for me to do. For the year, we think we will be at 22.2%, which would be about 20 bps better than last year. So I think Q4 is going to be better about 22.9%, 22.7% of that range. Again, I’m a little cautious here because there is some softness in the commercial market. But again, our Defense businesses are picking up.

Yes. That makes sense. And then just last for me. I mean I know it’s early and we don’t want to talk about ‘23, but I know that there was this bogey out there for a while now about the potential for you guys to do, give or take, around $1 billion of free cash flow in 2023. Is that still in this world like a reasonable target to shoot for? Or is it – is that kind of not achievable given FX and all these other things we’ve talked about for the last 6 months?

Let me say, I think $1 billion for ‘23 is a little too high because we have capitalized R&D that we have to worry about. But having said that, if you look at the big picture, which is the way I approached this, we started the year – we started after the FLIR acquisition with a net debt-to-EBITDA of 3.7x. We’re down to about 2.5x now. By the end of the year, everything else going along, we will be down to 2.4x. If all goes well by the end of next year and then by the end of ‘24, we will be down to 0.9x. But that gives us a lot of cash to do acquisitions. And that includes making maybe $500 million of acquisitions in the interim. So the way I look at cash flow is a longer-term view. We probably won’t make the full $1 billion. We will come close, but most importantly, we will be levered and be able to make acquisitions. At the same time, put us in a position where we can do something bigger if we want to later on.

Thank you.

And next, we will go to Elizabeth Grenfell with Bank of America. Please go ahead.

Hi, good morning. Can you give us a few details around the acquisition that you announced this morning?

Yes. I’d be happy to. It’s really, it’s a – while we didn’t disclose the terms, it’s got about 112 employees. It’s in Northern California. What it does is really it gives us two very important components to our – ads to our products that we don’t have. First, in the microwave area, we make traveling-wave tubes. But in order to drive these tubes, you need a power supply. So far, we’ve had to go to other people to buy the power supplies for our tubes. And we’ve been looking for that, and there is a scarcity of suppliers in that domain. With this acquisition, now we can essentially supply a system of both tubes and power supplies. For example, in a given application, we were studying, we sell the tubes and they add up to about $300,000 for that application. When we put the power supply with the tubes together, we can sell it over $2 million. So that’s in the Defense area. The second area is in our Medical field where we supply products that go into cancer therapy, radiotherapy, X-ray systems to kill cancer. We basically have a product that makes microwave – high energy pulsed microwave that are used in that system. And we’ve added to that – we seriously sell that for about $10,000. We’ve added to that more components, and we’ve gotten to where we sell about $40,000, $50,000 of products in a system. But again, what we didn’t have is the power supply, cooling system, the whole system that you can use in developing the high-energy X-rays. And that, again, is something that ETM brings to us. So what happens is a content that used to be $10,000, we have grown it to maybe $40,000, now can grow over $100,000 per radiotherapy system. And they have really good customer contacts and they have been accepted by the customers as have we with our own products. So that’s why we’re making this acquisition. It’s complementary to both our Defense as well as our radiotherapy businesses.

Okay. Great. And then the impact of the portfolio shaping you did within Teledyne FLIR this quarter, how much of an impact did that have on margins?

It improved margins slightly, but more importantly, what we’re doing is we took the costs out by reducing the workforce. It was a product line, for example, that they bought just before our acquisition in December of 2020. We bought them in May of 2021. It was a product where they were trying to produce basically commercial – industrial, commercial UAVs, unsuccessful, difficult business to be in. We have – in FLIR, we have really good products in the defense domain that we sell substantial amounts of. But to compete in the industrial domain, that was a product that we had to kill.

Okay. And then if I could shift – speak one more in, please. How are you thinking about the supply chain headwinds now? And when, if you think they’ll abate? And then the sales that are being lost because of challenges are those continuing to shift to the right or are they starting to disappear, any way to think about that?

Elizabeth, let me answer the second part of the question first. What’s happening to us is that we have about a $60 million shortfall in sales that rolls over quarter over quarter. So it’s not cumulative. It’s not like you have four quarters of $60 million loss in sales that adds to $240 million, just $60 million. What happens, it gets delayed, we get parts. The next quarter, we ship what we couldn’t ship, then we get delayed again. So we may start the quarter looking, saying, it’s going to hurt us by $100 million, but we recover from that, so it’s a $60 million problem for us right now. The flipside, the first part of your question, we are seeing some improvement especially in the more simpler printed circuit board assemblies. For example, to sell our cameras from Teledyne, DALSA and e2v, we need about 1,000 circuit boards a day on occasion. And that was drying up for various reasons. We’ve managed to address that problem. So that’s good. We also have some improvement in components. Having said that, we still have really tight market for more complex systems like field-programmable gate arrays, which – gate arrays, which are FPGAs. And there, what’s happening is the supply shortages are such that people are allocating certain number to each company. We have a very effective effort underway to combine all of our needs across Teledyne, prioritize them and give our priority numbers to our suppliers. Having said that, that is not improving. Some of our suppliers are asking for non-cancelable orders that go out a year from now. And so you have to make choices there, obviously. And we’re also doing that. So part of it is relaxing the PCBAs, but part of it with the field-programmable gate arrays, that’s not. So it’s a mixture. But I’d say, overall, there is improvement.

Great. Thank you very much.

Sure.

And next, we go to Jim Ricchiuti with Needham & Company. Please go ahead.

Thank you. Good morning. Robert, you alluded to the short-cycle business holding up reasonably well. And I’m just wondering, as you think about that area of your business in a mild recessionary environment, which areas do you see the business beginning to soften the first? And are you seeing any signs of that in your bookings in any of that short-cycle business?

Yes. In some of the products that we make – I’ll start with Digital Imaging. In some of the products that we make, for example, that go into warehouses, as the demand is softening in that domain, then obviously, they don’t need as much of our products for automation and improvement of delivery of their products. On the other hand, we – because we have such a broad portfolio of products that range from security to traffic to firefighting, not all of them are kind of getting impacted simultaneously. That’s why we think it’s – the downward pressure is not as great for us because of the diversity of our products. Now if you went outside Digital Imaging, for example, in our Instruments domain where we have environmental instruments, we have oscilloscopes, protocols, we have marine instruments, we have marine vehicles. There, things are a lot better. We think it might soften but it hasn’t softened much yet. We are getting in the Instruments our book-to-bill is still 1.05x. So what happens is that’s the thing that Jason and I always talk about is the breadth of our products and both in terms of who we supply to and what people buy our products for, but also the diversity of our – geographic diversity of our products, where that’s protecting us. So we might have softness in some areas. But overall, I think we’re doing okay.

Okay. And just on the comment that you made about M&A and certainly you could see the net leverage really coming down fairly meaningfully over the next 1 to 2 years. You alluded to 2024 potentially giving you the opportunity to do a big deal. Are you averse to doing a larger deal in ‘23? Or is it a case of – there are a lot of – there are smaller deals that you could do and you’ll just maybe gauge how the macro environment is and whether valuations potentially come down for certain larger assets?

Good point. Right now, if you look at the market for public companies as Jason often says, people always look in the rearview mirror, right? So everybody is looking in the rearview mirror, including us, and you’re seeing 52-week highs, right, in the back. It might be 9 months ago, nevertheless, it’s there. So expectations are what you see in your rearview mirror. If we go forward and things persist the way they are and people see lower numbers looking backwards, then I think we will have more opportunities. Right now, what our focus is to see if we can do more bolt-ons as we have done historically. When we acquired e2v in 2017, our ratio, net debt-to-EBITDA ratio went up almost to 3x. What we did – it came down by the end of ‘20. 2.5 years later or so, it came down to essentially zero. And we in the interim, made another $500 million of acquisitions during that period. So, the number I quoted for 2024 includes us being able to spend maybe $600 million of smaller acquisitions. As to the bigger acquisitions, I think we are waiting a little – obviously, we have some things in mind, but we ought to wait a little bit before people’s – people are not so effervescent about their evaluations.

And is your interest mainly in the commercial area, or has anything changed with respect to how the defense environment looks?

Right now, we still like our commercial businesses. But we are also seeing, as you saw, we also bought something at least a bolt-on in the defense domain, partially bolt-on – partially defense in the bolt-on. We will do some bolt-ons in the defense, especially if they fit our portfolio. But on the larger stuff, it would be either commercial or a mixture of the two, like FLIR was. FLIR was 60% commercial, 40% defense. And so we will look at that, whether it’s 70%-30% or 60%-40%. We look at the combo.

Alright. Thanks very much and congratulations on the quarter.

Thank you.

Next, we will go to Andrew Buscaglia with Berenberg. Please go ahead.

Hey. Good morning guys.

Good morning Andrew.

Along the lines of the short cycle discussion, specifically, can you just comment on FLIR – FLIR’s more industrial assets, which can be pretty volatile and can move pretty quickly, especially to the downside in a downturn? I guess what are you seeing with pace of orders or anything, any indication how that’s trending in that business? And then generally, how are FLIR margins settling? And I know they have been kind of volatile during this integration process. So, can you update us on how you feel about that?

Sure. Let me start with the products. Generally, I would say because of the breadth of the products, while there are some softness in some areas, just like our – rest of our digital imaging, FLIR’s book-to-bill right now is close to 1x, 0.98x, which is in some ways better than DALSA, e2v. From – because of the – again, because of the breadth of the products that they have from tomography instruments to infrared detectors to maritime systems, security, traffic, I don’t think we are going to get hit on all of those all at once, and we are not. The only problem that we have at FLIR, if I may call it that, is that historically, their revenues have been more skewed to the end of the quarter rather than evenly paced during the quarter like the rest of our digital imaging is. So, the only risk there is you get closer to the end of the quarter and something unforeseen happens. And then it can hurt you. We are working very hard to flatten that out. It will take us – we have the same problem in every acquisition we have made, large acquisitions, whether it was DALSA or e2v or others. And so we are working very hard to flatten that curve, the shipment curve. Having said that, coming back to margins, I think margins are settling in. They – from a non-GAAP perspective, while there has been some volatility, as you appropriately noted, I think will settle by the end of the year, we will settle to about overall in digital imaging to 22.2%. FLIR will be a little bit down from that. But generally, we should be okay. We are looking forward to really – last year was an odd year because we bought FLIR in the middle of the second quarter, and we essentially shipped 12 weeks of product with 8 weeks of cost. Again, because of that, end of the quarter shipment that I mentioned. So, that skewed the numbers. But things are fairly well stabilized now. And I think what we are looking for is make sure we get to our 22.2% by the end of the year for all of our digital imaging and then hunker down and improve that next year.

Okay. That’s helpful. And then you gave some nice color on the ETM deal. I might have missed this, but how big is this company? And maybe any information you can provide on their margin profile, where you expect those to go?

Alright. Obviously, we have been hesitant to talk about it, but it’s going to be probably in our Q anyways in a few days, maybe later on. But it’s got about 112 people. The reason I am a little hesitant about the sales, which are about $50 million, is that they also buy products from us. So, they buy our traveling-wave tubes, including with their power supplies and they sell them. So, the deal is going to be accretive. How many cents depends on how you look at the cost of borrowing. Could be accretive $0.02, $0.03, $0.04, if we say the cost of borrowing is 4%, 5%. On the other hand, our cost of borrowing is not 4%, 5% because our average cost of borrowing with our fixed borrowing and cash is more like 2%. So, it’s going to be accretive, revenue a little shy around $50 million, with some pass-through of our own products. I don’t know if that’s helpful.

Okay. Yes, very helpful. Just trying to get an idea of the size. Okay. Thank you, guys. Thanks Robert.

Sure.

Next, we will go to Kristine Liwag with Morgan Stanley. Please go ahead.

Hey. Good morning everyone.

Good morning.

Robert, on the supply chain, it really sounds like it’s starting to ease for you and your mitigating actions have been paying off. But can you provide a quantitative update? Last quarter, you had mentioned that the 800 of 900 missing components were resolved. Where are we at this quarter? And how does that trend from here?

It’s getting better. Last – and you are correct. But we started the year, this year, Kristine, by having about 36% of our missing components. Of course, the components were a lower number when we started the year. There were more like 500 components and we are at 35% that we couldn’t get at that time. We are now over 1,000 components, 1,100 components. But the missing percentage has gone down to about 6%, 7%. So, you are absolutely right. There is the improvement. The flip side is that of the 1,100 components, where we are missing maybe 65 or as I said, 60 open parts, the delay in those are kind of getting longer. And the demand on us is, okay, we are going to allocate so many to you, and you will get it next April. The flip side is it’s a non-cancelable order. I wish I had products like that. I would love to be in that business myself. So, it’s getting better, but still a challenge.

I see. And then in terms of – maybe back to digital imaging, you had mentioned a return to portfolio simplification activities. Now, you have pruned a very small loss-making product line. But as you assess that portfolio having owned FLIR now for a few quarters, are you evaluating a potentially larger cost-cutting initiative or a divestiture, or is this kind of insulated and minimal?

Yes. I think it’s the latter. No, we are – in all of our products, I know in all of our businesses, we do 80-20, which means we take some products that are unique and they don’t make money. We take the product lines out and then increase our products that are making us a lot of money. We are doing that at FLIR like we do at Teledyne. But no, we are not going to divest any large part of FLIR. We are happy with what we have and we are actually probably going to add some to certain areas.

Very helpful color. And if I could sneak in one more. Back to your comment on the supply chain, you mentioned that for some of the missing items, the lead times are getting longer. What’s driving those incremental headwinds? I mean I would think with some of the demand in other parts of semiconductors, for example, we are seeing rolling consumer demand, shouldn’t that free up capacity for your orders? And I guess I am just surprised that we are seeing some things continue to lengthen instead of really get resolved sooner.

Yes. In some of the discrete components like using commercial domain, things are okay. They are improving. On the other hand, in some of the memory stuff it’s – the length is getting longer. The lead times are longer. But depends on the complexity. Let me just kind of go through it. If you look at memory devices, lead times are getting lower. On the other hand, if you look at more complex devices, like microcontrollers, processors, the lead times are still 4 weeks to 60 weeks. So, it’s kind of a mixture and depends on what device we are looking for. For the simpler components and as I have said, printed circuit boards, we are making some real improvements there, and we feel very good about that. But some of those also require our people to go into the suppliers’ factory and schedule our products on a daily basis to get them out. So, it’s a mixture.

Great. Thank you very much.

Sure.

And next, we will go to Noah Poponak with Goldman Sachs. Please go ahead.

Hey. Good morning everybody.

Good Noah.

Robert, I just wanted to go back to your commentary around the bid-ask spread in the M&A process. Some other companies that have a similar strategy to yours have pointed to that, but it pretty recently suggesting that, that hasn’t really broken yet. You have a deal this morning. You are saying the pipeline looks good. You are quantifying what you could potentially spend in the immediate-term. So, I guess maybe in some ways, you have already answered this, but I am just really curious to put a finer point, like has – now that public markets peaked almost a year ago, has that bid-ask spread challenge cracked and that spread has narrowed, or are you just saying that it hasn’t yet, but it eventually has to?

I think in the private deals it’s probably cracked a little bit. And the reason for that is private entrepreneurs are looking at things – they are looking at the world, Noah, the way it is evolving, right. The uncertainty in the future is becoming much more pronounced at this time. So, entrepreneurs that have built a business like the one we just bought, that – those people have been in business since 1973, they are becoming more reasonable because they see things are not going to get better in the short-term. So, on the smaller deals like that, I think you are right. We are seeing some better pricing. Having said that, on the bigger deals and public companies, they are still seeing 52-week highs in the background. Until we get beyond that, which is going to be another six months, four months, where people are not looking at, look my high was $500. And I am now trading at $350, they look in the mirror and say, well, my high was more like $400 and now we are at $350. Then I think it’s going to be more actionable.

Okay. That’s helpful. You have referenced reducing cost and also price increases. Can you just provide a little bit more detail on where in the business you have done that? And how sizable are we talking on each side?

Yes. It depends on the business. Some businesses, we have a hard time increasing prices because of the programs that we have, long-term programs. But let me just give you an example. In digital imaging, DALSA, e2v, for example, we have been able to increase prices about 4.7%. In marine, where we supply unmanned vehicle, but also a lot of connectivity products for oil and gas, we have also been able to increase prices about 4.7%. On the other hand, in some of our defense products, we have hardly cracked price or gotten about 1% or 2%. Having said that, on the average across the company, our price increases have been about 3.6% year-to-date. And against that, we have wage increases that are 4%. And then products, material that we buy that have been about 3.4%. That’s excluding the extra 2% that we pay for scarce materials. So, that’s been a wash between the price increases and the inflation. Where we hurt is, of course, we are spending $50-plus million extra on getting our scarce products. So, I think over time, that will go away too.

Okay. And lastly, which products or segments did you allow to roll off of FLIR?

Just really, there was just an Altavian product that they bought in December of 2020, about four months, five months before we bought them. Actually, we were already in discussions with them, and they picked that up. And it was – I think it’s basically an industrial, commercial drone business, not in a very difficult market. There are 20 companies that – of that ilk that are competing with one another. Me on that domain, I would rather buy the truck and put in our very really advanced imaging systems on somebody else’s truck. I don’t want to build those inexpensive trucks. So, that’s the one.

Okay. Thank you.

Sure Noah.

And currently, no further questions in queue. End of Q&A:

Thank you very much. We would – if you would be kind enough operator, I am going to ask Jason to conclude our conference call, and then we will stop.

Thanks Robert. And again thanks everyone for joining us this morning. Brad, if you could give the replay information at the end of the call that would be great. And if you have follow-up questions, certainly do feel free to call me as well. Bye-bye.

Thank you. Ladies and gentlemen, the call will be available for replay after 10 o’clock Pacific Time today and running through November 6th at midnight. You can access the AT&T replay system at any time by dialing 1-866-207-1041 and entering the access code 1148115. International parties may dial 402-970-0847 with the access code 1148115. That does conclude our call for today. Thanks for your participation and for using AT&T Teleconference. You may now disconnect.