Good morning, everyone. My name is Karina, and I will be your conferencing operator today. I would like to welcome everyone to the FTG Q1 2024 analyst call. All lines have been placed on mute. There will be a question-and-answer session following the call. If you'd like to ask a question during this time, simply press star, followed by one on your telephone keypad. If you'd like to withdraw your question, press two on your telephone keypad. Please note that this call is being recorded. I would like to turn the call over to Mr. Brad Bourne, President and Chief Executive Officer of FTG. Mr. Bourne, you may proceed.
Thank you. Good morning. I'm Brad Bourne, President and CEO of Firan Technology Group Corporation, or FTG. Also on the call today is Jamie Crichton, our Chief Financial Officer. Before we go any further, I must caution you that this call may contain forward-looking statements. Such statements are based on the current expectations of management of the company and inherently involve numerous risks and uncertainty, known and unknown, including economic factors in the company's industry generally. The preceding list is not exhaustive of all possible factors. Such forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the company. The listener is cautioned to consider these and other factors carefully when making decisions with respect to the company and not place undue reliance on forward-looking statements.
The company does not undertake and has no specific intention to update any forward-looking statements, written or oral, that may be made from time to time, by or on its behalf, whether as a result of new information, future events, or otherwise. So notwithstanding a few challenges in our first quarter, I think 2024 is off to an excellent start. Before proceeding on the details, I would like to thank everyone at FTG for their hard work and their contributions to our success. Our success is a team effort among all 690 staff across the company and around the world. In Q1, 2024, FTG achieved some strong financial metrics, including first quarter bookings of CAD 37.5 million, which was up 14% over Q1, 2023. FTG's first quarter revenues of CAD 35 million were up 42% over Q1, 2023.
FTG achieved net earnings in Q1 2024 of CAD 1.1 million, and FTG achieved adjusted EBITDA of CAD 4.6 million, which was up 42% over Q1 last year, in line with the revenue growth. Other accomplishments in Q1 include integration activities of both acquisitions that were completed last year, progressed well in Q1 this year, with improved throughput, improved pricing, cost savings well underway at Circuits Minnetonka, and as of the start of Q2, the FTG ERP system is live there, too. At Circuits Haverhill, targeted cost savings have been achieved, and we're well underway with targeted equipment investments and growth plans for the site. More activities and full ERP implementation for Circuits Haverhill, Haverhill, are planned for the balance of 2024.
Also, in support of the new acquisitions and the overall growth of FTG, Leo Lacroix was hired as Executive Vice President of Circuits to oversee FTG's U.S. Circuits operations, including the newly acquired site. Leo has extensive senior management experience in the circuit board industry, selling into the defense market. FTG managed through a 6-week strike by 67 unionized workers at the FTG Aerospace Toronto facility, which resulted in decreased product shipments during Q1 of approximately CAD 3 million. The reduction in revenue had a negative impact on net earnings of approximately CAD 1 million. A new four-year agreement with the employees was concluded in the quarter, and the employees returned to work on January 23. The new contract expires in August 2027. As noted, customer orders received in Q1 totaled 37.5 million, which resulted in a book-to-bill ratio of 1.07 to 1.
As of March 1, 2024, FTG had total backlog of over CAD 99 million, which is a 34% increase over Q1 last year. Jamie will provide some more details on our Q1 2024 results shortly. But first, let me turn to some external items, and starting with our end market demand remains strong. Airbus delivered 735 aircraft in 2023, but more importantly, they're looking to ramp to almost 1,000 aircraft annually in the next few years, and this is a 35% production rate increase. Airbus has a backlog of over 8,000 orders, which is over a decade worth of production at current production rates.
In Q1 2024, Airbus delivered 142 planes, which is below the targeted delivery rate for the year, but March was almost half of the deliveries, so this bodes well for the future of the year. At Boeing, they shipped just under 500 planes last year and have plans to ramp their production by 40% to almost 700 planes in the next few years. Boeing's backlog is almost 6,000 planes, so also over a decade's worth of orders at current production rates. But the FAA has told Boeing to halt production rate increases while they ensure there is sufficient focus on quality. In Q1, Boeing delivered only 83 aircraft due to ongoing reviews of the 737 mishap with Alaska Airlines a few months ago. Setting aside that mishap, it is clear why both companies are looking to ramp production.
In the business jet market, Bombardier reported low double-digit shipment growth for last year, and their projections for 2024 are for a similar level of growth. Gulfstream is projecting a high single-digit level of growth for 2024. This industry remains in a robust growth mode. In the helicopter market, Bell Helicopter reported 31% revenue growth last year and are projecting near 10% for 2024.... All of this bodes well for us as we look to the future to purchase your demand in the coming years. We've also looked at results from the key defense contractors, all of them, and all of them reported revenue growth last year between 2% and 7.5% over the prior year.
I've not seen Q1 results from the key players as of today, but ongoing geopolitical challenges in the world will keep defense spending high for a period of time. Looking at the longer term, Boeing's most recent 20-year forecast shows long-term industry growth, and it continued to show 20% all-new aircraft deliveries going to China and close to 40% to Asia, as has been the case in their recent forecast. A recent business jet market forecast from Honeywell similarly predicts growth in this market in the coming years, with near-term double-digit growth rates for the sector. The simulator market mirrors the end-market applications. But as we always remind everyone about this market, it is lumpy, so large year-to-year variations do occur.
As we have said for many years, FTG's goal is to participate in all segments of the Aerospace and defense markets as each moves through their independent business cycles. It is not often all segments are growing together, as seems to be the case right now. Beyond all this, let me give you a quick update on some key metrics for FTG for Q1 2024. First, as already noted, the leading indicator of business is our bookings or new orders. As noted earlier, our bookings were CAD 37.5 million in the quarter. This resulted in a backlog of over CAD 99 million at quarter end. As we have reduced our lead times, this would typically put a damper on orders in the short- term, but our results don't indicate this.
In Q1 2024, sales were CAD 35 million, which is CAD 10.3 million above Q1 last year. Most of the growth is the result of the acquisitions. Obviously, the 6-week strike at our Aerospace Toronto site had a negative impact on the order of about CAD 3 million in the quarter. But the other Aerospace sites experienced significant growth of almost 80% for Aerospace Chatsworth and almost 45% for Aerospace Tianjin. At Circuits Minnetonka, their run rate in Q1 was approximately CAD 26 million annualized. This is showing good progress towards getting them to revenue levels where they will materially contribute to FTG sales and profitability. They had strong bookings in Q1. Looking at the businesses separately, in our Aerospace business, sales—in our Aerospace business, sales were flat at about CAD 10 million in Q1 compared to Q1 last year.
The strike at Aerospace Toronto was a significant damper on what would otherwise have been a very strong quarter. On the circuit side of our business, sales in Q1 2024 were up CAD 10.3 million, or 66%, compared to Q1 last year. Approximately 93% of the growth came from the two acquisitions. Sales were down in Circuits Fredericksburg and up at all the other legacy sites. Overall, at FTG, our top five customers accounted for 66.5% of total revenue in the quarter. This compares to 58.6% last year. Also interesting to note, of the top ten customers, six are customers shared between Circuits and Aerospace. We particularly like to see the shared customers, as it means we're maximizing our penetration of these customers by selling both cockpit products and circuit boards.
In Q1 2024, 27.7% of our total revenues came from our Aerospace business, compared to 39.1% last year. The Aerospace business share decreased, partly due to the impact from the acquisitions, which were both on the circuits business, as well as the 6-week strike at our Aerospace Toronto site. I would now like to turn the call over to Jamie, who will summarize our financial results for Q1 2024, and afterwards, I will talk about some key priorities we are working on. Jamie?
Thanks, Brad. Good morning, everyone. I'd like to provide some additional detail on our financial performance for Q1. FTG achieved a gross margin of CAD 8.9 million, or 25.5%, in Q1, compared to CAD 9.8 million, or 39.7%, in Q1 2023. However, gross margin in Q1 2023, including $2.9 million from the U.S. Employee Retention Credit program, or ERC. Excluding the impact of government assistance, gross profit in Q1 2023 was CAD 6.9 million, or 28%. We had generated additional gross margin of $2 million on incremental sales of CAD 10.3. The gross margin rate is down 2.5 percentage points as a result of a couple of factors.
Product mix is less favorable, as we had CAD 3 million of high-margin simulator product shipments in the prior quarter and minimal simulator revenue this quarter. This factor will also affect our Q2 2024. The six-week strike at Aero Toronto resulted in lower fixed cost absorption and therefore a reduced gross margin rate. However, this item is non-recurring. Annualized revenue per employee was CAD 214,000 in Q1 2024, approximately 3% better than Q1 2023. Excluding the impact of the strike at Aero Toronto, we believe the increase would have been greater than 10%. The average exchange rate experienced in Q1 2024 and the prior quarter was 1.35, so this is not a factor in our results.
SG&A expense was CAD 4.8 million in Q1 2024, up from CAD 3.8 million in 2023, although it, as a percentage of sales, it declined to 13.7% from 15.2%. The dollar increase is due to CAD 0.7 million from the two acquisitions which were not in the Q1 2023 results, and the fact that Q1 2023 SG&A was reduced by CAD 0.5 million of government assistance. There are increases in some of the other operating expense line items, which in the case of amortization of intangibles, interest expense, and accretion on lease liabilities, are the direct result of the acquisitions. In the case of stock-based compensation, primarily the result of a higher stock price.
Adjusted EBITDA was 4.6 million, or 13.0% of sales for Q1 2024, and there were no adjustments this quarter. We do believe, however, that the strike reduced Q1 2024 EBITDA by approximately CAD 1 million. Adjusted EBITDA for Q1 2023, which included adjustments for government assistance and acquisition costs, was 3.2 million and also 13.0% of sales. On a trailing twelve-month basis, revenue was 145.5 million, and adjusted EBITDA was 20.7 million, or 14.2% of sales. Our net debt as of Q1 2024 was CAD 7.2 million, as compared to CAD 3.6 million at the end of Q4 2023 year-end, which equates to 0.35 times adjusted EBITDA.
Free cash flow, defined as cash from operating and investing activities, excluding acquisitions, less lease liability payments, was an outflow of CAD 3.4 million for Q1 2024. Capital expenditures in Q1 2024 were CAD 3.4 million, as compared to CAD 0.6 million in Q1 2023. Some capital expenditures were accelerated in support of efforts to complete FTG's scope of work related to the government of Canada's ARR program, which had a completion date of March 31, 2024. Q1 2024 cash flow was further reduced by CAD 2.3 million for income tax payments and performance compensation payments of CAD 1.6 million, both of which were driven by strong operating results in 2023. We also incurred $258K to settle the obligation of performance share units. We incurred it in cash.
The corporation used cash to buy shares on the market, as opposed to issuing additional shares to avoid dilution. FTG has a total backlog of CAD 99.3 million as of Q1 2024. Our focus will be delivering quality products to our customers on a timely basis and improving the efficiency of our operations. Our complete set of filings are now available on SEDARplus.com. Back to Brad.
Thanks, Jamie. Let me delve into some important items in the quarter and/or for the future performance of FTG. We continue to believe our staffing levels are at or about the right levels to support our current demand. While we might tweak it slightly from site to site going forward, the majority of our staffing challenges are behind us. We always remember that we make money by building and shipping products, so we spend significant time and money and investment driving process and productivity improvements at all the sites. This can include manufacturing process improvements, but it can also involve items like automation. We now have a robotic system operational at our Circuits Toronto facility, and maybe surprisingly, also at our Aerospace Tianjin facility. We're looking to add the robotic process in our Aerospace Toronto facility during Q2 this year. But our automation goes well beyond robotics.
We also have a lot of very automated equipment across our circuit sites that help drive productivity and process control. Automation will continue to be an area for investment across the company. Looking forward, a key item for us remains the integration of our new sites. For Haverhill, we acquired them to grow our presence in the RF circuit board market for Aerospace and defense applications. While they are small, with a historic run rate of about $4 million-$5 million, we like their capability. The integration is relatively straightforward, as we intend to continue to operate it in its current facility with its existing staff. Our focus will be to engage our sales team with them to find new customers and to grow the business. This is not an overnight process, but one where we can generate incremental margins and profitability to the benefit of FTG.
Going along with this will be some focused CapEx to address a few production constraints to enable the growth. We did achieve some targeted material savings, which will benefit us going forward. And finally, we will move them onto FTG's standard ERP system in the future. This project is just getting underway. Holaday, or FTG Circuits Minnetonka, was a larger acquisition. Their sales were over $31 million, pre-pandemic. They were hurt by the pandemic, like we were. We see the long-term positioning of Minnetonka to be a source of high-technology circuit boards, similar to our Toronto facility, but with a U.S. footprint. This U.S. footprint is critical, as it will look to grow our share of the U.S.-only advanced circuit board market in advanced circuit boards in the defense market. In the short- term, we have three priorities as we integrate Minnetonka into FTG.
First, we need to ramp their throughput and revenues. In Q3 last year, we hired two key people. First, we hired Paul Godbout, who has run our Fredericksburg facility until early in the pandemic. He is back on a temporary basis, but with his operational skills, he has helped us immeasurably. It will give us time to find the right person for the long- term. Then, as noted earlier, we hired Leo Lacroix. He is a senior executive from within the circuit board industry with strong Aerospace and defense experience. The immediate task was also focused on Minnetonka, but he has now moved into the larger role and is responsible for FTG's US-based circuit board business. I am confident he will be a huge benefit to FTG for the long- term....
But as it relates to Circuits Minnetonka, throughputs and rev, Minnetonka's throughputs and revenues, we have closed about 50% of the gap to get back towards their pre-pandemic run rate. We continue to see strong demand, so ramping throughput remains a priority item for this site. In Minnetonka, the second priority is to reduce material costs. We have identified cost savings opportunities that can benefit this site as they are now part of a larger company. It will take some time to achieve the savings, as in some cases it requires customers' approvals and internal engineering efforts. But when complete, we expect to achieve savings on the order of CAD 1 million annually. Our third priority is to improve pricing. We believe Minnetonka had not been sufficiently proactive in adjusting prices as costs went up over the past few years.
We have had some successes already, and we will continue to address this. We want to ensure any inflationary costs incurred at that site over the past few years, whether material, labor, or other, are passed through to the customers and not squeeze our margins. Beyond these actions, we have plans to move them to FTG's standard ERP system, and as of the start of Q2 this year, it's gone live. There's a transition period as we run out old jobs from the old system and ramp up jobs in the new system. Once fully complete, it will ensure this site operates and reports in our proven standard methodology. Lastly, while not an immediate integration item, when we bought the site, we believed that we could expand and grow their customer base, focused on U.S. defense market. This has already started.
We are seeing some real interest from numerous customers in adding this site to their approved suppliers list. This is good news. The bad news is it typically is a long process to get through a new site approval, but we will stay focused on this to grow the site in the coming years beyond their pre-pandemic high point. In Q1, we continued to see strong demand across most sites. Our backlog due in Q2 is over CAD 53 million, including the new site. While not a good metric, we ended Q1 with over CAD 14 million in past due orders, down from CAD 18 million at the end of Q3 last year, but up from CAD 12.5 million at year-end. Over half the past due orders are at Aerospace Toronto. The strike at Aerospace Toronto is a big reason for their increase.
To help drive this down as fast as possible, we have worked with our customers to shift some production from our Aerospace Toronto facility to our other Aerospace facilities, at least for the short- term. This should help in Q2 and beyond to recover back to strong on-time performance across all FTG sites. As always, there are possible downsides or headwinds that could impact our future performance. With the labor contract settled at Aero Toronto, we have at least three years before another labor contract expires, so this risk is mitigated for a few years. We always focus on the Canadian-U.S. dollar exchange rate as a possible risk, but this has been pretty stable for a period of time at attractive rates. Supply chain risks are diminishing. While we see some items with extended lead times, it is less than what we were experiencing early in 2023.
Also, maybe just to ensure everyone's aware, we've now increased our SG&A costs by about CAD 1 million-CAD 1.5 million quarterly on about CAD 10 million in incremental sales from the acquisition. Included in this is about CAD 250,000 per quarter in higher financing costs compared to Q1 last year, as well as higher labor costs for SG&A staff at the new sites, and higher lease accretion costs due to the new leases tied to the new acquisitions. We are expecting to grow in 2024 as compared to 2023, like we just did in Q1. The easiest aspect of our growth will be having the acquisitions for the full 12 months this year, compared to only 7 months in 2023. They should add an estimated CAD 12 million in incremental sales for 2024.
If we can ramp production and sales at the newly acquired sites, this would further add to the growth. And we continue to win new programs across the company that will layer on incremental organic growth on top of all of this. Beyond this, we continue to see strong customer demand, as I discussed earlier, and we, and we will still see further benefit from the high-value assembly orders we booked early in 2023, as these will have, these will be full year benefits for us in 2024. These assemblies go on Boeing and Airbus aircraft, and we will see the benefit of the C919 program in China moving into production. We shipped our first production orders last year, and we expect to see significant production rate increases later in 2024.
With the more complex geopolitical situation in China, I'm sure there are still concerns about our activities there. But in 2023, both our operations in China had their best sales year ever, and this continued in Q1, with the site seeing 13% and 45% growth compared to Q1 last year. As I've mentioned in previous quarters, we've paid repatriated cash back to Canada during 2022 and 2023. In total, we've now brought back CAD 2.2 million in cash. By doing this, we don't have surplus cash stranded in China, and it reduces our exposure if things ever deteriorated between Canada or China and the West. We anticipate bringing back more cash in 2024. But we are being cautious about our operations in China, as any further increase in tensions between China and other countries could impact our operations there.
We continue to assess possible corporate development opportunities that could fit with either of our businesses. There are opportunities out there, but it's too, too early to know if they would be a good fit and a good deal for FTG. With our focus on operational excellence in all parts of FTG, our strong financial performance last year and in Q1 this year, our recent acquisitions, and our key sales wins, we are confident we are on a strong long-term growth trajectory. This concludes our presentation. I thank you for your attention. I would now like to open the phones for your questions. Karina?
... Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for our first question. Your first question comes from Nick Corcoran from Acumen. Please go ahead.
Good morning, guys. A couple questions for me. The first is the backlog is about CAD 99 million. How much do you expect to get through in the second quarter?
So total backlog is CAD 99. Backlog due in Q2 is 53, I think I said. We're not shipping 53, that I guarantee. But I do think, you know, a couple of factors for Q2. Q2 is typically one of our better quarters. There's less holidays, less vacation days, there's, you know, no Christmas shutdown, so we, we get kind of maximum number of production days, which is a benefit to us. So I would hope Q2 this year would be in line or possibly, you know, a little bit higher than Q4 last year.
Great. And then, just with the issues that Boeing is having, have you seen any signs in the supply chain that they might be scaling back any of their orders?
No. We have seen no impact as of now, and, you know, a couple of things happened, but this industry, you know, it's a big effort to change production rates, whether you're changing them up or changing them down. And so as of now, Boeing has made no effort, no attempt to change any production rates on their aircraft. They're holding them where they are. They might not be shipping planes out to customers, but the production rates are not impacted. And I think they believe they will, you know, they will get through the reviews, and they really are through most of the reviews, and get back to shipping product to customers. So as long as the production rates hold, there is no impact to us.
Then, one of the things you mentioned in your prepared remarks is you've been able to improve pricing. How much of the pricing do you think you passed through to date?
That's a good question, and honest answer, Nick, for Q1, I don't have a number. You know, we are, yeah, we're looking at this every day on opportunities, and every day as contracts renew. You know, we set target margins for what we're trying to achieve. And so if a contract's renewing, you know, we review margins on a part number by part number basis, and we make sure we are achieving our objective. And going along with that, we're, you know, we're really trying to be careful going forward, and we've been doing this for more than a year now.
When we're renewing contracts with customers, we're now either doing annual pricing, which means, you know, we can relook at it on a yearly basis, or we will embed a escalation clause in the pricing or in the contract so that there's a mechanism to automatically adjust prices on a go-forward basis. So we're taking these steps to make sure that we can consistently pass on any incremental cost increases through to the customer and not see our margin squeezed.
Great. Then one last question from me. In terms of CapEx for fiscal 2024, any indication what you're expecting for the year?
CapEx for the rest of the year will be, I'm gonna say normal, Nick, with the exception that, you know, we do have another maintenance capital. We have some roof we have to address the roof in Circuits Toronto, which is a relatively significant item. It's, you know, it's around the CAD 1 million level, which will occur kind of Q2, Q3 time period. But the rest, excluding that CapEx for the rest of the year, ought to be kind of normal.
Thanks for the postdoc.
Okay. Thanks, Nick.
As a reminder, if you wish to ask a question, please press star one on your telephone keypad. Your next question comes from Eric Chu. Please go ahead. Mr. Eric Chu, your line is open. Please go ahead.
Oh, hi, Brad. Congrats on a great quarter. Quick question for you regarding your Asian exposure and exposure to COMAC. Do you expect this to be a material lift in the coming year or coming two years? If so, do you have a general sense on what that quantum would be?
The shorter answer is yes. But I... And it's, you know, we've been engaged in the C919 program for a decade now. And, you know, I think when we started, we thought the development process was gonna be a lot faster, but, you know... It is done in any case. But from the beginning, there were projections for this aircraft of production rates ramping to 140-ish planes a year. That is still their plan. And, you know, for us, you know, that's not gonna happen this year, to be clear, but, you know, they are ramping, they're into real production, and it's gonna ramp each year.
I think to us, it's a material, maybe not a life-changing amount, but I think it would be on the order of, you know, CAD 5 million in incremental revenue, starting in the near future and ramping from there.
Got it. Thank you.
Okay. Thanks, Aaron.
Once again, if you have a question, please press star one. Your next question comes from Alan Jacobs. Please go ahead.
Hi, Brad. My question is on the impact of the strike. If it was CAD 3 million in sales, how come it could be, have as much as CAD 1 million impact on net income, which is like a 33% margin? I mean, is there something unusual that happened? Because even if that facility had higher than average margins, it just seems 33% like is a big number as a percent of the lost sales.
Yeah, but it, it's really just tied to FTG's economics. You know, we have fixed costs at all our sites that are about 30%, which stay, whether you ship nothing or ship a lot, the fixed costs are fixed, hence the name. So, you know, our contribution margin on incremental revenue, whether it's going up or going down, is more on the order of 33% or somewhere in the, in that ballpark. So, you know, it, it's an estimate from us, to be clear, 'cause we don't have an exact number on, you know, what didn't ship, and therefore, what margin was not achieved. But the, the key is the contribution margin impact to the site and FTG, not just a normal- normalized margin across the business.
But what about all the expenses, you know, including taxes and other things that... Or the impact of taxes on that CAD 1 million?
Sure. I mean, there is, there is impacts from taxes, but again, you know, we're to be fair, we're not trying to get a really precise number on this. We're trying to give a ballpark estimate. And so, you know, we're saying it was about a third of the revenue was the bottom line impact to us. You know, if you want to assume it's a little bit less or a little bit more, that's fair. I hear you. But I think it's a pretty reasonable estimate. It's somewhere in that ballpark.
Uh, just-
Okay.
And to be clear, the CAD 1 million estimate is a pre-tax number. We also referred to, you know, CAD 750,000 as the estimated after-tax impact.
Okay, thank you.
Okay, thanks.
As a reminder, if you wish to ask a question, please press star one. Your next question comes from Eric Chu. Please go ahead. Mr. Chu, your line is open. Please go ahead.
Hi, Brad. Are you planning on any acquisitions this coming year or the next couple years specifically in North America? Or is it mostly Chinese corporate development targets you're assessing?
Our history and our plan going forward is, you know, we're just gonna try to build the business. We're gonna try to grow it organically, and we're trying to... We would like to layer on acquisitions. Timing of them is always uncertain. You know, we have to find targets, they have to be willing to talk, there has to be a deal that makes sense. And so, you know, will there be one happen this year or next year? I hope so, but, you know, for sure, no guarantees. In terms of, you know, what we would be looking at, I would say it could be a number of things. You know, in some cases, we're looking to add technology.
I think if you look at the IMI acquisition last year, we're trying to get some RF circuit board technology into the business. So, you know, that was a technology acquisition. You know, at some point, and again, I don't know if it'd be this year, next year or beyond, at some point, I believe it's in FTG's interest to have a footprint in Europe. Good or bad, Airbus is outperforming Boeing these days, and if you want to grow your share with Airbus, it's easier to do it from a US, or from a European footprint. Similarly, there's a lot of increased defense spending going on in Europe. They're closer to some of the ongoing conflicts.
European defense spending, if you look at it as an entity as opposed to individual countries, that spending is significant, getting close to what the U.S. spends. So, you know, kind of a second reason to be in Europe. And really, along those same lines, another area that geographically could be of interest to us at some point would be India. You know, we look at the defense spending across the world, U.S. is for sure number one. Europe is significant. Russia and China are not markets we're going to pursue, so next on the list is India. So, you know, the Indian market is one that, you know, at some point, we could address as well. So, yeah, there are a number of factors we're looking at, in terms of what future acquisitions could do.
And we just gotta tie it back to what's available and, you know, what's a reasonable deal. So, we are looking. We'd love to do one in the next couple of years.
Great. Thank you.
Yeah. Thanks, Eric.
There are no further questions at this time. I would like to turn the call over back to Mr. Brad Bourne. Please continue.
Thank you. A replay of the call will be available until Sunday, May twelfth, at the numbers noted in our press release. The replay will also be available on our website in a few days. I thank you all for your interest and participation. Thank you.