Good morning, everyone. My name is Marcella, and I will be your conference operator today. I'd like to welcome everyone to the FTG Q3 2022 analyst call. All lines have been placed on mute. There'll be a Q&A 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 star two. Please note this call is being recorded. I would now like to turn the call over to Mr. Brad Bourne, President and Chief Executive Officer of Firan Technology Group. 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 and 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. Well, in Q3 we have returned to profitability without the help of any government support, and we are very proud of this accomplishment. Maybe we're not back to pre-pandemic levels of profitability, but we are certainly heading in that direction. Our challenges of the past two years of reduced demand have been replaced with a new challenge of ramping production as fast as demand is ramping. This is a better challenge. Q3 this year showed a 17% increase in sales compared to Q3 last year, while our bookings increased by 33% on the same basis.
As I talked about in the last two quarters, we have changed our mindset at FTG. For the past two years, we played defense. We played great defense. We took many actions to ensure we got through the pandemic, but defense is only half the game. As of the start of 2022, we are consciously taking actions to play some offense. We have a great balance sheet and the market is coming back. We are taking advantage of our balance sheet to increase capital spending to support higher technology, improve our operations and to grow. We will continue to do this, but we can and will do more. Our balance sheet puts us in a great position to grow through acquisition or other corporate development activities.
We are putting a lot of effort into this area now, and we can and are looking at other capital allocation options that can benefit our shareholders. Specifically, during Q2 and Q3, we had an NCIB in place to buy back up to 5% of outstanding stock, and we have purchased about 450,000 shares for about CAD 900,000 so far. We believe that FTG has the resources to pursue multiple capital allocation efforts to create shareholder value, including or organic growth, acquisition and the stock buyback. Now let me summarize some key accomplishments from our Q3 of 2022. FTG achieved a seventh sequential quarter of increased bookings as the aerospace industry recovers from the pandemic. Q3 bookings of CAD 27.9 million are up 33% over Q3 last year and is the best booking quarter since Q3 2019.
FTG achieved a CAD 1.21- CAD 1 book-to-bill ratio for Q3 this year. Total backlog at the end of Q3 is CAD 55.8 million, up 57% from Q3 2021. We booked CAD 7.5 million in new purchase orders to supply cockpit assemblies for military and commercial simulators for different aircraft, including refueling fixed-wing aircraft, helicopters and business jets, with the work to be performed by FTG Aerospace segment facilities in Toronto, Chatsworth and Tianjin over the next nine-12 months. Sales for Q3 2022 were CAD 23.1 million, which is an increase of 17% over Q3 2021.
FTG maintained strong liquidity with net cash on the balance sheet of CAD 10.8 million after investments in the Q3 of CAD 700,000 for capital expenditures, CAD 1.4 million for research and development, CAD 8.5 million for the aerospace Chatsworth facility and CAD 800,000 for the FTG share buyback. FTG recorded earnings per share of CAD 0.03 in Q3 2022 without the benefit of any government assistance. FTG achieved a trailing 12-month EBITDA of CAD 8.5 million, which CAD 2.8 million was in Q3 this year. Finally, we received CAD 1.3 million of funding from FedDev Ontario, which was the first installment from the Aerospace Regional Recovery Initiative program. This funding is repayable without interest, commencing in 2025 through 2030.
Jamie will talk about the financials shortly, but I would like to highlight what we are seeing in future market demand. The aerospace industry is recovering. U.S. and global air travel continues to rebound. This morning I heard Delta Air Lines reported very strong revenues in their latest quarter, which were above 2019 levels. There are many predictions regarding the length of time for the aerospace industry to recover, but all of them indicate a strong commercial aerospace market in 2022, even if not quite back to pre-pandemic levels and a full recovery by 2023. The big challenge in the travel business is facing is not customer demand, but being able to staff sufficiently to support the increase in daily flights.
When looking at the performance and plans from the large airframe manufacturers, Airbus is projecting a production rate in 2022 that will be 15%-20% above last year. For 2023, they are planning another 40% increase, which would put them above pre-pandemic production rates. Over the next few years, they are projecting 180% increase in the production rate of the A220, where we have significant content. Like many industries in 2022, the largest challenge for the aerospace industry is supply chain disruptions and uncertainty. The story of Boeing is a little more complex, as they've not shipped any Boeing 787 since May 2021 due to certification issues with the FAA.
For the Boeing 737, they are now at a 27 plane per month production rate and are targeting ramping to 47 planes per month by the end of 2023, a 75% increase from the current rate. They just reported their Q3 shipments, and there was good news and bad news. The good news is that they have started shipping 787s again. The bad news is that their deliveries of 737s was down sequentially. back to good news, Boeing booked 256 orders in their Q3 against shipments of 112 aircraft for a book-to-bill of CAD 2.3 - CAD 1.
Looking at the longer term, Boeing's most recent twenty-year forecast shows growth beyond the COVID downturn as air travel recovers, and it continued to show 40% of all new aircraft deliveries going to Asia, as has been the case in their most recent forecast. For the defense market, the defense budget request in the U.S. for next year has a small increase, so this market remains strong. Unfortunately, the conflict in Ukraine is increasing the focus on defense spending around the world. The business jet market has already seen traffic recover. A recent business jet market forecast from Honeywell predicts growth in this market in the coming years. The simulator market mirrors the end market application, so commercial aerospace simulator activity is down but recovering, whereas the defense simulator market remains strong.
As we remind everyone about this market, for FTG, it is lumpy, so large year-to-year variations do occur. The good news is, as we reported, we booked CAD 7.5 million In new simulator orders in Q3. We 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. Within FTG, our Canadian and China sites are more focused on the commercial aerospace market, where our U.S. sites are more focused on the defense market. Beyond all this, let me give you a quick update on Q3 2022 for FTG. First, as already noted, the leading indicator of our business is our bookings or new orders. For the last seven quarters, bookings have increased, and Q3 saw bookings up 33% from Q3 last year.
In Q3 2022, sales were up 17% compared to the same period last year. We definitely saw improved performance across the company as we had far fewer operational challenges in the quarter compared to earlier this year. Sales were up in Canada, in the U.S., in Europe, and in Asia. They were up everywhere. In our aerospace business, Q3 sales were up 30% or CAD 2.2 million compared to Q3 last year. Year-to-date sales are also up CAD 2.2 million or 10%. On the circuit side of our business, sales were up CAD 1.5 million or 11% on a Q3-over-Q3 basis. All sites were up, with our JV in China being up about 160% on increased demand and new awards.
On a year-to-date basis, sales are up CAD 6.1 million or 16% in our circuits business. Again, all sites were up this year versus last year. Overall, at FTG, our top five customers accounted for 58.5% of total revenue in the quarter. This percentage compares to 59.3% last year. One of our top five in Q3 this year is an account we have been focused on for the past number of years, and this is the first time it has made it to our top five list. Also interesting to note, of the top ten customers, seven are shared between circuits and aerospace. We like the shared customers as it means we are maximizing our penetration of these customers by selling both cockpit products and circuit boards.
It's also important to note that one of our top 10 customers in this quarter is the U.S. Defense Logistics Agency. This is important as they are a key customer for the defense aftermarket opportunities. Clearly, we have grown our aftermarket activity, which has been a strategic objective for us for the past number of years. In Q3 2022, 39.8% of our total revenues came from our aerospace business, compared to 33% last year. I'd like to turn the call over to Jamie, who will now summarize our financial results for Q3 2022, and afterwards, I will talk about some key priorities and status at a site level. Jamie?
Thanks, Brad. Good morning, everyone. I'd like to provide some additional detail on our financial performance for Q3. On sales of CAD 23.1 million, FTG achieved a gross margin of CAD 5.7 million or 24% compared to CAD 3.8 million or 19.2% on sales of CAD 19.7 million in Q3 2021. Excluding the benefit of wage subsidy programs in Canada and the United States in the prior year quarter, gross margin dollars improved by CAD 2.6 million on a sales increase of CAD 3.4 million. The increase in gross margin dollars and the gross margin rate for the Q3 of 2022 is a result of increased operating leverage on higher sales volumes, FX lift, and operational efficiencies.
The gross margin rates for the Toronto sites are positively impacted by the weaker Canadian dollar relative to the U.S. dollar, as much of the underlying cost structure of those sites is in Canadian currency. The average exchange rate experienced in Q3 2022 was CAD 1.29, as compared to CAD 1.25 in Q3 2021. At the site level, the increased gross margin rate was most evident at our sites in China, where the sales increase was more than double. We continue our focus on operational efficiency. One metric to measure this is revenue per employee. For Q3 2022, annualized revenue per employee is approximately CAD 205,000, which is an increase of 18% over the comparable quarter of 2021.
In light of the current constraints on the supply of labor in all of our manufacturing locations, we will continue this focus through the automation of manufacturing processes and investment in capital equipment. From a geographical standpoint, 76.3% of FTG's Q3 2022 sales were derived from customers in the U.S., which is up from 74% in the prior year. SG&A expense was CAD 3.3 million, or 14.1% of sales in Q3 2022, as compared to CAD 3.1 million, or 15.9% of sales in the prior period. The increased expense level is due to increased professional fees, completion of wage subsidy programs, and increased credit loss provisions commensurate with sales volumes.
R&D costs for Q3 2022 were CAD 1.4 million, or 6.0% of net sales, compared to CAD 1.2 million, or 6.2% of sales for Q3 2021. R&D efforts include product and process improvements at the Circuit segment and efforts to develop and qualify new products for future aerospace programs. The exchange rate at the Q3 2022 close was CAD 1.31, as compared to CAD 1.26 at Q2 2022, which is a weakening of the Canadian dollar in the quarter. FTG's balance sheet includes assets and liabilities denominated in U.S. currency, with a net out asset balance of approximately $10.3 million.
The translation of our U.S. dollar assets and liabilities into Canadian currency at the end of Q3 2022 resulted in foreign exchange gains for the quarter of CAD 0.3 million, compared to CAD 0.4 million in the prior year quarter. Although FTG does maintain an active FX hedging program for the sales and purchases in foreign currency, we currently have an unhedged balance sheet position with $5.6 million of cash within our Canadian and Chinese operations. EBITDA was CAD 2.8 million for Q3 2022, as compared to CAD 3.1 million in Q3 2021. Excluding government assistance programs in Q3 2021, EBITDA increased by CAD 2.1 million- CAD 2.8 million, or 11.9% of sales in Q3 2022, from CAD 0.7 million or 3.3% of sales in Q3 2021.
For Q3 2022, FTG recorded earnings before income taxes of CAD 1.3 million, as compared to earnings before income taxes for Q3 2021 of CAD 1.5 million. However, the prior year quarter included government assistance of CAD 2.5 million. The Q3 2022 income tax provision of CAD 0.5 million, or 41% of pre-tax earnings, reflects that the corporation's Canadian and Chinese operations were profitable, and that deferred tax assets on certain foreign operating losses were not recognized in the quarter. Our net cash position as of Q3 2022 is CAD 10.8 million, as compared to net cash of CAD 17.1 million as of Q3 2021. The lower net cash position reflects the acquisition of the Aerospace Chatsworth facility during the quarter for cash consideration of CAD 8.5 million, or $6.6 million.
Our intention remains that we will complete a sale-leaseback transaction for this facility on suitable terms. Excluding this transaction, free cash flow in Q3 2022 was CAD 4.6 million, as compared to CAD 0.2 million for Q3 2021. The increase in free cash flow over the prior year quarter is due to favorable changes in non-cash working capital of CAD 2.7 million, principally customer prepayments, and that Q3 2021 included non-cash earnings of CAD 1.7 million from the PPP loan forgiveness. As at quarter end, the corporation's primary sources of liquidity totaled CAD 50 million, consisting of cash, accounts receivable, contract assets, and inventory. Further, we had $19 million of unused lines of credit. Working capital at Q3 quarter end was CAD 30.8 million, as compared to CAD 40.0 million as of the 2021 year end.
The reduction in working capital was primarily due to the use of cash to acquire the Aerospace Chatsworth facility. During Q3, we also deployed CAD 800,000 in cash to buy back 412,700 shares at an average price of CAD 1.96. Accounts receivable days outstanding were CAD 67 as of Q3 quarter-end, compared to CAD 72 as of the 2021 year-end. Inventory turns were CAD 3.7 as of Q3, compared to CAD 3.4 at the 2021 year-end. Accounts payable days were CAD 68 at the Q3 quarter-end, as compared to CAD 86 at the 2021 year-end. We completed Q3 2022 with a book-to-bill ratio of CAD 1.21 and a backlog of close to CAD 56 million.
Backlog includes CAD 31 million of orders scheduled for Q4 2022, with the caveat that we are encountering constraints in the supply of certain aerospace components and to some degree, labor also. We believe these conditions are prevalent throughout the aerospace and defense industry today. We will continue our focus on cash management and the balance sheet, cost control, and operating efficiency. Our complete set of Q3 2022 filings are now available on SEDAR. With that, I will turn things back to Brad.
Thanks, Jamie. Let me delve into some important items regarding our performance across FTG. For me, I thought our Q3 had further improved operational performance. If you look at Q3 this year versus Q3 last year and exclude the government assistance received in each of the quarters, the revenues this year increased CAD 3.4 million, and the bottom line improved CAD 2.5 million. Takes exceptional operational performance to achieve a contribution margin of over 70%. We did have a bit of a benefit from the weakening of the Canadian dollar, but still, the operating performance was really pleasing to see. We have a similar improvement on the year-to-date basis, where sales are up CAD 6.8 million, and the bottom line is up CAD 5.4 million, again, excluding government assistance. This too is a 70% contribution margin.
We were very pleased to announce that we had been approved for CAD 7 million under the Canadian Aerospace Regional Recovery Initiative program in the quarter. This program provides assistance to help Canadian aerospace companies recover faster from the pandemic. It is certainly going to enable FTG to play more offense. In the quarter, we filed our first claim and received CAD 1.3 million in funding under the program. In our aerospace business, our Toronto facility has done a great job in managing through the pandemic, but now the focus is on growth. They have made some good inroads in increasing activity in the defense market. We saw a big recovery in their simulator business in Q3, at least in terms of new orders, and this should benefit the Q4 of 2022 and beyond.
We've had a few supply chain challenges, such as chip shortages this year, but so far we have mitigated the impact down to a manageable level. It has, however, delayed shipments and our ability to ramp production as fast as our orders have ramped up. Our Aerospace Chatsworth facility was also impacted by push-outs of suppliers for some military components, but they continue to have a long list of new sales opportunity, almost all coming from the defense market. They continue to see and win U.S. Defense aftermarket opportunities, again, resulting in the DLA being in our top 10 customers for the first time in Q3 this year. Our Aerospace Chatsworth facility operating performance was significantly improved in Q3 this year, and they are profitable for the quarter and for the year to date. Of course, there's the Aerospace Chatsworth facility itself.
In the quarter, we took possession of the building, which we needed to do to protect our operations there. We are working to find the right sale-leaseback opportunity to return to being a tenant and free up cash for other investments. In our Circuits segment, bookings in our Toronto facility have been very robust this year as the commercial aerospace industry recovers. We are taking actions to ramp production in line with this increased demand. Q3 was impacted by some equipment challenges, but they were still solidly profitable. In July, the collective agreement with the represented staff at that facility expired. Negotiations are ongoing. Given the reality of the current levels of inflation in Canada, there will be increased costs in a new agreement. Until a contract is ratified, there's always the possibility of a work stoppage.
Circuits Fredericksburg is back on track after a slow start to 2022. Q3 saw solid performance. Circuits Chatsworth had improved operational performance in Q3 this year with sales up in the quarter and year to date. We continue to invest in the business to further improve performance, including additional capital equipment, process improvements, and strengthening the organization. This site is not yet at the performance levels we expect. Both our China sites are exclusively focused on the commercial aerospace market. As noted from the Boeing market forecast, Asia remains a key market for commercial aerospace activity. Our aerospace Tianjin facility has seen orders increase consistently since the start of 2021 as the commercial aerospace market recovers and they win new work. Q3 sales were up 130% compared to Q3 last year.
In Q3 this year, a significant portion of the increase was for new cockpit products for the Boeing 737. These orders are showing the results or return on investment from a multi-year effort to have the Tianjin and Toronto sites approved to supply cockpit products and panels to Boeing. Tianjin is also seeing strong demand from their business jet customers and in general aviation. We have a hiring plan in Tianjin that would see us add 40%-50% more production staff as fast as possible. At their current capacity, they are sold out through 2022. Of course, our goal is to add capacity so they can continue to grow.
On September 29th, CAAC in China announced that Comac had received the type certificate for the C919 aircraft, indicating the design and production process have complied with national standards. This is an important milestone for the program after 14 years of development. It represents a transition from a development program to a production program. Comac has reported more than 800 orders for the aircraft. At our Circuits joint venture in China, we saw new wins and increased demand at that site in Q3 and in the coming quarter. Sales were up almost 120% year-to-date compared to last year. We continue to manage our balance sheet but also to leverage its strength. Our net cash on the balance sheet is above CAD 10 million at the end of Q3.
This is after the acquisition of the facility in Chatsworth, CAD 900 ,000 in share buyback so far this year, and after normal investments in the business and CapEx in R&D. As part of managing our cash, we have initiated actions to repatriate some cash from our China operations. Their strong performance has resulted in surplus cash building in both businesses, and we believe we can deploy that cash elsewhere in the world to achieve better returns. We are seeing a number of acquisition and corporate development opportunities arise that could fit with either of our businesses. Given our commitment to playing some offense and our very strong cash position, we are evaluating and pursuing them. Our criteria for any such transaction would remain what we've always said.
It would need to meet a number of the following objectives: be aligned with our market and product focus, expand our technology, expand our geographic coverage, such as Europe or India or other top 10 Western defense countries, accelerate FTG's penetration of the aftermarket, drive up plant utilization, be an attractive price and multiple, be accretive to earnings. Finally, looking forward into the balance of 2022 and beyond, there are reasons for optimism. As already noted, the industry is recovering and ramping production. Our sales team has been doing a stellar job, and we are seeing them winning new programs and adding new customers. We are playing offense to capture new work. With a focus on operational excellence in all parts of FTG, we are confident we remain on a growth trajectory in the coming quarters. This concludes our presentation. I thank you for your attention.
I would now like to open the phones for any questions. Marcella?
Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. If you'd like to withdraw your request, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Nick Corcoran from Acumen Capital. Your line is open.
Good morning. It's from Acumen Capital. First question just has to do with the inflationary pressures you may be seeing in the business. Have you seen any upward pressure on either input costs or labor, and have you been able to pass on any price?
Yes. Simple answer is yes to both of those. You know, we are seeing material cost increases in both our businesses. You know, on the circuit side, I'd say it's more just general price increases on the materials. On the aerospace side, we're seeing as lead times push out for components, if you want to get them faster, you need to pay premiums and expedites to get them in. Both of them definitely are seeing inflationary pressures. Labor, you know, yes. Again, yes. You know, as I talked about, we are in negotiations right now with the represented staff for Circuits Toronto, and there is no doubt that the fact there's inflation around is going to put pressure on those negotiations.
to your question about, you know, can we pass it on? Yes, but not 100% across the board. You know, in some cases, we have contracts that have multiyear pricing, and those ones are tougher to address instantaneously, although we're doing what we can. For sure, as any of these contracts come to their end, we are definitely passing on all of the inflationary costs to those customers. The good news is, you know, a number of the significant contracts we have are at the end, and so we are right in the midst right now of you know, repricing parts, reflecting today's reality.
Great. You mentioned there's been an impact from availability of electronic components. Can you quantify what that impact was in the quarter?
Yeah. I'm gonna generalize it a little bit. It's a combination a number of things, what I'm gonna talk about. Definitely, you know, there's some delayed components that are impacting revenue, as Jamie said. You know, there's also a little bit of impact from not being able to staff as fast as we need to support the ramp in orders. You know, as of the end of the quarter, our past due orders to customers was on the order of CAD 5 million or CAD 6 million. You know, I don't think we're ever expect to be perfect, but that's a big number for us. You know, that is the impact of not being able to get product out the door to meet the customer's dock date.
Great. Obviously a strong backlog at quarter end. How much do you expect to get through in the Q4?
Yeah. As always, Nick, you know, we don't give official guidance. You know, we have huge backlog, as Jamie talked about. No, we're gonna continue to struggle to ramp fast enough to support that. I would be surprised if we could actually bring down our past due orders much in the quarter, if at all.
That's great, [Brad]. Thanks. Take my questions.
Okay. Thanks, Ben.
Your next question comes from Paul Steep. He's a Private Investor. Please go ahead.
Hi. Good morning. I joined the call late, but I've got a couple questions. Maybe could you talk firstly about the decision to purchase the Chatsworth facility versus extending the lease there?
Yeah, sure. It was not our first choice, but it was our only choice. The reason I say that is our lease was coming to a conclusion, and as it did, the landlord decided it was time to sell the building. You know, that, at the beginning, was not a big deal. The problem was it was listed, and truly the first 10 people that went through wanted to buy it and use it for their own purposes. You know, we would not have a facility. We quickly made a decision. We need to buy it to maintain our production facilities. We just would not have had enough time to find a new facility, build it out, get the government certifications that we need. It would've just totally destroyed our aerospace Chatsworth business. We bought it.
You know, we bought it to protect our production. Long term, our goal is not to own real estate. We don't own any other real estate at FTG. Having bought it, you know, dealt with our problem, we are now looking for a sale-leaseback opportunity that we could go back to being a tenant.
Perfect. That helps. If I look back at the history of FTG, I guess you've done eight acquisitions that I can see back through 2003. Maybe talk about which of those you view as being the most successful that we might look at as a template. Would we wanna think about the Teledyne purchase in 2016 or Colonial Circuits? You gave us a sense of the flavor of how you're thinking about deploying capital, but I think it'd be helpful in this market. I've got one follow-up. Thank you.
You know, a couple of comments on that. That's a good question. When we have done acquisitions in the past, we have always done them for a specific reason. You know, either we're looking to buy a technology or to, you know, buy a revenue stream or to add some capacity. You know, so it's very situational what we do. I guess having said that, if you go back to the last three, in 2016, we did two acquisitions. We bought Teledyne Printed Circuit Technology, we bought PhotoEtch. Both of those were to buy a revenue stream. Neither of those businesses was performing well, but our goal was to take that revenue, move it to our existing facilities, drive up utilization, and, you know, make them successful.
Those types of acquisitions are definitely the toughest, because in the aerospace and defense market, when you move product between sites, you get into a lot of certification requirements and qualifications and testing, and it just, it's a very tough type of acquisition. The fact we did two together in 2016 was, in hindsight, not the best idea we've ever had. We got through that and, you know, we definitely have had, you know, the upside of that additional revenue ever since. Those were definitely tougher to get through, but they definitely helped FTG and, you know, moved us to another level. In 2019, we bought Colonial Circuits. We're actually looking to buy capacity. Our timing was not perfect because, you know, within six months of buying it, there was a pandemic.
Nevertheless, from an integration perspective, that was a much easier acquisition because our goal was buy it, run it as is, where is, no transition of parts or anything to other FTG sites. Those are much easier to do. You know, as we look forward, you know, right now, I would say generally, we're looking more at the easier integration type opportunities. I can't think of anywhere that we're looking at somewhere it would be a buy it, close it, move all the revenue. That's important because it, you know, it does definitely reduce the risk of the acquisition and helps them be accretive much faster.
That's great. That helps. Last one for me, just, and you might have caught a bit of it earlier on. I noticed that contract liabilities spiked fairly materially this quarter. In fact, I don't think it's spiked like this since the start of 2018 and the start of 2020. Is the deferred revenue that you take in specific to a particular customer contract, and should we think that it just sort of waterfalls the way it has in the past where it sort of burns off over three quarters? Thank you.
Yes. The contract liability, I guess, is the current accounting terminology for advance payments. Those are specific contractual payments from specific customers that will, you know, burn off over the period of performance of the contract and a Q3-Q4 assumption would be fair.
Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. There are no further questions at this time. Please proceed.
Thank you. A replay of the call will be available until November 13th this year at the numbers and passcode listed on the 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.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you disconnect your lines.