Greetings, and welcome to the Astronics Corporation Q3 fiscal year 2021 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Deborah Pawlowski of Investor Relations. Thank you. You may begin.
Thanks, Daryl, and good morning, everyone. We appreciate your joining us here today. On the call with me are Peter Gundermann, our President and CEO, and Dave Burney, our Chief Financial Officer. You should have a copy of our Q3 2021 financial results, which we released earlier this morning. If not, you can find them on our website at astronics.com. Let me mention first, as you're likely aware, that we may make some forward-looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the release as well as with other documents filed with the Securities and Exchange Commission.
You can find the documents on our website or at sec.gov. During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the table that accompanies today's release. With that, let me turn it over to Pete to begin. Peter?
Thank you, Debbie, and good morning, everybody. Our agenda this morning is to review the Q3 again, which was a mixed quarter. If you've read the press release, sales were light, as was the income statement. On the other hand, bookings were very strong with a consolidated book to bill of 1.37. Our discussion will basically vacillate between reviewing the income statement, which is disappointing to us, and bookings, which we're very pleased about. Also sprinkled throughout the conversation will be a couple of significant cash events. Dave will go through the details, but we have an AMJP award which happened late in the quarter and had a minor impact on our income statement. It'll have a bigger impact in the Q4 and the Q1 .
Also subsequent to the Q3 , we sold a facility which will be reflected in our Q4 results, but is another kind of worthwhile cash event to spend some time on. We'll close with some expectations of the Q4 , as far as we can see and a little bit of discussion on 2022, although we're not gonna be at a point today where we can provide much guidance going forward at this point. Q3 summary, sales were disappointing at $112 million. We guided with our Q2 release to sales of $115 million-$120 million, so we obviously missed our own target. The big challenge, frankly, is supply chain related, probably a recurring theme that you've heard about from a bunch of companies. Secondly, personnel challenges or shortages.
We figure the supply chain hit for the quarter was somewhere in the $8 million-$10 million range, and we can talk through the specifics of how that plays out. Long story short, we use a lot of electronic assemblies and a lot of smaller components in our products, and lead times are extended and unpredictable and leaves us less able to respond to short-term requests for changes from customers. There's a constant churn among our customer base over the course of a quarter. Sometimes they wanna push things out a little bit, that's not a problem. When they wanna pull things in, we can't respond these days the way we normally could if our supply chain was acting normally.
If you accept the $8 million-$10 million number, that puts us at or above the predicted range, and that's, I guess the frustrating backwards look at our Q . In terms of personnel across the company, we are at about 2,200 people right now. We would like to be about 2,400, and we're actively trying to bring up our resources. That shortage had some impact on our revenue levels in the Q3 , but it pales in comparison to what the supply chain problems were. Weak revenues hurt the income statement obviously, but the bottom line does show some improvement over comparable revenue in previous quarters. The Q2 had comparable revenues of $111 million, an adjusted EBITDA just above break even.
In the most recent quarter on similar revenues, adjusted EBITDA of about $2.8 million. That has more to do with mix than anything. More aerospace and less test, we feel drove the positive EBITDA in the Q3 . I mentioned AMJP earlier. For those unfamiliar, that stands for Aviation Manufacturing Jobs Protection Act. It's a program that's been run by the Department of Transportation. There are a bunch of qualifications and requirements. We put in an application, probably six months ago, five months ago?
It was worked on for that period of time, signed at the end of September.
Right. We got the award in the end of September. Dave will talk a little bit about what the requirements are, but we basically got our full application amount of $14.7 million. There was a small benefit in the Q3 of $1.1 million and a reduction of cost of goods. It'll be a much more significant impact in the Q4 and the Q1 as the thing has a six-month period of performance. The bright spot in the quarter for sure was bookings, consolidated of $153.5 million, book to bill of 1.37. That continues a very positive trend over the last four quarters, and I'm gonna throw out a bunch of numbers which are evident in the table on the last page of our press release.
The last four quarters total bookings have trended very positively, 116 - 120, 126 - 154 over the last four quarters. Total for the last four quarters, $516 million, a book to bill of 1.16 over shipments over the last four quarters. The numbers are driven by a very positive aerospace trend and a negative test trend, so a real mix change in the business in terms of bookings. Aero bookings in this most recent quarter were $142 million for a book to bill of 1.49, so 50% higher than shipments. Again, the sequence over the last four quarters, if you look at that table, is very noteworthy from our perspective.
$74 million - $100 million to $118 million - $142 million. That means the total for the last four quarters in our aerospace segment was $435 million, a book to bill of 1.22. One caveat in there is that in the most recent quarter, we did get a significant amount of bookings that are categorized in our aerospace group, but when they ship, they will appear as in the other category, which we expect to happen over 2022. That total is somewhere in the neighborhood of about $17 million. The aerospace news is driven by a pretty solid set of good news across most of the industry that we service. Narrow-body activity in particular is very strong.
Flights are up, load factors are up, and production rates are ramping, with the primarily driven by 737 MAX. We're shipping in the mid- to high teens these days, or we were through the Q3 in terms of ship sets per month. Retrofit activity is picking up noticeably. We think that's been a major driver, not only for the strength in the last quarter, but looking forward, we see a target-rich environment there that we expect will drive us very positively for the foreseeable future. Wide body activity, on the other hand, remains pretty subdued, but we are encouraged by the current easing of international travel restrictions, particularly in the U.S., which should pick up or should promote wide body utilization as we close out 2021 and enter 2022.
Similarly, business jet demand for the OEMs has been very strong. I'm sure you've all read about the book to bills that the major OEMs are reporting. We should benefit from that in terms of higher production rates forecast for 2022. We aren't necessarily seeing that in our production yet. There's a lag between their orders from their customers and their orders to us. We're sitting on that and looking to see what our 2022 production rates are gonna be like. We expect them to be higher. Finally, military aircraft, about 10% of our business in a typical year, is stable, remains strong, mostly driven by F-35 these days and a few other premier programs.
While I'm talking about the aerospace market and industry, I do wanna take a little bit of a detour here and talk about an emerging opportunity which we're pretty excited about, and some of you have probably read about. There is a trend for a number of startups in the industry and more established companies also who are developing electric aircraft. Often these aircraft are categorized as EVTOL airplanes, electric vertical takeoff and landing airplanes, but also conventional aircraft with electric propulsion. We are of the opinion after having done some development and a pretty comprehensive review of the industry, that some of our skill set is directly applicable to these type of aircraft.
We haven't talked about it too much as a kinda main course of conversation over the last couple years, but we have been busy developing a franchise of electrical power distribution primarily for smaller airplanes. Many of you have heard me talk about or us talk about programs like the Textron Denali or the Pilatus PC-12 or the Bell 525. More recently, we've been talking about our involvement in the FARA and FLRAA competition for the U.S. Army Future Vertical Lift. The capabilities we have and the expertise we have developed is increasingly apparent, is directly applicable to this emerging electric or eVTOL segment of the industry.
I don't have a whole lot of predictions beyond this here today other than to do this little bit of introduction because we expect that as we wrap up this year and move into next year, this part of our business will get a few headlines, and we expect that it should be a promising area for us to play in as we go forward. Skipping over to our test business. Our test has had a tough spell here. It's been a downward trend with both sales and bookings under pressure the last few quarters. We think of it as an $80 million plus business, so we need to average at least $20 million a quarter in bookings to keep things healthy, and the last few have been about half of that.
Our Q2 was about $8.2 million, and this quarter, Q3 was $11.1 million, way off where we want to be. We've talked about it before and the story has not changed. We feel like these delays in orders are largely related to the COVID-19 pandemic and the work from home scenario that a lot of our customers in this space are dealing with. We do not feel that we have lost anything competitively, and we are seeing some signs of life. Our October booking, subsequent to the Q3 , the first month of the Q4, came in at just shy of $12 million, $11.9 million. We booked more in October than we did in the Q3 , which was more in the Q2 .
The optimist in me says that hopefully things are starting to break loose and our Q4 bookings level should put us back on a healthy track. Taken together, we ended the quarter with a backlog of $354 million. That's up from the beginning of the year when we began with $283 million, and we think sets us up pretty well for expectations going forward, which I'll talk about more in a few minutes. For now, I wanna turn it over to Dave to go through some of the specifics of the income statement and our banking arrangement and some of the cash events. Dave?
Thanks, Pete. Consolidated sales in the Q3 were $111.8 million, lighter than we expected, but up 5% from last year's Q3 and flat sequentially with the Q2 of this year. Going into the quarter, we were expecting higher revenues, but material shortages had a larger impact than expected. At the end of the quarter, we had about $8 million-$10 million of backlog, as Pete mentioned, that we could have shipped if we had the inventory to complete the work. Aerospace segment sales continued to improve, with sales up 16% over last year's Q3 and up 7.3% sequentially from the Q2 , and up 17.6% from the Q1 of this year.
Most of the improvement this year has been in the commercial transport market, which had sales of $57.5 million, a 30.6% increase compared to the Q3 of last year, and up 20.4% sequentially from the Q2. Driving the increase has increased volume of our seat and passenger power products as activities with the airlines have increased. Additionally, volume increases for passenger service units, primarily for the 737 MAX, have increased. In the test segment, revenue declined by about 33% compared with last year's Q3 and driven by decreases in defense and transit areas. Operating margins improved compared with last year's Q3 , reflecting the higher sales volume and the recognition of $1.1 million of AMJP money.
We received the proceeds for about half of the $14.7 million grant during the quarter, but we'll recognize the income from the grant over a six-month period that started near the end of September when the grant agreement was signed. We expect that we'll recognize about $7 million as a benefit to gross profit in the Q4 , with the remainder recognized in the Q1 of 2022. We expect a second cash installment of approximately $5 million-$6 million to be received in December of this year and the balance upon final reconciliation of the allowable labor costs in mid next year. The AMJP is a grant program administered by the Department of Transportation that provides grants to eligible aerospace companies to support those companies in retaining jobs in the area of commercial aerospace.
Grants based on an estimate of eligible labor costs over a 6-month period and requires grantees to retain those jobs. Switching over to a little bit of a forward look. We're forecasting near-term margin headwinds as we move into 2022 due to increased raw material costs and shortages, as well as tight labor market. The supply chain situation is complicated and changing on a daily basis and difficult to predict. Regarding tax rate, some of you will notice that we have a bit of a strange tax rate. Typically, in a period of loss, you see a tax benefit. Ours continues to look a little strange as we fully reserve and will continue to reserve all of our deferred tax assets.
We fully expect to be able to realize these and utilize these assets to offset future income tax expense, but the guidance for accounting for such assets when the company has had several years of losses requires us to fully reserve them. We do not expect we will have any federal cash income tax expense or GAAP income tax, or benefit through the 2022 and into 2023 periods. In terms of liquidity and debt, we were in and continue to forecast to be in compliance with our debt covenants. For covenant purposes, we were slightly below our maximum leverage limit of 6x adjusted EBITDA for the quarter. Forecasted top line growth in the coming quarters, as well as some positive one-time items, such as the AMJP grant, sales of Fort Lauderdale building and tax refunds will help.
The Fort Lauderdale building sale was concluded at the beginning of October, so it was a Q4 event, and it was part of a planned facility consolidation. The consolidation is expected to be completed by the end of the Q2 in 2022. We're forecasting rolling four-quarter EBITDA margin improvements as we move through 2022 with the goal of moving our leverage below 3.5x adjusted EBITDA. Our maximum leverage for the Q4 of this year is 5.5x and is based on net debt as a reminder. Short note on cash flow. Cash flow from operations for the Q3 was poor and was driven by an increase of about $21 million in net working capital in the quarter.
The larger pieces of the working capital changes during the quarter were accounts receivable, which increased by $10 million, inventory increased by $4 million, and payables were down by $6 million. Having an impact on the receivable balance was increased sales to customers with payment terms of 90 days during the quarter. That is driving a lot of the receivable increase that you see on the balance sheet. That concludes my remarks, Pete.
Okay. Looking ahead, we are forecasting Q4 revenue of $115 million-$118 million. We did consider supply chain constraints in determining this number. Our Q3 backlog of $354 million, or our Q4 backlog at the beginning was $354 million, $113 million of which is scheduled to ship in the Q4. You might think getting from $113 million into the range of $115 million-$118 million shouldn't be that hard, and I would agree with you. In normal circumstances, kind of book and ship business, if we go in with $113 million, we might expect to be in the mid-120s at least.
Given the supply chain constraints, it's just difficult to count on doing that. There's noise and opportunity, I guess, both on the high side and the low side. Our best chance, best range right now is $115 million-$118 million. We're not ready to predict 2022 yet. Hopefully, we will be comfortable saying something when we talk about our Q4 results. We are comfortable saying that we expect it will be a strong year of strong double-digit growth. We believe everything's kinda lining up such that, you know, unless there's some kind of another variant round, which would be terrible, or something crazy in the world, we think we're in for a strong double-digit year, looking forward to 2022. Frankly, can't wait to get there.
I think that ends our planned remarks. Daryl, if we wanna open it up for questions, now would be good.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your questions.
Hi, good morning, guys. Thank you for taking my questions. My first one is, Pete, I was wondering if you could give us a little more color regarding that bit of Aero book-to-bill. I'm not sure what exactly that means or what kind of product line that was.
Can you say that again, Jon? I'm not sure I followed.
I think you said that you booked something into aerospace that you said would have gone into the other segment. I'm not sure I quite understand that.
Other. You know, we break out our revenue into military, business jet, commercial, and other, and it'll show up in other.
Understood. Okay.
In the Aerospace segment.
Yep. Okay. Got it. That makes more sense now. Okay. And you know, I caught the comment that said you had planned for you know, supply chain disruptions in Q4. I was just wondering, at least $8 million-$10 million are pushed out that much into Q4 from Q3. Is there an expectation of the same amount as you go into Q4 and roll into 2022, or is that number going to increase or decrease? I'm just wondering how you tried to handicap that going forward.
Yeah, it's a really good question, and I think we think it's gonna get a little bit bigger going forward. You know, we do regular reviews with our business units, and one of my recurring questions is, you know, is the supply chain picture getting better or getting worse? We have, I don't know, 12, 13 different operating units, and nobody is telling me it's getting better, frankly, at this point. You know, some are saying it's kind of staying the same. Nobody but nobody's telling me it's getting better. That tells me that, you know, as a group, it's probably getting a little worse, which is discouraging. We try to factor that into what we expect is gonna happen in the Q4, and we'll obviously report a number when we get there.
We think, we hope, that 115-118 number's pretty safe.
Got it. That's actually a color. I was just wondering, what are your thoughts on wide-body production and retrofits going into next year now that, you know, these travel restrictions are lifting and frankly, everybody was hoping and waiting for this? So is it in line with your expectations, or do you think there might be some upside? You know, just help us understand, how much is being made now versus how much you think it'll get to next year.
I don't expect production rates necessarily to move much next year. You know, I think the well-publicized rates by Boeing and Airbus probably take this into account. You know, we would hope that there would be activity on the retrofit side for our main products for commercial transports, which are mostly in-flight entertainment related. I guess I would tell you that if the narrow-body trends are any indication, when it comes back, it should come back pretty strong. Production rate's nice, but aftermarket's nice also. I'd expect to benefit from an aftermarket pickup before a production rate pickup.
Okay, great. Thanks. I'll jump back in queue.
Okay.
Thank you. Our next questions come from the line of Michael Ciarmoli with Truist Securities. Please proceed with your questions.
Hey, good morning, guys. Thanks for taking the questions. Maybe, Dave, first, just can you reconcile the. Are you adjusting or adding anything else back to the EBITDA to get to the covenant level? I think you said, you know, the rolling four-quarter leverage should improve to below two times. What. Are there any other inputs that's
No, no
back to the-
I don't think. If I said the rolling four-quarter EBITDA leverage improved to 2x, that was a mistake.
No, I said, 3.5 times. Right.
I said that's what our goal is as we move into 2022.
Okay.
Yeah.
Okay.
Yeah. No, to get to the covenant adjusted EBITDA number, you need to adjust your traditional EBITDA calculation for the non-cash expense items that you have on the top part of the income statement.
Okay.
That's the largest. We did utilize about $6.6 million of excludable legal expense for the quarter to increase
Okay.
our adjusted EBITDA.
Okay. Got it. Helpful. Maybe just more on the supply chain. You know, Pete, I guess, you know, looking at Aerospace, you had that little bit of $1.1 million tailwind, but you were just about at breakeven operating margins. You know, probably could have been, you know, significantly better had you had that extra $8 million-$10 million drop through in there. When we think about the pressures from supply chain and maybe inability to get product out the door, you know, can you specify, is this all electronic components, chips? And then can you maybe talk about the pricing environment as well?
Are you having to pay significantly more for some of your raw material inputs, and whether there's freight, logistics, and how we should think about that going forward in terms of impacting segment margins?
Sure. We are seeing pressures in a wide range of commodities that we buy. I would say the biggest general area is in electronic components, because we build a lot of electronics and a lot of assemblies that, you know, require chips and diodes and capacitors and components that come primarily from Asia. That has definitely been a point of pain. We're also seeing it in things that you might not expect, like plastics or even paint. You know, we have some parts of our business that are heavily dependent on molding and die casting, things like that. Even those kinds of materials have been problematic. It's pretty widespread. Part of the frustration, frankly. It's unpredictable.
You know, you bid on a program, and you refresh your suppliers, and you get pricing and lead times, and you relay that to your customer, and then the customer gives you an order, and you go to place an order, and something they said was 8 weeks is now 30 weeks. It's that kind of thing that can really screw up a delivery schedule. We are seeing some price pressure, primarily in the area of going out and doing spot buys because our blanket arrangements with existing subcontractors, you know, are falling short. They're just not delivering on time. We are seeing some of that. I think it's not something that we would consider permanent at this point, but certainly, troubling and problematic. I mean, it's gonna play through our income statement in the beginning of next year.
We're still trying to figure out exactly how to quantify it. You know, our perspective is that our customers want parts, and we have a history of servicing them to a certain standard, and we're going out and buying some components over and above what existing backlog justifies in anticipation of being able to support those orders when they come in. It's a little bit of a you know, a guessing game to some extent. When you're looking at customers that expect things in 12 weeks maybe, and suppliers that are now you know, pushing things out to 20 or 30 weeks, you gotta kinda take proactive action. I'm gonna turn it over to Dave to see if he wants to augment that discussion at all.
Yeah, it's particularly hard to quantify because it's, you can take one group of materials, you know, say resistors, and some are available and some aren't available. Some have had 20%, 30% price increases, and some have not. It's not straight across the board situation, on all similar components, and it's difficult to project.
Got it. What about pricing? I mean, are you increasing your prices to your customers? I mean, with a you know, I think you're probably still 80%-90% market share globally. You know, I would think you'd have some success just pushing that through, whether it's to airline customers or the OEs directly or IFE providers. You know, any kind of color there?
Yeah, I think you're right. Compared to a lot of companies, we probably have a little bit more pricing flexibility and short-term ordering patterns that will allow us to do that. But I use the word will allow us to do it, not that we've done it already. I mean, in some parts of our business, we have increased pricing to reflect increased costs or reduced volume, frankly. We have blanket agreements with some of our major customers, which are volume dependent, and the volumes dropped as part of the whole pandemic effect on the industry. In some of our parts of our business, we're doing some other kind of innovative things like putting on a temporary surcharge to cover what we think are temporary increases in cost.
That's actually kind of been working, I guess. You know, we haven't had much pushback on that. We definitely have an eye out for it. I would tell you that the price increases that we've seen so far are outpacing the opportunities that we have to increase pricing going to our customers. Over time, that'll all equal out, but there's probably gonna be, you know, hopefully a 3- or 4-month lag, could be a 6-month or a year lag, before it all kind of balances out.
Got it. All right. Perfect. I'll jump back in the queue here.
Good.
Thank you. Our next question comes from the line of Dick Ryan with Colliers Securities. Please proceed with your questions.
Thank you. Say, Pete, what's the status of the earn-out on the semiconductor business sale? Where does that stand at this point?
No real change in that. We're hoping to get that resolved here. We have an opportunity perhaps later this month where something may break loose, but we don't have anything new to report on that at this point, Dick.
Okay. You've had some strong orders in the AeroSat, you know, the satellite tail mount satellite antenna. What's your outlook there? You know, you've had two bulk orders, I think you'd probably classify them, maybe not. What's your outlook going into 2022 for the tail mounts?
It's pretty solid. Percentage-wise, it's probably gonna be one of our fastest-growing product lines in the business, but it's still relatively small. I think, you know, we're expecting revenues of about mid-$20 million range. That's gonna be up, you know, 30%-50%. That's actually one of the areas just to tie all this together 'cause it's all kind of interrelated. That's one of the areas where we could probably deliver significantly more if we could get the parts. But it's a very complex assembly. It's got a pretty long supply chain, and we're really challenged to do that. But that is an example where we could, especially here in the Q4 , we could probably, you know, do twice what we're actually planning to do if we could just get the parts.
Okay. Can you comment on the down select, maybe timing as you see it for FARA or FLRAA and how you're playing into, you know, either one or both?
Yeah. Well, FARA is out a ways. It is behind FLRAA. I'll concentrate my discussion on FLRAA. We think that the architecture that the army wants favors our technology very strongly. We think there's gonna be a down select between the, you know, Lockheed/Sikorsky team and the Bell team, sometime, late Q1 or into the Q2 of 2022. We are a primary team member on the Bell team. Our role there is pretty defined, although still evolving. We're, you know, hopeful of opportunities with Sikorsky if Sikorsky team were to be successful, but that's less firm at this point.
If the Bell team wins, it'll be a real significant program for us, as early as the second half of next year from a development perspective. You know, ship set contents will easily be the biggest we've ever seen in that type of product, the electrical power distribution system, to date. More on that as it happens. It's basically a first half 2022 event.
Okay, great. Thank you.
Thank you. Our next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your questions.
Hi. Thanks for the follow-up. Dave, I was wondering with the net working capital use and, you know, slightly up revenues and maybe a margin headwind next quarter, do you expect to remain with your covenants next quarter and kind of what are the puts and takes to get there, especially with some of these one-time items you're talking about?
Yeah, we do expect to remain compliant and actually to improve on our leverage ratio in the Q4 . A couple of one-time things to rehash a little bit. We expect about $5 million of additional AMJP cash to come in in the Q4 . Well, we received $9 million for the sale of the building, just under $9 million, in the beginning of the Q4 . We're expecting tax refunds of roughly $10 million to come in during the Q4. You know, $23 million-$24 million of cash inflow from kind of non-operating type of stuff there will help.
The top line growth that we're expecting going from $111 million in the Q3 , you know, up $4 million or $5 million into the Q4 is gonna add margin. That's gonna help there as well.
Okay, great. Thank you. Just as we head into next year, Pete, I think you said you felt confident in double-digit growth, a strong double-digit growth. I was just wondering with the component headwinds, you know, other inflation like, you know, just everything that's out there, like plastic and labor like you mentioned, you know, hiring more people, retaining more people, I'm just wondering what kind of EBIT or EBITDA margins are possible in that environment. Maybe, you know, you know, I don't know if you're looking at a full year basis or maybe, as we roll through the quarter, things get better. How should we think about the potential next year if you hit the growth targets you're thinking about?
Well, there are obviously a lot of big unknowns, and we don't typically give bottom-line guidance. If we're reluctant to issue top-line guidance at this point, it's the bottom line is even that much more complex. If we can do strong double-digit, and I, you know, I would expect if things were to work halfway reasonably, we're gonna be, you know, well into double-digit growth. It ought to have a very strong positive impact to our income statement. I don't think we're set up to get back to, you know, 15% EBITDA numbers at this point. We should take some pretty solid steps in that direction.
I think we need to table the discussion, you know, before we get into any more detail until we can talk about revenue confidently. Certainly we would expect to you know start to see stronger adjusted EBITDA numbers at that higher revenue level. Dave, I don't know if you wanna comment.
No, I agree. I think it's the top line and we're gonna have the additional contribution margin from that. Strong sales growth we're expecting, there'll be some offset to it with the inputs on cost going up a little bit there. I think we'll start the process of working our way back. We won't get into those double digit EBITDA multiples next year, I don't think. Certainly as we move into 2023, that's something that is within range. I do think we'll improve steadily as we move through 2020, 2022.
Okay. Great. Last one for me. Just with regards to the orders in the quarter, $153 million, does that mean you have line of sight to a quarter that's about that big in revenue terms within the next two or three quarters? Or is the timing or lumpiness of that going to preclude that from happening as you see it? Just help me understand what the timing and lumpiness in the backlog looks like.
It's a good question. I think we do have line of sight trending in that direction. I mean, you look at the last four quarters cumulatively, we have bookings of $516 million, and that's with $280 or so in the last two quarters. If we get any kind of continued improvement, you know, we ought to be able to push that forward quarter moving total up to close to the $600 million level. Sooner or later, you gotta ship that stuff, right? We're obviously gonna struggle, we think, for a while with supply chain like everybody else in the world. I don't know where all the workers went, but hopefully some people start coming back into the labor market.
You know, the best takeaway from our position right now, looking backward at the Q3 and even the early days of the Q4 , is that demand picture is really strengthening nicely. We think, you know, that's a very positive trend. Dave and I were talking this morning, and we unanimously, both of us, you know, feel that, you know, you'd much rather have supply chain problems and very strong demand rather than demand problems and no supply chain, or supply chain working normally. If you have to have problems in one place or the other, we like it where it is, I guess.
Sure. I got it. Good luck. Thank you.
Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next questions come from the line of Michael Ciarmoli with Truist. Please proceed with your question.
Hey, thanks guys for taking the follow-up. Pete, what specifically I know you said that 17 million bookings that's in Aero goes into other. What sort of products are they?
They are not aerospace related. You might recall, Michael, when the pandemic took hold, we took some of our facility resources and personnel resources and applied them toward some of our contract design, contract build programs. Some of them are apparently coming through in pretty significant volumes. We talked about one, I think we did an announcement a few quarters ago or a few months ago, about a hand wash station using aqueous ozone, and that turns out to be a really big hit in organizations and facilities that are concerned about the COVID pandemic. We've received some very strong orders there, and that makes up a bulk of that $17 million. I will tell you that there are others in the pipeline.
Difficult to predict at this point, but you know, it's taken longer than we had hoped when we launched this kind of initiative as a response to COVID. It's gonna be, we think, pretty good business throughout 2022 and one of our drivers.
Got it. Two other quick ones. F-35, how are you guys thinking about that into next year? Is that gonna be a potential headwind just given the rebaselining of that program?
Yeah. It's an evolving picture, isn't it? You know, F-35 is a pretty important program for us. We have a ship set content, off the top of my head, somewhere in the neighborhood of 80,000 or so on that airplane. And it's an important program for us. I guess rates are expected to drop a little bit next year, but there are other things in terms of upgrades and changes that we think might compensate. We don't think that's gonna be a serious headwind for us next year.
Okay. Last one, this might be a tougher one, but I think in prior calls you've said that the break even point for the company in terms of revenues might be around that $115 million level. Do you have a sense? I mean, I know it's tougher right now with supply chain and elevated costs, but just as we think about kind of a run rate business is, you know, you've obviously taken some cost actions, but should we think about $115, $120 as sort of the break even level?
In terms of EBITDA break even?
I was thinking operating income.
Yeah. You know, for the reasons you said, it's tough to predict there.
Okay.
It's probably moved up a little bit from there.
Okay.
Changes from day to day, given kind of where the material costs are going. The breakeven point has definitely gone up a little bit from where we were, say, a year ago in that regard.
Okay. Got it. Perfect. Thanks, guys.
Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Gundermann for any closing comments.
No comments. Thank you for your attention today. We look forward to talking to you again. Have a good day.
Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Have a great day.