Firan Technology Group Corporation (FTG) Earnings Call Transcript

I would like to welcome everyone to the FTG Q3 2026 Analyst Call. All lines have been placed on mute. There will be a questions-and-answer session following the call. [Operator Instructions Please note that this call is being recorded. I would now 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 Drew Knight, 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 uncertainties, 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. We're make decisions with respect to the company, call over to that to turn the call over is not under a 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. Our third quarter was another record quarter for FTG on virtually every metric. We had record revenues, record earnings, record bookings and record backlog with continued strong end market demand tailwinds. More specifically, in our third quarter of 2026, we achieved the following: Bookings were $90 million, marking a 75% increase over Q3 2025 and a book-to-bill ratio of 1.41 to 1 in the quarter. The quarter end backlog stood at $221 million, a 49% rise from 2025 year-end. Revenue was $64 million in Q3 2026, a 34.3% increase over Q3 '25. Adjusted EBITDA was $15.1 million in Q3, a 97% increase from $7.5 million in Q3 last year. Adjusted EBITDA is $40.8 million for the trailing 12 months. Net earnings were $10 million in Q3 2026, an increase of $7.2 million from Q3 last year. And free cash flow was positive $7.1 million in the quarter. Net cash at quarter end was $3.9 million. We had no bank loans at the end of the quarter. Other accomplishments in our third quarter included bookings continued at a record pace, and many orders included both price increases and significant price premiums for quick delivery. FTG continue to leverage increased defense spending. In 2025, we qualified for 2 large scale classified defense programs. And in Q3 this year, there were significant orders placed for these programs and Dover's ramped up, contributing materially to our sales and earnings in the quarter. Strategic leadership appointments made that a number of FTG sites last year has resulted in stronger operating performance and throughput across the company. We continued our efforts to increase our international diversification and thereby reduce our exposure to U.S. tariff risk. Sales in Canada were up 61% in Q3 this year compared to Q3 last year. This included shipments for deliveries for the [Dave Canada 515] aerial firefighting aircraft. And shipments for the C919 narrowbody airline are also continuing in Q3, driving a 40% increase in sales to Asia in the quarter. FTG qualified with new customers in Europe and Australia. We opened our aerospace facility in Hyderabad in the quarter, which will also reduce our tariff exposure and open new markets for us. FTG Aerospace Calgary continued to benefit from efforts to certify and sell its product portfolio globally that had profitable results again in this quarter. An FTG Circuits Toronto Union agreement with its representative staff was completed and ratified. It is a new 4-year agreement. Drew will provide some more details on Q3 2026 shortly, but let me turn to some external items. Our end market demand remains strong. Airbus is targeting 870 aircraft deliveries in 2026, up about 10% from last year. As of August, they have delivered 475 aircraft this year. But more importantly, they're looking to ramp to over 1,000 aircraft annually in the next few years. Airbus had a backlog of over 8,000 orders. At Boeing, they shipped 600 planes last year. And in the first 6 months of this year, they shipped 314. They are planning to increase their delivery rate on the Boeing 737 from 42 to 47 aircraft per month. And on the 787, they're planning an increase from 8 to 10 aircraft per month. Boeing's backlog is about 6,000 planes. In the business jet market, Bombardier reported mid-single-digit revenue increase for the first half of this year. They're also pushing hard to add the defense component to their business and have had some success to date in selling their business jets for defense applications. In the helicopter market, sell helicopters reported a 12% increase in deliveries in their last quarter. All of this bodes well for us as we look to future demand in the coming years. Defense spending is expected to continue to increase going forward. U.S. budget request for next year is for a 45% increase in spending to about $1.45 trillion, with increased spending on various hardware programs, which are most relevant to manufacturers like FTG. There are new commitments from all needle members, including Canada, to ramp defense spending to 3.5% GDP with another 1.5% for defense infrastructure, and it increased their defense spending in their last fiscal year to 2% of GDP. All of this indicates significant increases in defense budgets for all European countries and Canada. So 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 as has been the case for the past few years. Beyond all this, let me give you a quick update on some key metrics for FTG for our third quarter this year. First, as already noted, the leading indicator for our business is our bookings are new orders. Our bookings were just over $90 million in the quarter, again, a record for us. The backlog -- this resulted in a backlog of over $220 million at the end of the quarter, even after record shipments. Q3 sales were $64 million, up 34% from Q3 last year. Within this, our Aerospace business sales were up 18% in Q3 to $19.8 million compared to Q3 last year. Sales were up everywhere except Chatsworth, where we continue to see delays in the timing of some orders. While we have held our grand opening ceremony for our new site in Hyderabad, India, the site is not yet shipping product. Calgary saw strong revenues from hardware Health, which were mostly SATCOM radio delivered in Canada and the U.S., but also some additional edge equipment. We also have some saw some revenue related to weather hardware and increasing weather data revenues as well, mostly related to our -- no contract. Licensing revenues from our Satcom radio were very strong again in the quarter. On the circuit side of our business, sales in the quarter were $45.1 million, up 40% over Q3 last year. Our Manitok and Fredericksburg sites were each up between 75% and 80% over Q3 last year. Only our Harold site was down marginally in the quarter. Overall, at FTG, our top 5 customers accounted for 56.8% total revenue in Q3. This compared to 52.7% last year -- the increase was primarily due to the increase in activity from the 2 defense programs, both are with existing top 5 customers. Airlines were 3 of our top 20 customers in the year due to our Flight acquisition. Also interesting to note that the top 10 customers, 7 are customers shared between searches and aerospace and 1 of the former flight customers. Given the actions of the new administration in the U.S. of implementing tariffs. It's also good to see that 2 of our top 10 customers are outside the U.S. and another 6 of operations, both inside and outside the U.S. While on this topic, 70.9% of FTG sales are to U.S.-based customers in Q3 this year. This includes sales by U.S. sites as well as site from FTG sites in Canada or China. This compares to 71.2% last year. While sales grew by 34% in the U.S. They grew faster in Canada and Asia, as we benefit from previous efforts to expand globally including things like our content on the C919 aircraft in China and acquiring fight with sales globally. Sales were flat in Europe in the quarter. Bill inside U.S. are helpful in the event of tariffs, the U.S. might impose on our non-U.S.-based site. Our goal is to continue to grow our non-U.S. revenue for our non-U.S.-based sites, but at the same time, we're also happy to grow our U.S. revenue for our U.S. base. In Q3 20, 31% of our total revenues came from our aerospace business compared to 35.1% last year. The drop is due to the ramp of the defense programs on the circuit side of the business. I would now like to turn the call over to Drew, who will summarize our financial results for the third quarter this year. And afterwards, I will talk about some key priorities we are working on. Drew?

Thanks, Brad. Good morning, everyone. I would like to provide some additional detail on our financial performance for Q3, starting with revenue and gross margin. On sales of $64 million, FTG achieved a gross margin of $27.5 million or 42.9% in Q3 2026 compared to $14.5 million or 30.3% on sales of million in Q3 2025. The increase in gross margin dollars and gross margin rate is based on top line growth and those that have followed FTG in the past have heard Brad say the top line drives bottom line. When top line revenue grows, FTG's fixed costs allow for much of the contribution margin to fall to the bottom line and improve margin and profitability rates. Of note, the improved profitability at Arrow Calgary and several U.S. sites has a substantial impact on consolidated margin rates. Arrow Calgary continues to benefit from its ongoing licensing revenue that resumed in 2026, a customer contract cancellation charge as well as repeat hardware sales of its AFIRS Edges product. Additionally, Arrow Calgary also certified and shipped the first unit of its WVSS weather sensors, which also come along with ongoing revenue -- data revenue streams. The U.S. sites improved margins via increased throughput with limited added resources. This heightened capacity utilization drives superior margins. Moreover, the improved throughput at several U.S. sites enabled them to provide quick turnaround deliveries which attract pricing premiums. This quick turnaround production is a value-added service that is frequently requested by customers in the aerospace and defense marketplace, and FTG has provided this service for many years in certain plants. In Q3, all FTG Circuits plants were able to provide this high-margin quick turnaround service. Moving on to SG&A. SG&A expense was $10 million or 15.6% of sales in Q3 2026 as compared to $6.3 million or 13.2% of sales in the prior year. The increase of $3.7 million in Q3 2026 was primarily due to increased performance compensation of $2.3 million tied to higher profitability. Also driving an expense increase were IT costs tied to the FTG website redesign and CMMC cybersecurity efforts, plus sales and marketing costs associated with increased sales activities, including commissions and added headcount. Now speaking to R&D. R&D costs for Q3 2026 were $3 million or 4.7% of sales compared to $2.6 million or 5.4% of revenue for 2025. R&D efforts include product and process improvements at the Circuits segment as well as Aerospace segment product development and process improvements. Also in Q3, FTG recorded a provision of $1.88 million related to prior period investment tax credits. Separate from this charge, the company recorded tax credits of $214,000 compared to $433,000 recorded in Q3 2025. I -- regarding foreign exchange, FTG is exposed to currency risk through transactions and also assets and liabilities recorded in foreign currencies and finally, from foreign subsidiaries translation of financial statements for consolidation. The average exchange rate experienced in Q3 2026 was $1.389 as compared to 1.374 in Q3 2025, which equates to a strengthening of the U.S. dollar by 1.1%, and this helps results for FTG's operations located in Canada. Moving on to profitability and EBITDA. Adjusted EBITDA, as detailed in the MD&A, was $15.1 million for Q3 2026 or 23.6% of sales compared to $7.7 million or 16.1% of sales for Q3 2025. Adjusted EBITDA improved $7.4 million over Q3 2025 for the same reasons as noted for the gross margin improvement, namely increasing top line drives increasing bottom line and profitability rates and due to the significantly improved contributions from Arrow Calgary and our 5 U.S. plants. The circuit's expedite fees in Arrow Calgary's licensing revenues and contract installation fee were all high-margin revenues for Q3. Regarding earnings. For Q3 2026, FTG recorded net earnings of $10 million or $0.39 per diluted share as compared to $2.8 million or $0.11 per diluted share in Q3 2025. The earnings comparison to prior year was improved by favorable income taxes based on the distribution of profits in 2026, being more widespread and utilizing some historical tax losses that have been carried forward. Speaking to income taxes. In the prior year Q3 2025 was tax inefficient with a few nondeductible losses unable to reduce taxable income in profitable business units and thus incurred a 30% tax rate. Conversely, in Q3 2026 profit were widely distributed and utilized historical tax losses for a tax rate of 12%. I'd like to remind everyone that FTG continues to have substantial tax losses available to offset future income and the accounting benefit of these losses has not been recognized in our financial statements. These tax loss carryforwards are located in both the U.S.A. and Canada with the Canadian losses recently acquired in the acquisition of FLYHT in December 2024. Regarding our financial position, FTG maintains a strong balance sheet and repaid all interest-bearing debt in Q3. In other words, we repaid our bank debt and retained the government debt that is interest free. We finished Q3 in a net cash position of $3.9 million as compared sequentially to net debt of $2.9 million in Q2 2026 and compared to net debt of $8.1 million as of 2025 year-end. Free cash flow in Q3 2026 was $7.1 million as compared to negative $4.6 million in Q3 2025. Capital expenditures, including noncurrent deposits, were $4.2 million as compared to $1.2 million in Q3 2021. Going forward, we expect CapEx to be closer to FTG's long-term target of 3% of revenue. However, as we add production capacity in Canada, the U.S.A. and India, this rate may tick higher to 4% or 5% in the next couple of quarters. As at the end of Q3 2026, the corporation's primary sources of liquidity totaled $94 million consisting of working capital of $66 million and $28 million of unused credit facilities. FTG has plans to improve cash efficiency and minimize stranded cash in various business units. Accounts receivable days outstanding were 61 at the end of Q3 2026, up from 55 days at year-end due to recent revenue and AR ramp-up and also due to timing of a couple of specific customer payments. Inventory days were 101 in at the end of Q3 2026, down from 112 days last quarter and 105 days at 2025 year-end. This inventory level is higher than our usual plans to address higher than our usual plans and is to address order fulfillment in coming months. Accounts payable days outstanding were 69 at the end of Q3 2026 as compared to at the 2025 year-end as we plan to manage working capital offsets with our partners where practical. Transitioning to our future outlook, FTG's book-to-bill ratio for Q3 2026 was 1.4:1. We entered Q4 2026 with a record backlog of $221 million, of which approximately 84.8% is expected to be converted to revenue through Q3 2027 or in the next 12 months. The new business activities in both the aerospace and defense industries are strong and continue to accelerate. Both the Circuits business and aerospace business are increasing throughput and winning their share of new customer RFPs. In Q4 2025, we noted the program awards for 2 substantial classified defense programs. We have since received the opening POs and started deliveries in Q3 2026, though these orders are still only a fraction of the annualized volumes. I should note that FTG's reported backlog only includes POs received and does not include program awards with estimated volumes. As we approach the midpoint of Q4, we are focused on managing cash flow and improving operational efficiency and throughput. Also, we are continuing with the Arrow Calgary revenue plan, which is already bearing fruit, with an incremental benefit of in-sourcing the manufacturing of their products starting this quarter. I should note that our complete set of quarterly filings are available on sedarplus.com or on the FTG website. With that, I would like to turn things back over to Brad.

Thanks, Drew. Let me delve into some important items for the future of FTG that will continue to build on our past accomplishments. We will continue to pursue growth in the defense market. As noted previously, we expect defense spending to continue to grow in Canada, in the U.S. and [Natal]. We had some good success on some classified programs in the U.S. last year, and we are pursuing more new programs this year. We are seeing volumes ramp up in many areas, including electronics for various weapon and electronic warfare systems. With our 5 sites in the U.S., we are well positioned to capture increased U.S. defense spending. In particular, we had acquired the Minnetonka site in 2023 to be our high-technology U.S.-based circuit board site for the military market, and we are now seeing the benefits of this acquisition. The site has had the highest sales in their history in Q3. As fast as we can grow and offload work to other sites, we see more demand than we can support. Beyond this, we will look for opportunities outside of the U.S. as well. the NATO defense it was about 1/3 of the U.S. budget a decade ago, and it's 2/3 today. So it's definitely a market of interest to us. as Canada ramps its defense spending and its commitment to needle, we're hopeful that it will create new opportunities for FTG sites outside the U.S. A good example of this is the Bombardier -- so global Ag program, which is gaining momentum in Europe and Canada. And given our relationship with Bombardier, we will have some content on it. After the U.S. and NATO, the next biggest defense market is India. And as we get our sites established there, we will look to capture some market share in this market, too. We will look to capture more work in the commercial aerospace market and grow as volumes ramp up. As part of this, we will look for ways to increase our activity with Airbus as they are the stronger performer right now. To do this, we will leverage our Canadian Chinese and possibly even our Indian sites. Given the uncertainty regarding tariffs from the U.S., we will look to continue to diversify our revenue streams for our non-U.S. sites. Some of the items I already mentioned will assist us, but it will remain a priority action for us. And to Desen,we added a new sales person in Quebec recently. We will continue to increase our sales at outside the U.S. to help drive this growth. Tariffs are now impacting input costs in our Circuits business. This is because a lot of materials used in the manufacturing process originated outside of North America. The impact is higher for our U.S. sites, but Toronto is also impacted when material shift via the U.S. to Canada. We estimate the overall cost impact in the millions of dollars in 2026. We have started to work with our customers to pass these increased costs to them and their end users. Some of our revenue growth in the quarter as a result of price increases. Also for our Circuits business, we are seeing significant cost increases on input costs driven by circuit demand related to AI data centers. The costs are moving up fast. And again, we are working towards passing these costs on to our customers. but it's tough to keep up with the rate of cost increases we are seeing. As mentioned, we renewed our collective agreement for our unionized staff in our Circus Toronto facility in July. The wage increases are fair and will not impact the site's profitability the new contract is 4 years in duration. And we will continue to take steps to create value from our acquisition of FLYHT. We have renamed the business FTG Aerospace Calgary, as we amalgamated it legal into FTG. The amalgamation was done to possibly enable us to use site tax losses beyond just our operation in Calgary. But to be clear, we do not have certainty that this will be possible. In the Calgary business itself, we believe we are now well positioned to have a strong year as a result of our product certification and SDC efforts last year. We are seeing strong demand for all 3 products and our pipeline of robust for 2027. Licensing revenue for our SATCOM radio product has returned and should be consistent year-to-year going forward. The licensed product ends up on Airbus aircraft. So we know the demand is strong. We are now also confirmed as the manufacturer of this product for the licensee to capture additional margin from this product. The things proceed as anticipated, this will benefit us in 2027 and beyond. The product will be manufactured in our Chatsworth site. We're also going to manufacture this product for our own aftermarket sales in chatter as well, and we expect our first shipment in Q4 this year. The EdgesWQAR has the key STCs in place and was the first few deliveries behind us, we are quoting many new opportunities in a number of geographic jurisdictions. And we are starting to manufacture this product in our Tianjin plant to enable us to capture this margin as well. First shipments of this product manufactured at FTG, should also happen in Q4 this year. Sales of their weather product is starting to ramp up as well with our contract with Noah in the U.S. We obtained our first STC to install the WSS 2 on the Boeing 737 MAX 8 aircraft in the quarter. The first unit has been installed on a WestJet aircraft. Once approved and installed, there's a recurring revenue stream as we provide real-time weather and water vapor readings to Noah. We expect to install further units with WestJet through the balance of this year, each incrementally increasing our recurring data revenue potential. These actions should enable FTG Calgary to be a positive addition to FTG and further mitigate the risk from U.S. tariffs. We opened our aerospace facility in Hyderabad, India in Q3. Our decision to expand geographically was partly to us looking for an insurance policy against anything negative that could happen to our China operations, but it was also partly to expand into a new region with growth potential and to add our overall capacity. As we analyze options, we concluded India is a very cost-effective place for manufacturing. And with Prime Minister Modi's Make in India policy, coupled with significant defense spending, it would be an ideal place to operate in places where we can serve our existing question customers but also penetrate the Indian aerospace and defense market. We selected Hyderabad as it has an aerospace hub primarily focused on manufacturing unlike Bangalore, which is more engineering and software focused. Through the balance of this year, we will be stacking up and training and building some initial products that is expected to be intercompany activity. So no real incremental benefit to FTG before 2027. We expect to have the sites certified to key aerospace standards by the end of this year, after which we will be able to ship to external customers. We continue to assess possible corporate development opportunities that could fit with either of our businesses. We have a few areas of interest including in establishing a footprint in Europe, growing our presence in India on the circa side of the business are expanding our technology in a few areas. We are evaluating both acquisitions and greenfield construction to accomplish the above ideas. Related to this, if Q3 revenue is annualized, our run rate is now over $250 million. We still have capacity available to grow. -- by adding people at many sites. We're also still working to add additional capacity by adding some equipment in our Circuits Toronto site and getting our new aerospace hydro bad sites into production. We are not capacity constrained looking for. although our rate of growth might be -- might continue to be our challenge. With a focus on operational excellence in all parts of FTG, our strong financial performance in the first 9 months of this year, our past acquisitions, our key sales wins were 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 any questions. Vincent?

[Operator Instructions] Your first question comes from Nick Corcoran from Acumen Capital.

Just a quick question for me. The third quarter is simply seasonally softer. Did you see any seasonal trends that you typically see? Or -- and I guess the related question is, have you been able to keep momentum into the fourth quarter here?

Yes, you're right. Our history is Q3 is a little bit softer in that it's the summer months for our Q3 is June, July, August. We typically see more vacations. And we lose production days. So there's never been a demand issue in Q3. It's more how much can we produce. Now this year and Q3, particularly, we've had crazy strong demand. As Drew and I have both mentioned, there was some customers looking for really expedited deliveries. So we did everything we can -- we could to minimize our production lost time due to vacations in that to the benefit of the quarter. So the demand is still there going into Q4. We continue to work and do whatever we can to ramp our production support that demand. So yes, the momentum continues into Q4.

Good. And you mentioned that customers are willing to charge premium pricing to expedite orders has continued as well.

Yes. I mean there's always some of that in FTG. And basically, we -- if we can deliver fast, we can get a premium price, customers were kind of super keen to get products. So definitely, that benefited us in the quarter. But we have some amount of that every quarter. It's just a question of how much.

And an indication whether the expected orders were for aerospace or defense?

Yes, I'd say mostly on the defense side.

Good. And then one last question for me. You mentioned that you're in the propane equipment to add into Toronto. Where do you expect that to be operational?

I expect it to be operational now, but it's not -- but it's -- I guess, like everything in the industry right now, lead times have pushed out on equipment. I think we're expecting to get the equipment into the building by the end of the year, and now we're just working with the suppliers. In some cases, we need them to help install and commission it, and we're trying to get that scheduled. That could end up being in the end of Q1 next year, somewhere around there.

Next question comes from Russell Stanley from Beacon Securities.

Congrats on a spectacular quarter. Thanks for the question. Maybe first, just a follow-up on the premium pricing obtained on expedited shipping. I guess can you comment as to how broad-based across defense. You saw this. We know the tailwinds are there, but I guess I'm ultimately wondering was it focused in any product category such as the weapons and electronic warfare opportunities you mentioned earlier.

Yes. I guess a couple of comments on that. I think I should have said it on the previous question. But I guess, first thing, when customers need expedited deliveries there is pricing premiums for us to do that. And there's costs related to it on our side, right, that we need people to work over time the weekend and that to try to support it. But I guess, the point I was going to make is -- the amount of expedite also drives the premium. So if someone wants to pull an order in a week or 2, there's a smaller premium than if they want to pull it in a month or 2. And so it's a variable that the size of the premium is variable depending on how desperate they are. And then to your specific question, for sure, the 2 classified defense program drove significant expedite fees in the quarter.

Got it. And it obviously doesn't look it from the bookings number in the quarter, a great number there, but the U.S. government is now operating under a consumer resolution. I'm just wondering, how much of a headwind risk that might be in future quarters? How long would that need to persist before it might disrupt bookings from your perspective at all?

Yes. I don't know, the U.S. budget process is a complex one. And my feel is there's continuing resolutions every year for some amount of time and somehow they work their way through it. It's a risk, yes. But for me to guess what the implications are, I have no idea. Yes, it's beyond my take rate. And whatever happens, happens, but history would say it's unusual when it actually gets the point where it impacts bookings.

Maybe one more for me. Just coming back to the classified defense programs and the second program in particular. I think on the July call, you noted you were winning on the customer to complete some redesign work. It reads like those orders have have started. You mentioned the first program could be particularly huge in terms of annual revenue potential that probably across multiple providers. Are you envisioning the same situation, the same scale with the second program?

Yes. They're both ridiculously large. There's no chance we could support it all. So yes, they're definitely striving it across a few different suppliers. But yes, they're both -- so you have again in terms of volume -- annual volumes, like I don't know, $50 million to $100 million annual potential each.

Your next question comes from Kaelan Purdie with ATB Capital Markets.

Congrats again on the great quarter. I'll just echo just a question that Russell asked there. How significantly did the 2 large classified contracts impact the financial results this quarter and what kind of updates could you share regarding those program milestones, any run rate visibility? I know you mentioned $50 million to $100 million, just echoing that that's for those 2 contracts. And then I guess the multiyear outlook for those efforts. Just any more color there would be great.

Yes. I don't know where to start. So in terms of the multiyear look for sure, they're both multiyear programs. For sure, I don't know what they are. So I'm not going to give you much color on that. And what else? How much of the impact a quarter I don't know if that's a good question. I don't have a hard number on that, but if I was guessing, I going to say maybe it was in the order of 10% of our revenue, somewhere in that range. So it's not 50% of our rent, but it definitely was helpful. And I'm sorry, what else did you ask?

I think that's great color there. We're good there. I appreciate that. Yes. Just another one for me, I guess, where do the staffing levels and labor availability currently sit across your U.S. facilities? I know you previously mentioned some of them have experienced some tightness.

That's a good question. So a couple of comments. And we're seeing some interesting developments across FTG I'm going to say, 2 sites, our Fredberg site and our Circuits Chatstersite, both have 2 guys running them. Both of those guys are closing it -- well, they're doing, say, 30% to 100% revenue increases with no head count. That's what we like. It's all the staffing problem because they're just cranking it out with the staff they have. And then Minuto definitely, we needed to staff up the guy running the Tonkin now has come up with a much more aggressive professional, robust plan for staffing there were plus, I don't know, 25 to 30 people, somewhere in that range this year. basically tracking to what we needed for that site. We're getting them in the door. We're retaining the turnover is down. So it's is doing a great job of getting the staff in there to support his ramp in volume. And it looks like it's going really well right now. So it's -- at the end of this, some of those challenges and constraints have been overcome in the quarter.