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Astronics Corp (NASDAQ: ATRO)
Q4 2018 Earnings Conference Call
Feb. 21, 2019 , 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Astronics Corporation Fourth Quarter and Full Year 2018 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Deborah Pawlowski Investor Relations for Astronics Corporation.

Deborah K. Pawlowski -- Investor Relations

Thanks, Dana; and good morning, everyone. We certainly appreciate your joining us here today. I've got Pete Gundermann, our President and CEO; and Dave Burney, our Chief Financial Officer on the call. You should have the news release sent across the wires earlier this morning. And if not, it is available on our website at astronics.com.

As you are aware, we may make some forward-looking statements during this teleconference, including during the Q&A portion. 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 where we are today. These factors are outlined in the earnings release as well as in documents filed by the Company with the Securities and Exchange Commission. You can find these documents both at our website and at sec.gov.

So, with that, let me turn over the call to Pete to begin. Peter.

Peter J. Gundermann -- President and Chief Executive Officer

Thanks, Debbie; and good morning, everybody. And before we get going, I should assure you that I am in fact Pete, and my voice doesn't sound normal. I've been assured that whatever I have you can't catch over the phone. So, I apologize in advance. I may get hit with a cough attack here sometime over the course of the call and I'm -- got the mute button ready to go. I'm not afraid to use it. So if I go silent for a minute, that's what that's all about.

But everything being equal on that, we'll talk about our fourth quarter results, which we feel pretty good about, and do a post-mortem on 2018, which we feel was a pretty strong year for the Company, and then we'll turn our attention to 2019. As usual, there are some issues to talk about there, primarily relating to the sale of the semi test business that we announced on the 13th of of this month, and -- or didn't announce, but closed on the 13th of this month; and also some of the issues that are likely to affect our 2019 including primarily the three businesses that we've dedicated some space to over the last couple of calls, we'll continue to do that today.

So with that as a backdrop, our fourth quarter ended up pretty strong; revenue of $203 million, was our consolidated, was our third highest ever after only the previous two quarters, the second and third quarter of 2018. Our fourth quarter results were up 18% over the comparator period of a year ago, that's about $32 million of growth. Acquisitions contributed $12 million of the $32 million of growth, and organic was the rest $20 million or about 12% organic growth year-over-year.

Our Aerospace segment had a particularly strong quarter. We set another revenue record of $175 million in the fourth quarter. That's our fourth record quarter in a row, and up 25% over the comparator period at the end of 2017. Our Test business was relatively light, revenue of $27.7 million, that was pretty much what we expected, and predicted at the end of our last press release or last quarterly conference call. That result of $27.7 million was below both the comparator period of a year ago, and well below the second and third periods of this -- of last year. Second and third quarters of 2018 were relatively strong for our Test business.

Net income in the quarter was strong at $12.5 million or 6.2% of sales. That's up dramatically from the comparator period, when we had a large impairment charge at our Armstrong business at the end of 2017 of $16.2 million, due in the year-over-year comparisons that colors the comparisons substantially got to keep that in mind as you look at the older numbers.

Aerospace, again, was a solid contributor with operating margins of 12.7%. That's not where we wanted to be, but it's the highest we've had in quite a while and it shows signs of improvement. Our three struggling businesses that we've talked about, CCC, AeroSat, Armstrong, we've talked about them collectively as a group now for about nine months, and they turned in a combined operating loss in the fourth quarter of $6.4 million. We're not particularly happy with that. That's below where we thought we would be, but it is down substantially from the third quarter when the three turned in an operating loss of $11.2 million. So, $11.2 million to $6.4 million, we think is pretty good improvement. We expect continued improvement from here, we'll talk about that more specifically at the end of the call.

Diluted earnings per share in the fourth quarter were $0.37 versus a loss of $0.18 in the comparator period a year ago; again, because of that impairment charge at Armstrong.

Not only good shipments and margins but bookings were pretty strong. We ended up with bookings in the fourth quarter of $220 million consolidated, that's a book-to-bill of 1.09. Aerospace bookings were right there with shipments, even on an all-time record shipping quarter book-to-bill of 1. Test had a pretty strong booking quarter of 45 million, a book-to-bill of 1.62. The star in that arsenal has to do with a number of things, but some progress we made with the New York City program for $30 million is achieved part of that.

Backlog at the end of the year was $415 million, a record high, included in that total is $12 million of backlog that was essentially sold with the semi test business in February to our friends at Advantest.

Year-to-date -- year-to-conclude, I guess, at the end of 2018, we ended up with revenues of $803 million, that was up pretty substantially 28% from $624 million in 2017. That's total growth of $179 million, and roughly split equally between acquisitions and organic growth. Acquisitions contributed $85 million of the $179 million of growth. Organically, we generated $94 million of growth.

Net income for the year ended up at $46.9 million or 5.8% of sales, up 138% from $19.7 million in 2017 or $1.41 per diluted share versus $0.58 per diluted share in 2017. Net income for the year was positively impacted by the lower federal tax rate and a change in our state tax position that we talked about on the last call, and negatively affected again by the combined operating losses of $34.7 million of the struggling three businesses. Again, we're not happy with $34.7 million. It compares about the same as 2017 when those three businesses combined for $47.1 million, inclusive of the impairment charge at Armstrong. So, $47.1 million in 2017 and $34.7 million in 2018, we're looking for substantial improvement in 2019 as -- and we'll get to that in a minute.

Total bookings for 2018 came in at $837 million, that's vesting shipments by about 4%, Aerospace bookings were up about 5%, Test bookings were down about 2%.

Looking more specifically at our segments. Our Aerospace quarter as I said, was a really strong quarter, record revenues of $175.2 million, up 25%, 26% compared to $140 million in the comparator period. That's our fourth new record in a row for our Aerospace segment. Operating profit came in at $22.2 million or 12.7% of sales, not exactly where we are striving to be, but it is the highest we've achieved in three years. If one were inclined to run the exercise and back out the losses from three stragglers of $6.4 million or assume that we could get those businesses to break even, operating profit in the quarter would have been 16.4%. So, we continue to believe that our best margin improvement opportunities to continue to focus on reducing the operating losses of those three businesses, and we think we're making progress. Bookings, as I mentioned moments ago, for the Aerospace segment in the fourth quarter were $175.5 million, slightly ahead of shipments book-to-bill of 1 and our Aerospace ending backlog of $326 million is our highest ever and sets us up well for entry into 2019.

Looking back at the whole year for our Aerospace segment, revenues of $676 million were up 26% from 2017. They made up 84% of our consolidated total with the sale of our semi test business, that 84% in the future will increase, it will increase over 90% of our total. Operating profit for the year was $70 million or 10.3% of sales compared with $39 million in 2017. Again, for the year, the three troubled businesses that we're working with had an operating loss of $34.7 million. If you were to do the exercise to assume they were a breakeven, our Aerospace segment operating profit would have come in at about 15.4%. Looking the year-to-date were $712 million, so even with the record shipments, bookings of seated shipments by 5% over the course of the year.

Looking at some of the tables that we put in our press release and specifically at the sales by product line table on the bottom of Page 10 of our press release, our Aerospace business these days continues to be well balanced in my opinion, our Electrical Power & Motion product line makes up about 38% of our consolidated sales. Our Lighting & Safety product line makes up about 22% and Avionics adds in about 16%, and they're all doing pretty well.

Electrical Power & Motion was up almost 15% for the year and 29% for the quarter, that's a combination of a couple of things, primarily in that grouping is our in-seat power product, which continues to do very well, but the other big contributor there, increasingly is a seat motion capability that we have, where we have picked up quite a bit of market share over the last year-and-a-half and it's becoming a pretty good contributor to our overall consolidated result certainly helping to explain that growth. Our Avionics product line, chart shows up 144% for the year, that is largely because that's where the revenues that come from our Telefonix acquisition of December of 2017 ends up being categorized, mostly in our Avionics product line. And Lighting & Safety is up 10% of the year. So, obviously a good indicator when your three biggest product groupings are up strongly. That's nice to be able to report that at the end of the year.

Switching over to our Test business. In the quarter, revenues, as I mentioned, were light as expected; came in at $27.7 million, that's down about 13% from last year and well after the pace from the second quarter and third quarter, the volume was pretty much dictated by schedules, which are dictated by customers. So, we knew it was coming, we were not surprised.

Our operating profit for the segment in the fourth quarter on that lower volume was pretty meager $600,000, 2% of sales. However, Test had a pretty strong 2018. Revenue for the year was $127.7 million, that's up 42% from $90 million in 2017. Operating profit on that volume was 10.7 million, 8.4% of sales. If you look at the charts again on Page 10 of our press release, you can see pretty easily that the year was driven by relatively strong semiconductor demand. Semiconductor demand more than doubled going from $32 million in revenues in 2017 up to $84 million in 2018. We'll come back to semiconductor in just a minute.

Bookings for the quarter were $45 million, that's a book-to-bill of 1.62; as I mentioned, very strong. And year-to-date bookings were $125 million versus shipments that are $127 million, that's a book-to-bill of 0.98. It ends our quarter with a Test backlog of $90 million.

So a few words on the sale of the semiconductor product line. No doubt, people remember that in December, we announced a plan to transaction to sell the business, the product line to a company called Advantest for $185 million in cash at closing, an earn-out opportunity of $30 million and a contract manufacturing arrangement, which was to last for approximately four years.

Last week, on February 14th, I guess, we issued a press release saying we had closed, but under substantially different terms. It was $100 million cash at closing with an earn-out opportunity of $35 million and no contract manufacturing arrangement. And the simple explanation for what happened there is, we, at the end of the year, were badly surprised by some changes in expectations on the part of some programs that we had been working toward and they had a material change on the value of the business. Excuse me, I'm happy to get this far through the script actually. And the change in forecast was substantial enough to cause the change in the valuation of the business.

If I bring you back to Page 10, again, those product line charts or tables that we put in the press release, again, you can see in 2017 we had semiconductor semiconductor revenue of about $32 million; in 2018, it was $84 million. We had been expecting at 2019 that was roughly at that same elevated level and we expected, based on visibility, that 2020 would be a step change above that, and instead learned in late-December that, for us, if the business stayed in our hands, 2019 was likely to revert back to 2017 more than anything else.

So that was disappointing for us, not -- and it was a surprise to us also, but it was also when you look at it in context of what's going on in the world with trade tensions and semiconductor industry trends in general and consumer electronics trends in general, in retrospect, maybe not such a surprise. So we weren't happy going down from $185 million cash at closing to $100 million, but at the end of the day, we decided that was a better thing to do, first of all the business we think is frankly better off with Advantest than us. They have a global reach, they're not a US company which has some benefit in today's world and they have a much more comprehensive product line which -- and presence in a wider array of customers around the world.

What it allows for us to do is to focus more specifically on our primary Aerospace business, that's focusing both in our internal operations and also in our external communications and dealing with the investor community in general, and the contract manufacturing thing means that we will have a little bit more of an abrupt change, but we believe that we are ready for that and we think we can make it work and we think that when we get to the forecast section and you look at the backlog that we have in place for Aerospace and Defense Test business that we're in pretty good shape to have this event happen today.

I think I'm going to go on mute for a second, Dave, and let you talk about balance sheet, because we've generated some cash not only with the sell, both our results in the fourth quarter.

David C. Burney -- Executive Vice President and Chief Financial Officer

Okay. Thanks. Yes, Pete just finished talking about the sale of the semi business that was certainly a big event for us in February, but going back to the fourth quarter, we had very strong cash flow generating about $40 million of cash flow from operations in the quarter that brought our year-to-date cash flow from operations up to about $55 million, which is a very strong year for us and one that we've been waiting a while for to get back on track to where we think we should be in terms of cash flow generation.

Outstanding debt at the end of the year was about $234 million, down from $272 million at the end of last year. Our current borrowing rate on our senior credit facility is at LIBOR plus 125 basis points. And I expect that could go down somewhat when we conclude the first quarter, as I expect our debt load to be a little bit lower again by the end of the first quarter as we use the proceeds from the sale of the semiconductor business sale, which were about $100 million pre-tax to further reduce our revolver down to about $134 million right now.

We do have a $500 million senior credit facility. And we have about $250 million available on that based on our trailing four-quarter adjusted EBITDA. And we expect to have another strong year of cash flow from operations. So there's plenty of flexibility in our capital structure to fund continued growth and our capital deployment will continue to be as it has been over the last several years to be focused on growth and acquisitions. We do have a authorization to buy back shares that if they present the right opportunity and when measured against other opportunities we could exercise on, but our focus continues to be based on growing the business. We had getting off the balance sheet a little bit because I know somebody will ask the question, we had two 10% customers for the year: one in the Aerospace segment that was about 14% of our full year sales and the other one also in the Aerospace segment, which was about another 14% of our year-to-date sales.

That was all I had, Pete, if you're ready to speak again.

Peter J. Gundermann -- President and Chief Executive Officer

I'm done coughing. Thank you. So switching the look at 2019, in December, we issued initial Aerospace guidance of $710 million to $745 million for 2019, that at the midpoint would represent 8% growth and we are sticking with that forecast for today. We are initiating Test guidance now that the shoes have aligned themselves up of $50 million to $60 million in 2019. If you were to back out semiconductor proceeds that we sold from the 2018 base, that guidance would represent at the midpoint about 14% growth for 2019. So consolidated, we're looking at revenue guidance for 2018 of a range of $760 million and $805 million; again, consolidated at the midpoint of that range, we'd be seeing about 8% growth.

We don't issue bottom line guidance, but I do want to talk about a couple of things that you might be curious about and be thinking about as we move into 2019. The first is the potential for increased tariff cost. We talk about these from time to time recently in our Company and I learned the new technical term from my CFO on this subject. That's a wild guess, but he's talking about incremental tariff expense for us in 2019 based on a whole set of possible assumptions of about $10 million compared to $2.6 million in 2018. So that's our best guess at this point. A lot of things could happen, the tariffs could go way, suppliers could resource production, there could be other hidden tariffs that we're not aware of, but $10 million is kind of the number we're looking at.

And to spend a few more words talking about our three troubled businesses, AeroSat, CCC, Armstrong, we are not happy with the progress to-date, but there is progress to-date. In the third quarter of last year we had combined operating losses of about $11.2 million and $28.3 million through three quarters. So through three quarters, we've been averaging about $9 million, a little more than $9 million operating loss per quarter. Fourth quarter was $6.4 million. So we're starting to see some predictability as to where we think things should settle out. $6.4 million obviously annualized would be $24 million, $25 million, which would be down from our 2018 total of $35 million, but we think we're going to do quite a bit better than that. In fact, we think the first quarter will be about $6.4 million, similar to the fourth quarter, we expect it to drop from there as a few things happened to a rough range of about $2.5 million in the fourth quarter. We originally talked about being break-even in the fourth quarter, we think that's less likely now for a number of reasons, but we think we're going to go from $6.4 million in the first quarter, we're going to end up about $2.5 million in the fourth quarter. And that would be a pretty dramatic improvement over the $35 million year-to-date loss as we saw in 2018.

So, how is that going to happen? Well, one thing that's going to happen by our plan is that revenues for those three companies will substantially uptick in 2019. They collectively ended up in 2018 at about $45 million in revenue. We believe they're going to be somewhere in the neighborhood of $80 million, and there's substantial upside potential in the future on that, but obviously, when you're dealing with a year, you're dealing with a firm cutout. So, we think second half of this year we're going to be seeing some ramps that are going to get us into that range, and that's critical or a bunch of things, but it's critical for seeing that operating loss start to be manageable by the end of the year.

So why are we sticking with it? That's part of the reason we're sticking with it. We see that there are substantial opportunities in the market. We think we have some competitive offerings that we think are advantageous and desired by customers, and there is some inherent demand, and our goal is not to operate these businesses at losses indefinitely. Our goal is to make them profitable contributing members of the Company just like everything -- most other businesses. But we got to get them to break even before we can do that. So, that continues to be our goal, and we think we will continue to make progress, and obviously draw attention to it as needed on calls like this going forward.

So we're pretty excited. We think the semi test move was a good move, we think it's good for us, we think it's good for our employees that went with the business, and a fair number of them did, pretty much all the engineers and program managers, and professional people that drove that business are now employees of Advantest. We think that it's a good time for our A&D business to stand on its own, and we think our Aerospace business, which is 90% of our total or 90-plus has never been better situated than it is right now, and we're looking forward to another strong year in 2019.

So with that, Dana, I think we'll open it up for questions.

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from the line of George Godfrey with C.L. King & Associates. Please proceed with your question.

George Godfrey -- C.L. King & Associates -- Analyst

Thank you. Good morning, Dave, Pete.

Peter J. Gundermann -- President and Chief Executive Officer

Good morning.

George Godfrey -- C.L. King & Associates -- Analyst

Pete, on the three businesses, can you talk about what is holding up the ramp on each one? And what I mean by that is, do you have to have product ready, do you have to sell the customer and buying the product, but you need partners to fulfill their obligations in order for you to then be able to sell your product? Maybe if you could, just shed light on what holds or how that revenue ramp goes up on each of the three businesses. Thanks.

Peter J. Gundermann -- President and Chief Executive Officer

Sure, and that's a good question. And there are different answers for each of the three. Maybe I'll move from West to East, CCC, the big issue with CCC that they've been struggling with really since we bought the company is a development program for a pretty high profile customer that they've struggled with mightily and we've had to incur substantially greater investment to make the program work than we thought we would, and a smaller company or a less involved company might walk away from it.

We did not feel like that was even the slightest option given this is our industry and it's a pretty core customer and a pretty core market and so we want to make it work. And the key there is to get that technology proven out, and get it functional and then get it delivered, and the major milestone for them over the course of this year is to get that done. From a revenue expectation standpoint, we're looking at well more than doubling revenues at CCC based in part on the successful execution of this program.

Armstrong, the little bit of a different deal, Armstrong is a certification company, engineering company first and foremost. We merged it into Telefonix, those -- I think, George, you were at our Investor Day in December, you met a guy named Mike Kuehn, who's running both those businesses and the -- and they've done a really good job of integrating the skills back and forth that they need to be more successful in their business. So, it's been a kind of a one-two punch of building up competency and strengthening weaknesses, and going out to the market to find new opportunities to apply those capabilities, and they're well under way. I'd say of the three Armstrong is actually in the best shape right now in terms of low risk and a bigger opportunity.

So, if we were to start this discussion today instead of talking about three troubled businesses I might talk about two, and they would not be on the list. That leaves us with AeroSat on the East Coast, and AeroSat is an antenna company, and we have then stuck at the starting line it seems for about a year-and-a-half now on a few programs, most prominently a tail mount program, that we call tail mount. It's basically a smaller antenna that sits up in the tail of bigger business jets for Transoceanic, primarily Transoceanic type of services for WiFi access. And we've been partnered with different companies or came out with a partnership group to bring that program to life a year-and-a-half ago or so.

I think it was one of those things everybody thought to be about a six-month development effort and six months turned into nine months, turned into 12 months, turned into 15 months, and eventually, the teaming structure kind of fell apart and a new teaming structure came together that new teaming structure is by our account way above where the old one was, and we've got a handful of airplanes flying and they're doing quite well from our perspective, and the plan is that that program is going to get kicked off from a sales perspective in earnest early in the second quarter.

So we think we'll wrap it up, kind of the test sequence of it and with our partners, we're ready to go. And we think that, as the year ramps, that will become more and more of a significant program, and that was part of my comment earlier that whether we're going to get to double sales or the 90% of sales or 110% of sales, is a little bit arbitrary based on some of these things getting kicked off in time, but that gives you hopefully a little bit of a flavor of the three companies. We think we've got a good plan in place for the three. We think that that plan, if we come close to the revenue expectations should bring those operating losses down to a much more manageable level in short order.

George Godfrey -- C.L. King & Associates -- Analyst

Got it. Thank you, Pete, for that. And Dave, just one question for you is, what is the margin look like in the Aerospace & Defence Test portion of the business if we take out semiconductor, just to get an idea for 2019 what that business is going to look like. Thank you for taking my questions.

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah, so our expectation, I think, Pete mentioned in the -- for 2019 is to be in the ballpark of break-even on the Test business, absent any structural changes in it, that we'll be looking at throughout the year. But that's our forecast right now is to be within spitting distance of break-even, little above or a little below, but that's where we think it will be.

George Godfrey -- C.L. King & Associates -- Analyst

And that includes the New York City deal, correct?

David C. Burney -- Executive Vice President and Chief Financial Officer

Yes. Yeah.

George Godfrey -- C.L. King & Associates -- Analyst

Great. Thank you very much.

Operator

Our next question comes from the line of Ken Herbert with Canaccord. Please proceed with your question.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Hi, good morning.

Peter J. Gundermann -- President and Chief Executive Officer

Good morning.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Pete, just to maybe take it one step further, it sounds like then the loss you expect this year from the three businesses, CCC, Armstrong and AeroSat sort of maybe half of what it was in 2018 give or take $17 million, $18 million, is that I think about a cadence from the first to the fourth quarter numbers you provided, is that a realistic assumption?

Peter J. Gundermann -- President and Chief Executive Officer

I would hope that's conservative.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Okay. So it sounds like you see a bit of a maybe a step improvement from sort of the first to the second or second to the third quarter as you get into the back half of the year?

Peter J. Gundermann -- President and Chief Executive Officer

Correct.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Okay. And as I look at those businesses, specifically on AeroSat, is that -- I know you've always or historically talked about this as a retrofit opportunity, but is there a forward-fit opportunity for this antenna and is that a part of the mix or is that meaningful in sort of the 2019 opportunity or is that really something that could kick in at a later date?

Peter J. Gundermann -- President and Chief Executive Officer

It's a very good question. There is certainly are forward-fit opportunities. Connectivity is a hot topic, as you might imagine, for anybody buying an airplane new or used. We think, our best quickest bang for the buck, so to speak, is the retrofit opportunity, because there is this installed base of airplanes that needs to do something and that's the biggest initial target for us to go after. But as you might expect, also the OEMs in that space are very observant and very interested in what's going on in the aftermarket and if they find an aftermarket trend or product that they really like, there's certainly is a pull to the lines of that side of the house. So we're pursuing both with our partners and doing what we can to be ready in antennas, but we think, to begin with, it's primarily an aftermarket opportunity.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Okay. All right. That's helpful. And just a couple of points of clarification. You highlighted the tariff impact. And I think you said an incremental $10 million versus sort of a $2.6 million incremental in 2018. Is that sort of -- is the headwind $8 million or sort of $7.5 million this year or is the headwind really sort of $10 million versus the $2.6 million last year.

Peter J. Gundermann -- President and Chief Executive Officer

Yeah, what I meant to say was the incremental $7.4 million versus the $2.6 million last year, so $10 million of tariff expense total.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Okay. Great. That's helpful. And then you didn't or you haven't talked about sort of the E&D spend for the year. I'm just wondering maybe with sort of where that ended in 2018 and any commentary or how we should think about that here in 2019 either on an absolute level or percent of sales or however you'd like to talk about it.

Yeah, I can do that one. We ended up at about $114 million for the year.

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah, I can do that one. We ended up at about $114 million for the year. We began talking about E&D spend about 10 or more years ago when it was an important driver in understanding the fluctuations period over period or year-over-year. The last couple of years, it's kind of leveled out, absent acquired E&D costs when we buy businesses. So the plan going forward is, we'll talk about it when there is some significant change to the run rate for the spend. We had about $114 million in 2018. I would expect, going forward, we would see some inflationary type of change to it, maybe a couple of percentage points, a lot of it is dependent on salaries and looking out in 2019, it looks like, kind of the run rate we expect in 2019 will be similar to what we saw in 2018.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Okay. Very helpful. And then, just finally, I know you -- we haven't -- we don't really get to talk about sort of the in-seat power much, in-seat power segment much with everything else going on in the other businesses, but really nice growth there. It sounds like you're taking share, it sounds like, Pete, with a seat motion product. Can you just high level, maybe talk about some of what you're seeing at your airline customers around discretionary spend in terms of interiors and sort of modification efforts and maybe how that's growing as part of the backlog growth in Aerospace?

Peter J. Gundermann -- President and Chief Executive Officer

Sure. We, in general, see continued strong demand for in-seat power. I mean, it's been a very, obviously a strong platform for us for a long time and it continues to be so. I would say the trend toward stand-alone power systems, in other words, power systems without seatback IFE, in-flight entertainment, continues to gain in prominence in narrow-body airplanes around the world. So our general approach is that, in wide-bodies most wide-bodies do get and will continue to get seatback IFE and our approach to getting on those airplanes continues to be through the IFE providers who are very large customers of ours.

The narrow-body airplanes increasingly are more of a streaming content type of application in terms of IFE, so no seatback displays. And our approach to them is to go directly to the airlines. So we work with some 220, 250 airplanes -- airlines around the world. And in general, people maybe aren't buying as many cellphones as they used to, but they all have them, and same with iPads and same with computers, and the increasing prominence of connectivity on airplanes in the narrow-body world in particular means that demand for our product continues to grow and we are doing really well with it.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Great. Thank you very much.

Peter J. Gundermann -- President and Chief Executive Officer

Sure.

Operator

Our next question comes from the line of Michael Ciarmoli with SunTrust. Please proceed with your question.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Hey, good morning, guys. Thanks for taking the questions here.

Peter J. Gundermann -- President and Chief Executive Officer

Sure.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Pete, can we just go back the -- if you're assuming that those three businesses go from $45 million to $80 million, I mean is that growth embedded in the guidance? I mean, if I assume $80 million for those three companies at the midpoint, it sort of implies that the rest of your Aerospace business only grows at something like 3%. So can you give us sort of what you're thinking or is that type of growth baked into the guidance?

Peter J. Gundermann -- President and Chief Executive Officer

It is baked into the guidance not exactly the way you're doing the math. We put some -- we put that guidance in there at the higher end of the range and we discounted it for risk as we move to the lower end of the range.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay. Okay. Fair enough. And then just, I mean, if you're going to get that kind of growth, 77% growth, I mean, but being less confident or less likely to see breakeven, what are some of those puts and takes and are we going to see antenna sales in 2019? I know, I think, when you last gave us the update, we were waiting maybe to see how the antenna performed on the network. Is there any broad update you can give about about the antenna? I mean, is it in the marketplace yet or what's the status there?

Peter J. Gundermann -- President and Chief Executive Officer

It's out. It's in the marketplace in the sense that it's flying around on a bunch of airplanes. You might remember we had a handful of airplanes flying under the old network and those systems have, I believe, all been swapped out at this point. So the airplane -- those airplanes are essentially acting as test nodes for the new network and we believe that that's all going very well. As for expectations, we prefer not to get too granular in terms of what companies doing what. But I can tell you, we're not going to come anywhere near to that $80 million, $85 million level without substantial antenna sales.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay. Do you anticipate what the timing would be for the first sales? I mean, is there significant testing left that has to be accomplished?

Peter J. Gundermann -- President and Chief Executive Officer

No, I think it's more getting the sales cycle warmed up, getting the contract structure established kind of things that are actually kind of beyond our scope. We've kind of done what we need to do, we think, there might be incremental things here and there, but we think we're kind of ready to go.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay. And then just if you could, just educate me on this. I mean, if I'm a business jet owner, if I'm corporation and I'm already flying transoceanic in my business jet, I mean, I probably already have connectivity. There's a lot of players out there whether it's Viasat, Honeywell, Collins. What's going to create the retrofit? Why am I going to say, we need to go out and retrofit our existing solution? I mean, obviously bandwidth, but it's -- I'm just trying to figure out what drives this sales cycle against all those other established players.

Peter J. Gundermann -- President and Chief Executive Officer

Well, they would be competitors to some extent. I mean, there's a whole debate -- most of the competitors you listed there are Ka versus Ku. So there's a whole lengthy debate as to pros and cons there. Our belief frankly is that Ku offers better global coverage and with high throughput satellites coming online offer the competitive differentiators between Ka and Ku tend to disappear. So, we think that there's not an overly intimidating field of competitors out there at this point.

The other thing is the starting assumption there that most airplanes flying over the ocean are already connected. That is kind of true, but a lot of it is much older technology, not Ka, not Ku, even lower levels. So, we think that there is pent-up demand basically for these older airplanes to be brought up to the modern standards and that's where we're kind of targeting. It could be that Ka right now is line offerable. I think, getting back to Ken's questions earlier or maybe George's that, at the OEMs, I mean, there is a Ka presence there, part of the reason we want to go aftermarket to begin with is we think that's where the bigger volume is, that's where we think we can make more of a splash. We believe that as Ku proves itself with HTS satellites, and the price point becomes apparent and the user community starts talking, we think we've got a good opportunity to move upward and displace Ka with Ku.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Got it. Okay. No, that's helpful. And then just one more on the, just sort of on an operating income bridge here if I can. You talked about the three businesses. So maybe those losses get cut in half. I think, you also had earlier this year a range of legal and some other one-time items, maybe in the 9-ish $10 million. Can you -- is that the right way to think about sort of bridging operating income growth from 2018 into 2019? Adding back, not only or cutting those losses in half, adding back some of those legal and other one-timers. And then, can you just give us what the amortization might be in 2019?

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah. This is Dave. The amortization rate that we saw in the fourth quarter is going to run through most of 2019. And I can get that for you in a second here, Mike. But as far as the one-time costs that you're thinking of, I know, in the first quarter we talked about $1 million accrual for a legal issue. Important, when you're looking at one quarter kind of rounding when you look at a full year worth of expenses. So, I mean, other than that, I'm not sure we had throughout the first three quarters some increased loss accruals each quarter relating to that one long-term program at CCC, we did not have that in the fourth quarter.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay.

David C. Burney -- Executive Vice President and Chief Financial Officer

So, we don't expect that to continue into next year.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay.

David C. Burney -- Executive Vice President and Chief Financial Officer

Those were the big things. So I'll get -- I don't have it at my fingertips right now for the amortization expense, but I'll get back to you before we're done with the call.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Got it. I'll jump back in the queue, guys. Thank you.

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah, I got it. It's about $16.5 million for 2019.

Operator

Our next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question.

Jon Tanwanteng -- CJS Securities -- Analyst

Good morning and nice quarter. Do you expect that 16.5% roughly core Aerospace margin, ex the problem businesses, it's likely to hold up through 2019? And if not or to be better, what are the puts and takes of that (inaudible) quarter?

Peter J. Gundermann -- President and Chief Executive Officer

I'm not sure I understand what you're -- can you say it again, Jon?

Jon Tanwanteng -- CJS Securities -- Analyst

Yes. So you had 16.4% operating margins ex the problem businesses in Q4.

Peter J. Gundermann -- President and Chief Executive Officer

Right.

Jon Tanwanteng -- CJS Securities -- Analyst

Do you expect that to hold up through the next year?

Peter J. Gundermann -- President and Chief Executive Officer

Yeah. I mean, I think, we're pretty comfortable with our margin profile in general. If I back up the clock, the whole reason we started talking about these three businesses is that there was some concern and pressure basically in the investor community about what was happening to our business in general. And our perspective was most of it's doing great. We have these two or three things that are dragging us down that we need to fix. We still feel that way. And I don't think, we expect anything else to bottom out on us here. I think we're pretty comfortable with kind of where we are. I mean, it's competitive world and there's again some difficult customers and all that. But in general, our hope is not only to get the three struggling ones to break even, but to have them become part of the contributing crowd. And if we do that and the contributing crowd continues to maintain itself, I mean, 16.4% or whatever was this low, it should be higher.

Jon Tanwanteng -- CJS Securities -- Analyst

Okay. Great. Thank you. And then just going back to another question and what you disclosed in the press release about the Test business being flatter or modestly profitable this year. Was that on an EBIT basis that you were describing that? And secondly, what you want those target margins to be and kind of what revenue or cost-cutting efforts do you have to make to get there?

Peter J. Gundermann -- President and Chief Executive Officer

Yeah, it's a very good question. And we we're hedging a little bit. We think we can get to kind of a breakeven EBIT basis over the course of the year. I mean, there is going to be a little bit of -- I should maybe mention this for clarity. In our first quarter press release, you're going to see some semiconductor revenue, well, I guess, in part because, we didn't close till February 13th, but also we've got some service obligations that we're going to continue to have really over the next couple of years. So there will be some residual semiconductor involvement and revenue there. Nothing that's market related, it's more contractual service based on past sale. So you will see that.

But it's definitely a turning point for our business. I mean, semiconductor has been lumpy and it's been stressful at times; when it's good, it's really good; when it's bad, it's -- we've had to adjust. And one of the things that we've learned to appreciate, I've learned to appreciate is that the crew that we have in the Test business is pretty resourceful and they tend to do pretty well responding to a challenge. And this is a challenge, this is a changing of the structure of the business. On the one hand, a lot of the overhead structure that was dedicated to semiconductor has gone with the sale. So our headcount is way, way down in our Irvine, California operation related to that. But there's a lot of the structure that was shared that did not got. We've got that still.

So we have to do an analysis of kind of where this transaction leaves us and what our prospects are going forward in other businesses and other things that we might do to diversify ourselves and bring in more volume. But we're pretty pleased with the plan we have in place. I mean, if this -- we didn't, again, we didn't go out trying to instigate the sale, it kind of came to us. But given that it did and we felt we should pursue it, our remainder business, looking at 14% organic growth in a year like this, it's a good time to have it. So we're pretty pleased with that. And obviously, we'll be updating on the Test business as the year goes on. We don't pretend to have all the answers at this point, but we certainly don't think it's a crisis. We're not going to be talking about our Test business like we've been talking about our three struggling businesses on the Aerospace side.

Jon Tanwanteng -- CJS Securities -- Analyst

Okay. Great. But from a margin perspective, is it going to start off pretty rough and then progressively improves or how do you see that going through the year?

Peter J. Gundermann -- President and Chief Executive Officer

Well, it's going to show a pretty substantial gain in the first quarter, I can tell you that. But it's probably going to start off weaker, I mean, you back out the proceeds of the revenue of the sale and then it'll stabilize and normalize toward the end of the year.

Jon Tanwanteng -- CJS Securities -- Analyst

Okay. Great. Thank you.

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah. And we expect the revenue relating to that rail program to pick up as the year goes on.

Operator

Our next question comes from the line of Dick Ryan with Dougherty & Company. Please proceed with your question.

Richard Ryan -- Dougherty & Company -- Analyst

Thank you. So, Pete, maybe to follow up on some of your comment -- latest commentary there on the A&D test you got two facilities supporting $50 million, $60 million in revenue; obviously, maybe some rationalization going on there. But a broader question, how does the pipeline of opportunity look there? I know when you -- you are striving to get kind of into a prime position versus a supplier position. Can you just kind of talk about the pipeline of opportunity for that business?

Peter J. Gundermann -- President and Chief Executive Officer

Yeah, we think it's as strong or stronger than it's been in quite a while. We have been waiting for more of a robust market maybe in response to regime change in Washington. Then it's happened over the last couple of years, but it appears to us that there are certainly more opportunities happening and our bookings have been reasonably strong, quoting activity has been reasonably strong. So I'd say we more and more comfortable. It's going to be a lumpy business. So it's got to be a business where when we are -- when the times are good, they have to be good, because there are going to be times when the volume is lower and the margins are worse. So we have to kind of keep that in mind as we restructure the business. But it's going to be -- it's not 50% of our overall business, it's going to be about 7% or 8% at least this year, and barring substantial growth or acquisition or something like that, I expect it will kind of stay in that range.

We do have the two facilities that you talked about. We're going in with eyes wide open as to how we navigate this. The two facilities are not plugged replaceable, we do different things in different places. So it's really not a kind of a slam dunk kind of go-forward option. We got some people right now trying to figure that out and trying to decide kind of where we go from here. As you can imagine, where we thought we were going to be with the semiconductor sale up until late-December was very different than where we ended up. And that was not a trivial exercise in and of itself. So our primary focus has been to bring that sale to a successful conclusion. We think we've done that actually. So now the exercise is to figure out what we have left and where we go from here. So, more on that as it comes and I expect we'll certainly no more by the end of the first quarter when we release first quarter results.

Richard Ryan -- Dougherty & Company -- Analyst

Okay. Great. Any updates on the EPDS opportunities, the current contracts you have and any potential wins down the road?

Peter J. Gundermann -- President and Chief Executive Officer

EPDS, Electronic Power Distribution, it's a -- I don't have anything specific for you, Dick. Maybe one of these days we should start to do kind of an overview, because it is certainly an active part of the business and we have established ourselves, in my humble opinion, as the go-to people or that kind of flight-critical power in smaller aircraft. And there was a time when we had to look long and hard to find people willing to even consider us. I think we've established ourselves as the people such that now I would dare say that in the industry around the world an airplane doesn't get developed without us being invited to at least consider participation. We don't jump at everything, we don't do everything, but we do pretty much -- we have a very, very high hit rate when we decide to pursue something and it's because we've got the scars to prove it. We've got the capabilities and the maturity of the architecture to do it well and the industry knows that, so. And it's -- we're about at the point now that you bring it up, in 2019, maybe a little bit more in 2020-2021 where this is going to be more and more of a meaningful part of our financial results. So why don't you let me have the homework of maybe doing a little side expose of that on one of these calls over the next coming quarters and we'll revisit the topic.

Richard Ryan -- Dougherty & Company -- Analyst

Sounds good. Thanks, Pete.

Peter J. Gundermann -- President and Chief Executive Officer

Thank you.

Operator

(Operator Instructions) Our next question is a follow-up question from Ken Herbert with Canaccord. Please proceed with your question.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Thanks. Hi, Pete. Just one quick follow-up. You've got on the Aerospace business another one to two quarters here in the first half of 2019 with much easier comparisons than in the second-half. As we think about the organic growth, is there anything from a cadence standpoint across 2019 we should be aware of just considering the comps and how 2018 progressed?

Peter J. Gundermann -- President and Chief Executive Officer

It's a good question. We expect the first-half -- the way it looks right now, we expect the first half of the year to be stronger than the second half. But I'm not sure that's -- there's a bunch of moving parts in there and part of it is just by the time you get to the second half of the year, we don't have the -- there are lot of orders that could pop up between now and then that aren't in the books yet. So we were a little bit -- I was intentionally vague there, because I don't think we really know, but at this point it looks like the first-half is going to be a little bit stronger.

Kenneth Herbert -- Canaccord Genuity -- Analyst

Okay. Great. Thank you.

Peter J. Gundermann -- President and Chief Executive Officer

Sure.

Operator

Our next question comes from the line of Michael Ciarmoli with SunTrust. Please proceed with your question.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Hey, thanks for taking the follow-up, guys. Pete, just on the Test business, on the subway program, should we expect -- I guess, just how are are you thinking about that program? Are there going to be any start-up costs or learning curves associated with that? Just trying to think about how that program ramps up.

Peter J. Gundermann -- President and Chief Executive Officer

It's another good question. It's a substantial award, we feel, in part because it's a little bit of outside the bounds of what we've done in the past, at least, it would look that way to the outside observer. On the other hand, it's kind of right up our alley, in that the philosophy of Test that the customer in this case wants to drive toward is remarkably similar to what we've done in certain other arenas including defense arenas like with the Marines or the Navy or whatever. So we're bringing in our skill set to a new customer. And I'm sure there will be learning curves and we think we've got it pretty well circled in terms of what the risks are, but definitely there -- it's a little bit different. Anytime you do something different, I don't care what it is or who you are, there is some risk of things, risk of learning opportunities, how's that.

At the same time, let me just say that our sense is that there's really a substantial body of demand in this arena. I'm talking about rail and subways, and specifically around the world, there are lots of cities that use rail and subways. So, our feeling is that the way things have been done prior to this award and prior to our involvement are a little bit different than the way they're going to be done in the future. And if the world kind of shift toward the New York City model, we could have a pretty good opportunity here. And we are involved in various other discussions and conversations that could lead to bidding activity that could lead to other awards and this is going to be an interesting thing. Obviously, as developments go over the course of the year, we'll know how our engineering efforts, which are already well under way, are proceeding and we'll know how the market is responding.

You might imagine that if you were responsible for the subway system, I'm just going to pick a city, DC maybe, I'm just guessing, I'm just picking them at random, but pretty much every city in the US anyway that has the rail system will pay attention to what New York City is doing. And New York City made a big statement going in our direction on this program. So we think that if we do it right and we do it well, we can solve some of the problems New York City historically had. And if we do that right, it could lead to other opportunities in other cities. So who knows. We're pretty excited about it though.

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Perfect. Thanks a lot, guys.

Peter J. Gundermann -- President and Chief Executive Officer

Sure.

Operator

Our next question comes from the line of Mike Wallace with White Pine Capital. Please proceed with your question.

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

Good morning, Peter. How are you?

Peter J. Gundermann -- President and Chief Executive Officer

Good morning. Good. How are you?

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

Good. Couple of questions. Nice job on generating some good cash flow from the business this year and paying down some of the debt and that's despite the receivable balance at $47 million at the end of the year. We're going to get $100 million from the Test business in cash. Can you talk a little bit about what do you plan to do with that? Looks like we reduced some debt over the year. And just give us some thoughts on that. Thank you.

Peter J. Gundermann -- President and Chief Executive Officer

Well, when those kinds of checks show up Dave doesn't let me have them. So Dave, do you want to answer this question?

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah. I mentioned earlier that we took the $100 million and paid down debt initially. There will be a tax bill due on it probably later this quarter or beginning of the second quarter. That will be about $25 million, I think, our estimate is on the cash taxes on that. But the short-term plan is as we did, we paid down $100 million on our revolver.

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

Okay. Good. And there isn't really any share repurchase activity last year. What's your thoughts on that?

David C. Burney -- Executive Vice President and Chief Financial Officer

Again, the focus is on growing the business and reinvesting and continuing to look at acquisitions as the priority.

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

Okay. Operating margins in the Aerospace business, that saw some nice improvement year-over-year. As the three troubled companies started to show a little bit of improvement in some other volumes, how should we think about operating margins as we look out into 2019 for the Aerospace business?

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah, I think the fourth quarter was a good example of some nice improvement in the Aerospace operating margins. If we operate at that level of revenue, I expect that's a continued achievable number there. We continue to look at opportunities to expand that. As Pete mentioned earlier, we are facing a $10 million headwind mainly in our Aerospace segment relating to increased cost for the tariffs; I should say, incremental $7.5 million there. So that presents a little bit of a challenge to us as we continue to explore alternatives to buying some of those electronics from China. So yeah, my comment is the fourth quarter was a good solid Aerospace quarter with with no real strange muddiness to it.

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

Okay. So would that be a good base to think about as we build off of for 2019?

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah. Yeah, for Aerospace, certainly, it's -- again, there was unfortunately for the last year or two, we've continued to have a lot of muddiness and one-off things that have happened, we didn't have any of that in the fourth quarter. So it is a good representative quarter for us.

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

Yeah, it's probably one of the cleaner quarters we've seen in the last several of them. And could we see a lift of 100 points to 200 points over the next 12 months in that as you look through your backlog and think about converting it to revenues and running it through the business. How should we think about improvements from the 12.7%?

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah, lot of it will depend and sales mix. And we intentionally stay away from providing specific guidance on operating margins. But I would say that there is opportunity to expand margins, but as Pete said, when you carve out the three problem businesses, the remaining operating margins for the rest of the Aerospace segment is really strong. So the challenge and the big opportunity for us to increase our margins is to improve those three are probably more appropriately those two real problem areas that are dropping our Aerospace margins down, and that's what we expect to happen. We mentioned earlier that with regard to CCC and AeroSat, it's a top line thing there, we need to get top line growth there to see the margin improvement. And CCC, we had a really strong booking quarter, we don't generally call out specific bookings for our different business units, but the bookings were good -- best bookings we had at CCC since we bought the business were in the fourth quarter.

Operator

Our last question comes from the line of George Godfrey with CL King & Associates. Please proceed with your question.

George Godfrey -- C.L. King & Associates -- Analyst

Thank you. Just a quick one. Dave, what is the remaining share authorization? And then, I heard you say you're focused on M&A activity with the proceeds, but is it safe to assume we get those three businesses fully fixed and functioning where you want them before we see any more M&A activity? Thanks.

David C. Burney -- Executive Vice President and Chief Financial Officer

Yeah, there is a $50 million share repurchase authorization. And I wouldn't say that the fixing of the two problem businesses that remain is mutually exclusive from continuing to look at acquisition opportunities. We have a solid team behind us with the people that are running those businesses, now that are the primary focus and people with the broad shoulders doing most of the work at those two businesses, and we have others that continue to look at acquisition opportunities. So there I don't view fixing those two businesses as diluting our ability to continue to look at acquisitions.

Peter J. Gundermann -- President and Chief Executive Officer

I would add that, if you could script the world perfectly that might be the way to do it, but you can script the world perfectly. So if and when you find things that are good acquisition candidates, whether you're ideally ready for them with other things going on your business and how you got to take them and the best case in point is our last acquisition, which was the Telefonix acquisition of a year-and-two-months ago, which was just has worked out to be super. So that was in the phase of all these other three things working their way out. And most people who are involved in the acquisition game will tell you that you need to have the big hits every once in a while to compensate for the ones that are more of a struggle and Telefonix is one of those big hits. We've had a few, but we're really pleased with that acquisition, that's one of the better ones in recent history.

George Godfrey -- C.L. King & Associates -- Analyst

Understood. Thank you very much.

Peter J. Gundermann -- President and Chief Executive Officer

Sure.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Peter for closing remarks.

Peter J. Gundermann -- President and Chief Executive Officer

Okay. Well, thanks for your attention today. And we're, again, we're pretty pleased with how 2018 worked out. There were struggles, there are always struggles, but overall, we felt it was a really good year. And we think we're really well-positioned going into 2019. So thanks for your attention. We look forward to talking to you again at the end of the first quarter. Have a good day.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 77 minutes

Call participants:

Deborah K. Pawlowski -- Investor Relations

Peter J. Gundermann -- President and Chief Executive Officer

David C. Burney -- Executive Vice President and Chief Financial Officer

George Godfrey -- C.L. King & Associates -- Analyst

Kenneth Herbert -- Canaccord Genuity -- Analyst

Michael Frank Ciarmoli -- SunTrust Robinson Humphrey, Inc. -- Analyst

Jon Tanwanteng -- CJS Securities -- Analyst

Richard Ryan -- Dougherty & Company -- Analyst

Michael Scott Wallace -- White Pine Capital, LLC -- Analyst

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