Joe Forkey: Exactly, yes.
Chris Vichovski: Okay. Alright. this all seems very optimistic. Good luck. And this is all from me. Thanks.
Joe Forkey: Great. Thanks very much for the questions.
Operator: [Operator Instructions].
Robert Blum: Andrea, this is Robert Blum here. Before — while we see if there’s any additional questions in the queue, Joe, a couple of questions here on this side. As you mentioned sort of the pursuit of more defense and aerospace projects, give us an idea of how long it sort of takes to A, win these opportunities, and B, sort of the conversion of them into revenue, maybe in comparison to the medical device side?
Joe Forkey: Yes. It’s a great question. It’s actually part of what we’re looking at as we’re digging into the various segments of the defense aerospace market. But I can use the two programs that we have running right now as good examples of sort of the extremes. And as you point out in comparison to medical device, let me just remind everyone, the medical device programs — because of the regulatory requirements and because we’re typically working on a program from the very conception stage — typically take two or three years to get through the engineering process. Now in some cases, it will take even longer if it’s a program that requires something more than a 510(k), or if there are multiple clinical trials that are required.
But typically for a medical device program, we’re looking at somewhere around two or three years to go through the engineering pipeline — sometimes a little faster times, sometimes a little slower. Our experience with the defense aerospace programs is that it depends critically on just how far the program is pushing the technological limits of what people have done before. So this new program that I commented on, that came into production this year, is a program for which the customer came to us with a set of prints and a fairly welldefined design, and they came to us about a year ago. So this one took about a year for us to to develop the process, to build it, which is really the key technology that we’re contributing year. It’s the manufacturing process and the know-how that we have in the manufacturing process.
So it took us about a year to put that process together, for their particular design that they came to us with, and then to run through a couple of rounds of prototypes to demonstrate that we could do it. That was sort of the fastest that I would expect one of these programs would take, is about a year. On the longer side, the historical defense aerospace program that we have that we’ve been producing for a number of years just before the pandemic started, that one actually took some three years or so. Maybe even four years to go through a few rounds of prototypes. In that case, the customer was asking us to do something that day, and we agreed was right on the edge of what was physically possible. And so, while we don’t know exactly what it’s used for, we know that it’s used for a very advanced technological device, whatever it is, that’s pushing the limits in terms of what can be done with the micro-optics that we’re making.
So in that case, while the customer had an initial design, we had to go through three or four design iterations to be able to satisfy both their requirements and what could be done from a physical standpoint. So I expect that what we’re going to find as we dig into these segments that have higher growth rate because there’s a lot of technological development that’s going on, I think what we’re going to find is that that range that we found for these two programs — between one year or four years — is probably the typical time line that we should expect for these new programs in the defense aerospace market.
Robert Blum: All right. Perfect. That is helpful. Our next question we have here is you mentioned the introduction of a new ERP system. Talk about how you expect the system to improve operations and financial results?
Joe Forkey: Yes. So I should say, Wayne and our new COO, Mahesh, really have spearheaded this effort, which has required the efforts of a lot of people in the company. They’ve done a great job of getting this ready to launch in the next month, as Wayne alluded to. So I’m going to let him answer this question, but I would just say, from my standpoint, I expect I’ll be able to get and more detailed reports more often, which I think from my standpoint will help me to understand what’s going on in the company on a more timely basis. But let me let Wayne talk about this in more detail.
Wayne Coll: Thanks, Joe. Yes, I think my answer is similar. An integrated system will allow us to collect better information, more quickly and productively so we can run the business more efficiently, and it’s really going to help us to scale with our existing headcount.
Robert Blum: All right. Perfect. Sounds good. I think the last question here is how are you planning to manage sort of the significant growth in production you are expecting, and do you have the resources that you need?
Joe Forkey: Yes. And so, that’s a question we’ve been asking ourselves for quite some time. So of course, we’ve seen that this production ramp is coming for a little while now. In terms of planning for it, we’ve planned in a number of fronts. So we did do a bit of a sort of a mini reorganization of the company a few months ago, in order to get people into the positions that we thought would be most effective as the production starts to grow. The last of those positions that we came out of this restructuring reorganization, was a senior director of operations for production, and that role has been filled by someone internally just about a week or two ago. So we’ve been working, for some time, to make sure that the organizational arrangement is ideally suited to the production that we see coming.
In terms of the resources beyond that, there is obviously the direct labor resources that we’ll need. And so while we can sort of pre-positioned those folks, we can’t do too much of that, because I have people sitting around and not being productive. So the direct labor for the assembly work and production work, we’re pretty confident we can bring in when and as we need them for the growth that we see. The other sort of critical piece of resources is one that I alluded to in our comments, and that is our production facilities. And while we’re able to satisfy the requirements that we have today, we do believe that over the next few quarters, depending on exactly when various programs start to hit, that we likely will outgrow the facilities that we have.
So there are a couple of different ways that we could expand, and one of those ways of course, is to look at a new facility. So we are looking at all potential ways of satisfying the facility requirements. And as we move forward, as the new programs come online, we’ll be ready to have a new facility capabilities as we need them in the most efficient way possible.
Robert Blum: All right, fantastic. That’s all the questions we have here. Andrea, I’m going to go ahead and turn it back over to you if there’s any additional questions, or to close the call out.
Operator: There appear to be no questions on the line at this time, I will turn the conference over to management for any closing remarks.
Joe Forkey: Thank you, Andrea, and thanks, everyone, for joining us on the call today. I look forward to speaking with everyone soon. Have a good night, and stay safe.
Operator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.
