Thank you, operator. Good morning, everyone, and thank you for joining us for the Airbus Q3 results conference call.

My name is Gren Schoch. I'm the Chairman and CEO of Airbus.

With me here today are Chris Bitsakakis, President and COO; Frank Intelie, our CFO; and Chris Figel, Executive VP and General Counsel. In terms of an agenda, we'll take a few minutes to review some of the operational highlights for the quarter, and briefly review our financial results before opening the call to – for your questions.

Before we begin, I'd like to remind you that today's remarks, including management's outlook for 2020 and beyond, anticipated financial and operating results, our plans, objectives and our answers to your questions will contain forward-looking information within the meaning of the applicable securities laws. This forward-looking information represents our expectations as of today and accordingly is subject to change.

Such information is based on current assumptions that may not materialize and is subject to a number of important risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on this forward-looking information.

A description of the risks that may affect future results is contained in AirBoss' AIF and MD&A, which is available on our corporate website and in our filings with the Canadian Securities Administrators on SEDAR at www.sedar.com. With that, I will now turn the call over to Chris for the operational review.

Chris?

Thank you, Gren, and good morning, everyone. It would be remiss of me not to take a few minutes before we start our update to pay respect to the countless men and women throughout the ages that put their lives on the line, with many of them paying the ultimate sacrifice for the freedoms we enjoy today.

Their sacrifices have laid the foundation for the society we live in. And for that, we are forever indebted.

We are particularly humbled by the role that AirBoss plays in keeping our soldiers safe. Our survivability product platform is something that we take great pride in and feel an incredible responsibility in our role in keeping our soldiers safe.

Whether it's our chem.-bio protective equipment or a world-class gas mask, or our Husky vehicle, which has encountered over 8,000 blasts without ever losing a soldier, we make the survivability of our military personnel a critical part of our everyday business. This responsibility is not only felt by our senior leadership, but with every employee at AirBoss.

During the pandemic, when we utilized our military survivability DNA to ramp-up production of PAPRs to protect our frontline responders, we had hundreds of AirBoss employees across four different facilities come in every day during a pandemic to produce 100,000 PAPRs in 100 days for the U.S. Federal Emergency response.

We are respectful of the sacrifices paid by our service personnel every day. And we are also very proud of our employees, wherever they offer their small level of sacrifice to keep our military, our first responders and health care workers safe from threats.

As most organizations planned for a moment of silence today at 11/11, we will plan for our moment of silence then. And with that, we will now begin our Q3 update.

As was communicated yesterday in our press release, we had a second straight quarter of record financial performance driven by the impressive execution of the AirBoss Defense Group in the manufacturing and on-time delivery of its proprietary respiratory systems to governmental and non-governmental organizations battling the COVID-19 pandemic on the front lines as well as increasing strategic stockpiles. This tremendous performance by ADG was combined with a sequential improvement in much of the rest of the business.

Before I get into details, I'd like to just note a few highlights from the quarter. Revenues more than doubled year-over-year to $163 million in Q3, driven by the creation of ADG and consolidation of CSI at the beginning of this year in the subsequent critical role it has played during the pandemic, offsetting natural softness in our other businesses due to the pandemic.

EBITDA grew six-fold to $37 million, with margins expanding driven by our production efficiency at scale. We delivered strong returns for shareholders and partners with return on equity and return on capital employed at about 24% and 26%, respectively and return on invested capital of 19%.

Free cash flow was $14 million in the quarter or $0.57 per diluted share and we have generated $38 million of free cash flow this year, bolstering our cash balance enormously. We reduced our net leverage to 0.25 times LTM EBITDA, 1.6 turns less than the beginning of the year, and this has been reduced further subsequent to the quarter end.

These record results have put us in a strong financial position entering 2021, and have given us the ability to be aggressive with opportunities that present themselves. We took advantage of this position of strength just recently as we endeavored to acquire the minority ownership in AVG that we did not already own.

As a brief background on ADG, this entity was formed at the beginning of 2020 with the aim of combining AirBoss' class-leading CBRN protective solutions, including our respiratory systems for frontline workers, supported by our agile manufacturing capabilities and supply chain management with the defense products, marketing strength and strong relationships with governments and militaries around the world of Critical Solutions International. The opportunity to take advantage of the cross-sell was an obvious strategic rationale, although we could not have anticipated how quickly it would be validated.

So far this year, AVG has been a domestic leader in the battle against COVID, and AirBoss, as a whole, across various locations has assisted in this effort as we have ramped up our domestic manufacturing capacity to deliver on hundreds of millions of dollars of orders for personal protective equipment that are designed to keep safe to hospital workers and first responders on the front lines working to save lives. In late July, ADG completed on time and on contract, its $96 million FEMA contract awarded at the end of the first quarter for 100,000 respirator systems or PAPRs and 3 million related filters in only 100 days.

The people across our company mobilized quickly and by the end of the contract, we were manufacturing approximately 10,000 PAPRs and 100,000 filters per week across four of our U.S. facilities, including our engineered products facility in Auburn Hills, Michigan.

The flawless execution of this contract was succeeded by $121 million award from the U.S. Department of Health and Human Services, or HHS, for 50,000 PAPRs and 600,000 filters for the National Strategic Stockpile.

We commenced delivering on this contract in Q3 and expect to complete it by Q2 of 2021 with no concern of any contract reduction or cancellation as the PAPR units themselves have already been produced and will all be delivered this month while we focus production on the filters and other peripherals going into Q1 and Q2 of next year. These contracts were provided with no premium in our pricing, but their sheer scale has driven significant efficiency gains, resulting in improvement in ADG's EBITDA margins.

Separately, near the end of Q2, ADG was awarded a two-year extension to its Husky long-term contract awarded in March 2017. The anticipated volumes of Husky 2G support equipment to be procured until September 2022, or approximately $36 million.

And in early Q4, it received multiple orders worth $22 million over two years for products across its survivability platform, including ground-penetrating radar and its new rollover detection warning system, protective wearables and equipment, including more PAPRs. As it relates to PAPRs, we are continuing to reach out to end users in an effort to increase usage.

This is for two reasons. One, PAPRs are long-term more cost effective, offer better protection and are manufactured domestically, whereas almost the entirety of the less effective N95 masks are manufactured overseas.

Use of the AirBoss PAPR system can become standard operating procedure for all infectious disease control in hospitals, unrelated to the ongoing pandemic as opposed to less efficient PPE currently in use. Secondly, there is a potentially significant recurring revenue portion tied to those systems through the ordering of replacement filters and hoods.

For example, the razor, razor blade model, for the systems that are being actively used and for which peripherals such as filters are replaced on schedule. Currently, although many of the FEMA PAPRs have been fielded and are in full use, some of the systems are in earlier stages of deployment, but it's early days, and we are scaling up our efforts to promote their benefits and availability for potential end users and hospitals and clinics as we look to take advantage of our installed base to drive a recurring revenue channel for future years to come.

As it relates to our contract pipeline, obviously, the FEMA and HHS contracts stand out in scale from the organic aspect of the business. However, excluding these COVID contracts, we are going into 2021 with a significantly deeper pipeline of newly awarded and highly probable base business that we did going into 2020.

That, of course, may be complemented with further PPE orders. We expect to benefit from a more streamlined and coordinated approach to emergency preparedness planning in future years, by agencies looking to shorten acquisition times and build additional strategic stockpiles prior to the next urgent event.

Furthermore, there are numerous other markets that we are beginning to tap and are ramping up our online availability and marketing of our PPE for various medical personnel, including those who have not typically purchased such PPE in the past, such as dentists and other health professionals who come in close contact with patients. Additionally, we continue to target traditional defense contracts, potentially valued at hundreds of millions of dollars globally over the next several years for our broader portfolio of survivability solutions, including our low-burden masks, glass cage wearable sensors, Bandolier line charges, the first commercial sale of which took place in April to the Netherlands with an expectation that other NATO countries may follow, and vehicle accessories, such as more of our rollover detection systems or RDWS.

We currently have deployed approximately 1,500 Husky vehicle systems globally, so there's a continued opportunity to support these systems on an ongoing basis as evidenced by the recent contracts I mentioned. Regarding the results of the U.S.

presidential election, equipment protection for soldiers receives normally strong bipartisan support, so we don't anticipate a significant change in our growth prospects. One example of this is the documented bipartisan support from Congress related to measuring soldier's blast exposure -- blast pressure exposure, which we believe provides an opportunity for wide-scale deployment of our Blast Gauge sensors in future years as the military looks to accelerate its efforts to prevent and treat PTSD in active duty personnel as well with veterans.

As it relates to our Rubber Solutions and Engineered Products, we saw a meaningful recovery in these operations in the third quarter, with both segments seeing sustained recoveries, that approached levels of over 85% of pre-COVID volumes, as we approach the end of the quarter. Obviously, the full recovery in volumes and filling of the additional capacity we've invested in depends partially on the stable and sustained reopening of businesses across North America, especially in the U.S.

In the case of Rubber Solutions business, gross profits remained relatively stable year-over-year, as we offset the lower volumes through careful management of overhead costs and supported by government-directed wage subsidies. Our long-term priorities here remain on growing this business as a supplier of choice in the consolidating North American market with a growing focus on building defensible leadership positions in select compounds.

As it relates to our Engineered Products segment. Gross profits increased as we supported the rebounds in volume demanded by the automotive sector, ahead of industry levels given our focus on SUV, light truck and minivan platforms, while managing variable costs.

The Engineered Products segment also continued to provide search capacity to produce products for ADG, including our PAPRs and other defense products. AirBoss Engineered Products has also continued to focus on efficiency improvements with several new molding machines coming online as well as our new fully robotic work cell launching into full production mode.

Additionally, we continue to focus on the diversification of our product lines into sectors adjacent to the automotive space. Before I pass on to Frank for a deep dive into our financials, I mentioned at the top, our strong financial position and the ability to be opportunistic.

We have had an exceptional year and have deleveraged our business enormously and now have a very solid balance sheet. Not every company has had the business diversification in place to succeed during this pandemic as we have or they are hamstrung by an uncooperative debt-laden balance sheet or lack of access to capital.

Therefore, we anticipate there will be opportunities to consolidate at more reasonable multiples than in the past. We have been clear that we will be opportunistic as it relates to M&A, which furthers our strategy but diligent in the price that we will pay.

We have not wavered from this approach. We have a healthy pipeline of targets and have been intently active in various M&A opportunities.

And we will continue to be with a focus on adding new compounds and products, technical capabilities and geographic regions of selected North American and international markets. With that, I will now pass the call over to Frank for the financial review.

Frank?

Thank you, Chris, and good morning, everyone. As a reminder, please note all dollar amounts presented are in U.S.

currency, except for dividends per share, which are Canadian dollars. As Chris mentioned, our strong improvement in financial performance in the third quarter over the same period in 2019 reflected ADG's successful delivery against a number of defense and government contracts, including the FEMA and HHS awards.

On a consolidated basis, net sales for Q3 more than doubled to $163 million. This was largely due to ADG's performance and the addition of revenue from CSI, supported by the pivot with an engineered products to support the manufacturing of certain defense products, including PAPRs.

Consolidated gross profit more than quadrupled to $46 million and doubled in margin to 28%, driven by increased sales by ADG. And consolidated adjusted EBITDA grew sixfold to $37 million.

Profit and adjusted profit attributable to the owners of the company was $11.6 million and $11.7 million, respectively, in Q3 or $0.47 per share. Turning to our individual segments.

ADG net sales in Q3 increased to $108 million. The significant increase was primarily the result of the completion of the previously mentioned FEMA contract, commencement of the HHS contract and supported by increased sales associated with other contracts.

Gross profit in the second quarter was $37 million or 34% of sales from 22% in the same period of 2019, with the margin expansion due primarily to higher volumes associated with the new business, notably FEMA and HHS contracts. Net sales in the Rubber Solutions segment decreased by 11% in Q3 to $30 million.

Volume was down across the majority of sectors as a result of either full or partial shutdown of customers' operations due to the COVID-19 pandemic, though, as mentioned, there has been a continuing ramp-up of most customers' operations. Gross profit decreased 1% to $5 million for the quarter, primarily a result of decreased volumes.

Margin was 16% of sales versus 15% in Q3 of 2019 and due to the company managing overhead costs and supported by government-directed wage subsidies. Net sales in the Engineered Products segment increased 19% to $38 million, driven by the pivot to manufacturing defense products noted above and year-over-year stability in its external sales.

Gross profit was $3.7 million in Q3, an increase of 96% year-over-year with margin expanding to 10% from 6% in Q3 of 2019. Primarily a result of higher volumes and the additional defense product mix supported by operational cost containment and managing overhead costs.

The segment saw a significant recovery in automotive sales compared to Q2 and was relatively stable to Q3 2019 despite the impact of COVID. CapEx was $4.2 million in Q3, and we currently expect an annual amount of approximately $13 million.

Free cash flow was $14 million in Q3, essentially doubled Q3 2019, but the same as Q2 2020 due to primarily the timing of cash taxes. Net of the $1.2 million of dividends paid, that free cash flow enabled us to add another $13 million to our balance sheet.

And as we noted, the free cash flow generation this year has enabled our net leverage ratio to drop from 1.85 times at the end of 2019 to 0.25 times at the end of Q3 2020. Our $60 million in credit facilities was undrawn at the end of September.

The strong performance of ADG is facilitating accelerated payback of the $60 million vendor take-back note with approximately an additional $15 million paid back in Q3 of 2020 and approximately $25 million already paid back as at September 30th. As it relates to ADG, as noted, we acquired full ownership on October 26th, and we'll be consolidating 100% of their bottom line results as of the date as attributable to shareholders.

We were opportunistic in our acquisition of the minority interest, leveraging the fact that we have benefited financially this year. For our partners, we believe the ultimate outcome benefits them as well as they have a strategic position in the overall parent company, AirBoss, thereby participating in the terminal value while receiving an immediate cash return on their investment as opposed to waiting three years, and essentially more than doubling the investment in less than a year.

We believe the consolidated ownership of ADG should also enable its true value to surface. As it relates to timing of contract recognition, a reminder that obviously, we completed the FEMA contract in Q3.

So that does not have a carryover into Q4. The HHS contract does continue and we anticipate the remaining PAPR systems to be delivered in Q4 and then delivery of the peripherals over Q1 and Q2 of 2021.

Excluding the impact of these COVID-related contracts over the long term, our general aim continues to be to grow volumes in the double digits as we were doing pre-pandemic, while expanding our margins through continued operational efficiencies and complementing that with potential bolt-on M&A. We, like all of you are hopeful a COVID vaccine will be ready in the near future.

Notwithstanding, we believe the heightened importance of emergency preparedness, including maintaining domestic supply chains and strategic stockpiles provides potential upside for any sharp ramp in the usage of our PAPRs or further large contracts from other governments and health agencies for PPE, along with other potential contracts in future years, such as for our defense products. In summary, we believe that our diversified business has provided ample evidence that it can succeed during a pandemic.

While much of that was driven by ADG, if and when this pandemic comes to a close that would obviously benefit our other segments as the economy rebounds. We have not been idle in these segments this year, and we have been developing new products and adding automation.

We are currently running ahead of last year's levels, and we expect to build on that momentum and come out very strong as the pandemic dissipates. Operator, that concludes our prepared remarks for this morning.

We would now like to open the call to questions.

Hey, good morning guys and congratulations on a nice quarter.

Good morning.

Gren, I just wanted to pick up a little bit on the conversation on AirBoss Defense Group. I mean, since the Q2 call, we kind of entered a second wave here across North America and Europe.

Has the -- has quoting activity changed at all in say, the last couple of months?

Certainly, the noise level is picking up a little bit. We still haven't got any significant stockpiling orders other than the HHS order, which we announced for 50,000.

There really was never much of a lull between Phase I and Phase II of this pandemic. And most of our customers are still panicking and trying to sort out the record hospitalizations that are happening now as a result of this current wave.

So they haven't really got a chance to focus on stockpiling yet. You see there's a lot of articles in the press about shortages of PPE everywhere.

We still anticipate that as to come. It is a sort of a different time in the market, the government fiscal year end September 30, and with the change in administration and the 2021 budgets not having been passed yet.

We probably don't anticipate big government orders until the same time frame that we got from last year, which was May and August. However, internationally, we're seeing more interest.

We're also, as of this week, commencing an online marketing program to other target customers such as the general public, dentists, massage therapists, physiotherapists, anybody that has to wear a mask all day. So over the next couple of months, we're going to roll-out an aggressive online marketing program to non-government potential customers.

Okay. That's helpful.

Second and last question for me. I just want to dig in a little bit on the recurring revenue potential.

I think with the FEMA and HHS contracts, you'll have 150,000 or so PAPRs in the field. How should we be thinking about the recurring revenue potential of those PAPRs?

And do you -- I guess, the main variables here are the utilization of those PAPRs, and are the users actually changing the filters when they're supposed to. I mean, you can get to some pretty big numbers.

So just wondering if you have any incremental info on any of that so we can kind of square up what a recurring revenue number might look like for that installed base.

Unfortunately, we don't really have much good data yet. There has been a lot of issues getting the PAPRs out of FEMA into the end users hands and tracking that.

We're getting more every day and everybody that gets them contacts us, and we're doing online training with them and they are buying replacement filters and hoods. But as far as we can tell, there still seems to be a bit of inefficiency in getting it from FEMA into the end user hands.

And then, of course, the ongoing revenue and replacement revenue will depend on how much they're used once they're in the end users hands and whether they replace them the filters and hoods and things as for recommendations of us and CPC. But it's something where we've put a task force together internally to contact every user and keep in touch with them, and offer them ongoing training and spare parts and more and more PAPRs.

So that is slowly building, but if they were all in use, obviously, that number would be very big, and we're not seeing that yet.

Okay. That’s perfect.

I better turn it over there. Thanks guys.

Thanks. Good morning, gentlemen.

Yuri took all my good questions. So just a little bit of a housekeeping question, can you give us the amount of the Canadian wage subsidies in Q3?

Yeah, it's Frank here. So they approximated $950,000 for our ARS rubber side, approximately $930,000 for the Quebec operations and then there was another $100,000 for the corporate operations.

So just under US$2 million, all tools.

Okay. And can you – how is the rest of the ADG business going?

Can you talk a bit about non-pandemic sales, military gas masks, foods, gloves, et cetera?

Do you want to take that, Chris, you want me to?

Sure. I can take a stab at that, Scott.

Good morning. As you saw from our recent press releases, we have been announcing quite frequently the awards with boots, gloves, huskies and peripherals.

And so the non-pandemic side of our business is actually going quite strong. And I think what we're starting to see now in terms of quoting activity, we're starting to see a lot of the traditional products that were put into a holding pattern during this pandemic are starting to come back around again.

So as we look into the pipeline for 2021, we feel pretty optimistic that our other product lines that were relatively quiet for the first three quarters of 2020 are starting to come back in terms of a higher level of quoting activity. So our other products are doing quite well, and we see additional quoting opportunities for 2021 now coming to the table.

Would you expect those activity levels to be in line with, say, 2019? Or are they going to be lower or higher?

No, I mean, it depends on the product line, but I think we saw a large demand for huskies in 2020, for example, that seem to be being pushed into 2021. So we expect product lines to be significantly better than what we saw in 2019.

Okay. And can you give us a bit of an update on the Blast Gauge?

I think the last 10,000 unit contracts was – I don't know, about four months ago or so. Is that program progressing as to your expectations?

Yeah. The Blast Gauge is getting a lot of really positive attention right now.

There is a program of record that we're working on with SOCOM, which is a special operations people and we're also working with the general Army as well. So the Blast Gauges that are in the field are being tested.

I mean, the Blast Gauge themselves are running well. It's more the military personnel working with how to manage the data and what to do with the data and how to manage the whole infrastructure around that.

So we are seeing, I'd say, quite an increased interest in accelerating the deployment of the Blast Gauge. The trials are going very well, and now we have two different major parts of the military that are looking at actually making a program of record that we have the most advanced to be able to sign to it.

And we're also getting international interest too. We have several international customers that have contacted us, and we're doing smaller scale trials with them as well.

So, we are getting more and more optimistic on the Blast Gauge, and we think that we're going to start seeing, probably towards the end of 2021 and early into 2022, some good news on the ramp-up there.

Thanks. You guys have done a pretty tremendous job delevering the balance sheet here over the last year or so as you fulfilled your contracts.

And acquisitions appear to be a pillar of your strategy. So with that in mind, how much leverage are you guys comfortable with putting on the balance sheet?

And I know you flagged bolt-on acquisitions, but could there be some chunky deals done as well?

The general comment is I hate debt. But we have, in the past, gone up to around the 3.5 times debt to EBITDA level for acquisitions.

And I don't mind going up to those kinds of levels for the short-term to do an acquisition as long as you can see a path to rapidly delevering afterwards.

Okay. And Frank, just on housekeeping questions here.

When I look at Engineered Products, it looks like there's a bit of defense sales and EBITDA baked into there. Can you provide a little bit of more clarity on that?

I'm just trying to get a better sense on the apples-to-apples comparison within the segment?

Yeah. I mean the automotive sales were roughly in line with what they were for Q3 of 2019.

And I'd say the defense sales in Q3 represented about 20%, 25% of the total sales that were reported for the segment.

Okay. And I'm assuming the EBITDA margins are roughly in line with what the defense margins are on that 20%?

Correct. That's in the range.

Okay. And then, last one for me here.

Just on the VTB, it looks like there's still a little bit left to do there. Does this essentially get eliminated on the acquisition of CSR?

Or does that adjust the purchase price for you guys?

No. It was always eliminated.

It's just now between one company within the organization owed to the parent. So again, it's just moving cash from one account to another.

So it essentially does continue to get eliminated.

Okay. That’s it for me.

Thanks, guys.

Thanks. Good morning.

Just a question first, I guess, here for Frank. What caused the depreciation and amortization in the third quarter to increase fairly significantly, sequentially relative to Q2, in both -- in defense, in particular, but also in engineered products?

Yes. I think, again, some of the new equipment that we brought in, that's now in production.

And obviously, the depreciation is kicking off for that is driving a good chunk of that, Tim.

So, is that -- because I noticed -- like the PP&E balance didn't change all that much at the end of Q3. I, sort of, would have thought it would have jumped up.

But is that…

I think, it was the timing of when we introduced the robotic machine, which really started just towards, I guess, middle end of September from that perspective. And then we've also been, as was disclosed in the notes, we had some retirement of assets from AFP in order to make room for new capacity that will be coming online.

Okay. So are the Q3 expenses reasonably good proxies for, kind of, going forward then?

Yes, I would say so.

Okay. Okay.

Then I'm just thinking about the work the defense product work that's being done in the Michigan facility. How much longer do you think that will be carried out there?

I mean, are we talking another four quarters, one quarter? And then just any comments you can provide on the impact, on the margin once that business does cease to be completed there?

Or is that something that could be – or at this point, you see as being permanent?

I think Tim, when it comes to PAPR production; we've completed the PAPR production in Auburn Hills for the moment. If there would be a new PAPR order.

We, basically -- when we did the FEMA, PAPR production, we had four different facilities running the PAPRs because of the sheer scale of what we were doing and the fact that we had not yet introduced all of our efficiency improvements in order to get the productivity rates up, given that we had a very short time window to get this thing done. But when we went to the HHS contract, we focused the production on our land over Maryland facility, which is an ADG facility and AirBoss engineered products in Alberta Hills.

So those two facilities are going to be our go-to facilities for PAPR production going forward. So in the event that we have another major stockpiling order or emergency response order, then both those facilities have their assembly lines ready to go, they'll both jump in and start production.

In terms of other defense products, we are molding our rubber products in AirBoss engineered products right now for a current U.S. order, as well as some international orders.

And the U.S. order right now has -- the current order that we have on the books right now should last another three quarters, but we expect those orders to be re-upped.

So in a sense, particularly for the U.S. military, we feel that the production of rubber goods for the U.S.

military will stay in Auburn Hills.

Okay. And then just there was a commentary on Alberta Hills the pipeline of product opportunities.

Was that in relation to just defense specifically or AirBoss overall? I'm sorry, I missed the context of that comment.

The question was specifically related to defense, but I'm glad you asked your question in the way that you did because it's been quite a good product development cycle for both engineered products and for AirBoss Rubber Solutions during this pandemic. As you recall, we've really focused on innovation, we've expanded our research facilities, and we are continuing to work with new customers and bringing them on board and scaling them up.

We've really staffed up our R&D technical people in the other two segments. And the product development that's going on now, I think allows us to be very optimistic that, coming out of this pandemic, that we're going to be in a strong position to scale up with new customers, with new products that we didn't have going into the pandemic.

So, from that perspective, we're pretty optimistic on all three of our businesses going forward.

Okay. Thank you.

And then just my last question, again, I apologize; it's a bit of a clarification. Gren, you were mentioning about not expecting any sort of big government orders.

And forgive me, if I'm incorrectly kind of repeating what you said. But until -- from the U.S., that is, I think, until kind of the May-August time frame of next year, kind of similar to what happened this year.

And that's due to budgets and the White House and what have you. Was that just in reference to sort of pandemic-related PPE orders?

Or what was that in reference to specifically?

I think, that's pretty much general, Tim. I mean, they can't order until budget has passed.

And I'm not positive on this, but I don't think, one will be passed before the inauguration in January. So I mean, there's a lot of talk, but typically, they don't give you an order for a budget that hasn't been passed yet.

No, the proposed defense budgets are still very, very strong, and I think, we've got bipartisan support. So, I don't anticipate any issues like we had a few years ago with sequestration, et cetera.

But typically, you get orders in the first quarter with budgets that are passed in December or January. But this year, that's going to be a little later because of the inauguration.

And then typically, you get another surge just before the end of September, so, in August and September, as they allocate unspent funds that have been approved.

And you feel there's an opportunity -- sorry, go ahead, sir.

Yes. So, I think, to the extent that its government funding, that's driving the orders.

I'm not anticipating that we're going to get anything until the budget is passed. I mean, we may get -- drive some drags, but I don't think it's -- you're going to see $100 million or anything like that coming.

Okay. And that applies to potential additional PAPR orders if they were needed?

Or what about the sort of ongoing demand for filters and sort of aftermarket parts for those -- that equipment that's in the field?

No, no. Like for the day-to-day, ongoing demand for filters and things like that, but those are typically not -- so the government FEMA bought the razor or they bought the PAPRs, but once the hospitals own the PAPRs, they're responsible for ordering, replacement filters, et cetera.

So, that's a different budget, and that comes out of the -- that's a non-government budget.

Right. Okay.

That's helpful. I just wanted to make sure, my understanding that was correct.

Of course, there's still -- there are still emergency funds around. So this pandemic, which is currently at record hospitalizations, if it gets out of control, there's still -- there is a possibility that we will get something before that out of emergency funds.

But what I was saying is, I haven't seen the stockpiling budgets being approved yet. It doesn't mean that they haven't been there, that there isn't some money there, but I just haven't seen it yet.

So as we've mentioned before, we believe that ultimately, many, many government organizations from National Guard, Army Corps of Engineers, CDC, WHO, all those people, down to the local levels and state levels, will purchase stockpiles. Additionally, there's other customer targets, like we've got several European countries that we're working with.

We're trying very hard to get Canada to buy some, although, Canada hasn't bought one yet. And Canada has got more infections, more cases per capita of healthcare workers than the U.S.

does by quite a bit, even though the infection rates in Canada are below the U.S., the healthcare workers, there's been quite a bit in the press recently about nurses and doctors being really short of PPE. So those are potential customers that we could get sooner.

Okay. That’s helpful.

Thank you very much.

Good morning and congrats on strong performance. I just wanted to confirm a few items for modeling purposes.

First off, the level of visibility you have for rubber solutions and engineered products segments. So you indicated that Q3 numbers were roughly 85% at prior year level.

Do you have any sense where this will get to in the coming quarters? I mean, earlier in the call, it was mentioned that other sales were roughly flat year-over-year.

I just wanted to get a little bit of idea of what we can expect in Q4 and Q1.

Yes. I think, if we look, going into Q4, we're already at levels that are ahead of Q4 last year in terms of volume.

So that's, I think, the basis for our optimism as we come out of this pandemic. As related to Q3, we saw the ramp-up starting towards the end of Q3.

And then going into Q4, that ramp-up continued. And now we're in a position where we are actually ahead of where we were in Q4 last year.

All right. Perfect.

Thank you. And a follow-up.

So you announced a few new contract wins in the last few months, like the $35 million for Husky orders and $22 million for a portfolio of products across the fence. Should we expect the margins for these new contracts to be close to the historical defense EBITDA margin of roughly 20%, rather than the 15% we've seen in recent quarters?

And also, can you confirm the time lines for revenue contribution from these wins?

Yes. I think, from a historical perspective, give or take a little bit; the margins are sort of in line with what we've seen historically.

As for timing, maybe I'll ask Chris just to --

Yes. It depends on which product we're referring to.

The Husky 2G extended contract, that's going to be extended over two years, but we're not sure exactly when the revenue will be recognized there, if it's going to be back-end loaded or front-end loaded. The order for UAE that we announced should start production relatively soon.

So that revenue should start coming in, early in 2021. So it really depends on the program that you're referring to, but we are certainly seeing some revenue come in quickly and others kind of stretched over a couple of years.

All right. Thank you.

That's all for me.

Thanks. I just want to go back to the D&A discussion for some clarity.

I thought that the D&A was higher sequentially, because of impairment charges of about 2.7, is that not the case?

Yeah. As I mentioned, for the latter part, there was some write-offs of some retired assets that related to AFP, as we get ready to bring in some new automation.

And then there were some intangibles related to prior portfolio products and the survivability platform that are no longer sort of viewed in sort of the pipeline. And so that was also written off, as disclosed in the notes, for approximately $2 million.

But then there was additional -- some small CapEx that started kicking in, towards the end of the quarter, which we'll see more wholesome depreciation as we move into Q4.

Right. But the -- going from $4 million in Q2 to $8.4 million in Q3 -- I mean, $8.4 million is boosted by these impairments.

So, it's not a good go-forward run rate, right?

No. Not with the one-time adjustments that are related to the impairments.

Those should be leveled out.

Yeah. Good.

Okay. Thanks.

Thank you, operator, and thank you again, everyone, for attending this morning's call. We are proud of how we performed this year.

And I want to thank all of our employees across the organization for this. We are excited about the future of the company going forward.

And we look forward to updating you at our next call. Until then, we hope you're all keeping safe and well.

Goodbye. And thanks again.