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AAR (AIR) Q3 2019 Earnings Conference Call Transcript

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AAR (NYSE: AIR)
Q3 2019 Earnings Conference Call
March 19, 2019 4:45 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to AAR's fiscal-year 2019 third-quarter earnings call. We are joined today by John Holmes, president and CEO; and Sean Gillen, vice president and CFO. Before we begin, I'd like to remind you that comments made during the call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 as noted in our news release and the Risk Factors section of the company's Form 10-K for the fiscal year ended May 31, 2018. In providing forward-looking statements, the company assumes no obligation to provide updates to reflect future circumstances or anticipated or unanticipated events.

At this time, I'd like to turn the call over to AAR's president and chief executive officer, John Holmes.

John Holmes -- President and Chief Executive Officer

Great. Thank you very much and good afternoon. We appreciate you all joining us to discuss our third-quarter FY '19 results. Before we begin, I would like to welcome Sean Gillen, our new CFO.

Sean joined us on January 7. And prior to AAR, he was most recently vice president and treasurer of USG Corporation and have previously spent 10 years in investment banking at Goldman Sachs. We're very pleased to have Sean on the team. Now turning back to the quarter, consolidated sales grew significantly, up 16% from $456 million in the prior period to $530 million in this quarter.

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Adjusted diluted earnings per share from continuing operations, our growth was even stronger of 61% from $0.49 to $0.79, inclusive of a $0.19 tax benefit in the quarter. We also had a strong cash generation this quarter as we delivered $58 million of operating cash flow from continuing operations. We continue to see strong performance from our parts supply and programs activities. In the parts supply, our strategic investments have enabled us to capitalize on the continued robust parts demand we are currently seeing and the multiple new distributorships that we have won are contributing to sustain growth.

Our programs activities remains strong, most notably with continued solid execution on our WASS contract. As a result, our aviation services segment grew 16% year over year. Sales on our expeditionary services segment have also increased 18% due to other recent contract awards. This strong performance was partially offset by labor shortages in our MRO and mobility systems operations.

As you know, the labor market across the U.S. is extremely tight and our more labor-intensive activities have struggled to find enough qualified labor to meet the demand from customers. We've been impacted by these labor shortages in MRO during the last several quarters, and while we saw sequential improvement in MRO in Q3, it was not at the level that we had anticipated. In mobility, as we ramped up production at the recent contract awards, we were met with similar labor challenges.

We've taken several actions to address these labor shortages, but we expect to see continued sequential improvement. We've also been having productive conversations with our MRO customers about sharing in these increased labor costs. Subsequent to the quarter, we announced a new international site in Costa Rica within the WASS program. This program continues to perform very well, and we are happy with this expanded scope.

We also announced another contract award for the production of cargo pallets for the U.S. Air Force, which will be fulfilled by AAR mobility systems. Also, subsequent to the end of the quarter, the company entered into a definitive agreement to sell certain contracts and assets of our COCO business. The sale is subject to certain regulatory approvals, and we expect it to close before the end of calendar 2019.

In addition, we have entered into separate agreements to sell the majority of our idle assets. In conjunction with these agreements, we recognized a noncash after-tax impairment charge of $58.5 million in discontinued operations. As you're aware, the rotary-wing and certain fixed-wing markets have remained on a significant pressure from ongoing decline in demand from the U.S. Department of Defense, as well as an excess supply of aircraft coming from the softness in the offshore oil and gas market.

As we exit the COCO business, this will complete our strategic shift in the asset-heavy COCO model to the asset-light GOCO model, which will be a focus of our growth going forward. With that, I'd now like to turn the call over to Sean to discuss the financials in a bit more details.

Sean Gillen -- Vice President and Chief Financial Officer

Thanks, John. I'll take a few minutes to discuss the company's Q3 financial performance in more detail. As John said, our sales in the quarter of $530 million were up 16% year over year. Our consolidated gross profit increased 9.9% year over year to $85.3 million, driven by the aviation services segment.

Gross margin was 16.1% versus 17% in the prior-year period, primarily due to the aforementioned labor shortages, as well as the mix in expeditionary services. SG&A expenses were 10.3% of sales during the quarter, compared to 11.7% last year reflecting the improved leverage of our cost structure to support our double-digit sales growth. We anticipate that full-year SG&A will be around 10% of sales as previously indicated. Third-quarter results included a reduction of income tax expense of $6.5 million or $0.19 per diluted share.

This is primarily related to the recognition of previously reserved income tax benefits. Adjusted income from continuing operations was $27.6 million or $0.79 per diluted share inclusive of the $0.19 income tax benefit. This compares to $17.3 million or $0.49 per diluted share in the prior-year quarter. Note that in the prior-year quarter, a tax benefit of $0.43 per diluted share was excluded from adjusted EPS because it was due to the Tax Cuts and Jobs Act legislation.

In this quarter, the tax benefit of $0.19 per diluted share is included in adjusted EPS because it is due to normal course annual tax adjustments. This is consistent with past practice. Net interest expense for the quarter was $2.4 million, compared to $2.2 million in the prior year due to an increase in underlying interest rates. During the quarter, our cash flow from operating activities from continuing operations was $57.6 million, compared to $50.3 million in the prior-year quarter.

The prior-year quarter included a benefit from our accounts receivable financing program of $63 million, while the current quarter included a benefit of $4.3 million. The strong cash flow generation reduced net debt $45 million during the quarter to a $150 million, resulting in net leverage of 0.92 times. With that, I will now turn the call back to John.

John Holmes -- President and Chief Executive Officer

Thanks, Sean. As we enter the labor market to recruit in January after the holiday flying season, we experienced greater-than-expected difficulty in recruiting experience labor to meet the strong customer demand in our MRO facilities. While we're seeing a positive impact from the many actions we've taken to address this issue, it is not at the rate that we expected. Based on the impact to Q3 and the expected impact to Q4, I would like to provide an update to our full-year 2019 guidance.

We expect sales in the range of $2.01 billion to $2.03 billion, adjusted EBITDA in the range of $165 million to $170 million and adjusted diluted earnings per share from continuing operations inclusive of the income tax benefit of $0.19 in the range of $2.50 to $2.57. At the midpoint of these ranges, the updated guidance reflects annual revenue growth of 15.5%, adjusted EBITDA growth of 14.5% and adjusted EPS growth of almost 42%. Had we not experienced these labor challenges, we would have been well within the original guidance range. I do want to note that this updated guidance assumes no meaningful impact positive or negative from the grounding of the Boeing 737 MAX fleet.

As you know, this is a dynamic situation that we are actively monitoring and we are working with our customers closely to assess any changes. While we continue to experience these challenges in our labor-intensive businesses, we are exceptionally pleased with the overall growth of the company. Our parts supply and programs activities continue to outperform and we are excited by the full pipeline of opportunities that we see both in our commercial and government markets. I'm excited to have Sean on the team, and we are working closely, looking at our businesses and strategy with a focus on delivering sustainable growth, margin improvement and consistent performance.

We are also very well-positioned with a strong balance sheet and can deploy capital to support our growth strategy. Thank you for your time and interest in AAR. And at this point, I will turn it back over to the operator for questions. 

Questions and Answerss:

Operator

[Operator instructions] Our first question comes from Michael Ciarmoli with SunTrust.

Michael Ciarmoli -- SunTrust Robinson Humphrey -- Analyst

Good afternoon, guys. Thank you very much for taking the questions. Welcome aboard, Sean. Sean, just on the guidance, just so I'm clear, was the tax benefit already contemplated in the $2.50 to $2.80 for the full year?

Sean Gillen -- Vice President and Chief Financial Officer

No. So that tax benefit was not contemplated as part of the original $2.50 to $2.80 guidance.

Michael Ciarmoli -- SunTrust Robinson Humphrey -- Analyst

OK. Got it. And then just on Costa Rica for the INL WASS contract, can you give us any color, I guess, first, how that contract has been performing? It seems like there was no disruption from the government shutdown and maybe what the potential revenue and operating income benefit could be at that additional site as once you guys get that up and running?

John Holmes -- President and Chief Executive Officer

Sure. First of all, the contract is performing very well operationally. The customer is extremely happy. We're in regular contact with our counterparts at the State Department and they're very pleased with the performance.

So this new site will go live later in this quarter and will be fully up and running in the first quarter of FY '20. And we have ranges on what the site will do as it relates to revenue. It's not as large as some of the other sites like Afghanistan, for example, but it will certainly be a positive impact to the program. And I think as we said in the last quarter, there are additional sites being contemplated, but this is the first one that's been definitized.

Michael Ciarmoli -- SunTrust Robinson Humphrey -- Analyst

Got it. Helpful. And then just last one and I'll jump back in the queue. John, can you remind us where you are on the -- there was the protest for the worldwide logistics support services, right before your call started it look like Leidos was awarded the contract.

Can you just remind us, are you now a part of that team or where do things stand with that program?

John Holmes -- President and Chief Executive Officer

Oh, I am seeing that announcement. The protest is over, they ended up adding more participants to the IDIQ. There are, I believe, multiple task quarters that are out to bid, and we have few bids in on those task quarters, and we expect to hear, at this point, any time. I'll get information on that Leidos award.

Michael Ciarmoli -- SunTrust Robinson Humphrey -- Analyst

OK. Perfect. Thanks. I'll get back in the queue.

Operator

Our next question comes from Ken Herbert with Canaccord Genuity.

Ken Herbert -- Canaccord Genuity -- Analyst

Hi, good afternoon, John and Sean. John, I just wondered if you could provide any more detail on the MRO headwinds and maybe any quantification around what that did in the quarter or maybe how much of a sequential improvement you saw? And then as part of that, do you expect this to be sort of a fully flush through in fiscal '19? Or how is the visibility look on specifically the MRO side of the labor issue?

John Holmes -- President and Chief Executive Officer

Yes. So we go in and out of the market and then certainly appreciate the question. We go in and out of the market at various times during the year. And one of those entry points, if you will, is January after the aircraft come back from the holiday flying season.

And so now that we're in the market and the aircrafts are in work, we have good visibility for the rest of FY '19 because we don't have another entry and exit point, if you will, to the market. So that's why we feel comfortable issuing the guidance. As it relates to quantifying the impact, it's significant and we tried to frame that for you, just in terms of, again, had we not had this labor headwind, we would have been well in that original guidance range that we issued back in January of last year. So it definitely has been a significant impact to the company.

Ken Herbert -- Canaccord Genuity -- Analyst

OK. That's helpful. And can you quantify the INL contribution in the quarter or maybe what was organic growth for the business?

John Holmes -- President and Chief Executive Officer

Yes. I mean, again, we view INL as organic. It's a win. So we view all the growth this quarter as organic growth.

And for the first couple of quarters of INL, we have broken that out just to give everybody a sense of the ramp-up, but on a going-forward basis, it's part of the company. And so we're not going to be breaking that out, but it's contributing as expected.

Ken Herbert -- Canaccord Genuity -- Analyst

OK. That's helpful. And if I could just one final question. I mean, I know you alluded to this and I know it's early, but I know you certainly have significant exposure to flydubai in particular and other MAX customers on the programs side of the business, in particular, and I'm sure as well from distribution.

I mean, any initial commentary you can provide on conversations with your customers there? And are you seeing any disruption to the business yet? Or is really the adjustment to the guide largely just reflective of the labor issues within mobility and MRO and you're not seeing anything yet on the program's side?

John Holmes -- President and Chief Executive Officer

Yes. No. Great question on the MAX. Certainly, we have a number of MAX customers around the world, as you know.

You mentioned flydubai, which is a program customer. The MAX grounding, certainly depending on how long it lasts, could really impact the company in a couple of ways. On the potential downside, it would mean that aircraft that we anticipate coming in for maintenance into our hangars that those could slide to the right, because those aircraft have now been put into operation or extended their service to fulfill routes that previously had been operated by the MAX. Conversely, the fact that 737NGs, current generation 737NGs, current generation A320s might be flown more to make up for routes that previously had been served by the MAX.

That's going to drive likely, depending on how this goes on, that's going to drive increased parts requirements and those are bread and butter fleets for us because that could be positive. So it's early. We're in active dialogues with all of our MAX customers and it's something we're watching very closely.

Ken Herbert -- Canaccord Genuity -- Analyst

Great. Thank you very much.

Operator

Our next question comes from Robert Spingarn with Credit Suisse.

Robert Spingarn -- Credit Suisse -- Analyst

Just looking at the labor shortages, is this a specifically just a labor shortage or is it a pricing issue? In other words, are you able to get your customers, you've talked about this in the past, to the pricing level you need in order to compensate the labor?

John Holmes -- President and Chief Executive Officer

So I guess, a great question. A couple of thoughts there. The receptivity of the customers as it relates to potential pricing changes in this issue has definitely improved significantly over the last couple of quarters, and we have had some success with a couple of our major customers in repricing our agreements to account for higher labor costs on our end. However, there's a timing issue, and this is a bit of a moving target.

One of the things we saw when we went back into the market in January is that rates that we felt good about that would attract labor in certain sites actually were not as attractive as we thought. So we were in a bit of a back and forth between what it took to get experienced technicians and what it takes and what we are able to get from the customer. So that's an ongoing dialogue. And it's also not just a rate discussion.

It's really about the experience of the labor force. So we've been able to attract bodies, if you will, good people, but they're just not as experienced and not as efficient as the labor force we would have had, say, a year ago. And so that efficiency certainly plays a role in the profitability inside the operation as well.

Robert Spingarn -- Credit Suisse -- Analyst

OK. And then I wanted to ask you because I don't recall you mentioning it, but is there any update on India?

John Holmes -- President and Chief Executive Officer

Yes. India is still an ongoing project. We actually did make quite a bit of progress this past quarter. There was some various issues that have slowed down the construction of the facility.

We got through those, we're back on track now. We're still on an active dialogue with the launch customer, and I still view that as a calendar 2019 go-live event.

Robert Spingarn -- Credit Suisse -- Analyst

OK. And when are you going to be able to give us some kind of quantify that opportunity?

John Holmes -- President and Chief Executive Officer

Overall, it's a start-up, right. So there'll be some start-up cost that we'll incur once we get going. But ultimately, we view this as an accretive operation to the portfolio given the price that we'll be able to charge over there relative to the cost of labor. And as we get closer and certainly as we announce that we're in a position to announce the launch customer, we can provide more information on all that.

Robert Spingarn -- Credit Suisse -- Analyst

OK. And then just going back to the question, this is another version of the INL question in the growth. But at some level, can you parse apart aviation services and give us an idea of how growth differs between parts, programs, MRO, there's so much in there now. Clearly, INL is a big driver here because it's new, just to get an idea of what's everything is doing.

John Holmes -- President and Chief Executive Officer

If we go back to the Q1 and Q2, we had broken that down a bit more. And overall, and because it's within the segment, we want to get away from that, but overall, we saw similarly very strong performance in the parts supply businesses as we did in the first half of the year. So if you go back and you look at what we had disclosed prior were kind of in that range, and we could see that continuing. I mean, those businesses are doing extremely well at the moment, and we're encouraged by all of the demand that we're seeing both in the aftermarket parts market and the new parts distribution market.

Robert Spingarn -- Credit Suisse -- Analyst

And then how do we think about just with all this talk on labor shortage and so on, how do we think about MRO? Is it growing?

John Holmes -- President and Chief Executive Officer

MRO has declined from last year.

Robert Spingarn -- Credit Suisse -- Analyst

OK. And based on what everything you said in your hiring situation and so on, at what point do expect it to inflect up?

John Holmes -- President and Chief Executive Officer

So we're working on that and we are writing our plan, and we're starting to write our plan for FY '20. And we will be having an Investor Day at the beginning of FY '20. And at that point, we'll provide guidance for the full year. And one point, Rob, just as you think about aviation services and we'll talk more about this when we have our Investor Day.

We view this as a bundled services offering. So it's a big part of our value proposition and how we're driving growth in the market, is the parts supply related to our parts programs related to the MRO. We view all of those as working together to offer a bundled solution to the customer. And as you know, that model has been quite successful if you look at the growth in aviation services over the last several years.

Robert Spingarn -- Credit Suisse -- Analyst

Sure. But, of course, the hallmark of this whole thing is that it's all been growing and the idea was that third-party outsourcing on the labor side would be a trend that continues and it sounds like you're sticking with that, you've just got this hiccup with the labor. But I guess, we also want to make sure it isn't something structural about third party.

John Holmes -- President and Chief Executive Officer

No, no, no. I don't see it as structural. I think you're exactly right. I think this is a moment in time in the market, and we're in the process of finding a new equilibrium between the rates that we charge the customers and the rates that we have to pay in order to field the qualified team of mechanics.

Robert Spingarn -- Credit Suisse -- Analyst

OK. And then just to put a final point on it now that you've told us that MRO contract, how many quarters has that been the case?

John Holmes -- President and Chief Executive Officer

That's been the case this fiscal year.

Robert Spingarn -- Credit Suisse -- Analyst

The whole fiscal? OK. So all three quarters?

John Holmes -- President and Chief Executive Officer

Yes.

Robert Spingarn -- Credit Suisse -- Analyst

OK. Thank you.

Operator

And our next question comes from Larry Solow with CGS.

Larry Solow -- CJS Securities -- Analyst

Great. Most of my questions actually been answered, but I'll ask a couple, sort of, in different way. So on the reduction in the guidance. So the $15 million, $20 million EBITDA you're reducing, I guess, it looks like it's -- a couple of questions on that.

Is it solely from the labor shortage? So really exclusively MRO or maybe a tiny bit in mobility and everything else. And everything else, the rest of business sounds like doing well, but is it all sorts of minor expectations?

John Holmes -- President and Chief Executive Officer

Yes, Larry. You've got that right. I mean, it's coming from the labor businesses, which are the hangars and mobility, the manufacturing, that's what's driving it.

Larry Solow -- CJS Securities -- Analyst

And mobility is growing.

John Holmes -- President and Chief Executive Officer

Yes, exactly. And I mean, the overall growth of the company still have got mid-teens growth. And again, the programs businesses and the parts businesses continue to perform well above the expectations that we had.

Larry Solow -- CJS Securities -- Analyst

And the outlook for the programs business is a lot of them just remind us, obviously, adding new program win is great. But of a lot of these programs are still sort of not fully ramped. So it seems like there's some visibility on them, assuming the aviation environment remains healthy for you guys that they should ramp further?

John Holmes -- President and Chief Executive Officer

That's correct. Several of the customers that we have contracts with, their fleets will grow, and so we'll see additional ramp on business that we've already won. And as for the program businesses, we've also, over the last couple of quarters, continue to sign a number of new parts distribution businesses with different OEMs and those are all in various stages of ramping up as well. And that's another area of the company, the new parts distribution area of the company, which is contractual on the buy.

In other words, we have contracts, long-term supply contracts with the OEMs, but in a lot of cases, it's also contractual on the sell. In other words, we have long-term supply agreements locked up with the airline customers that we serve or the government customers that we serve. And so that's a nice sustainable growth business that's more easy to forecast.

Larry Solow -- CJS Securities -- Analyst

OK. And then on the INL contract, I know you'd rather not quantify it and I understand. But is it fair to say it sort of running in that plus or minus $200 million annualized revenue number you had...

John Holmes -- President and Chief Executive Officer

Yes. It will be a little below that this year. So if you look at the last couple of quarters that we did disclose, we were in the high 40s. Yes, so it will be below the $200 million for this fiscal year.

Larry Solow -- CJS Securities -- Analyst

OK. And again, and then, well, just on Costa Rica. I know, again, I think this is your sixth site, right? You have five sites already, is that right?

John Holmes -- President and Chief Executive Officer

It's the fifth operating site, there's a...

Larry Solow -- CJS Securities -- Analyst

OK, because there were four sites. That mean is it half the size, plus or minus? Is that a good way to look at it, the average of the other four? Or?

John Holmes -- President and Chief Executive Officer

Yes. Yes. We prefer not to get into that, but it will not be the largest site.

Larry Solow -- CJS Securities -- Analyst

Right. OK. But it's more than a rounding error. I mean, it's sounds like it's double-digit millions in annual sales at least, so contribution that would...

John Holmes -- President and Chief Executive Officer

Fair. That's fair enough.

Larry Solow -- CJS Securities -- Analyst

OK. How about just a call on proceeds that you expect from the sale of the COCO assets. I guess, maybe we can figure out what you had valued on your balance sheet before and what you wrote off. But can you share anything in terms of what do you expect from proceeds of that? Is that a material number or no?

John Holmes -- President and Chief Executive Officer

Yes, not yet. We still have some assets that we're looking to sell. So once that's all wrapped up, we'll disclose those amounts.

Larry Solow -- CJS Securities -- Analyst

OK. And then it seems like your guidance sort of implies for Q4 similar performance at least in the top line and maybe a little better on the bottom line, that looks like the range is if I'm doing my math correct.

Sean Gillen -- Vice President and Chief Financial Officer

Yes, that's right.

Larry Solow -- CJS Securities -- Analyst

OK. And then we should assume that normalized tax rate is like 24%, mid-20s?

Sean Gillen -- Vice President and Chief Financial Officer

Yes. 23%, 24% is what we think on the tax rate.

Larry Solow -- CJS Securities -- Analyst

OK. Just last question. You guys, I think, you announced you got an approval from the Japan Civil Aviation Bureau. Could you just help us, I'm sure this is more of a longer-term opportunity, but potentially what that market could be for you guys in, say, three to five years or something?

John Holmes -- President and Chief Executive Officer

Yes. On the government side, we've actually got a lot of good things going on in Japan. We do quite a lot of new parts distribution to the JMOD, the Japanese Ministry of Defense, and because of that, we have a growing footprint in Japan in terms of an office there, and we have had contracts with various Japanese commercial customers over the year. Having the ability to issue tax on repair parts, attendant to some of these other opportunities that we have in Japan is a positive.

So it's a target market for us. Historically, it's been a really good market for AAR. We saw some -- it kind of went away from us in recent years, but we've had a renewed push in getting the JCAB approval is a good step in the right direction.

Larry Solow -- CJS Securities -- Analyst

OK. Great. Thanks, guys.

Operator

And our next question we do have a follow-up from Ken Herbert with Canaccord.

Ken Herbert -- Canaccord Genuity -- Analyst

John, I just wanted to follow up on, again, this MRO, and I don't mean to keep harping on this. But presumably, the business in these airlines are going somewhere and as you sort of had a bit of a disruption, do you expect any issues at higher price and sort of winning some of this work back or you just sort of taking share as you're able to bring the talent on or I guess, how do we think about that and sort of timing issue or these customers ideally not representing in a sort of permanent defection, but how we do we think about that competitive dynamic as you're able to bring the people back on?

John Holmes -- President and Chief Executive Officer

Yes. I think it's a great question. It's important to note that as we've been going through this over the last few quarters, we have not lost a single customer. We have had work or lines of work that we had had to turn away at certain of our facilities because we just didn't have the labor to handle them, but the customers overall are sticking with us.

And not only are they sticking with us, they're very supportive of AAR. We deliver a quality product. We're the largest in North America, as you know, and we are a vital part of this part of the aviation aftermarket support system. And so the dialogue that we've been having is, one, around OK, what do you think you need from us in order to field the teams so that we can keep the work with you.

And we've received a lot of support in that regard. In terms of where the work is going, a number of larger and smaller MROs in North America that work has been kind of moved around based on things that we've had to turn down depending on where we were in the labor retention area, but the customers are supporting us. And it's also important to note that we do have long-term contracts in place with most of our larger MRO customers and so we've got mechanisms to keep it work.

Ken Herbert -- Canaccord Genuity -- Analyst

OK. And I'm assuming most of the work or the lines that you haven't been able to support have been either a regional jet or narrowbody aircraft, correct?

John Holmes -- President and Chief Executive Officer

That's correct.

Ken Herbert -- Canaccord Genuity -- Analyst

OK. Just one final question. You used to talk at the beginning of the fiscal year around roughly sort of a 50% cash conversion on the EBITDA or give or take sort of $90-ish million for the full year. I mean, clearly these issues have maybe pushed that to the right, but can you just provide any update on expectations for the fourth quarter in terms of what is typically a very strong quarter for you in terms of cash generation? How we should think about the fourth quarter or think about the full-year conversion? If you can sort of update that that would be great.

Sean Gillen -- Vice President and Chief Financial Officer

Yes. It's Sean. I think we expect in Q4, as you mentioned, is usually a pretty strong quarter for cash flow. So I think, we would expect continued strong cash flow growth in Q4.

But as it relates to kind of the full year and that 50% EBITDA target, that's not something that we think we're going to be in, but we think we'd be cash flow positive for the year as we've mentioned previously.

Ken Herbert -- Canaccord Genuity -- Analyst

Well, thank you very much.

Operator

Thank you. Speakers, I'm showing no further questions in the queue. I'll turn the call back over to you.

John Holmes -- President and Chief Executive Officer

OK. Well, again, we appreciate everybody's time and interest, and we look forward to wrapping up our fiscal year. Thank you very much.

Operator

[Operator signoff]

Duration: 31 minutes

Call Participants:

John Holmes -- President and Chief Executive Officer

Sean Gillen -- Vice President and Chief Financial Officer

Michael Ciarmoli -- SunTrust Robinson Humphrey -- Analyst

Ken Herbert -- Canaccord Genuity -- Analyst

Robert Spingarn -- Credit Suisse -- Analyst

Larry Solow -- CJS Securities -- Analyst

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