PKE
#Happy new year, <UNK>.
That's really an interesting question, I think, and there's really two parts to the answer.
One is what we do ---+ we talked about improving our yields in Kansas as an example.
We talked about our new products, which are higher-margin products.
So we have to look at the content of the revenue and also our costs, which we were always going after however we can.
Of course, we are dealing with costs.
There's a limit.
Your costs can't be less than zero.
There's a limit to how much you can do with costs, but I don't think we will ever stop looking at our costs.
And obviously as you commented, the product content has a big impact on margins as well.
And having said that in the short-term, especially the topline revenue line is going to have a big impact on gross margins.
So if revenues fell off in the fourth quarter, that's going to have an impact on gross margins.
If they came up, they have an impact on gross margins.
I think that if we start to see some movement up in our revenues and our long-term planning has always been consistent with revenues moving up, that that upward trajectory of revenues will have a positive impact on gross margins.
It's just simple math.
(technical difficulty).
On the two factors are what we do in terms of our cost, in terms of our product mix, product introduction.
And then on a short-term basis, what the market does in terms of ups or downs in revenues.
Long-term our objective would be to have gross margins, which would be over 30%.
Well, at this point, we don't think that GE is going to help us, not in the 2016 calendar year in terms of any kind of revenue growth.
So we really weren't proposing that if you figure it that way.
But I think it's not a bad way to think of it, <UNK>, for Q3, and that might be not a bad model for 2016.
Now with GE, we are working calendar years.
So, as I mentioned, 2017 calendar, we are expected based on the forecast to see some upward movement to a level more than we were for the first part of this year.
As a forecast, we don't know whether it's going to come true or not, but that takes into account also what we are discussing regarding the inventory work down.
The only point is that that could have an impact upon the next fiscal year because that's the beginning of 2017 calendar will have a little bit of an impact upon the next fiscal year.
As far as other programs, there's nothing significant that we are aware of that will have a major impact ---+ upward impact on revenues in the ---+ or aerospace in the coming year.
So that doesn't ---+ I guess I should be clear because I don't want to mislead anybody intentionally ---+ that doesn't mean that revenues won't move up, but it's not like we could point to a big program and say, okay, here's your forecast.
This is what's expected each quarter, and therefore, we can predict revenues moving up, which would be the case with a larger program often, but most of what we do in aerospace is still not GE.
It's a lot of smaller programs which are less predictable for us, and those are the things we're going after.
We also ---+ I guess I should add that we talked about GE as if it's a zero-sum game, but it's really not true.
We are almost in a constant state of being qualified for other GE programs outside of the cells and thrust reversers.
That's where we started ---+ in the GE facility in Baltimore that produces those products, and that's where we are pretty much sole-source.
But there are very significant opportunities with GE Aviation for the engine itself, the fixed structure of the engine itself, and we seem to be in a constant state of being qualified on those opportunities.
So that's a factor that we really can't quantify too well at this point.
It's a little bit of a wildcard, but it's all positive.
What we're talking about is the baseline ---+ what we know, what is ours, what we have.
There is upside even this year with GE, but that's more difficult to quantify.
I know that's a rambling answer, but I'm not suggesting what you do because you are smarter than I am as an analyst.
But I don't think it's a bad idea to look at Q3 a little bit and think, well, this might be something I could use as a basis for a model for the coming year.
I would not disagree with that.
I'm not recommending that.
We're not forecasting that, but I don't think that's an illogical or unreasonable approach.
And obviously, <UNK>, I just want to add, it's our objective to beat that number, and that's what we are working on every day, to beat that number.
Beat those kind of numbers.
I think those costs, we are always looking at opportunities to improve our cost structure.
But the level that we're at is we have some base that we are probably working off of here.
So movement from that base, assuming we stay right around this revenue level, is probably not going to be very significant.
I can't think of anything that would materially change it in the near-term.
You're welcome.
Thank you, operator.
One more thing I'd like to mention ---+ hopefully some people are still listening ---+ is that there is a live webcast at the Needham conference.
I think it's a week from today, and that's available to anybody, and you might want to tune in for that if you are interested.
We will be doing a presentation about Park ---+ and not just going through quarters, it's more just the history of Park and what we're doing because it's also intended for people that don't know much about our Company.
So I just want to mention that to you.
And having said that, thank you very much for listening in on our third-quarter conference call.
And again, I'd like to wish everybody in the audience a very happy new year and the best of luck in 2016 to all of you.
