Ducommun (DCO) 20 Feb 202019 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the 2019 Fourth Quarter Ducommun Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Chris Witty, the moderator. Please go ahead, sir.

to Foruth welcome Conference and you, Ducommun's Quarter XXXX Call. Thank Treasurer, Chairman, today Interim CEO; and Accounting are me President Chief and Officer. Steve Officer President, With Vice Oswald, and Chief Wampler, and Financial Controller Chris going the any statements to Q&A performance we that regarding certain the during or forward-looking may projections follows. to make make events, prepared I'm discuss that limitations or future remarks or

and and such conditions, of are, could financial risks, cause forward-looking Litigation including statements. forward-looking expressed today are from any historical are which uncertainties to statements results results subject that results of differ materially future to Reform therefore, statements under operations to perspective. These Certain statements actual facts, the market projections factors, Securities forward-looking by the and implied XXXX are as other future statements or Private not Federal Act

believe Although reasonable, no can give that reflected statements to forward-looking correct. expectations such prove are we in we will be that the assurance our expectations

In which is operating addition, level of government cost statements are in subject These in legal business, and our SEC, our Ducommun forward-looking and Form the change. markets, risks Particular and cyclicality management our company's to include, changes, Annual end-use defense results on XX-K facing others the U.S. of estimates the to are regulatory risks, are risks. others, the acquisitions competition. subject Report current the and based of of and among expansion spending, risks described filed future with those

by and on authorities. measures. to to update company's on to includes this made made, refer only This find of non-GAAP XX-Q to time the intend our this website today, SEC Investor a call we most Relations this regulatory referenced our the GAAP our presentation, measures. as and non-GAAP filings also do filed in tab. are the during with all you'll not filings statements call required as a reconciliation of made the link except Form We similar if Please financial Statements call with any for SEC measures the the and the under

to to Mr. review call I Steve would Steve? of the Oswald a operating the results. now like for over turn

Thanks quarter call. today joining you us everyone conference for our fourth Chris. for thank Well,

an usual, begin after review developments on recent I'll As financials by which providing the update in Wampler company, at detail. our will Chris

few important a XXXX, we As performance. year opportunity I the our strong this very take in a finished want highlights company for to first to of review

portfolio, our focusing high-value acquisitions been and over past our developing working product new team operations, all Our diligently driving on the technologies, others. of making has years, providing among strategic three improving customers to

In XX.X%. sales XXXX XX% rate the in $XXX XXXX, over X.X% years. it’s margin has operations. In we highest up not X.X% in XX company that million with from at or XXXX Net since more increase, generated well margins to grew and million from million in Adjusted to XXXX. profit than $XX $XXX Ducommun realized we cash been rose as and for gross XXXX grew conjunction

growth line for very we EBITDA to these all of versus XXXX or the proud XX.X% sales sales Just or rose as of of great the bottom We're million ahead. high-performance year. with million important, XX.X% and developed last gains $XX.X years company in as top in $XX.X sustained

Boeing. with included the as programs majority F-XX, marked It missile by XX% The organic. such quarter, good which was increases double the programs. important to fourth growth specifically revenue and the XX% gains digit sixth of and consecutive Airbus turning the averaging Apache the helicopter quarter F-XX, military rose were several Now year-over-year and growth of also driven mainly

our orders across defense the of business. other boasted particularly The within about $XXX million year by key bad for was a with backlog quarter real strong surprise platforms, the ending numerous

an We also of ratio impressive defense. driven the on book-to-bill again posted X.X, by quarter

aircraft, past within years performance the the leveraging time, important release, the orders the seeing mentioned time of press part and the to during more vehicles. by And good our defense and in sequentially also we technical the the capabilities now team for great see increased supplies a in Ducommun more acquisition, Naval results. of of products completed in advanced year XX%. who improving half spent of military At variety It's Ducommun’s business another and Worldwide, our team that are development the second amount structures few a and Nobles markets. same business As the of defense vessels operations and we

value going engineered is along our products the very integration opportunities portfolio. and markets is well opening team for and with expanding great The new Ducommun, already adding the

we're As within strong to also XXXX in a press the start release, mentioned of the areas many company. up in

to In we Spirit the proactively action Boeing companies, operations ensure effective within After our costs MAX. XXX December working announcements both within – addition, on the are closely closely January Ducommun took with also all and affected are are and being AeroSystems our managed. from in in

impact All able some minimize working have been and redeploy some to of employees. the affected of business, operations our been to our we successes due to have with new

difficult. The MAX amount January of the due personnel those in is less furloughed X% are than and to

future. on soon later That looking dealing rate meet along Spirit We requirements in as situation. the our forward back We're well proactively are Boeing with ramp comments performance positioned and communication to of as proud to starting said, up production April. operationally with the any the being from also with public with them based QX and are center we in teams

over helping Raytheon, backlog we announced Airbus This XXXX strategic revenue, in our as business with contract exemplified outlook, by is from produced utilizing process regards $XXX in Mexico with $XX programs and platform. now strong is with deliver at technologies AXXX this River sell our see Guaymas, offset full XXXX which Aerostructures XX-year million ramp headwind XXX process to is business composite our all in our fully also new examples Middle the to July, Versacore million $XX the agreement engine components Ducommun’s revenue Company million of to center. supplier all supply In MAX we up XXXX And with growing performance to being benefiting to proprietary technology, production. will XXXX. in LEAP year's defense, for the with

acquisition closed XXXX in help revenue The will also Nobles October, provide additional year. this

the growth contribute work Finally, years, low-single all XXXX. on XXXX the of digits production including on plans past comments the cost development, in half the their should slightly flat Boeing improvements, public XXXX. Ducommun’s XXXX three second half following leadership hard of through Spirit initiatives to their up low-single in discipline and down Therefore will in in other digit revenue first regarding restructuring, both be and based and process also

the last few we the it's deliver circumstances certainly the on situation, the off years more we feel will our but with company's modest, is it excellent Coming under XXX and commitments. an in outcome, past shows MAX few years, development the

on Now and provide additional some programs. products let me our color markets,

Beginning our XXXX. XXXX broad with our XXXX product military every a nearly of fourth portfolio. sales In we and reflecting including revenue million space variety defense over of XX% posted sector, versus quarter growth $XXX of drove $XX.X up over XX% aspect platforms, across of again we million

for like from the F-XX We and our saw top a shipments fixed F-XX, Black Chinook. the military and well programs, particularly for , Hawk increase as demand substantial line strong digit in helicopters wing aircraft as double expansion

System top Missile last many military of Patriot the addition, significant growth We year. sellers and applications. and saw other rose become our one space across In

up $XXX our We a million for the began across in backlog all roughly with are again well-positioned in growth XXXX, future XX% year defense platforms and sectors year-over-year.

XXXX Within our fourth sales operations, year-over-year grew a over while to revenue $XXX commercial for million. slightly declined $XX aerospace XX% as million, quarter just whole, to

Ducommon’s of saw growth large, body year. narrow last growth platforms, continues by nearly fueled to all double-digit be which aircraft

in and is AXXX become and particular revenue. largest Airbus very Ducommon’s and our has in with and quarter. a major important share in put the helped have both our Airbus Boeing factors commercial trajectory our revenue in directly important a and since indirectly growth and still customer AXXX represents in larger last portfolio. The Airbus larger total families While MAX, clearly Ducommon’s expansion XXXX XXX contributor balance

The forward. schedule, the with the remain market our market we some breadth production in at commercial key the $XXX aerospace XXXX well the positioning at roughly us XXXX. sector backlog Despite about commercial of given for MAX we in platforms XXX uncertainty of going end performance this optimistic within stood million solid serve

have I'll Chris results review that, our in With detail. Chris? financial

Steve, you, good and Thank afternoon, everyone.

As under today's of a reminder, and press the company's call. filings release please the description see discussion further for during matters

strong great of a for discussed accomplishment included expansion, that margin line wins Ducommun growth, well Steve for and adjusted was the growth, us top that future. position EBITDA variety solid a of as XXXX year

We results. as broaden head a XXXX base the year-over-year performance-center-focused feel Ducommun factory efforts Our the continue our improvement driving of that serve streamline system we catalyst to in our approach beyond. be business the well operating and as operating its to confident will customer and into and to continues

move revenue our then across for driven markets we'll $XX.X extent to million $XXX.X performance details the the of of by to customers, of a quarter programs. demand higher million commercial and but XXXX. A primarily fourth Now review of XXXX. the Revenue of million the versus results. quarter was overall The XXXX in fourth $XXX.X of quarter fourth greater $X.X million and of lesser saw and from variety military sales the space within platforms our a sector aerospace increased was

for fourth quarter company. was end $XXX the the a at backlog record overall the approximately Ducommun's new of million,

As months expected we fixed backlog and on defined customer long-term orders prices purchase dates reminder, agreements of a delivery or less. based revenue with potential as firm and XX

profit at amount the dollar the as the in versus and primarily This the quarter gross our period. highest was $XX.X gross our The in since drive percentage result QX to the was XX.X% of impact XXXX favorable of company's prior highest of with profit the focus-factory-approach fourth volume gross to our performance manufacturing was history. the profit along gross quarter margins year-over-year second million strong increase Our quarter comparable margin efficiencies. year's due centers XX.X% was continues our in

SG&A Nobles operating the $XX.X period. SG&A quarter benefit revenue in income $X.X costs. was quarter million in and million primarily or or $XX.X of fourth for quarter XXXX, the fourth prior business of higher in the in incremental X.X% compared the the million company increase reflecting $XX.X versus of to compensation with fourth of revenue reported The the million X.X% from

prior purchase the included the that higher million a and refined by million The year-over-year of included higher of of charges $X.X profit, due improvement and refinancing comparison XXXX aggregate $X.X was restructure fourth in The adjustments thing year costs. revenue, total accounting to quarter fact and gross costs.

higher On sales the the quarter fourth to the basis, Interest debt of income fourth versus million X.X% in quarter in acquisition expense million in $XX.X in was company's sales XXXX. related versus to million or X.X% of XXXX levels million operating of in year $XX.X XXXX. adjusted Nobles of period XXXX $X.X October of or an was due prior $X.X the

December on a announced a which rate. a executed $XXX As entering our our to revolver higher million refinancing Loan million Loan of carries Term XX, debt which as XXXX down clear as pay well $XXX A included some interest we of B, Term into

income reported of $X.XX charges quarter net $X.XX million of mentioned. due per primarily restructure compared The profit previously million fourth other income $X.X for increase to higher $X.X per fourth to quarter and diluted I year-over-year share gross net lower share million company as and or the $X.X XXXX. diluted The of was of or the for

per compared of year of $X.X $XX.X per $X.XX XXX basis prior or in the for quarter share XXXX the for of XX.X% quarter versus XXXX, period share in was income revenue net Adjusted quarter $XX.X – million points. in revenue the EBITDA $X.XX million in to the Adjusted $X.X fourth period. fourth fourth diluted or was an or or XX.X% of million million XXXX increase comparable

to Now let Electronic me turn the Systems. results. segment

These the were prior posted commercial XX.X% Our million fourth of prior Electronic of versus quarter versus of operating slightly X.X% and in the or sales segment million quarter to reflect $XX.X while XXXX $X.X million increase $XX.X the down period. for a million customers, period. in $X.X shipments revenue revenue space military year-over-year. aerospace million income results or the revenue System $X.X of our in fourth of Electronic in posted year Systems

Excluding decline restructuring was operating charges for mix. margin last product the adjusted year-over-year XXXX XX.X% year, with the fourth reflecting electronics quarter

Structural Systems.

airframe million million XXXX $XX.X Structural $X.X segment year-over-year year. revenue single posted across sales million due of System was increase and aerospace military in last $X.X applications, $XX.X the to The our platforms markets. in quarter large Our of fourth commercial space within higher increase versus of aisle company's the revenue primarily and million a

of revenue of or operating or Structural of Systems revenue $X.X posted quarter X.X% for million XX.X% last year. income compared $XX.X the to million

Excluding quarter XXXX the was X.X% restructuring for margin quarter. adjustments, charges and inventory Structures and adjusted fourth purchase fourth for the operating accounting XXXX XX.X%

manufacturing improvement due for to product The million general million XXXX. XXXX of was expenses of and X.X% of in mix general favorable reflects and fourth year-over-year $X.X of operating $X.X improved versus expense Corporate $X.X administrative quarter of million. was X.X% lower margin revenue revenue $X.X CG&A decrease charges The restructure lower the or million corporate expense, efficiencies. year-over-year or

liquidity to generated solid $XX $XX during cash Turning million with XXXX of cash committed to $XX operations and million utilization the $XX improving year from asset possible. remain working We to as for million operating resources, of as and capital total. much for the full year effectively, in capital quarter quarter we and fourth million maintain compared XXXX managing and margins in the prior and generate

expenditures, and million capital million of year. with anticipate full support pleased future development. spending the about to for terms to million product and upbeat full performance million $X.X We're remain fourth spent in in during $XX again fourth new our $XX.X programs the results. our and $XX quarter quarter we We XXXX In year

to back over for closing Steve? I'll his Steve now turn it remarks.

runway some lot the despite and certainly Chris hopefully believe year final company the Again, Thanks three MAX, certainly provided, as for terrific today just we I important a XXXX. short-term we've here, information was have for shareholders was I begin the And a years think thoughts Okay. a challenges, ago. we of XXXX ahead. well, few

of across have our and of we resumption it that platforms at as along strength important year. subsequent discipline defense the increasing we the content add operational to continue with production. support Airbus, on focus company Spirit also XXXX structure, program continued I'd and do will with developments footprint, right leadership serving this sees the Boeing determined and all and that cost strengthen one be this

be our track commitments. first quarter. will And everyone we at the can assured fully our challenge, we as the the is that Finally, despite you like on engaged company short-term during past years, few through the move deliver record

With over that, for I'll turn Alexander? it questions.

[Operator first from Canaccord. Instructions] have Ken your Herbert We question from

is Your line open.

Steve afternoon, good and Hi, Chris.

afternoon. good Ken,

impact that top Really Are the how to Steve. than commentary but you've given nice of on headwinds you half end of the first margins maintain I a provide MAX color standpoint, on we year, appreciate Hey. can line the think any the you from the more year margins on with gross gross any would about of in the in volume particular? or be greater able XX% great? the detail should

problem. No Yes.

a That’s great question. Okay.

figured on As it I we and to Q&A. get Chris had about it the and talked we'd

the so just least for for year think the to And roughly, the Ken, op So okay. where did that the at run in is XXXX, to going that we XXXX. X.X%, we're flattish on whole in operating be, flattish margin, we to rate income margins of year

year? some the of and the just probably see Alright, half obviously you'd relative Okay. stronger I'm guessing to volumes year half with second first of the though,

said. right, yes. Well That's Yes.

the guessing out line deviate plan you be I'm your deliver – Okay. ship Spirit to mentioned mentioned April I you this that to largely Spirit you And Steve, going in just to had March in numbers that start and think wanted – the that? to think what I put would to and shipments they to year, certainly you were in with elaborate from Boeing you much or expect do with

Spirit. is officially. We're No, get in schedule next absolutely from heard what expecting to them line, of from the in week we locked Ken, everything Tuesday production from on

So line their in everything comments. to is public

great obviously some obviously do then the you bit you've side? think And just provide to a switching and Can defense how in on benefited of really the the just detail little from you How That's side. see think on and rotorcraft? you F-XX or on success F-XX excellent. more defense continue defense gear, grows we moving in pieces about XXXX XXXX Okay. the

I of couple Yes. things. guess,

mean, of I I in which put improved my obviously good years. we’re got operations, First really work lot defense not I very of last we've couple the it comments, here. into think our when we've a

mentioned going built, lot forward, I I little BD We into think type won't get and bit, of team I of I also think detail. a have a right the so

driving think we some defense. and more business things structures you'll about hear more great have I this year

So our if look if a – that. that feel a tuned also accounts you penetration at in stay fairly for Lockheed, is you at I Northrop But look those low.

So I ahead for see areas. a lot runway in of Ducommun those

pass perfect. Okay, Appreciate the I'll back there. color. it

Ken very much. thanks

Ken. Thanks,

Oh! It’s a pleasure.

Crawford Mike from question next your FBR. Riley have We B. from

line's open. Your

is Spirit about in into that about your in in nine mostly the go we parameters potential so margin you're of sets margin your the as Xx that, we can around know back that closer run as you look year, – talking like thoughts about And months if impact, margins If if defense Maybe if thoughts monthly the about talking numbers your month. just year business, if next K Thanks. XXX in what that's if the perhaps consider gave then to we mid-XXs but you otherwise XXXX. a have the – year ship the in the the around what and that, what in any following – the of might expected we rest rate year? how on is

Yes.

yes, sort and year, you look I at with with when Mike. this of so start agree laid So – you how it I’ll out.

we defense a side. reason diversified to a We'll have There's Steve's year. pointing there's this bit – up is step it little So a portfolio. the

the range out that and talking we that'll through performance growth keep of the the be us on be back with be as with we but XXXX, step step to as as it's we're ran this the in there'll that So we MAX – balance sort challenged of back year, we were will structure's about. MAX where – side take a take little margins defense

rate if out we've here as years is that margin defense. – the we up year on another plan continue the doubles corner with over structure of year, and we'll As to you get that sort and then that we incrementally side a headed again, few to turned the next back move

to there. we're going keep So looking

we a possibilities as lot, the into So that’s gives move it expansion us XXXX.

Right. margin too the But, specific? regarding of question is that impact

I I today. how I look, say, look we going thought mean, to we Mike, talk were guess about

to I to you get over, I I op expand obviously, a story think the would – goes good and scale get if we're going it the about run margins. going things say talk so X about there's margin. mean that the if for, X, I that that, going would this least our at of to we're XXXX, lot drop but if real But we feel year look at to goes good, back XXXX outlooks we're to say I income

one at then and other something let's business production I'll And stab it Right? Baton. that around if XXX still back your growing. take the last into a get is we say month But XX say or and like pass

being current You're model and cetera. expanded et longer and and/or like et Ducommun your EBITDA footprint VersaCore Guaymas, very production term your target on successful, a of operating margins gross type cetera, more given for say

correlate I way this I'll Yes. your is it mean, so it, maybe No, I'll another third try try too. Michael.

with margin Again, expansion both plays when I pointing a out now. Let's, going our If just Steve to and to to that more at right another how margin? do gross and think, upside. into on this and in get we've to that bit we're a battle It is doesn’t gross or keep level on I there. take XX improvements operating talking that's the that we and mid-XXs scenario head going where matter is volume let's it's at gone take we're which about we step where from That's profit of you're we're the it's and hone year. sort to in we've us this are journey, now direction I talking XXXX mean little baseline, mid-XXs been along as

And Mike, this Steve. is

there's if XXXX, there the is. head asking You're me room on

thank Okay, well you.

Okay, thanks.

SunTrust. Michael question next from your have We from Ciarmoli

line's open. Your

guys. afternoon good Hey,

Hi, Mike.

here; close how the are you? to year Next

you, Mike. Thank Great.

Maybe just bit, Steve. the a to stay margins little on

margins you but the you furlough, employee if of you to doing some able you thinking it pretty excess any volume the and optimistic are fixed double going are be is assets? mentioned maintain are that of How of that back think free to capacity? declined. let's that reuse flat with do What in given then able be you are what we to the kind some those have to else guys about capacity And guess to impressive repurpose bringing You on? how of do about rates do XXXX, or or kind up I employees if of

facility anywhere. related can as mean, step back Yes, and it the Steve we're here I'll these currently – of headwind are taken utilization. have doing kick carrying or being to MAX we're certainly what The level a on the on in the I at facility have coming brunt of But this, of question is, is off we the jump assets that's not that's benefit all that us. we one don't XXX our

So the of four to headwind is splintered facilities out that. amongst pieces have all that three

that then customers gives that the this and so take we with what the the were pick headwinds. that there can with going with was having other flexibility sitting to if then increased versus facility have on all us that's And that we one and slack, the commercial up defense

of up. of then feel MAX we helps as ramping what things is it that’s ramp of as company rate did. half you're to why up along that That's challenging. little growth like why why we at as you're sort we the in bit. of second talking with hundreds makes about – about again not kicking one little talking And about a location, you're other all the that's picking and just the not we – easier more our of of certainly out. we Steve the then Because talking manage we up what's for then So size a people half to year the certainly first can can flex forward the And year, a it sort alluded go

just the got other already we a capital – place, know, we you And have of – day, things just, okay. couple this in Mike, the I just

ready the So in my mentioned We're remarks. I as ramp-up. for

able people have couple and or Fortunately that just And going of forward because a we're fairly last at I'd it’s and redeploy we thing business, we’re say lean. good so cost structures and in either discipline programs defense, our and us. fairly helped new when and years, past to I the you also look is last mean,

So a like it's different do ahead not mean, a things I in We done things. of of all lots January. it. we've sudden, of we've got some got to

going I shape think again, XXXX. to in in be good we're

Got headwind. it. And portfolio then rest MAX you if like Nobles should you're sounds Clearly we – there, that be organically mean, the, going so But I look MAX the that the at growing, headwinds, I XXXX, pretty a sort mean, fill seems down substantial of like it's the just obviously growth have on contribution is it aggregate, gives Nobles. the to you the the absent of some hole. And of down? I got expect top in organic line you from outlook gave more to obviously contribution but

I Yes, of a things. couple think

half So a bit as flattish first couple to I mentioned tougher, points in remarks, down. little of the we're a

half, single about. we Airbus, and up Nobles Second as a obviously. on lot in with got still We've growth I talked good We've expect so defense. got going

kind – for we've is the I already that, part. the feel situation most got of orders So that right

sometime expecting so to Calhoun. about Dave in So Spirit obviously executing we're start we're for is March, – Boeing, April and just and it's about

So that's where we are.

that in Was can that’s winds, to in of follow-on military orders I out programs factor you maybe point sequentially? in strength backlog. mean, Got called just there some just you jump a some Nobles one backlog that, on the driving big that the driving And it. and military then that last then specific the of military, new whether growth? is the

part with them that bring of at backlog they the Yes, Nobles a valuation we they mean I their is them date. do – with bring that. acquired

So you've pop this seen quarter there. Nobles in first

the some in defense But Yes. backlog things other programs current and like either programs. was increase the new and for F-XX of majority a

So nice mix both or is it nice? a

in All queue. it. jump right, Thanks I'll guys. Got the back

you. Thank

from Company. question Sidoti & next from Marshall your have We Edward

Your open. line’s

Hey guys. How you? are Good evening.

Good.

I'm curious for interest what XXXX? the anticipation what's – on expense

On it. Yes. anticipating XXXX we're

QX, with view because of sort have that's what points pay switch of our If up term-loans that down, we us, picked coming for run of to a we're we like you look fair at at a definitely but probably we at couple did rate. going what out

So versus like, it we it just rate million XXXX incremental to assumptions, expense I tax traditionally XX%, of XXXX. rate, what it XX% at about tax then if thinking $X interest the to through in look XXXX be million, normally? would $X we're And is the versus think – XX% looks talking XX%,

Yes.

look you rate to in more mean rate, run going if we're I to at where the XX% Now tax XX% the going is we're to be.

Okay.

Yes.

Okay.

XXXX, the should the expect given in that op EPS of comments that flattish is around revenue the and kind appropriate XXXX, declines then So, income for I given current environment?

a go I’m wouldn't the I No. because going No, second, back for say on that. second. And one interest hold just to

really looking quarter run rate about look – at Yes. we XXXX. probably X.X% more sorry, yes, about into the I'm of we're on run rate per – looking as more We're a X.X%

though even that's flattish, So up?

bit. little Yes, That's that's up, rates down to a going offset.

can grow grow think EPS? that you in you still environment, so you And still –

over think I up. we'll Steve, the is this be Yes, year,

Okay.

Okay. have math through to just the there. to going I'm work

up We'll be for the year.

as look at, times. just of…. half, I few Okay. – probably a touched I second you've More as right? on I I sort And scenario think this a

I him. think we lost

you buddy. lost We

XXXX, offset down XXXX that? to that revenue being would lost been margin through previously differential have that able [indiscernible] be received I revenue of the of in acquired operating I sustain you of the that between to or going pushed think that's and and under has made all in will new and programs running about the that two-thirds have up you – kind the mean, cost and

ahead… let's Well Okay. make and sure go Chris,

do Yes, And say that and impact as we're point back is I the headwind already at. as asking? where so you absorbing. up? on structure all hearing filled cost no losing, under what margin think with we we we have Is it what that's you're So related have I MAX was we're impact to margin

Yes. right. Right,

that able revenue. We’re replace to

scale full mean next Steve's at I answer of Well, the I just to is think, when yes. point, the you look year,

at different of it's I our one. you story month-to-month, centers, performance think look day-to-day, when all at in a each week-to-week it,

we if other don't And the day up that defense and there necessarily the of get the So on you we margin go for there there in until more that year, to losing on one do we of get we flex make facility overdrive some as until structures the have it. and filled a other, that's first some the of that's is little pressure shift will growth help revenue, some we the it to more do we and think be, in side half there's we to a again, more well. little why

Got it.

Thanks Okay. much. very

right, All thanks.

have line We is Becky from Instructions] from next [Operator Vincent open. Vincent your question your Enterprises,

Thank great on you. the Congratulations results.

you. Thank

you. Thank

have you my is to about F-XX the really question meet But the opportunity program. to one day. Thanks

highlighted that was that curious of I times several presentation and throughout Lockheed You on Martin or your their some was customer primes? the if primary

that. not I'm to I disclose sure, want

not We are disclose going to probably that.

Okay. it realize I question. didn't was thought… I difficult a

difficult It's just… not question, a it’s

fine. That's

Yes.

you. Thank

Thank you.

question Herbert Canaccord, line your We have open. next is from your from Ken

more people of or if and and flowing I volume taken Parsons how you've I largely facility steps the MAX follow-up curious in And other you've just more is in second again, for through Steve. quarter specifics of any breaks future on the the on MAX? if if spills wondered the or the specifics facilities. just in you provide of the Guaymas I'm Hi, sort more if could on all appreciate you of Can got any then you've people of second that workflow MAX can or around the sort provide currently can quarter? course and got in key I'm the and that if the Monrovia on, out that count and on, by one the curious, structure, fixed cost of head first into do sort maybe any

Yes. it's Ken, Hey Chris.

over production Okay. the plan I'll game sort what with, quarter the to. I start at second that's aspect. done terms of reasonable of that QX we've ramping should us we're and the that in it does the then start in assuming And you on time period levels quarter, work thinking unfolds to first what where we time essentially where back when holds a look need to mean, get now, of

we're – As we're Steve in quickly, about get And we're to you exactly we're still means for each Boeing, their it mentioned, one then then well, headed. real on you so sorting them. that, what out on where Spirit, just at locked look with going of work know,

your as main facilities, to the Monrovia, also sort which doing Gardena Back facility have question got on York, facilities Coxsackie, Kansas, do, we you Parsons, well. some New you've our of

think or cetera. whether why might is mitigate inlets or evenly, its sort what of split we impact So York And at it we're fire think the some looking at et seals where can why is impact have. it spoilers, we're fairly New and is somebody the spread the it up that But we – out. that's in of going that's

So it's a fairly even split.

Again XXX if VersaCore they Monrovia So, you – little on yes, support got the but Guaymas, now, heads right spoilers. they see their still on down a bit

to success to of lot XX of, just in as staying us, in to, six because a it, months started the able we the Airbus. the we ahead were of defense, we've So year. of which a way do last more again, kind last of good months we and able six over think months I And things helped with obviously run lot more the been and operations the

any Guaymas it of more any to of move of out to or Yes. spoiler opportunity the down work Is Monrovia? there

a No, it’s it's process. not well, – specialized

in to Monrovia, be We which have aren't go some going able legacy to tanks anywhere.

work do part, they here the a of spoilers, So little in but that's I kind the Monrovia stay. most operation of bit a to for on there's niche think some

one here, from in you’ve as think the sort to the ability to Are other rates at to or down MAX support roughly fair re-hire how steps have it growth about the just doubling risk to all of road? mitigate of a programs. concerned, obviously too but enough. sort just of final of get potential hire and you not ahead Steve, re-staff And you volume XXXX about taken far with that I mean, XXXX question, Okay, to obviously

on no lean, Yes. because because within staff. have wonderful the an important the we're concerns of like thing was most we're But to – than so our Well, I real less we’re company. first thing furlough, is, and program MAX a that for X% able the fortunate, keep a is Ducommun,

much. you Thank Excellent.

Alright, Ken. Thanks.

your Michael have from from Ciarmoli We next question SunTrust.

Your line is open.

thanks guys, for taking follow-up. Hey the

Mike. Sure,

electronic sure at next would a perspective expansion that weaker the confidence from drive the you were hold systems system to guys in this a Maybe what modeling I as just issue Chris, seem but of some and you in falls called that to I here, there. quarter, on margins, and that what's flat, year looking get that want electronic we mix, Maybe the gives electronic think current just corporate the in make ability mixed like some to into more of they – the expansion you margin out next burden quarter it year? look it

– we've volume company right, we've book business electronics Steve we the mean of I rate alluded the that's exited headed. most as and it, you're have exactly centers. businesses we're No performance the happen to other, that's one – those talk the the helping to I mean, diversified gotten where to Yes. of build year when business a the going better as better to of a in throughout going year, about

it we be the that The of looking what will extra little as and mentioned get historically drive that to had we're XX% and And is we've that's we've is I margin we to to year of where accretion. sort margin. here there able XX% to being think volume volume through, pop it this part that, was that lift big to came we more been up. got that the a And for

this electronic going our year Yes. is Yes, the system. be friend to in Mike, scale

volumes I some as of and the certainly big any military And concerns to of there, a one, in be growth aren't budget, some in at what all, payers. the there this these Hawk, I Black at modernization newer pretty here some see about legacy those fixed Got figured. you so there maybe talked look that's of mean programs, just units bill wing then cut these huge, it, there's out but Is couple any into of looking programs. of programs? aircraft Chinook big you some last concern legacy the flow funds maybe of

thing. on if – think straight even But, obviously making that mean, that's those see defense we're we think be these Apache I fine. into i.e., focused that? to of business, happen. point on going, directionally I and fair and I primes right, have see, team we're a We're bit do going it's because as that business of I a it's feel up well type do big a little you got headwind other development Mike, some going winning new it and is we programs. now of we

it. queue. Okay. questions in will be I There appears turn further to no

fine. Perfect. okay. That's didn't hear Great. him, I

look where what's the Okay, to had everybody Again, about feel let's Hopefully to and so at going today. I XXXX feel thank information, quarter. provide up. get discussion. more forward lot wrap in many And XXXX to an Again, I first bit we we speaking just in were about and calling XXXX, end a the to keep let happen I great information understand of of able thanks. about you great are. going. it thought through, enough we little me for excellent to Obviously a to want I folks we

Thanks everyone.

and day. today's you Ladies and for a participation your this wonderful gentlemen, conference. Thank concludes have

disconnect. all may You