Ducommun (DCO) 2 May 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Ducommun Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Chris Witty, the moderator. Thank you. Please go ahead.

to first welcome conference and you Ducommun’s quarter XXXX call. Thank Treasurer Chairman, today Interim CEO and Chief are me President Officer. Chief Controller Accounting Steve Officer President, With Vice Oswald, and and Wampler, and Financial and Chris

as differ that to statements including question-and-answer projections are am regarding future forward-looking Certain therefore expressed results session the financial are Litigation actual and to that may and that future by materially I Securities implied forward-looking prepared which any the today performance or statements to Reform make or follows. any These of during forward-looking results certain subject are projections forward-looking from remarks are conditions, under and to the factors, statements. facts, Federal uncertainties risks, cause of discuss we other XXXX future going Private statements not limitations such historical events, or market to statements Act statements the operations could perspective. results

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

and In is addition, Particular timing and our we to operating orders estimates our of authorities. Statements the facing only this regulatory on statements risks, subject intend spending, except of of are acquisitions the this statements are time expansion the in the Form as made are or update changes, any filed of regulatory end-use our not forward-looking described and legal operations in as made presentation annual are and SEC on risks competition. risks. the management XX-K from others, include, cyclicality subject call made Ducommun to and among others the those and change. if U.S. by customers, and cost defense report do required business, government current with to markets, during of the company’s risks on These our our of based impact of future which results COVID-XX customers, level

refer to call referenced Relations call. the company’s SEC Form This you GAAP our filings the today will XXXX a a for link on also reconciliation SEC find measures non-GAAP includes the the our filed with with the filings quarter financial first We our Please with XX-Q and Investor SEC website measures. to of all under the this non-GAAP tab. to on

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

I for situation our and review getting as and pandemic you, us which Thank will your detail. conference today hope that usual, I of update Chris for quarter are joining the everyone current you families an healthy call. will as Today Chris of and as Okay. in also company, thanks and Wampler possible. give best our financials the after first this through

New a Generally, employees. facilities York in at and contracted that with high was time being the our mostly at through change priority zero on Albany believe California had state, our manage am report it’s of of rapid the in these challenges despite the the and safety been judgment health to we having Ducommun happy I which as work. X south reported, only impact such not impacted with Southern spread one as operation virus case and areas we of has team top

place. even We in also effective protocols putting remain diligent on safety more

ideas across sustain this forward, the move company sharing to performance. facilities best our we As are and practices

orders. our the and effective to been Ducommun’s I diligently has value in team been was to of evident believe in challenges focusing the performance strategic technologies, is X working revenues for having customers, reasons the progress first nation our markets, product the this Despite over structure our of has quarter cost recently the particularly The all the developing and past on This operations, years, new making pandemic excellent. high result an improving portfolio, acquisitions. driving defense providing business Ducommun’s

the remind of the not and the P&L the improved rose year-over-year our headwinds X% last that consecutive virus ninth revenue, of I revenue but quarter XXX to which over of impressive. everyone want from quarter year-over-year only company’s we a for MAX in impact growth, first also is with $XX size year, Overall, marked March, material so increase. from million not the

from and system Ducommun’s of Clouded Leopard our Nobles As started really Worldwide the business, the in with include Majority business new defense especially has QX. mentioned quarter gains strength, weapon showing just in its the the previously, areas increases in armored F-XX, UAVs. programs. many started, other business Missile, defense fighting developing vehicle, some Patriot And the F-XX pulling progress in were F-XX getting of industry and F-XX, helicopter, Apache great

proud of the defense things the I growth of and are of revenue most continued is we highlight One Raytheon.

missile deliveries program relationship, throwed we opportunity electronic case and a the recall, that Missile win to booked last Defense. you may business, This also products. commercialized the Ducommun’s missile step our them, for first Raytheon of Ducommun agreement with million forward company former structures the Raytheon continues Systems to for first QX. for a areas sign of a defense I $XX As the program. within to major happy known the structures offering am have that supplier order business. all This the a is plus are was for the selected toll in build report as product July is in as Raytheon and preferred Through We fully Missile other value which now current

story is customer In rotation rankings. our major of addition, another the

only Boeing, Northrop was it Spirit ranked and top the Although Aerosystems. are Raytheon, Technologies, X companies now Grumman quarter, one by United revenue

our is strength, while pandemic clear indicator the business portfolio and quarter, XXX company impacted It context, the and or second arrived each and first, significantly of XXXX, January Boeing should of Spirit third always the I the at by is the every that a place. diversification at showing you Ducommun, material held commercial working balance MAX. aerospace in For be and since the

of in achieving the share gain Also, at current and this aerospace, commercial the in news opportunity. or growth every the QX. least year-over-year defense, year positive tough driving two, team at is believe We in despite Airbus, Ducommun will to with next continues and trending situation favor continue

As the years larger even of ago. X you are opportunity not for a AXXX rates of down, percentage recall, Airbus program. Though the a customer may exists the was still company

Apache, The part across spot million. commercial environment aerospace continues based other deliver. of others. strong bright pressure. the case but in for helped to systems weapon discussed, for defense F-XX, of the is number Tomahawk from strength order vehicles, down $XXX offset platforms, ending It which included and This key QX, great Ducommun the the was previously by the on missile F-XX backlog bolstered UAVs, orders numerous ground quarter sequentially still Obviously, a QX

both Overall, solid revenues earnings. the company in XXXX, and start a is in off to

As early January the shutdowns XXX ensure Spirit costs. ensure MAX and previously the Aerosystems Boeing the pandemic deal company its to have adjusts in production that communicated, took action costs effective our in to due now Actions managed to with December we all at operations as XXXX. announced proactively Ducommun were continued

and You and within positive can actions gross the done QX, a job. certainly both percentage see great income in certainly effusiveness of profit with team has the posted environment this operating our very tough

affected financial in want to time leadership that proactive in for the through in to continue background be the this experience our as has to through crisis team be mention area XXXX, the the well. cost I XXXX, We difficult the and of also managing

additional the QX provide regards strong MAX, and will We that programs see also good strategic in quarter acquisition to current the In revenue defense mentioned be for expect agreement XXX the providing company our inorganic the Nobles range the But the the to it’s a circumstances, challenges the earlier, with commercial X.X% be The lower the of operating outlook, think income aero, effort help QX X%. with between also many with in we unprecedented growth. to in with along and Raytheon, backlog in XX% should including XX% growth very year-over-year. supplier year-over-year growth. percentage within

aerospace. look we we be defense year, time the income, year-over-year to will second between of but be this the due X%. the to commercial improve revenue to again, Operating As overall to X% business estimate believe we by X% will XX% down half will that

quarter, all million pandemic, improvements, As despite you process years, discipline of leadership a the the others has have the And X short-term past overcoming future. cost long-term beginning outlook, material MAX including the restructuring, first though, work development, at in saw hard and the difference. clearly the business a for the $XX plus made great

programs. posted first nearly sales provide me with let of across you military our platforms $XXX.X revenue space XXXX. XX% products defense of million, quarter Now, a drove versus additional we some every product up broad our of sector, on variety in our markets, aspect We and portfolio. color and Beginning

strength in and well for line helicopters saw our we earlier, expansion military aircraft F-XX, fixed-wing programs particular top for F-XX, in F-XX As demand mentioned the with like the increases as Apache. as for F-XX shipments

missile this again system quarter, In growth saw applications. addition, rose the we and many military across other space Patriot significant

We the growth over was the Martin XX% up Sikorsky, that Black Lockheed and defense, announce quarter year first with happy defense supplier $XXX in positioned X million are platform Hawk a backlog for in an as recognized across a ended XXXX next further year-over-year. for to the Ducommun our well all also company. sectors the quarters impressive I of roughly by am

The long revenue with puts with Airbus gain portfolio. our Ducommun’s the rates and and did and for stabilize operations, both see program. despite rates at but quarter managing and larger families Airbus in our Airbus with positioned sector a aerospace helping balance first clearly year-over-year expansion start downturn to the $XXX well QX. at commercial we sales and is also MAX AXXX costs gains the and declined million the is the majority the stood AXXX to work aerospace to customer. decline within in and roughly share, in directly this indirectly end Ducommun XXXX XXX the continues on quarter, represented commercial our year-over-year posted Within $XX.X first Ducommun’s the share and important million, of commercial in since continued larger at of adjusting term. backlog once Airbus

to turn At this Chris. point, will it I over

good Thank you, afternoon everyone. Steve and

reminder, please and of release As see on call. company’s description earnings today’s filings mentioned QX for a information further the

COVID-XX our parameters quarters discussed, we production MAX were us dual serve to in Steve months of the that and quarter’s the economic our the ability external lean We As faced first well from evolve impact feel as flex the the confident XXX we and overall ahead. structure challenges conditions lower results, operating production and to rapidly pleased growing pandemic. will with even

year-over-year. This XXXX Now, I to million of of Revenue first flat results. $XX.X the of versus commercial for the quarter by essentially quarter offset from was $XXX.X aerospace million in partially XXXX. higher of space first sector Industrial million was by and the our $XX $XXX.X the million military details performance revenue of sales driven will customers. sales move overall within our lower were

As space year mentioned call, commercial XXX MAX, headwind in earnings in and our the business to end MAX, demand. offset military expected our we Boeing directionally

the end Growth Ducommun’s strong sustained, overall continues million, of the backlog. to backlog in space was first levels. a at and the military record approximately quarter drive backlog near $XXX

we gross move due costs. last As XX.X% again manage agreements rose posted and for prior define on commercial in gross on million and solid to compensation benefit the a demand. year. of $XX.X of profit customer quarter was and XX.X% favorable delivery orders expected firm-fixed We or and dates aerospace purchase potential reminder, year-over-year with increase million downward gross revenue to reduced we from the The and Once to backlog XX margins lower profit long-term we mix rose environment through do XXXX, $XX.X months profit comparable prices pressure year’s as through the as expect from based less. as Gross period.

the higher compared million quarter $XX.X XXXX. quarter year-over-year on was million first than SG&A of in was the impact of higher gross in million versus the period, of more of October or quarter company’s due offsetting versus company improvement revenue $X.X income to the the X.X% interest The the to year reported $X.X the rates primarily XXXX. of new quarter first funding first or in million the debt revenue of year Nobles X.X% outstanding the in and margins. $XX.X quarter operating prior due of the prior the credit quarter. increased facilities, our debt reflecting expense million Interest in revenue The The the for $XX.X was period. million lower $XX.X in to amount favorable outstanding during was acquisition first during the increased

or year-over-year the first The increase XXXX. reported was quarter income first company per the $X.XX for share compared of million margins, compared of higher XXX comparable XXXX The revenue $X.X quarter I $XX.X net to million EBITDA share to per the or of revenue, of for period stronger of million quarter $X.X income diluted an of points. to diluted as primarily or first or $XX.X $X.XX was gross million of net due XXXX, in mentioned. Adjusted XX.X% previously increase the revenue for for XX.X% basis

Now, the segment let results. to me turn

$XX.X segment a Systems space revenue versus revenue Systems sales first favorable revenues year million commercial revenues or in the volumes the company’s across Electronic XX.X% posted for $XX.X the quarter quarter The our posted the a in of Electronic reflect manufacturing of million of prior million versus and improved aerospace product and of platforms. reflects customers income Our year performance or with mix. operating period. $XX.X military in $X.X the $XX.X first of in XX.X% uptick in results million These increase and period. prior million modest XXXX

volumes posted the $XX.X reflecting of $XX.X aerospace by the our year. and offset Structural as compared revenue revenue offset to income in X.X% year-over-year applications, decrease general benefit posted operating XXXX. and unfavorable was margin Systems million of demand within or $X.X reflected in revenue year-over-year X% versus military revenues dynamics $X.X for of XXXX of $X.X operating quarter quarter last and Systems commercial $XX.X $XX.X across current revenue Structural space and of The the by XX.X% well million manufacturing CG&A costs. million million X% lower of last or first first markets. due of $XX.X compensation million decline to revenue partially and lower segment of expense, partially mix product or of Corporate, the company’s million XXXX quarter The were Our sales for million of million expenses administrative year. versus higher

the $XX impacts of capital down $XXX quarter with compared million. cash drawdown potential during the of at XXXX the liquidity quarter have period. the quarter We resources, million end to uncertainty our million liquidity this $X.X sheet COVID-XX. of the related drew grew from caution we of as prior toward in cash available and an million million We of Turning on and year $XX of used our first We to $XXX held revolver the balance during on operations first abundance end.

variable performance-based quarter The compensation is for of compensation year. significant the and cash – in is weakest our first the quarter quarter. flow out performance-based, the with significant the incentive year historically paid We operate first subsequent variable performance annual the prior

outflow Additionally, accounts net and receivable by from offset inventory investments higher operations. partially income added to the

our not are the XXXX in of facilities, expire which to We full XXXX. with are scheduled covenants compliance until credit and

we life a with of facility covenant X.XX. credit of a As reminder, leverage a ceiling covenant have ratio

end. was X.X debt-to-EBITDA quarter at Our

lean We restricting our focus optimizing have and are generation our structure, we as volatile operations reinforced and in environment. and working with on spending discretionary this capital lean cash

the remainder we positive result, flow during a As expect to cash of free generate XXXX.

$XX in anticipated XXXX. anticipate will level. million this alignment first spending spending spending between expenditure from with capital a more our initiative, terms XX% of $X.X In in decrease $XX than and and In of million XXXX we the conservation our capital during cash expenditures, result spent capital quarter million

with We’re a optimistic quarterly our impacts, even operating manage the again performance uncertainty very the remain of we about and pleased future environment. create through the as which COVID-XX challenging cautiously

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

Thanks, Chris.

and to in have work of despite quarter information today in first such together. of leadership lot other footprint, Airbus. challenges this XXXX. especially shareholders provided discipline I our other through also areas thank that thought defense partners the operational we developments and to Again, the important hope add I continue we as runway the we believe crisis. these excellent the have have our a While some as current long-term, and and I we want the do through of I in times structure, work customers, would to all right cost also shareholders face we was as business difficult

to want Roughly I’m our our efforts, operations thank the at every tell $XXX,XXX to employees, like show company pandemic. challenges out and this our members team the home our to those to ones the our most help our with proud in leave their and take XX% for from many customers to job another given when is and also where $X we’ll common all add done of reach from with stressful donations from for of the day. orders closing support. up loved million never families I’d I It We’ve just the important, charities, get and easy time neighbors. them to In local area shelter-in-place operate, we authorities. the And the nation. $XXX,XXX the

you Thank for listening.

questions. Let’s go to

Our first Company. & Sidoti [Operator Instructions] from Marshall with Edward comes question

Your Marshall & with first again, question line Sidoti your Company. now is comes open. Once from Edward

line open. Your is now

your Was I doing Steve, are am how well. Thanks, I mute? hope thanks. Chris, you? Well, Hi, families

So has last based just shipsets that COVID? on quarter, pushed of MAX just right were expected about that those been you Or year? anticipating I talked ship you’d – this XXXX. result we the And the over Are that for the a program. XXX wanted as to

now, we’re XXX. right Ed, at

we’re do. with that I anything on I as right our anything. now Chris, working really customers, else far As but have we think or don’t

until fairly I No. call rate to that’s of from as contact XX now, confident been ramp-up out if but toward we’ve their to that I yesterday I were year with a Boeing’s mean been got there’s a get this been them. I put slow they them all mean in they’ve more call worked in the they front that there, XXXX. on they to through back hit think – listened yesterday, we our mean little beyond year-end certainly, caution call

new have no – We yes.

Okay.

about Did operating even build that throughout you start the you’ll QX? that you And QX? And So that start production, first, do as look year occur at you did maybe you in costs. you’ll more in to your talked production? a restart anticipate that plan

of in of the that obviously, other because, shutdown, January, right? place we I news things. got furloughs lots did in had already actually QX. in gate We we So got out of and the early about middle we the by mean the December

So we managed it.

We’re working we manage side. continue just them proactive can to with closely the And on again, be that. QX, then QX. as cost as We in we

Got it.

trying executed I’m to sounds XX% a the repeatable posted, talked QX getting what’s toward might – like than taking You It it or that. about that potentially have And quarter in when And margin you QX that in the did you higher embedded them. Electronics that? then that get just a step it I of be sense in How is number? maybe a follow-up back. for this

the we’ve volume if all of forward much? had No, step I know. a centers to gone we I sort think centers, as getting this was key little more that more we’ve certainly us the in leap Yes. There of volumes breakthrough sort this nice Ed, mentioned through. But to performance we we year, for a leap it? at know also did do. well. performance is a dropped here sure. Yes, quite the efficient up expect stronger mean And it the getting was than QX. much this several for as it I take the that sustain Can I of a which and quarter don’t level,

little one for to strong very is a for a as quarter. So, to helped to a we out Steve tough move look Electronics And to look shine us going keep in profile. Electronics be And a to, is Yes, had in alluded there going continue We QX, that the will – do headwind. as the it balance more forward. bit QX little on that we’re overall. QX certainly be

for? provided, step Could two those up the So the operating embedded further, quarter, consolidated on the segments the just margin roll I that talk year. maybe on from one ask guidance you it’s – you what’s that the that number about to profit whether can you’re business kind looking of to for

bit I Well, a take will I it. little think

defense, scale driven operations benefiting really are by we – tight. from obviously So right? side, we are of lot a the First, on Electronics have being our

volume. that from benefiting obviously we’re so And

this, is, going that’s us. as those the to to So on it. mentioned how factories, other then we’re help I side we’re on commercial proactive know And side very doing do I on earlier, certainly and mean the cost. in We

that’s So the fairly numbers, why though seeing is down. revenue we’re nice

from that’s mean getting embedded the So at level? I X%, was the what X.X%, kind – at? what’s segment of I

Yes. I the we’re to to directionally, repeat a is – QX Ed, for volume tough going be one Electronics. mean –

So I don’t stay there. quite would know it that

operating the be margin. take You step to one higher. a It’s challenge saw back in that in to much QX’s going structures

out a until to back I we you of Electronics with in if level fair see So what get probably more at, it this think build you we look. our were QX that’s volume

guidance. And it. thanks, for Got the it. by way, providing the Got

thank an think I you. time that, then. remember little this Ducommun Maybe first the is probably easier can I doing bit question a so of

if what So tax, interest QX? no. assume in there were any be thinking about expense saw we and from your meaningful I to would changes got I

interest Well, is – in mean – expense, both. you from what as the take the be toward certainly of QX. I going changed the end mean little market I I’ll only we QX, saw a bit got we whole place yes. them to

you facilities, we $X.X saw in So the that – with with through should and our QX million are QX. we a variable in there I get cleaner little through our come mean than QX debt

So more environment. year-end interest we definitely where favorable it’s were a at rate call, the

number more in should at And were so versus talking quarter call. the what be million about $X we that a year-end probably the

on as But We that answer. for item laws it a to of us. QX, were to generally, SBC back help that side, cut we’ve I right tax the at a still that tax tax the we’re in repeat then under on will be the year. laws XX% still last some favorability you to we’re that the at decent hit probably over the some So where the definitely think with pretty new couple should line. is year XX% full to years. – XX% go XX% we a discrete And process pointing And of to out gotten through

safe Stay do well. and

you. Thank

question Canaccord. Ken Herbert comes Our from with next

open. Your now line is

ask you this buffer Chris. nice how on on excess support quarter. sort wanted Boeing and you I the temporary Steven just first how year to next maybe have comment Steve, the MAX back in order first permanent can are versus carry this side Hi, much takeout rates is and maybe capacity cost depending quarter, Really much the on or to or in up when gets those to numbers? XX upon of cost year to to going to of

Ken thanks. Yes.

needs So do aren’t the we look, first, make furloughs. forward. And obviously, people the it decisions if we to bring move with there’s to to isn’t to and We got as them tough do be. being try some we far something as real we can best on And we orders that, and no but where then furlough. there, the light outlook able back, for

think it. we’ve good It’s I a on on handle the got So people variable. side,

I’ll The really capital we intensity thing other to that drive – try where say we’re low is can. we

job margins you But our do overheads, carries do the we overall, think and see as manage variable machines some pretty we others. have the good So obviously costs. more than from maybe I can operations, managing that a that we

I think myself. this been the throughout management, we’ve through So again, before, year, that

proactive as at using long as companies to to we you’re good shape. it, of in So like stay work and say ahead used

ends. think this going year, overall, okay both to I So on be we’re

able to execute up? to fair support to the push Okay. on add that I that and Boeing won’t is then And be need you rates rates, much to higher to looking guess MAX, cost if and it’s say when

we shape. Yes. that. That’s in want to confirm Yes, good good. are I Yes.

Okay.

on check a – that’s So that. mark just

payments? any on talked are actually perfect. of or you either you mean prime just seeing the about lot Okay, base is What there. the in on COVID-XX. benefit of side are are to And to Steve, industrial a what about benefiting and and has you’ve clearly terms But in you been and you’ve your I the accelerated obviously through well the ensuring light initiatives or of a of starting defense lot a that wanted contractors. contract seeing, mean from actions from obviously see terms lot talk front? – payments customers the that defense I I awards of in side supported a the there government made

there I I’ll of there’s we a some as seeing we’re reality I take a mean an time seeing I agreement is contract situation some that. flow. business lead advanced – chatter or or usual overall, the long something items on – that usual what might the as Ken. be happening, little that to a mean we where payment lot on I that there side the is mean mean essentially can cover may but But we’re defense it’s side. – get one, cash a business on like of be on defense very quicker it’s and

to Yes. No call. and about but it’s there’s other I same much some comment, thing. news Ken. change know just Pretty been folks, here, the been some Lockheed standard

VersaCore are lot you growth. maybe product now what help obviously, line? level just you are pressured today, but that Okay. you where are some it and That’s a was, outlook to final great great. seeing that, product a what’s and And markets commercial the Because of or for there? the with sort if I obviously, and could, just line of put one set know, resources quantify can I comment, you I gain into us obviously, share know bit But

Yes. Sure. Thanks that for question.

We we’ve been working Mexico off of in middle And Guaymas, with now actually so started the fully it’s we’re bit. for years. that. right [indiscernible] VersaCore, And [indiscernible] been disruption, And at our And now probably the LEAP in small blocker it. with working of this We half it And a have few contract. doors But facility. at rate in things of on other we now a on end operational, of least commercialized that blocker camp, second going Obviously, other that million other pushed engine without now commercialization run still are the such a we we’re doors. for $XX coming have areas the on the as looking we’re a we companies. a fulfilling which year, like feel majority are to we target planning a is out VersaCore. big and

– check OEMs it’s big got of check about conversations the as are a later we the it’s with which this We box for to them talk fall think think we in a the new then the And year. sell, part doors maybe blocker is box can So know. with we other Guaymas, that big with you having future. things

Great Thanks Steve Chris. and hear. lot Great. to a

next comes Thank FBR. you. Mike our Crawford question Riley from B. with And

now is open. line Your

further that you, I taken the right your all that the could am you and Is Thank gross hear cost no footprint? existing expected do Steve. utilization But like you sounds after fixed the to any level? footprint still and kind with couch to within previously have need of margin glad decline think absorption capacity actions you shuffling.

have still performance been about. months I to Mike. year tale the the your think I we sort would and of side, is cost allow on various I’ll a headwind the quickly. two too works they’re of mean this four lot have – what we’ve – structure so us? to really have to us we way, that It businesses four first as the different – electronics headwind that is isn’t pointing significant any well – that I And setup this going we mean it pretty do flex a do reasons to months at I that The here with of money structures. handle mean that the two one could structure translate the clearly what of got able still that structure we facility months, and I’ll has for make Yes. the heavy the does fixed say the I with – take But five we be cities of performance center that’s it’s at one, us. we’re center. of

information does comes side. way. to forward, the mean? on is been of able comes build, how it our forward, structure – to the fulfill headwind, to new most the the But we As it’s going that – how on it new being going want to approach Back of to that and flex as how products question as sort clearly to want what earlier, that different that what’s we Ed’s do to

footprint how on we at been scale around we being structure we’ve to that of where and just to physical as got about that’s we that’s have trying one not set we’ve why the with it flexing can. talked to consolidating benefits this It’s up, with So at point. your – said, footprint best more point, are the

the of given in the flow cash then, I accounts Okay. you’ll taken rest to free year, revenue the Chris, be Thank in relative some capital for having decline outsized really you. imagine of EBITDA. and working And these

should just is balance now – leverage that your net improve further down sheet So, even Xx. where further

move to you strong where applications up-market more high and competitors. So are company niche into accelerate to M&A further level with few could the this margins getting a do

does And in so to what answering that and look are pipeline that not environment? this just able to end, like? And people phones

working more on Mike? question the of on lead or acquisition capital in that, part the Is the tail

I kind mean in one, is then, thinking in I standstill? M&A cash a way am question free the Well, right terms And flow? of two be of would

Okay.

me take part. mean, Yes. Let the Mike, first absolutely. I

puzzle. then that of way end additional of with it, be laid the sort you as the piece there’s uncertainty flow. cash each it free game they some But would happen if absolutely, said you out, So

than mentioned, it we big XX different here a April very top related is of part think as messaging, you heard profitability, Steve, in February. was the on and is, from where to it I line

two a as of and what the take well So be we’ve cities. got part And how some give working from that facilities. between we of equation we capital profitable as and that drop-through to part the of will the again, then tail question, of is key that

going look places we we pulling right investment the gain defense some side down on the to as So structure there hopefully there’ll be be grow over this while the several the business taken some of size are on side next some months. working there capital where as to year, the

the on and in in certainly, right Mike, But And a place. we acquisition, now, we’re still engaged people have our phase. pause

right pause part, at And how for in we’ll months early now, XXXX. most next on see few least. second for the looks half the so probably But we’re the

Okay, great. very you much. Thank

Mike. Thanks Yes.

Ciarmoli Michael with from comes question SunTrust. next Our Instructions] [Operator

now line is open. Your

Hey good evening.

everybody growth Nobles was? tell guys. contribution and Maybe just evening to ones guys or healthy. for organic disclose for would Thanks guys you Glad us some taking housekeeping Thanks in first. what Good revenue quarter you doing? the is how my hear the re question. Chris, – safe

Sure.

it’s – Let X%. than less me

Okay. I’ll Mike. it leave there,

actually you shipping Got you MAX, guys it. the And just now? did on restart? the program then are And on product

the obviously. are and for best on just Boeing place have in can’t – quarter, first okay? work the week, certain make basically, things. you we are relationships them with could, through do So a we We really that some We ship are with products other one working we

with of get to we Spirit. on these program but bit but mix, bin Spirit. getting give started now a it’s with guys we��re we’re going, a need Obviously, time to say certainly a I’d So

once bin are again. forward. the forward, bin the things – once start moves up But we starts moving So moving

and those did Yes. shutdowns start have And there, they did stretch – our where us. QX absolutely. impact decent ability of we did to a mean QX Mike, they temporary impact into in I did the ship, here

yes. Yes. Absolutely,

built these lot and expect at especially the you good as I like bin the you to going system down? the of you pretty in has Do I’m And that’s MAX realignment stock appreciate this, lower that down the on any sense a you is buffer into chain Do ‘XX a knows do the what’s something lead even get with with programs. already some pressure But as on last are are significantly? how obviously, Maybe these these you coming drawn of be comment does this I supply further had looking there in guess guys headwind XX a expect into mean year. to – guidance rates of it to, that pressures, Spirit rates? here. from obviously, either nobody really

here are I as be answer as we think as sit okay? I see far going will my no, to now, I right – some production. Mike, mean

the to things knows But are forward. that I we’re continue think think I activity, who to sure, going right? for – I going to think roll

that a out. is okay. further It’s XX little reduction I the think

be So a think say, no. level overall, I top would I would

Okay.

a defense looking in you are risk as one, any the guys across or growth in Okay. any the board. expected segment, planned from But you chain, just that there, last the as demands geographies, COVID-related threat obviously, deeper chain? in supply to And would facility shutdowns, shipments usual business on supply the Electronics do your pose then your at your see of lines, different there suppliers product that anything with or dealing either disruptions

mentioned, I I point Yes. mean is, think through as this what something before. would to, I like Steve mean the I Mike, whole team lived

there side, that got a the and a So we’ve there and push we where various chain got here. set we’re having a the that, answer the But not up supply out we center It diverse the in the can have we be the one you up, are how mean is if be invested bump particular. any with said a could no. shutdown. on one a data we with are moving. set chain, we where keep could product a we the can benefited supply or so points lines definitely, to It trying road that hit can supply much ways performance And how I have from be of level, supplier issue. are when at look naive. Again, high shift

room problem So got not to overall, see go. we can – right now, a but that we still we prevalent it’s

Mike. material don’t see now, anything we And right

I envision pre-buying a you be Yes, to right. But anything on a levels. there? just then source okay. could right kind you even or that of stockpile like do of for as new That’s having potentially it sounds any mean, you And sized inventory, cash don’t

No.

No.

safe. Okay, perfect. Alright. Thanks guys. Stay

Mike. Thanks,

I it. Okay. appreciate

from our And you. with Herbert question next comes Ken Thank Canaccord.

open. is line now Your

Yes, hi, and Steve Chris.

but the with get real is of again, just it that year, the right the On to the cash, to free going like is second of quick you free from couple positive for a positively on, flow in cash full that use the sounds the quarter second inflect of follow-ups. your everything year – comments framework? half likely a discussion, Just cash that flow

we I the think of mean flow than there’s cash anticipating the through QX able we’re and though it’s build top there, for QX, a from the I here that, generate we optimistic Ken. line – then the are profitability little year. to as on and go still being some even still more rest headwind momentum the in year-over-year

on go going of exposure Okay. any reduction are and sort Do XX% That’s of rates and great. between or Boeing then the where this to see and considering goodwill Airbus. about I some intangibles think XX% in to when And LDS XXX risk to to second, a potential particular you volume XXX?

includes planning like get question, bit a that no, what’s we lot to with right risks are we sit scenario evaluated, we’ve And at that of any us to we anticipate scenarios, – right in I gone pandemic assets from and as as Yes. companies, as been the there’s what of well intangibles physical units would and through now, be those into reporting at going are quarter. and I cushion we issues. before And quite new Clearly, quarter as But hold, so comfortable mean we mean is have where every taken front look out COVID looking all don’t with are now. now I various having answer to a right – has that goodwill. of there. mean a

Ken. We good good about about it, feel feel We it.

you. Thank Great.

have follow-up And we with Sidoti. a Marshall from you. Edward Thank

Your line is now open.

narrow-body, the larger think Ducommun But ups. a Dreamliner. always One, we your as Two commercial. I through, say, we is but of participation we’re with the with XXX, that on what let’s generation, aircraft step step quite – as near-term work coming and focused the maybe you of on the the follow XXXX the kind XXXX, bit do of to next on thought What’s we quick of Ducommun’s on potential know program? kind –

on light. there. light. is It’s We do few – It’s have XXXX a light. things It’s

just at if you revenue look we versus in run single-aisle I – okay? look general, generally our at that Xx, single-aisle or bookings you think wide-body,

Okay, okay.

range, XXXX, So on we more are much we continue. aisle, going generally we have Xx and single I but in things the players think are do to Xx. in the definitely And that’s

Got it.

LDS. we any wind that topic last developments part energy wind, is on the of second on The brought quarter further and up

the that look we – a first, It the LDS. Ed, did our So yes, thing was and It’s love myself great company. first been team together. for acquisition

great us. for been it’s thing a So

the in we’ve – product field. a are got We

have doing information on trials, company midyear. and one probably some least we at at with working We’re more should

Thanks it. Got much very

Okay, thank you.

you we with Thank from a Michael and Ciarmoli follow-up have SunTrust.

open. now Your line is

thanks saying? you’re on there maybe you Can some and mentioned taking you this progress guys Steve, for Hey think I what one UAVs just elaborate defense.

I want in in about there right to because future. I be can’t Yes. I put think talking it more disclose now. going the it we’re guess to I

– let I was don’t I important should it that it we we’re that I shareholders tell thought and a here, authority careful in know, be I an analysts the to but good. to It for here commercialized have to say I and yet. anything, was you UAVs. just Just got did put not order you I’ve in it’s to did area forward be in know moving area. that because important it thought us, for new a book it’s

of Electronic structure us Can you side a Systems? or give hint

Electronic – electronics.

okay perfect. Okay, Thanks guys

Mike. you, See

to Thank there appears at callers you. this no in the be And queue. time, further

the So turn I’ll Oswald any closing over remarks. call to Mr. for

wrap a us that today. Thank much. I our thanks, very Well, you up had the again just great support. we to Thank thank everyone conversation. analysts. Obviously, joined who here, I’d appreciate everybody.

people all most safe, and our of our arm the best customers. and out communities the trying care take we to can, help obviously important arm We’re keep working here, do our and

So I care. everybody good – to want wish you to we and safety, to and forward to health Take look seeing want you talking soon.

for now disconnect. you your may This participation conclude and today’s thank gentlemen, does program your you on and conference. Ladies