Ducommun (DCO) 8 May 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the First Quarter 2024 Ducommun Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Suman Mookerji, Chief Financial Officer. Please go ahead.

to First welcome Conference and you, Ducommun's Quarter XXXX Call. Thank Chairman, today CEO. is me President Steve With Oswald, and I'm going we to session statements the regarding discuss remarks that certain limitations events, prepared or to follows. projections performance the that or may during future make Q&A any forward-looking therefore, to financial Securities Certain today are, projections XXXX, statements the Private as are Reform not conditions, Act results and including any historical forward-looking statements market facts, of Litigation of are statements that future perspective. operations and under These materially statements risks, or and future forward-looking statements. subject are uncertainties actual expressed forward-looking other to cause could results factors, implied results from which by such to differ the

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

natural estimates protect of and rates, enforce government geopolitical of new retain to risks change. the current legal in competition, results or and customers, expansion otherwise, on and rights, are chain and avoid products, risk In developments, or personnel future experience certification may disasters, rising amongst key and ability the interest orders issues our adequately end-use and intellectual including Particular cyclicality timing the the level risks, of high our ability to economic to supply of and acquisitions, cybersecurity operating markets, subject launch and delays cost based regulatory attract pandemics, disruptions, from of attacks. labor property U.S. others, business, and is addition, defense the of spending, the our which customers include, of facing Ducommun company's the

of reports with release risks. other filed annual as as the our from for discussion report time the press quarterly on XX-Q Form and time to reports today detailed the refer SEC well a to issued on Form Please XX-K,

statements those are subject risks. forward-looking to Our

and SEC as Please for on measures. as this financial Statements QX the update required GAAP includes the of the to also and this with non-GAAP XX-Q XXXX if referenced time filed This authorities. quarterly made presentation, Form reconciliation to any a do in statements today. made regulatory We SEC are this our call. made, filings refer the call call not to except report during non-GAAP on with of our only we intend by measures

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

you, joining us of Thank today our everyone, Okay. give I and Today, usual, review will company. update situation financials Suman the an Thanks, for conference in detail. quarter Afterwards, first as for current our on Suman. call. will the

start our Vision Let an with on me off update continued towards XXXX. progress

following over York. segments of was the of has executing the For the Vision Ducommun the management and budget continuing Ducommun primes strategy content in on and consolidating background, investors out its expanding summer key the our acquisition and its executing by product the defense increasing XXXX. this offloading then with facility Board vision feedback. XXXX, aerospace high-growth been that program, We fall revenue aftermarket presented and platforms. engineered by COVID of to Unanimously the targeted proportion of content, XXXX defense pandemic excellent had approved the coming November strategy by developed in New Since and month time, strategy commercial and footprint,

a opportunity at the creation good the strong DCO, XXXX strategy We believe results unique catalysts near-term value present long-term for ahead and QX shareholders. of results The were conviction for and and with example work. all have the Vision a in midterm strategy XXXX goals very along

Airbus, over year. Recovery platform was $XXX.X commercial as on we quarter. the along with year AXXX consecutive notable, growing than in during on both as a over Boeing businesses revenues the outstanding for well our million, more with period aircraft fuselage. an growth rotorcraft quarter was business, the QX where doubling Strong prior X.X% million prior the strong helped the across XXX make the start revenue the our entire to exceeded third for quarter year the great for and and $XXX Revenues Ducommun. and the growth drive skins

and Overall, MAX up commercial aerospace issues. XX% continued with Spirit Boeing XXXX Airbus despite and QX challenges others Boeing was and with from quality

have environment. We demonstrating of challenging for aerospace revenue year-over-year grown consecutive now a commercial business our in quarters, in OEM XX our resilience business even our the

Apache we talked We we which revenue the business XXXX. in shipments and the contract for as tow the business the almost [indiscernible] missile again and F-XX, as past, defense in expect production quarter. as by remain partially $XXX about for declines well legacy was in naval strong and weapon have close-in grew Our Defense in starting systems Hawk, platforms which selected first for a weapon programs in demand new growth programs, the X% was Growth including submarines. and offset in other year-over-year, about Black anticipate ahead. F-XX million the the as system a such pause optimistic

card As $XXX that provided missiles, in last classes performs strategy the part for X backlog of second story, the the card pays after now integrated, SPY-X meaning mentioned on I've for much we've of radars are months of ever the a X This an as are missile happy QX from ships long-term offloading XX simultaneously. we very air and missile tell leap XXXX. ballistic past, deliveries family slow card carts surface transition, as program These for important defend of defense off, they were missiles, of now at part and aircraft and hostile at a stands bigger QX, be. that I'm can against RADAR year, now go and the and and over and record X is fleet. in The transition card the report $XXX is RTX been U.S. the business in it for program as on cruise radars working missiles, RTX hypersonic with this also we've should The new has ships in SPY-X it been increased current QX in But for a was out our the SPY-X QX a from as and is we up million XXXX, news over work. Navy's awarded in award one shipments expected in on, building been the are a track giant X great support, Ducommun $XX support. to $XX wins certain and are in through the complementing follow-on defense backlog. the order Defense begin million. defense new driver million. backlog Significant programs, $X.X timing from are ongoing. billion growing million to

SPY-X the and over defense communicated anticipate prior in we on target offloading programs of $XX will for rate increase our of As overall development run XXXX. of commercialized now long-term or an $XXX $XXX million the other million program, be million XXXX, that already in the

It has long journey, been but a well it. worth

XXX value initial gross growing for from we improvements, XX.X% to Another quarter, margin year-over-year in pricing up folio restricting XX.X% the of points basis real as from initiatives, our and savings. highlight was product benefits the strategic productivity engineered QX continue realize

transitioned Arkansas savings to expected start the reductions the allowed of with during scope to left facility, in XXX Missouri away. facility a variable We the to fully miles roughly first in more of transition several realizing portion Ducommun Berryville, also us with programs for significant during our and operations This program closure QX, with quarter, made our has RTX. X

with them Ducommun, for to with the Apache MAX approvals our but this on and continue tail outcome Boeing working buffer. on headwinds effort the some also and and building year, and We Boeing a make QX we a road, are to Boeing the We're QX long respectively, transition term, with in Commercial phase driving full Defense final on great of and shareholders.

a XXXX. a income result growth MAX mentioned record in million year in QX XX.X% year the a XXXX, compared prior in of The industry to basis increased a and operating quarter. gives with for in Defense delivered production record earlier XXXX was we mentioned $XX adjustments, $XXX consolidated year-over-year, diluted come. it as The was a team XXX great $X.XX to income margins our earlier, well adjusted kick beginning primarily start the $X.XX slightly commercial the compared Boeing Adjusted at diluted the businesses during by increasing to million well for the continued $XX issues with to products to and increased a positive the backlog in versus billion, $X.XX towards XX% X% to was with quarter. driven end quarter. XXXX. XXXX to QX rates For lower QX share our business with GAAP positioned engineered to another great $XXX during news XX.X% year-over-year sequentially Strong The in a prior of driven backlog share to company more Ducommun quarter. savings GAAP that by costs single-aisle a EPS QX backlog EBITDA defense $X.XX goals. company's compared XXXX improved The prior adjusted at also Spirit. solid defense work the the reaffirms start the year-over-year. improvement and share was as EPS million. a compared in point restructuring the QX, And in aerospace at diluted decreased due revenue year issues QX QX operating ended Vision share million $X.XX X.X% was Total interest and a great and Ducommun as the EPS compared the EPS to remains quarter with over sequentially of as higher backlog, and

backlog $XXX However, aerospace to million. our XXXX relative commercial at still QX grew

supply gross by compared good team period. growth expansion In quarter prior positive another evidenced QX, delivered another year and the chain as quarter revenue significant of the to managing margin our

MAX XXXX, the programs which including for MAX us, we growing business XXX strength and a defense is this the on the uncertainty MAX, for and The look the for guide wrong are reasons, not the more in Strong and to Spirit softness at on again the major in we on best AXXX. the supportive to will backlog in call. do will We and also MAX, and level, lighter middle, and of we much program fill part revenue a FAA rates, digits where as share. Airbus the for such believe continue by commercial revenue of outlook. at year, further to the aerospace surrounding a best to approach bit slowdown comforted that is updates to a the bill the programs other rate guidance is The on work due is this next gaining be earnings mid-single see Despite remainder be QX BA, continue continued bookings higher QX situation. in for the point the eventually our

me markets, to additional in our let revenue QX Beginning and space below our XXXX. million million, $XXX with some $XX.X provide color we and Now million military just on sector, at programs. experienced products compared of $XX.X

positive growth over was Apache demand XX% in Blackhawk which blades muted, military and in including saw While signs more helicopter program we our XX% also grew for strong and with revenues growing the year-over-year. products, than

also systems for submarines. saw in surface Falinx business weapon growth on naval strong as ships We as used the performed weapon Our system well well. closing other

represented First military revenue XXXX. space the XXXX and revenue back XX% of in quarter's XX% from the XX% period, Ducommun in in down and

more We will reflecting which expect with that we balance like. this aerospace, commercial continue, trend

first backlog backlog. million year-over-year, XX% of $XXX million, the ended also We of $XXX Ducommun's an a the increase representing of with total quarter

and growth, revenue quarter business on by increasing MAX, driven jets. commercial including along with first growth operations, to increases aircraft continued platforms, AXXX aerospace double-digit on rotary XX% platforms, year-over-year large regional rate commercial wing, million mainly XXX to XXX see the and our bill and platforms $XX aircraft Then

first a on do, fully MAX. impact XXX As Boeing, long-term did issues production our many trend FAA to will however, for in oversight aware, likely of increases Boeing you MAX. to will the FA not expect positive We are the production addressed. its results. quarter rate approved cap on the XXX January significant This of remain are have once that get announced This the very the increase limitation for rate

aerospace our within end million commercial over the aerospace backlog of first sequentially, million the was solid number increasing The given the $XX temporary at a the commercial weakness business $XXX markets. quarter, in

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

Thank you, Steve.

further for As information please description XX-Q and the earnings QX QX a of release call. today's on a see reminder, mentioned company's

aircraft of significant remain domestic first discussed, We of strong commercial which industry period rates. quarter reflected As encouraged the increase we in travel, our another single-aisle should Despite some aerospace for saw production Steve the by impacting a through work and performance. headwinds, higher demand our as we global results support industry continued in again long-term strength revenues. issues

encouraged especially with first that we user end In record our backlog the addition, drive like With we segment. and our we to quarter, continue achieved this, in good performance. space feel in all are military momentum XXXX we are by beginning the will

first the our of our of to million of and growth $X.X quarter million of turning revenue XXXX. revenue the $XX.X first military of the $XX.X platforms. end of of in highlighted in million posted Revenue total X.X% of by prior quarter for versus gross quarter all $XXX.X million year Now XXXX across versus $X.X XX.X% XX.X% in platforms aerospace and growth million for commercial $XXX.X first segments, space of million profit our our reflects increase or We period. results. quarter growth The user for X year-over-year was the or

On we items on relating inventory on cost have the margins were restructuring step-up improvements restructuring acquisitions, non-GAAP improvement recent our and XX.X% our our current We operations. in portfolio, engineered impact as fire basis, strategic continue certain in The versus from adjusted the the productivity XX% growing products in initial gross initiatives, by an prior gross provide period margins sales margin savings. charges and QX some driven our XXXX. amortization to pricing was Guaymas of gross and adjusted in QX to XXXX

significant on working avoid difficult buys with operating far investments, continue to have progress business. a our our thus Through and efforts, to make our including supply able through inventory proactive chain We we labor. and strategic any been impact environment

increased by $X.X our inventory to we position centers XXXX from our XXXX, of meet our million to quarter XXXX first the year-end delivery During performance commitments.

net our $XX contract of assets million. by grew also We liabilities contract

our to We for improve investments continue to opportunities flow. to our look capital unwind cash working

year the share during revenue revenue adjusted year. a reported per The the net $XX.X to this $X.XX revenue Ducommun's $X.X of higher net period. was compared or per first diluted per or share compared $X.X of or ago. $XX.X prior income year the for operating first Adjusted net of $X.XX reported of in basis, by compared in income or $X.XX $XX.X income $XX.X period quarter for an or reported income million million X.X% million the of $X.XX diluted to million million comparable diluted to X% of income company compared quarter On last million income X.X% of revenue adjusted share X.X% in operating million XXXX. QX company operating and of operating the the or or XXXX driven of to higher and net of income quarter The million income. net $X.X adjusted $X.X the net income quarter were income or

our Additionally, our reduce helped to interest rate hedge year-over-year interest expense.

results. Now let segment me our to turn

driven $X.X income Structural and higher revenue in our $X.X quarter was to rotorcraft revenue or Our addition platforms million or The year and across commercial quarter strength aerospace the Systems of segment AXXX markets XXX, $XX.X to of of revenue for XXX Systems for sales Black quarter. Structural including increase the commercial prior the in MAX million X.X% space by versus million revenue first XXXX Apache $XX.X programs. applications, operating the X.X% million last compared million posted in the year. and reflected Hawk $X.X of the year-over-year the and of military of higher within million selected $X.X

in reducing year-over-year. XXXX margin segment costs both be down XXXX. versus adjustments winds our other operating and charges can higher restructuring QX X.X% it attributed Monrovia This in operating was to as QX Excluding margins plant years, in production, in the XX.X%

versus mainly was this of to systems, launch platforms as revenue period. due first the F-XX. The XX.X% impact or including million for platforms, weapon system in and submarine million income or certain $XXX.X legacy X.X% Electronic quarter revenue million $XX and commercial first timing $XX the the by close-in military the in launch versus as growth $XXX.X and and of missile million prior the in aerospace period. platforms year such was the Electronic posted offset the operating in segment reduction Systems increase -- Systems prior naval Our across of such XXXX partially F-XX, year revenue quarter of programs the

and Excluding versus years, year-over-year portfolio, XXXX due segment product to in variable engineered operating adjustments other in our pricing XX.X% lines XX.X% strategic initiatives mix, increase product facilities. in to restructuring in well other savings was both QX restructuring our the as The from to of during in center were performance as QX products The charges was the including XXXX. margin transition program the favorable kick quarter. beginning by savings growth driven from restructuring

on Next, to an restructuring. update provide

commenced XXXX. and our and This that the to term. to performance being in and reminder taken Guaymas, discussed, in work our strategic the position as California low-cost of in we long to and a the previously the Mexico in and restructuring back short accelerate and a the in the stronger are shutdown achievement centers United company of Monrovia, performance actions other As These better facilities for existing initiative includes Arkansas, of Berryville, to States. operation transfer our goals

make with to an and with to obtain on our requisite these retention continue working their RTX diligently employee transitions are and excellent engagement customers, progress also We approvals. and Boeing

operations. recorded second at we plan we charges The to the in charges. were related majority end is quarter. wind benefits XXXX, complete recertification the process The severance and by facilities continue $X.X and as of down QX During these to both production ongoing, million the restructuring we X of

and these and the realization land at are $X actions annual in the year. We program. as beginning $XX building expect the of million Monrovia, completion incur the to and in this million in selling generate program, Arkansas. our our both to restructuring expenses an California complete restructuring through expect actions of we to Upon to from to We XXXX million anticipate million we savings $X additional see of $XX end

next liquidity capital Turning resources. to and

During QX the $XX.X partially QX liabilities, usage a improvement in to XXXX, million. of operating cash smaller inventories was activities, from The and assets. flow XXXX offset contract due we was higher used an million to $X.X contract compared increase which higher in improvement

end of on the the of first and of had the of liquidity million, our we As comprising available unutilized hand. portion cash revolver quarter, $XXX.X of

on allowing to put our was credit in reduce to us facility July XXXX the in our The credit the to in and opportune our at $X.X flexibility existing of in the hedge year-over-year Our cost XXXX. due going time debt place to million markets, rate us of revolver allowing balance size increase acquisition strategy. a improvement was an expense interest effect. spread, Interest compared million QX execute $X.X was despite the higher into in interest

XXXX In points period for so or an savings XXXX The starting to X-month that $XXX at million pegs of X-year effect put and significant XXXX, will and in in November of our interest resulted rate million savings term continue $X.X QX far in place basis hedge the a XXX we interest into went XXXX and debt. drive in interest beyond. January cost hedge

financial XXXX the conclude overview we would XXXX, anticipate and like had year. the a I to to balance strong that start for To say of QX a strong

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

the shareholders. delivering time cases, also XXXX In strong we story our highlights year is at future Okay. certainly the you XX,XXX the and company on the the strengthens our excellent the I year for the Thanks, country operation, bright and days, to Vision solid did with for of set with other listening. math open quarter, with The that continuously States. a XXXX. was a a United shareholders ahead over the Thank our company, XXXth achievement, long the out recently great been an What closing, record a great like very all for our earnings be a the and has a in in young door growth to continuous business QX and revenue goals for Suman. some we'll start year. path company in and through recognizing stakeholders. many

questions. up open for now Let's

question first Crawford the B. comes Mike Our . Instructions] of [Operator of Securities. from line Riley

buys, points you're which like some problem are trying main is the would for be avoid do else the some? you becoming trying of what what it pressure to strategic Steve, titanium, What inventory a

Yes. good big mean our I Look, of something we've the are platforms titanium in up in titanium. the other that widebody and it's last going really proactive years is with these one. been start situation very and couple over with as Russia, shape obviously obviously the a

was go important on The getting did an other business But drama we business. the and in for cards, there's even for there know I really buy just did strategic past. thing around obviously, ahead certain us less card things now it's certain on out important. the than more we

not for we're say long titanium in like I'd we're by going the good shape. I So I circuit plan X I day those on things continue doing reports We're to as probably day, things think it take mean, the those -- just to but aside, two, as on cards, are have.

the the Okay. for a are Excellent. maybe And the legacy up that growing mean F-XX call you And phasing be platforms of bit you way, eventually other transition? Hawk, in Black just are now. some little then is maybe you? given platform for a that that's out to What the out going get conversely, key -- did the although as decline. I that might One

you look, what's in say, the F-XX, the Louis. F-XX So on happening right? the one, is we about I'd Sure. all St. Sure. spot know know we

We going still I maintenance other to and are things. see, in good depot business think,

the program biggest that's of I one. Again, So are still talked these us. about That's kind an related. going missile okay timing things be the for to

even and couldn't be to the as business. mention that at in Apache. we're I to I side, come great shipping going the Sikorsky for of higher well. that the I the also XXXX. Seahawk we So plan discussion going there's just I mean, -- us, going it's we're know lots everything, and is happier move though we in We're mean higher back. we far business I starting the Blackhawk as -- with positive to as mean, to again on start see

programs. especially the rotary had volume other -- F-XX, great Mike, and backlog, terrific. card. still getting -- we're Despite good business So F-XX in the so some was we it's second feeling the the with very And our and

of the next-generation some the jammer. as including missile the standard With us SPY-X giving mirror also add, out, previously programs, the pointed I are if missile, may and and other strength, missile radar Steve

radar programs helping So are missile and

in offset legacy programs. the the decline

transition timing. a As

Okay.

Just one the one for related platform. final of me, kind rotary to

So -- of aircraft. and over last, a was some BLR you it's year Aerospace. some just to unique there I since goals one now to get try of their And know maybe the acquired there military there? Is structures progress into

We're working just now, it and Mike right spot on that. on on

is Our really really Blackhawk, Guard. bigger through the that's opportunity and with the National

we think lot that, think, We the on also will out take we're there's things of some engine right? news the So that I time, I have -- think, a more other But with excited. opportunity be for that. obviously about of these that things, switching

So that's -- stay tuned on that.

comes question Truist Securities. next Ciarmoli from of Michael Our the of line

Suman, or of guess, in the margins, Steve ES I segment. really strong results. a the kind Maybe two-part, just Nice

are any say, okay, to those It I a sounded well. both some there in of you the outside threw You just do we on got we know you of Electronic about the and forward? extrapolate But color commented record hear kind you pricing, inflationary that differently I'd environment? on and taking based, something Systems with pretty And guys think as how then value whole level. advantage going now. Anything this. often out just hate items? I pricing of that's these -- doing let's think of think I like margins was mix

Yes, really question. Mike, with the quarter. margins Electronic a We're this happy great Systems

Kind aftermarket and are pricing have strong, good. a of of that in seen as is are as portfolio. strategy. is As And And really been a at engineered things couple continues a beyond engineered products two as industry, factor. here. the Vision key the there And themes play of drop-through that, you you've is percentage noted, across pricing we one that in business, certainly, same. the has the other the revenue Kind our to seen of Systems the growing key Electronic the XXXX drivers grow of

growth quarter And strategy, the us active the So significant from amount this quarter performance has getting out taking with in produced programs has one programs and program, center our footprint that consolidation transitioned those and in to being Center started much our is also and the out now we've good businesses. variables had out of product And early to engineered right? a addition of of cost kicking are variable skeleton Performance second facility, the in of now a is SG&A business. that other crew only overhead without which in fully

sustainable driving of seeing mix, margins, two a is trend of And some So narrow the those current the I outside that's really margins think factors. impacts And the product mean, sustainable. minor are I forward. band general going is within we

said XX% annualized. Okay. run XX% you Any way know you to quantify what saw from the rate consolidation I savings. to

any way like some to sounds quantify it -- that? you So got

of the that. million current stages during quarter. over the early in It's $X Still

Yes.

mean, You're it's the good think we're XX%. I story. the a number, with spot on right? look, about I thrilled

into that's think obviously to that. driving of and that, about So board, pricing we're the move We together, excited we're things across right? going So Vision these XXXX, the we again, coming second year are value help. as

drag. conversely, structural systems, the And wind-down it like, mean, just the Got on And expect next And sound like with of quarters? that doesn't as X it overhead sounds I persist really guess kind dealing then for it of it. under-absorption out sounds like except to you're margin rate I normal guess, you anything just should issues transition. I

a being half quarter were on Monrovia which Yes. of sequential basis. I what a down, is Center, quarter almost Performance basis, revenues mean X/X our almost wound they year-over-year were on

And start X to facility The actively to going margins. down -- significant do the trend of really shut that it's Monrovia in the producing improve. on drag products expect not XXXX. not kick So in create here the that the XXXX of being in amount out we only but some improvement. in then wound quarters, imagine, linger is down, gradually and naturally that's of those going So we be right? X to of It's easy, the then XXXX, a next you in benefits as for when can not only closure but in, will facility complete

Monrovia just Yes. on everybody too. a been And for size around that's the okay? all And to it's time, not a area. long So for carrier, plant, close is a to small Angeles. aircraft very It's right? So of call it's Mike, in Los that

So good I'm there. here. line things the we're -- X-yard very at ahead

So in Monrovia

defense know here. in I don't Got want $XXX your Stephen, me, go numbers if really back in I or don't 'XX that defense take could Last the run it there was north 'XX. by words pretty put growth 'XX. Obviously, if but I thinking with it. mean But your earnest late by million losing up work some how come there, the get you're about not 'XX. this something there. But or for mouth I million trajectory. it, F-XX, I'm can some we should might about could But thinking I'm think in sharp are other and sure of apples-to-apples offloading. $XXX rate, I one I Again, to defense growth you're started some programs. way be revenue I in 'XX you think and

our but lot So that for it. there. talk next-generation RTX everything, of a UAVs cost numbers some It's you of had might they getting we're volume them right. and said, of here years the though so about GA. had company we good GA, you down well, Consider So other you're of SPY-X. went speak doing, at coming -- couple like outlook lower -- has know, that's same right? even a out that us we what the But right? But as consider lot no, -- take I is even because like seeing, and been as here, say, that we're looking some we orders, The what I'm of -- these mean market we've the a of like stuff. right? love They with guys It's we whole with thing a So we're to jammer repeat seeing -- Yes. F-XX and you like lot are it disruptive a really on

like as the we a the be these forever. to story, It's long new stuff we We overall, holds but and to that, think the we current a I you business, for and going as want I in delay well. of you but as I SPY-X, know want pretty that's what want the want. we're apples-to-apples, right? That's stuff out think, know, all And right? programs fleet that got to, and long, not it's think And the well. I as new life things got lot that's well in, that's So mean, doing. there's there, what

to more we as XXX. come XXXX, now but let's okay, think Vision that, So hold the well on get I it

Our Ken next from comes question the line of Markets. Capital Herbert of RBC

is any moving look in Steve, quarter, second quarter? step now that margin reason the they they rate Or margins is when the in should down the would this model first run we there -- forward? at something gross don't that we gross

the quarter. take first that, first gross we're margins Ken. with in with stab I'll a And the happy really

side, that driven really drivers. electronics the the and I were said, by on savings, Engineered key Products, As restructuring

If And outside overall product These structured the they it our are within Monrovia XX.X% to fairly we band I gross offset benefits at it's the marginal adjusted narrow at I mean, last company, And gross These look year. you had sustainable. margin in in look of the you business. now XX%. a were quarter. headwinds were was if in from during margins would the by QX, mix partially say, of

the we've really GAAP if going good forward I difference, into feel thing. really -- take about a more narrow So a been of you is to the at and adjustments, the the margins good these of would say which some think within we I And gross year-over-year, range. adjustments it's big margin, it's look with but especially able

year. us think on can the production you maybe or for the sounds set And on to are Can quarterly anticipated Great. on comment expected, the we or but sequentially sort about of in back down year you an step monthly maybe MAX on the to third from cadence a maybe because program quarter, either your like uptick and the how level there's that you should where the of of it year MAX? the a sort rate I this first guess, the deliveries second

Yes.

question. So Ken, yes, good

right, fairly after of this quarter that. there we until happened, because things had came happening, look, first obviously, terrible a a still lot So was of then good things January, lots thing in

April good. pretty was light. QX bit a was So

Because get spirit, quarter. major we're anticipate coming is the their and bit for now, thinking based there, So on thing But for The We'll a Boeing in feeding both figure to it's too, we're going it. action shareholders third all a which progress. mid-XXs, when to OEM, we maybe well as little to mid-XXs BCA. lighter us. remember, our we lower we're out nice back. have on right, customer as see it Right right? for of the is, second the So

I MAX, real can't If working well with were right announcement the AXXX. hard to and now. the working the gaining okay, on -- share We're as making want on go don't you as

on types things. So we're those working of

going lighter the but get to but nice nothing GS. problems, So be own we're Certainly, back business. our April, think, a little as with as I in we're we're We bounce it's transparent, which have maybe mid-XXs. want we there. its little but XXX, shallower, a been to concerned. has happy seeing I Ken, And a know well we're

opportunity on timing Great. And could around the you the Steve, AXXX even the AXXX of gains the be what on And portfolio? narrowbody where see Airbus would the some share take finally, just with the share? to or

looking probably Yes. months. We XX -- within we're again,

the think -- discontinue the see we could we AXXX. now. right months, And on going things how working to XX within are or right? take something we're Because these AXXX, We'll things again time. these something -- goes, it grow. continue might we to So on have But

good things you and a program us As ahead that's there. know, major for

the Jason Our of comes line next [Operator Instructions] Citi. question from Gursky of

about ask get because I Vision got I a Vision particular, growth, you've inorganic of Steve, done. to component, you'd bit little there more like some think wanted about XXXX. to And the M&A in the

a went out company recently buying a question. money question that X-part is We've got the more to that type be I product heavily go some companies. going access it's maybe that in claims involved of to and proprietary this up a bit yes, So -- guess public that's got now

just environment days what for assets. curious looks I'm these competitive the kind So of like

work your want maybe that's a, the get environment scale pipeline what's to like? off. to looking be the have work, customers like? of you dynamic And like Boeing because and seems the of your pipeline, guess, a What's guys go big competitive about and would kind on curious taking of I your of all just some might for on take willing Spirit going bit buys then the to talk Spirit, that And of that somewhere. there of kind look size guys that in just strategy. with all little one what has context if the of So M&A Airbus in the things work on with I also Airbus the chew got that And appetite you kind

be to you. with Good

of XXXX. Vision On right? the that have $XX modest several for on us. on years bit We a it's and we got ahead So first, only XXXX just piece, because we're the placeholder acquisition our a million, obviously,

in really now, a happy So move modest. we've -- with what we feel bit in forward we're been we're again, good we doing about right as And acquisitions. it's that. But time,

thing been think the for real a I it's shareholders company. for and great

we're more acquisitions that at can they business We're product where but current to where so look build on can, the looking that help portfolio. -- engineered we some our And side. again, do to maybe committed

it's and shareholders. a winning smart that's our think formula I for

again I is think low. XX

where we going something to more we're some can consolidation, as going But be we're think to well. that bolt-ons. do if can find I there again, do

sit. So couple of next I sort that's think for years, of we where the

you we into ship As for far Airbus, lets know just directly as Spirit, Tulos for AXXX.

Spirit. I right do the much Spirit them world, really in really which more, anything We don't AXXX not just So think, now. we're working is we're directly. with for Airbus, for

open I So that I upside we notes on it's But morning the it. read the we'd night, to for have the to there. as an the mean, could some going situations we're -- I difficult. of be this in us. think it's be last I mean capacity Europe be

out. first everything direct. We tier. report business We for we it, to have right think but we do Airbus, nothing could we the again, with And do help a Telus certainly is on now all

Okay. Great.

So think you cadence think kind on of the going might that like the $XX placeholder like, do towards chasing? is pricing million time the potential competitive what 'XX does -- of Is achievable. back-end pipeline or be curious, of assets timing environment this kinds you be? near the going that like more just looks of might of frame, those to acquisitions though, just What you weighted what I'm be kind pretty today? the And the to term, look XXXX? and be looks through

Suman okay? in, jump in always me So few things, a Let the market. say we're

say So I'll right? at things. all just So that, looking we're

we're cadences, or by We last have, from one, comes to do If that a this so April team down to everybody. something so here we Suman year. our least last I -- think, an M&A. year, back on do up led not excellent this COVID going year, This for we'd slowed obviously just did May, again, and two like But if in -- BLR at May.

bit now. little of a time had we've So

want the But know what we I for I in it's of So and hit and we're tell that a we've them, what had a every good mean, after, crowded will I the but we've really up a always competitive. companies mean We've market. things you I we've one, got follow you there. lobby. It's many and done, of not gone lot success rate. the single it's for

we're building part I big business. of -- that big came So for the a excited about me XXXX. thing It's in when a

let to Suman, do on And you anything say want else I'll so

recently late XX pickup assets at has there's flow QX QX, and The we've years. A has company come around looking deal dramatically we're been public a mean seeing market. for more you in been referenced competitive into over to looking for actually environment, and businesses. assets I necessarily went say changed. I would in I coming Yes. similar say wouldn't that been

we've the come across them in past. So suddenly

So I dynamic now. don't that changing see

our businesses to that So think like continue we we aggressive we really incremental be where of drive lot can for shareholders. we really value will a and for

and we years, past to X And win drive our have additional continue the can, demonstrated a those which the at for assets in we price can competitive despite shareholders. So with still we as ROI will at benefit aggressive we environment, opportunities. be

to about M&A work There's good predict. doing feel as predict difficult timing, ongoing active to Steve difficult that. it's timing several always on to we able on said, being And but So continue opportunities, is

chime to Jason, very We're excited here. And about growth. organic just also in

else, hopefully, too, we some feel at the delivering. very want our I in mean the MAX by get, year. we operation, through at future, point the a way and drop XX, to everything the of Okay, really they're find about end if will its good current

I'm for turn to Stephen time. I no back remarks. to now at this closing like Oswald . questions it further showing would

you and super and year us. what we for of company to for March Thank encouraged every want happier very Obviously, for do with us with and couldn't thanks today. thank I are up, out other in we we're our everybody, the have -- very our here. things. approach to our to And relentless day we working as a people think, hard to come the be for team, joining much, shareholders all my That's Okay. I stakeholders and our QX. all we go come a, with involved for

for a safe great and you. us. So again, Have Thank joining day. thanks

you your does the This today's conclude for participation in conference. program. Thank

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