Q2 2020 Ducommun Inc Earnings Call

At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question trying to section you will be depressed star one on your telephone. Please be advised that you. These conference is being recorded.

Require any forgets extent besides towards your though I would feel like they had the conference over to your body later today Mr. Chris many thank you. Please go ahead.

Thank you and welcome to do Commins, 2022nd quarter Conference call with me today are Steve Oswald Chairman, President and CEO, Chris Wampler, Vice President interim Chief Financial Officer, and Treasurer controller, and Chief Accounting Officer.

I'm going to discuss certain limitations any forward looking statements regarding future events projections or performance.

We make may make during the prepared remarks or the question answer session that follows certain statements today that are not historical facts, including any statements as to future market conditions results of operations and financial projections or forward looking statements under the federal Private Securities Litigation Reform Act 1995, and are therefore perspective. These four.

I guess things are subject to risks uncertainties and other factors, which could cause actual results to differ materially from the future results expressed or implied by such forward looking statements. Although we believe that the expectations reflected in our forward looking statements are reasonable we can give no assurance as such expectations will prove to be correct.

In addition estimates of future operating results are based on the company's current business, which is subject to change does it get a risk they seem to common include among others. The cyclicality of our end use markets. The impact of covert 19 on her operations our customers the level of U.S. government defense spending timing of orders from our customers legal and regulatory risk management changes.

The cost of expansions and acquisitions and competition.

These risks and others are describing our annual report on form 10-K filed with the FCC and our forward looking statements are subject to those risks statements made during this call are all.

The time, maybe than we did not intend to update any statements made in this presentation, except if and as required by regulatory authorities.

This call. This includes non-GAAP financial measures. Please refer to our filings with the FCC for a reconciliation of the GAAP to non-GAAP measures referenced on this call.

We thought or 2022nd quarter form 10-Q, with the FCC today wherever the FCC is having some technical difficulties. So you may not be able to currently do it on their website. Please continue to check as they are working on it I would now like to turn the call over to Mr., Steve Austenfeld free view of the operating results Steve.

Well, thank you, Chris and thanks, everyone for joining us today for our second quarter Conference call.

I was hoping you on your families are healthy and continuing to get through this pandemic as best as possible.

Today as usual I will give an update in the current situation at the company after which Chris will review our financials in detail.

The company rates focused first and foremost sort of health insert safety of our employees.

Team has done an excellent job and despite facilities around the country and quite a few on southern California.

The impact as a mostly zero the amount of positive cases across the.

Company less than 25.

We also continue to remain diligent on communication.

And I tried best practices are followed and all facilities to sustain this performance.

The common second quarter results were strong in light of the unprecedented challenges due to the pandemic.

And the commercial aerospace markets.

As mentioned in our April call. The reasons for the strength is that says 47, hey, the team has been improving all of our operations.

Development rationalizing the product portfolio.

Driving new technologies.

Obviously on providing high value to customers along with pricing.

Developing an effective cost structure with a flat organization.

And making three strategic acquisitions.

This is not particularly evident and the revenue and order progress over the last few quarters sort of commas defense business.

Along with the overall margin performance for the company.

Company second quarter revenue was down 18.4% year over year, all due to the commercial aerospace markets and aligned with our communication and expectations.

The commas defense business, however showed great strength being up 23% versus prior year.

So not ever wanted to show negative growth.

Revenue numbers impressive from not only the virus impact, but also overcoming $30 million 737, Max headwind in the quarter.

College Defense business all the other half continues to show excellent progress with big opportunities ahead.

The majority of the gain in defense included increases from our new weapons systems business Noble's worldwide, along with the F 35 Patriot missile.

CH 50, Threek heavy lift.

The 22 Osprey.

F 15, F 16, and other industry programs.

No the growth there this year, which I mentioned during our last call well do comments new efforts with you a these.

I'm happy today, we announced at this time, our first major customer in this new area is general Atomics Aeronautical systems.

We are thrilled to be selected as the strategic supplier by GE.

Providing critical components on the predator series remotely piloted aircraft.

And look forward to many productive years together.

Got it also good changes to leverage that preferred supplier agreement signed last July with a former Raytheon missile systems business now known as Raytheon missile and defense.

The toll missile case, a new structures program with a with RMF mentioned in the previous call is now at full production at all Monrovia, California performance Center.

We have to all the wins this year for the toll missile and other ducommun performance centers in the Midwest.

And in total this one program will generate over $30 million of revenue and 2021.

These types of ones have allowed us to build a compelling value story.

And now track record.

Utilize the comments full portfolio of products and services.

As you move further to drive sales gains at Raytheon technologies and other defense Oems.

The other real bright spot for the quarter was ending Q2 with a backlog of $505 million for the defense business.

Which is an all time record for to comment.

Total backlog was 831 million for the company.

Sequentially down from Q1, but still is a great number based on the environment.

That's business grew year over year by 30% bolstered by strong orders across numerous key defense platforms.

Which included the told missile previously discussed G., a weapon systems for ground vehicles F 18, Patriot F 35 ages and others and as this is part of ducommun that continues to deliver.

Obviously, the strike helped offset commercial aerospace border pressure.

I think Q1 cost actions have continued with a pandemic and the Q2 737 Max schedule changes to ensure we have adjusted our cost.

You can certainly see the effectiveness of our actions in both the positive gross profit expansion year over year and a solid operating income percentage.

[noise] team is certainly done a great job moving quickly.

Imagine this difficult environment with no material pandemic related costs incurred.

In regard to the Q3 outlook are significant backlog in defense.

Many growth programs mentioned earlier will provide the same strong revenue.

However, we see the revenue profile for Q3, the same as Q2 being 16% to 20% down year over year.

Our comments on the April Thirtyth call well for better sequential revenue in Q3, but this was base at the time of 216 shipments for spirit Aerosystems, a 2020 for the 737.

Max.

As we know this change later in the quarter from 216 to 125 and now 72.

Therefore this was the main reason we had to adjust the outlook.

A real bright spot, though is that we see our operating income margins now between seven and 8% in the quarter up 100 basis points more from our comments in April.

As you look to Q4, we estimate that revenue will again be led by defense, but the business overall will be down year over year by 14% to 18% again due to commercial aerospace and operating margins well again being the same range as Q3 at 7% to 8%.

Have you seen through the first half of the year the unprecedented challenges with the pandemic along with $55 million of headwind for the Max.

Created an historic challenge.

For the common in our team.

The business those shown great strength due to the many strategic initiatives since 2017.

And that's clearly made a material difference for the company our customers.

The shareholder.

Comment also has a great long term future.

Despite the current challenges we look forward to return to revenue growth for the full year and 2021.

Leveraging our many defense wins and to start defense backlog, along with benefiting from share gain at Airbus.

And also a modest level of recovery for some of our commercial OEM customers.

Now, let me provide some additional colorado market products and programs.

Beginning with a military and space sector, we posted second quarter revenue of 94.6 million.

Once again, representing strong growth versus 2019 up 23%.

Drove revenues across all across a broad variety of defense platforms.

Hi, there every aspect of our product portfolio.

As mentioned earlier, we saw increases in demand for our military fixed wing aircraft programs with particularly strong shipments for the F. 35 F 15 in F 16, as well as top line expansion for helicopter such as the CH 50, Threek K. The V. 22. In addition, the Patriot missile system Rose again this quarter.

We see significant growth across many military and space applications going forward.

We also had significant growth on a number of ground vehicle programs such as the clouded leopard.

The second quarter military and space revenue represented 64% of Ducommuns revenue in the period.

We also tend to be very well positioned for further growth across our defense platforms over the next several quarters and all sectors.

And again as of the second quarter with an all time record high backlog.

This was up unimpressive, 30% year over year, representing over 60% of Ducommuns backlog at the end of Q2.

Within our commercial aerospace operations second quarter revenue declined year over year to 40.4 million as expected driven by build rate decline on the 737, Max as well as many other programs impacted by the Coven 19 pandemic.

The common as stated earlier has effectively adjusted cost and manage the downturn is well positioned what <unk> lots rates stabilize and increase over the long term.

The covs expansion with Airbus since 2017 is clearly going to be a benefit as we move forward and puts important balancing our portfolio for the future.

The backlog within our commercial aerospace sector stands at roughly 307 billion at the end of the second quarter.

With the majority of the decline attributed to the 737 Max program.

With that I Love, Chris review, our financial results.

Chris.

Thank you, Steve and good afternoon, everyone.

As a reminder.

When it shows up on the FCC website, you can see the company's filing along with the Q2 earnings release that is already out there for for the description of information mentioned on todays call as Steve discussed we were pleased with our overall second quarter results, particularly during a global pandemic that is severely impacted commercial aircraft demand we were.

Im confident that our ability to flex production at our performance centers, while leveraging ongoing strong demand within the military and defense sector will service well going forward.

Now I'll move to the details of our overall results.

[noise] review of the second quarter 2020 revenue for the second quarter of 2020 was $147.3 million versus 180.5 million in the second quarter of 2019.

The performance reflected 17.4 million of higher sales within the military and space sector offset by 51.6 million of lower revenue from our commercial aerospace customers.

As Steve discussed nearly all of our commercial platforms have been negatively impacted by lower demand due to covert 19.

Ducommuns overall backlog at the end of the second quarter was approximately 831 million.

Growth in the military and space sector continues to drive a sustained solid base of business. As a reminder, we defined backlog as a potential revenue based on customer purchase orders and long term agreements with from fixed prices and expected delivery dates of 24 months or less.

We posted strong gross margins for the quarter as gross margins rose to 22.2% from 21.1% in the prior years comparable period.

Increase year over year was due to favorable product mix and lower compensation and benefit costs.

Gross profit fell to $32.7 million from 38.1 million last year due to the low lower commercial aerospace revenue, we continue to focus on execution and sustaining margins and where possible expanding margins, even as overall manufacturing volumes remain under pressure.

As DNA was $22 million in the quarter versus 24.5 million last year as the prior year included 1.7 million of onetime severance expense and execution of current year cost control initiatives.

The company reported operating income for the second quarter of 10 million or 6.8% of revenue and adjusted operating income of 10.7 million or 7.3%.

This compares to an adjusted operating income of 13.6 million or 7.5% of revenue in the prior year period.

The year over year decline was due to lower revenue, partially offset by higher gross margin and lower SGN a expense.

Interest expense was 3.7 million in the second quarter of 2020 versus 4.4 million in the prior year period, reflecting the favorable impact from lower interest rates, which more than offset higher debt levels.

The increased debt outstanding was primarily due to funding the company's acquisition of Noble's in October 2019, along with drawing down $50 million on our revolver, which remained as cash on hand at the end of the second quarter 2020.

The company reported net income for the second quarter of 5.1 million or 43 cents per diluted share and an adjusted net income of $5.6 million or 48 cents per diluted share. This compares to an adjusted net income of 7.8 million or 66 cents per diluted share for the second quarter of 2019.

The year over year decrease was primarily due to lower revenue as noted earlier.

Adjusted EBITDA for the second quarter of 2020 was 20.3 million or 13.8% of revenue compared to 22.4 million or 12.4% of revenue for the comparable period in 2019.

Now, let me turn to our segment results.

Our electronic systems segment posted revenue of 92 million in the second quarter of 2020 versus 89.3 million in the prior year period.

These results reflect a 7.7 million increase in sales to the Companys military and space customers, partially offset by 6 million of lower revenue across the commercial aerospace platforms.

Electronic systems posted operating income for the second quarter of 10.4 million or 11.4% of revenue versus $9.9 million or 11.1% of revenue in the prior year period.

Performance reflected lower compensation and benefit costs compared to 2019, the both manufacturing volumes and product mix negatively impacted margins sequentially versus the first quarter of 2020.

Our structural systems segment posted revenue of 55.4 million in the second quarter of 2020 versus 91.2 million last year. The year over year decrease was due to 45.5 million of lower sales across our commercial aerospace applications, reflecting current demand dynamics as Steve discussed partially offset by nine.

Point $7 million of higher revenue within the company's military and space markets.

Structural systems posted operating income for the quarter of 6.2 million or 11.2% of revenue and adjusted operating income of 6.8 million or 12.4% of revenue. This compares to an adjusted operating income of 11.8 million or 12.9% of revenue last year.

The year over year operating margin decline reflected unfavorable manufacturing volumes, partially offset by favorable product mix.

As a finished my update on structural systems I want to briefly mentioned an incident that occurred subsequent to the close of our second quarter related to our Glamis, Mexico performance Center.

This manufacturing facility as a part of our structural system segment.

Our second fiscal quarter ended June 27th 2020 on June 29, 2020, a fire severely damaged the facility, which is comprised of two buildings totaling approximately 62000 square feet. Thankfully there were no injuries, however, inventory and property and equipment in this lease facility were damaged.

This has historically been a site where we perform secondary operations for a number of our performance centers. In addition, this location has supported our versus the core product line, we have insurance coverage for the losses and expect the majority if not all of the items will be covered under the policy. We're currently working with our insurance carrier to assess the losses and work through the claims.

Process in the near term, we will utilize our contingency plan that incorporate significant redundant manufacturing capabilities, which will allow us to absorb the production that was planned for the Glamis performance center in several of our other performance centers, we do not expect a material change to the production levels and we will continue to focus on meeting our customers' needs.

For these products.

For the remainder of 2020, the adjusted results, we will be reporting will exclude our restructure activities and the impact related to the Glamis fire.

Corporate general and administrative expense.

Cdna expense for the second quarter of 2020 was 6.6 million or 4.5% of revenue versus $8.1 million or 4.5% of revenue in 2019.

This reflects onetime severance charges of 1.7 million in the second quarter fiscal 2019.

Turning to liquidity and capital resources, we have available liquidity of $120 million comprised of 70 million of cash on hand, plus the remaining $50 million on our revolver as at the end of second quarter 2020.

We generated 8.6 million of cash from operations during the second quarter of 2020 compared to $9.7 million during the prior year period. This perfect.

Once reflected effective working capital management, partially offset by lower net income.

We continue to be in compliance with our debt covenants in our credit facilities do not mature until 2024 in 2025.

As a reminder, our leverage ratio covenant ceiling is 4.75, our leverage ratio was 3.0 at the end of the second quarter of 2020 cash generation and cost management within our efficient operating structure remains our priority and we expect to generate positive free cash flow for the remainder of 2020.

In terms of capital expenditures, we spent 1.1 million during the second quarter of 2020, and anticipate spending between 12 million and $14 million in 2020.

This aligns with our cash conservation initiatives and should result in the capital spending decrease of more than 20% versus 2019.

These estimates do not reflect the incremental spending required to replace the manufacturing capabilities damaged in the firing Glamis. We expect the majority if not all of the spending to be funded from insurance recoveries.

Employee safety is always top of mind, even as we continue to focus on cost management flexing, our performance center production schedules and optimizing working capital as we move forward. Our Q2 performance was the result of a strong resilient effort by all the ducommun employees remain focused on execution and satisfying the customers demands during this.

Very challenging period.

Ill now turn it back over to Steve for his closing remarks, Steve Hey, Chris. Thank you.

Well certainly first I hope we have provided some important information today as you work through 2020.

Again, I thought the second quarter was strong despite the challenges and believe we have a lot of runway ahead in the long term.

I'd also add that we do have the right footprint cost structure discipline.

And operational leadership and experience to continue performing in the face of the current crisis.

I also wanted to thank our customers shareholders and all of our business partners. There continued support as you work through these difficult times together.

We've also given out now $1 million so the local area charities, where we operate.

Help our neighbors and communities.

In closing I would like to again this quarter take this time.

Tells the common employees that I'm proud of them.

And all other efforts dealing with the many challenges from the pandemic.

Our team members show up at our operations everyday.

They'll stressful.

Get the job done for our customers and nation.

With that let's turn it over some color. Thank you.

Thanks.

Okay bigger can we please the first call. Please question.

As a reminder to ask a question you them need spread far one on your telephone.

Your first question comes from the line is Ken Herbert from Canaccord. Your line is now open.

Hi, good afternoon, Steven Chris.

Hi, Ken Ken.

So pretty good hope you guys are well.

Thank you.

Hey.

Steve I just wanted to first ask sequentially.

Margins in the structural system segment showed a really nice increase was that was that make sure predominantly or was there anything else.

Nothing else going on obviously with the down volume.

Yes ill take out was yes, so on structures Ken It was a couple of things I mean mix was a big part of the play for sure Q1.

You look sequentially Q1 was sort of a perfect storm in terms of we came into Q1.

Where we had demand that during that quarter started to get pushed out with Boeing and spirit and the pandemic was sort of hitting right. There at the end as well. So we had a lot of ripple effect on on the cost and being able to absorb as cleanly as we'd like certainly in Q1, along with the mix that put us in a tough spot for for the number in Q1, and that's why that margin.

For Q1 was lower than it had been for several quarters and then in Q2 mix changed a little bit that certainly helped us but also some of the initiatives and sort of the realignment and flexing that was taking place during Q1 at the end of Q1 and as we got into Q2 help clear the path for a better performance.

Yes, we're obviously.

Day to day week to week, managing costs and driving productivity and we have I think we have a.

The way, we haven't set up with performance as we're able to react quickly and move cost out.

As appropriate.

Okay, No that's great and as I look at the revised outlook for the second half of the year I think coming out of the first quarter youre sort of talking about topline down 10% to now which.

Mid to high teens between the two quarters is that exclusively the Max or is there anything else. That's that's maybe come out of the schedule or maybe help offset the Max relative to first quarter. Yes. So look we talk to you on April thirtyth and being or in the situation I fell as appropriate.

We don't really really didnt give out in the past via a little more granular.

And as we said we were going to be 16 to 20 down in Q2, we came in at 84, which is pretty much where we were on April Thirtyth can we still had to 16 and the book for Spirit and you know as you know by the middle of June that changed okay. So.

You know we looked at it we're really again got to be 16 to 20 down. That's you know the best effort. We can give right now and then we're getting a little better in Q4 14 18.

No I appreciate the guidance, it's a it's very helpful. Steve and just one one final question have you adjusted your schedules yet to reflect the short of downward revisions from Boeing on the 77, maybe you could just talking about sort of what level of your shipping at at that program works, how much of a headwind that could be for you over the next couple of.

Quarters, Yes, that's one of the comp.

The big context that feel you know look we've we've we've had a great Ron.

Since I showed up in 2017 and through 2019 on the Max and the 737 LNG and.

Thats all that so that was all terrific obviously.

Lots of things have changed as you know.

We are managing at both with Boeing Spirit, we really have adjusted.

Our order books in our production down so when we give you these.

This information for the second half of the are we feel good about it.

Excellent really nice quarter. Thanks, a lot I can't I appreciate Ken.

Next question comes from the line of Michael Karmali from Suntrust. Your line is now open.

Hey, good evening, gentlemen, I'll Echo Ken's comments nice quarter here, given the current operating environment.

Thank you. Thank you should just just to go back to maybe maybe stay on the margins a little bit obviously, the good sequential improvement in structural systems, but what's been the biggest if you look at that original forecast April Thirtyth, you had that 5.5% to 6%.

Ladies that second half is that just.

More cost take out is has anything changed with mix regarding the defense profile.

Anything else that that's changing from a margin standpoint are you guys just taken out more cost are taking out cost more aggressively.

It's a combination so the cost take out that we did you know as we entered Q2 helped him we got to sort of see what that meant to US and then there have been additional activities because it is everybody's talking about its been a very dynamic scenario and so that's been that has been certainly as a part of it but also it's just seeing.

The sustainment of are seeing how structures react to that and sort of where they can come back to along with this additional defense business and what that will do for us. So.

I think it's a combination and it's it's what will be well keep working it as we move through the second half this year, Yeah, Mike Let me add one thing I think the other story here is that.

No other companies had to do with they've had to do but you know we did a major restructuring back in November 2017, and and as you go forward to go forward through time, they really have a flatter organization, especially a corporate.

And.

I think we have an effective organization.

Spirits. So that's the other thing Thats happening this year is that.

It's paid off that we've we really haven't had a lot of costs back since that November 2017 restructuring.

Got it and you've mentioned value based pricing a couple times on this call already anything.

Especially as rates have gone down have you been able to you know I know on the way up with rate all we kept here in about was partnering for success.

Pressure on rates you know the higher volumes anything you can get back on pricing or have you in the commercial side and it sounds like your debt.

Side.

I think I'm, not I'm not going to be.

I want to specifics, but if you look at our strategy and where we've been account, where we're going and where we're heavily into titanium we're heavily into other types of.

Processes, where the sought after a little less competition and we're really drive that and quite frankly as I've mentioned in my remarks, I mean, we've gotten a lot better last few years on on operation. So our customers are very happy with us.

Got it and then just on the the backlog.

Specifically in the commercial aerospace side is that.

You guys actually seen order cancellations from customers that you guys. Just how you calculate the backlog based on production rates or what was really drives in the backlog erosion, there just isn't our customer adjustments or cancellation.

Yeah, I mean, so we do have so couple of questions I think embedded there Mike but the first thing is it's the actual.

Purchase orders that we have in their into demand that we have in there from the customers. There's constant conversation with them what have we seen this quarter, that's a little different than many other quarters more conversation about pushing some things out whether it was the rate changes that Steve alluded to or others. So I think not not cancellations in terms of.

Anything of any money any magnitude, but more some push outs that have happened, but by and large.

It's it's a tough market and we're just we're dealing with it and Michael I'd just add out here that the whole I think it goes hole and some are Mark's earlier about in the spirit of cancellations I mean, like I said with titanium and lot of things that we do is that.

We are a great market position there. So we do have make some adjustments were fairly conservative with our backlog I think thats a good thing, but the other I think story here is to break half a billion and in defense backlog for the first time big deal.

Yes, no no agree and maybe I'll just ask one more.

Since you brought up that.

The wind with general Atomics.

You called out predator can we assume this might be.

Maybe ill use this term loosely but typically iceberg do you have more options within the general Atomics portfolio I know theyre working on some some lower cost grown technology now, but you think you can further penetrate them. After after this win here, yes, we absolutely do it I know on April Thirtyth, Mike You asked me, who the who the cuts.

And our wasn't I couldn't tell you so at least I guess general novices time, Okay. Yes.

All right so im delivering for you anyway now but.

Where.

Your first of all we're thrilled I mean.

As a leader.

You know and we're building some great relationship and and some great things there and what we think we think we got we've got lots to go there and we think they're terrific customer b with.

Very good I'll jump back in the queue. Thanks, guys.

Thanks Bye.

Next question comes from the line of Mike Crawford from B. Riley. Your line is now.

Thank you hey on that on the gross margins.

All time record I was back on the highest I can see was 21.7% back in the second quarter 2010.

Yeah, I believe back in the a little earlier back in a decade, we would have popped one a little bigger but this is certainly since the large acquisition. In 2011. This is a high watermark for lot of things clicking into and Mike from remarks I made this I just want everyone on the foreigner says. This this doesn't have by accident or just you know all boats.

Were up in the defense industry I mean, we've we've put a lot of time in the last couple of years in my remarks earlier to really put us in the physician, where we're delivering these margins despite.

Some real tough news on the commercial Aero side.

Okay. That's.

Great. Thank you for that just regarding not by accident.

The increase in working capital your inventories up it was that not by accident is not to plan for some of these new military programs or is that more of a function.

Structural slow down where you're gearing up for a certain number of units on the 737, and where do you want to see these accounts going forward.

Yeah no.

The answer there Mike is a little bit of both yes. So we have certainly some places where we are on new programs or we're building up to some extent, but definitely as we went through that turbulent Q1 into Q2 period. There was there was expectation and certainly we have a lot of long lead time material that goes.

Into being able to build some of the complex components and.

Turning that off correlated to the demand change.

Can have some leakage there as well so where do we want to go me, we'd like to we certainly would like to.

As Steve alluded to we're not showing terrific growth here in the second half the year. So we would like to be able to manage the inventory appropriately as we go through the year.

Okay. Thanks, and then final question just relates to Glamis filed that might affect.

The core deliveries to Airbus and.

In the status of versus the core.

Manufacturing in general.

Yes so.

Circle back on climate again, what let's break it into two pieces. There's a lot of secondary operations that we've done down there for years since we've had a presence in climate and for those we have.

We have capabilities back in the plant were the primary operations were coming from so literally it's just redeploying where we're going to finished that product out the part that relates diverse at core there has been some investment that's been done there and in that case, we are retooling at one of our other facilities here in southern California.

And getting back online is quickly as we can.

And in doing that we don't view more we do not view there being a significant change in being able to hit what we need to do to deliver for.

Moreover on it.

And Mike Let me just chime in here. It look we're as your though and I know you follow at first quarter look what we're we're very upbeat about it.

Well as Hal mentioned is that.

The GM for the business as well as.

Certain members of his team are actually they're based out of Gardena, California. So.

That was the other thing where we do have we certainly are disappointed and first fled knowing got hurt but.

You were able to move pretty quick with the Glamis production and.

You know, we're going to work out of this thing fine.

Alright, Thank you very much thanks, Mike Thanks, Mike Schmidt.

Once again to ask a question you've only depressed sarwan on your telephone can withdraw your question press about heskey.

And you have they follow up question from Ken Herbert from Canaccord. Your line is now.

Yes, Hi, I'd just add a couple of my quick follow up questions. The first on the on Noble's can you remind us again, maybe what the contribution to growth was in the quarter from Noble's and how does that acquisition been going it seems like theres been some opportunity for them to maybe take some share or grow a little faster than you would just.

Paid it can you just maybe comment on that specifically a little bit.

Yes, Ken this is Chris I'll address it so with the acquisition in the size the acquisition similar to LDS and similar to CTP small enough. We didnt put in a lot of information related to their their size of the financial statement. So as those three tuck ins have come in and as noble has come in certainly that that's a that's.

Nice helped to our structure story as we move forward.

But there's no specific dollar amount you know sort of thrown in there having said that the acquisitions gone very smoothly and we have been very happy with not only the them continuing on with the way that they were pre pre acquisition, but also them finding ways to grow and Steve alluded to the cloud leopard, but there is.

Some other ways there too that theyre going to continue to find ways to grow that we believe that they will grow even quicker than what we bought at that time acquisition. Yeah. I can let me just just chime in as well so look.

Mobiles legacy is been on aircraft, Okay and marine.

Now, we're moving into ground vehicles.

And obviously the cloud of Lebron and some other things so so it's going very well.

This ammunition shoe business.

Is.

Something that weve will rather than market leader, so we're driving it and we're absolutely.

I think they're going to have great things in 2021 as well so it's all thumbs up for renewables.

That's that's good to hear and Steve since you've been there you've done roughly.

From an acquisition a year I'm just curious if you can comment on sort of what you're seeing now in terms of activity and opportunities and and maybe how the pipeline looks and maybe the period of time until things maybe start to normalize a little bit sure. Hence I guess so so also there was a pipeline. Okay. So we are active I think.

One of the best things, we did what was bringing in some on mortgagee. Some on leads the BD Department Ed.

A lot of experience ex UGC and work with me KKR.

As well and so I think I think we got the right process. We got the right people pipeline is okay. I mean, certainly there we were looking at things.

As far as our cadence.

No and I think that.

We're we want to be you know.

We want to be aggressive we want to lead Ed, but we don't want a rush I mean, and I think if you look into less our last three deals are all worked out really well for shareholders and for the company and for for just in general So so our cadences.

If we fly such that we like we go after we have a pretty pretty successful record for being able to close.

Over the last couple of years, so more to come of that Ken it's important to us.

No I know, it's been obviously big part of the success over the last few years, yes, yes.

Yeah, and if I could just one final question, Steve there's been some suppliers there that have been talking about the new.

I guess whats are calling the premier bidder program from Boeing and I'm, just curious I know, obviously, it's not a sort of a complete PFS type replacement, but I'm curious if thats something you you've had discussions on if maybe you have signed up for that or how you're viewing that and and maybe some of the opportunities to invest a little more for maybe an uptick on some volume.

Yes, just we haven't any conversations with Boeing yet on that.

Okay Perfect Alright, you guys. Thank you.

Okay, and that's very much.

At this time there are no further questions in the queue. So I'll turn the call back to Mr. AASLD for any closing remarks, okay. All right well. Thank you very much I just want to again.

I wish everybody good health.

For for yourself and for your families and we certainly hope things when we talk to you next time things that we better on the on the pandemic front just want to wish everyone. A again, a good evening and we'll look forward to speaking you again soon.

Ladies and gentlemen, Thanks concludes today's conference call. Thank you for participating you may now disconnect.

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