Q3 2020 Ducommun Inc Earnings Call
And gentlemen, thank you for standing by and welcome to our Q3 2020 Ducommun earnings Conference call.
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I would now like to hand, the conference over to your speaker today, Chris witty Investor Relations moderator. Thank you. Please go ahead Sir.
Good day, ladies and gentlemen, and welcome to Ducommuns third quarter Conference call. At this time, all participants are in a listen only mode.
During managements prepared remarks, well hold a Q and a session.
Ask a question. Please press star one followed by your Touchtone phone.
I'd now like to go over a brief safe Harbor statement. Thank you and welcome to the comments third quarter Conference call with me today are Steve Oswald Chairman, President CEO, and Chris Poplar, Vice President interim Chief Financial Officer, and Treasurer, and controller and Chief Accounting Officer.
I'm going to discuss certain limitations any forward looking statements regarding future events projections or performance.
We may make during the prepared remarks for the question and answer session that follows.
Certain statements today that are not historical facts, including any statements as to the future market conditions results of operations and financial projections are forward looking statements under the federal Private Securities Litigation Reform Act of 995 and are therefore perspective.
These forward looking statements 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 that such expectations will prove to be correct. In addition estimates of future operating results are based on the company's current business, which are subject to change particular risk facing ducommun include among others. The cyclicality of our end use markets the impact of covert nineteena.
Operationally our customers the level of U.S. government defense spending timing of orders from our customers legal and regulatory risks management changes the cost of expansion and acquisitions competitions and disasters, either natural or otherwise.
These risks and others are described in our annual report on form 10-K filed with the FCC and our forward looking statements are subject to those risks Steve.
Statements made during this call are only as of the time made and we do not intend to update any statements made in this presentation, except if and as required by regulatory authorities.
This call also 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 filed our 2023rd quarter form 10-Q with the FCC today.
I would now like to turn the call over to Mr., Steve asked a lot for a review of the operating results Steve.
Thank you, Chris and thanks, everyone for joining us today for our third quarter conference call as in the second quarter call I Hope that you and your families are healthy.
Continuing to get through this pandemic as best as possible.
Today as usual I will give an update of the current situation at the company.
After which Chris will review our financials in detail.
The company remains focused first and foremost on health and safety of our employees.
Team has done an excellent job with the safety protocols put in place since March we continue to work with authorities and best practices.
Not of cases is also less than 55 year to date.
We remain and we remain diligent communication with weekly updates through our human resources team.
As mentioned in the press release Ducommuns third quarter results really shine.
Bison continued unprecedented challenges due to the pandemic.
And the commercial aerospace market.
All the actions initiatives and hard work since we began this journey in 2017 have shown in a strong operating results for Q3.
Artifacts business again, what's the real star a.
Along with cost reductions.
Having the right product portfolio.
Operational leadership.
And leveraging the ducommun operating model of lean and highly focused performance centres.
This is particularly evident as well in the margin expansion for gross profit.
Operating income.
And EBITDA.
Despite year over year headwind from commercial aerospace.
The quality of earnings too well is very high with the company, reaching 69 cents per share.
Adjusted basis, almost flat to 2019.
But overall revenue being down 17% from Q3 last year.
It's a great story for our investors.
As mentioned in our Q2 call, we see a return to revenue growth and 2021 and very good years ahead, and 2022 and 2023.
As much of the company's third quarter revenue was down 70% year over year, all due to the commercial aerospace market and on the low end of our expectation communicated in the last earnings call that being down 16% to 20%.
The common defence business, However show, great great strike being a 40% 41% versus prior year.
But not everyone show negative growth the revenue that was impressive for not only the pandemic NPAC.
But also overcoming another $30 million 737, maxs headwind in the quarter.
Collins Defense business continues to show excellent progress with big opportunities that.
The majority of the games and the fence included radar systems for Northrop Grumman incur.
Increases for our new weapons systems business Noble's worldwide.
A lot of advice that.
The Patriot you Abies, a general Atomics, Yeah 15.
And the total program.
I mentioned on our last call about the comments new efforts with you Avi.
Yeah, we are thrilled to be a strategic partner with GE.
Anticipate our first month of over a million dollars in revenue in December.
2021, bringing higher and higher levels of volume.
That's all muscle program for the Raytheon missile Defense business mentioned in previous calls is now in full production at Monrovia, California for the case.
And the other two common site whichever.
Which are providing electronic products.
As you move forward in time, we see greater and greater value for customers when we leverage both our structure and electronic systems product line, providing a one company approach for defense primes.
We're on track for over $35 million in revenue and 2021 for this program alone an increase from $12 million in revenue this year.
This partner across the company at this type of revenue level is something you want to comment.
And we're excited to see this progress.
Also as you see in the 10-Q.
Northrop Grumman, what's the number two customer in the quarter for the first time in our history.
And she is a key part of the comments to fetch growth strategy and we continue to expand our business with them supporting F 35 projects.
Major radar programs and structural applications.
I bet you in the past the key theme for the company is account share opportunities for common that defense primes other than Raytheon and LNG is a great example.
We're just getting started the company sees lots of new areas to develop within the defense markets.
The other bright spot for the quarter was that in Q3 with a backlog of $506 million for the defense business.
Which is another all time record for the time.
The total backlog was 796 million for the company sequentially down from Q2, but still is a great number based on the environment.
The defense business grew year over year by 36% and bookings bolstered by strong orders across numerous key defense platforms, which include the F 18 as.
As mentioned previously the told missile you Avi F 35, aegis weapon systems for Ralph vehicles at noble and others and this part of Ducommun continues to deliver.
Obviously, the straight helped offset commercial aerospace water pressure.
I think Q2 cost actions have continued in Q3.
You can certainly see the effect of this our actions in the positive growth profit margin expansion year over year, a solid operating income percentage along with the P. S.
The team has certainly done a great job in 2020 moving quickly.
Imagine in this difficult environment with no material pandemic related costs incurred or major restructuring.
In regards to the Q4 outlook.
Our significant backlog in defense with the many growth programs mentioned earlier will provide the same strong revenue.
We estimate that revenue will again be led by the feds, but the business overall as mentioned the acute and the Q2 call.
We'll be down year over year by 14, 18% due to commercial aerospace.
Adjusted operating margins outlook will now be above 8% in Q4.
Which is an improvement from the previous call in Q2, the outlook of 7% to 8%.
The comment also is a great long term future and we look forward as metro to return to revenue growth.
For the full year and 2020, along with very good years in 2022 and 2023.
This will be accomplished by leveraging our new builds out defense portfolio, which is currently over 90 programs.
Ducommun strong position in commercial aerospace, especially on narrow body with a better than two to one ratio with wide bodies.
Sure again at Airbus or.
Our engineered products portfolio and the recent acquisitions.
We're also actively in the market for M&A and.
With our track record. These past three years I believe it will only be an accelerator to.
[music] higher results in the future.
Now, let me add some additional color on our markets products and programs.
Beginning with our military and space sector, we posted third quarter revenue of $113.9 million once again, representing strong growth versus 29 tee it up 41%.
We drove revenue across a broad range of friends platforms, including nearly every aspect of our product portfolio as mentioned earlier, we saw increases the demand for our military fixed wing aircraft programs were particularly strong revenue as mentioned early from Northrop Grumman Noble's worldwide bias that Patriot G.A. F 15 and the.
<unk> and the toll missile.
Third quarter military and space revenue represented 76%.
Oh Ducommuns revenue in the period we.
We also get tend to be very well positioned for further growth across our defense platforms over the next several quarters in all sectors.
And again as the third quarter with an all time record high backlog of $506 million, which is an up in it which is up in to an impressive 36% year over year and that represents 6% of the common overall backlog.
Within our commercial aerospace operations third quarter revenue declined year over year to $26 million as expected driven by build rate declines on a 737, Max as well as many other programs impacted by the COVID-19 pandemic.
The comment also is effectively adjusted cost and manage a downturn as well positioned once once rates stabilize and increase over the long term.
The Commons expansion with Airbus since 2017 is clearly going to be a benefit in the future.
And puts important balance in our portfolio.
The backlog within commercial aerospace sector stands at roughly 269 million at the end of the third quarter a majority of the decline obviously as students 737 Max program.
With that I'll have Chris I review, our financial results in detail Chris.
Thank you, Steve and good afternoon, everyone.
As a reminder, please see the company's filings in Q3 earnings release for a further description of information information mentioned on todays call Assi.
As Steve discussed we are pleased with our third quarter results as they once again reflect the strength and diversity of our business, even as we continue to navigate the impacts of the ongoing pandemic.
We remain confident in our ability to continue to provide strong returns for our shareholders through these challenging times.
Now I'll move on to the details of our overall results.
Revenue for the third quarter of 2020, it was 150.4 million versus $181.1 million in the third quarter of 2019.
This performance reflected 33.4 million of higher sales within the military and space sector offset by 62.9 million of lower revenue from our commercial aerospace customers.
He mentioned nearly all of our commercial platforms all year over year declines due to the economic impact of COVID-19 on our customers' continued grounding of the 737, Max and decrease in air travel in general.
Ducommuns overall backlog at the end of the third quarter was approximately 796 million our military and space backlog is at an all time high of 506 million.
As a reminder, we define backlog as potential revenue based on customer purchase orders and long term agreements with firm fixed price is an expected delivery date of 24 months or less.
We posted strong gross profit for the quarter as gross margins rose to 22.3% from 21.2% in the prior years comparable period.
The increase year over year was primarily due to favorable product mix and reduced discretionary spending along with partially all it was partially offset by unfavorable manufacturing volume totaled.
Total gross profit fell to 33.5 million from 38.3 million last year as a result of lower commercial revenue.
Despite the top line headwind from COVID-19, and the related issues impacting domestic travel we've continued to drive margin expansion.
That's DNA was 22.1 million in the third quarter versus 23.7 million last year, reflecting our ongoing cost control savings as Steve discussed the.
The company reported operating income for the third quarter of 10.3 million or 6.8% of revenue and adjusted operating income of 12.4 million or 8.2% of revenue compared to $14.6 million or 8.1% of revenue in the prior year period.
The year over year decline in operating income dollars was due to lower revenue, partially offset by higher gross margins and lower US you know.
Interest expense was 3.1 million in the third quarter of 2020 versus 4.4 million in the prior year period, as lower interest rates more than offset the impact from higher debt levels as.
As a reminder, our interest expense expenses been favorably impacted by the credit refinancing. We did in Q4 of 2019 as the term loan aid was added along with the replacement or revolve our revolving credit line of credit lowered our overall rate interest rate exposure. The increased debt outstanding was primarily due to funding the companys acquisition of Noble's.
In October 2019, and that we drew down $50 million in Q1 to have cash on hand during the pandemic the pandemic.
The company reported net income for the third quarter of 6.5 million or 54 cents per diluted share and adjusted net income of 8.3 million or 69 cents per diluted share compared to net income of 8.3 million or 70 cents per diluted share for the third quarter of 2019.
Our adjusted net income gives effect to the impact of our restructuring activities and our climates fire related expenses. The similar adjusted EPS year over year exhibits a strong quality of earnings as we expanded gross margins expanded adjusted operating margins and incurred lower interest expense in the third quarter compared to the prior year period.
Adjusted EBITDA for the third quarter was 21.6 million or 14.4% of revenue compared to 23.6 million or 13.1% of revenue for the comparable period in 2019.
Now, let me turn to the segment results.
Our electronic systems segment posted revenue of 103.5 million in the third quarter of 2020 versus $90.6 million in the prior year period.
These results reflect the 23.1 million increase in sales to the company's military and space customers, partially offset by $9 million of lower revenue across our commercial aerospace platforms.
Electronic systems posted operating income for the third quarter of 14.9 million or 14.4% of revenue versus 9.7 million or 10.7% of revenue in the prior year period. This.
The strong performance reflects favorable volume improved product mix, along with robust cost controls.
Our structural systems segment posted revenue of 46.9 million in the third quarter of 2020 versus 90.5 million last year the.
The year over year decrease was due to 53.9 million of lower sales across commercial aerospace applications, reflecting current demand dynamics as Steve discussed, partially offset by $10.3 million of higher revenue within the company's military and space markets structural systems posted operating income for the quarter of $1.8 million were 3.8 per se.
Set of revenue compared to 12.9 million or 14, 2% of revenue last year the year over year operating margin decline reflects unfavorable manufacturing volumes and $1.8 million of aggregate expenses tied to the restructuring activities and the climates facility fire without which adjusted operating margin was 7.7% in the third quarter.
2020.
Corporate general and administrative expense.
<unk> expenses for the third quarter of 2020 were $6.4 million or 4.2% of revenue versus 7.9 million or 4.4% of revenue in 2019. The decrease since EG and expense was mainly due to lower professional service fees of 1.1 million.
Turning to liquidity and capital resources, we have available liquidity of 125 million comprised of 75 million of cash on hand, plus the remaining 50 million on our revolver at the end of the third quarter of 2020.
We generated 4.9 million of cash from operations during the third quarter of 2020, compared with 12 million during the prior year period. This performance reflected working capital investment to support customer demand and lower net income.
We continue to be in compliance with our debt covenants in our credit facilities do not mature until 2024 and 2025 as a reminder, our leverage ratio covenant ceiling is 4.75.
Our leverage ratio was roughly 2.9 at the end of the third quarter of 2020 cash generation and cash management within our already efficient operating structure remains a top priority and we expect to generate positive free cash flow in Q4.
In terms of capital expenditures, we spent $3.2 million during the third quarter and anticipate spending between 12 million to 14 million in 2020. This.
This estimate does not include the capital expenditures for why Mrs. We replaced the capabilities destroyed in the fire in June of this year, we expect the related insurance proceeds will support these reinvestment requirements. In addition in alignment with our cash conservation initiatives. This anticipated level will result in a capital spending decrease support than 20% versus 2019.
Our year to date effective rate of income tax expense is roughly 15% as of the third quarter for the full year of 2020, we expect the effective an effective rate of approximately 10%, we anticipate having a significant release of fin 48 reserves during the fourth quarter that will significantly reduce our fourth quarter tax expense.
With employee safety top of mind, we continue to also focus on execution to drive strong and resilient performance as we satisfy customer demand, we anticipate that our electronic and structural applications on a multitude of key platforms spanning both commercial and military end markets will continue to serve us well.
I'll now turn it back over to Steve for his closing remarks, Steve. Thanks.
Thanks, Chris well certainly proud of these results this quarter and the overall track record of performance. Since 2017, we continue to meet our commitments as mentioned the plan to start to growing the business growing the business again next year.
I would add as well that we do have the right footprint operating system cost structure discipline and leadership to continue performing in the face of this current crisis and feel very confident in our future.
I'm also pleased to announce at this time that the common well have an investor meeting our second during the first half of next year.
We look forward to sharing the exciting things ahead, and 2021 and subsequent years, our many stakeholders and we will be we will be following up.
As in the Q2 call I also want to thank our customers shareholders and all of our business partners for their continued support.
You work through these difficult times together.
We have now given out as well more than $1.1 million for the newly formed do common foundation started last year to the local area charities, where we operate and help our neighbors and communities.
In Q3, we are partnered two with three new organizations to help improve quality and our nation.
And assist small business recovery due to the social unrest in Los Angeles.
In closing I'd.
I'd like to again this quarter to take this time to thank as well too common employees.
I'm proud of them and all their efforts and then with the many challenges from the pandemic.
Our team shows up at the operation everyday.
And those stressful gets the job done with excellent results for our customers and nation.
And with that I will turn it over for questions.
As a reminder to ask a question. Please press Star then the number one on your telephone keypad.
To withdraw your question press, the pound or Heskey. Please stand by while we compile the queue any roster.
Okay.
And your first question comes from the line of Ken Herbert with Canaccord.
Hi, good afternoon.
Steven Chris can get good afternoon.
Hey, I just wanted to first ask about margins in the structural segment was there much of an impact in the quarter from the firing why mess or was there anything else in particular you'd call out that the push those maybe down a little more than we were expecting in the quarter.
Ken This is Chris Yeah from a from where we were in Q1, we did we did reset much more toward where we were with that baseline and it was much more of a combination of the volume.
As you can see the volume was down double digit percentage from where we had been running and then also and also then just limit on the mix as well, but no. The glamis fire expenses, specifically, though were added back to get to the adjusted margins of the of the 7.7%.
Okay. Okay. That's helpful.
And I appreciate the sort of incremental color on the fourth quarter and it sounds like things are maybe.
Maybe a little bit incrementally better on the margins with what you're guiding to is.
Could you give any more detail on that either in terms of segment or programs or just whats, helping but see a what's the confidence and the execution.
Yeah, Ken it's Chris.
As we look at Q4, I mean again just.
As we work through the reset with everybody else in the world in Q2 part of it was getting the Bering Strait, taking the activities to sort of get where we needed to do on the cost side and then as we now look to the rest of this year, we were pretty dialed in on what work, we're going to do what work, we can get out and and feel like we've got two quarters now that we've operated in this.
Environment and feel feel comfortable about putting that information are those those metrics out there.
Yeah. This is Steve we were we feel real good about our run rates are obviously doing this now for for six months and you know we see we see good things ahead.
Well, that's excellent and just obviously defense doing really well and you gave a little more detail on some of your key programs like like the tow and work with Northrop.
How would you characterize Steve just to the new business environment, because it looks like you are really taking share at some of your customers even in a good backdrop, but what kind of runway do you have on the share gain within the defense side.
I think it's I think it's quite a bit I mean that will we're going to cover more on the investor meeting. Okay. What we were going to give a I think ER. So somewhat some really good detail, but I will just tell you that since I've been in and the job here. Okay. You know Raytheon was you know that were wonderful customer and you know they bear with us for a long time and we've been with them.
But if you look past as you look past that we really were not penetrated well, we had really no business development strategy and so we really got our act together the last couple of years and now it's coming through I mean this toll this told program.
You know is real money for US I mean, you know to go from you know started zero to 12. This year really been working it for just a while then go to 35 plus and that includes not only the you know the structure TV, but also a couple of sites for electronics. So we think it's a way.
I think the Sky is pretty high in this line.
That's excellent and just finally, Chris one clarification did you say a full year tax rate assume 10% did I get that correctly you did can it will be again, there's this theres a significant finforty eight release that will that will take place. They should we anticipate taking place here in Q4. So when you when you look at the full year dial it in close to 10%.
Perfect all right. Thanks, guys great quarter guys. Thanks, a lot I appreciate it as always.
And your next question comes from the line, though Mike or Somali true Securities.
Hey, good evening gentlemen, thanks for taking the question. So nice results here given the given the backdrop.
I guess, 76% of revenue is lots to consider you guys a defense contractor [laughter], Mike will take the multiple that falls in New York.
No I don't know if they're up [laughter] right now.
Oh.
On on Aero or do you think we're at bottom and I guess, what I'm you know.
Really took a another leg down sequentially I know you called out the Max but I guess two things do you think rock bottom here and what really worsened sequentially was it just kind of dialing in the lower rates or any more color. There a couple of things first you know look where were you know work.
Cautiously I know this is and I don't want to be part of the cars here, but we're cautiously optimistic that you know first of all we're going to get a certification sort of layer on Max but but Mike you know the issue is all the inventory not only yeah you know.
Claims, but also everything in the chain. Okay. So so we feel like you know were really kind of a bottom yeah bottoming out here I can't put a no go right on the top of the Pan out here, but we're close if we're not there. So you know that one of the nice things is the story for US is that yeah.
You know, obviously 787, some other things and well have had some pressure, but you know areva expenses you know is fairly good.
And there are still doing fairly well in the narrow bodies. So you know so we're we we hear what you're saying we feel like you know there the.
Were looking good going forward.
Okay.
And then just I guess segue into margins I know Ken was just asking on the structural system, 7.7% you talked about next quarter potentially being above 8% consolidated should.
Should we think as sort of a seven seven as as a launching point, maybe not even a launching point just maybe very very gradual improvement from from these levels because it certainly seems like you've got the electronic systems kind of really dial down the margin front there.
Yes, I think I think what I would do is look at you know again the businesses are just small enough they're not it's not a linear in terms of quarter to quarter the mix and the volume does a big impact. So as we look to continue to expand it it sort of a range and we'd like to view the even talk about the volume on structures that we were at the trough, we'd like to be coming out of this.
Soon as we possibly can and that's hopefully is in Q4, we start emerging.
Your phrasing is right I mean, that's going to be a CLO slow a slow build up from there and that's what we will you know that's what we're building then yeah. Mike I'll also add that well I also said that we'll have more information at the Investor meeting, Okay, not got it on its plan, but in the future.
Got it and then just last one on the electronic systems, you got 40% roughly incremental margins year over year sequentially I mean, it would it would seem like your.
Some of the defense programs, you talked about ramping assuming you're getting more volume and learning curves. There you guys seem pretty comfortable with that sort a margin level, if not even building as you maybe get some more volume through the through the facilities I think the volume will help I think again on a range. You know you look at where electronics has been it's in the world.
At the top end of the range. We've been so assuming we can hold a strong mix then we can look to in CIT, but but otherwise I mean, I think that that 12 11 12 to 14 is sort of where we're at and when we're looking to reset that higher as we go absolutely absolutely I think to your point, Mike is important about maybe you know.
Not so much on the next quarter or two but you know we'll be scale players.
Okay, and we will see that.
Okay.
All right perfect. Thanks, guys I'll jump back in the queue. Okay sure. Thanks appreciate it.
And your next question comes from Amen, Gillani with B. Riley Securities.
Hey, guys. Thanks for taking my question and congrats on the quarter.
Nice to see the traction with Norse Ron I mean, do you increase revenue from like 8 million to almost 20 twond.
22 million sequentially.
Trying to get a sense for the revenue level levels with Northrop going forward is this something that could sort of.
Sustained in the fourth quarter and maybe going forward.
A run rate basis in fiscal 21 sure. So look you know Northrop is is one of our best stories again. This is the the theme I've been talking about where you know quite frankly, I'm not sure north of new everything we could do two years ago. Okay, you know and and now we've now they do I mean like I mentioned, we're doing it already.
Our systems for them.
We are doing in projects and F 35, and we are doing structural applications. So that's another thing I've been talking about is that.
We are moving I think in the right direction as well on our structural business to drive a lot more of really good growth steady.
Fence business, so I think.
You know the story is good with Northrop has just got to get better.
Got it and last question from me.
And capital allocation I was sort of like leverage ratio do you feel comfortable with.
Until you like sort of making the next acquisition and digitally how does that pipeline pipeline look on the defense side are you seeing from.
Any structural capability that ducommun might be interested in acquiring on the defense side.
Take the leverage first and then Steve can chime in sure.
The on the leverage I mean again, we're just under three with where we're at now we've talked throughout the last couple of years about staying in the threes. We are covenant light we could go to 475, we're very comfortable with it in the threes.
But having said that we're running more at a three O or in this quarter, a little less than that and until till the next acquisition comes I mean, we are we should we should be in that.
Yeah, I'll just mention on the the M&A and we're you know we're fairly at least on the structural side were fairly tight.
Thank you know we have some really good focus on what we're going to do what we're not going to do okay, and so we will obviously, taking some pressure right now because of the build rate, but you know if there is something that really fits that is really nichey that's products hard to make.
Those types of things.
We'll look at it but we still have we're always leaning towards what we've done in the past with noble and LDS and the others were were looking to build the engineering side of the business and the aftermarket.
Thanks, guys I'll pass it on okay. Thanks, a lot.
Again to ask a question. Please press Star then on number one on your telephone keypad Thats Star one to ask a question.
And your next question comes from the line of Michael Ethan with RBC capital markets.
Hey, Hey, good afternoon, gentlemen, thanks for taking the questions.
Thanks.
Really strong quarter for the defense side of the business you know with growth of over 40%. The backlog grew bookings were strong and you have these new business wins, you've been talking about for some time, so as I look at that side of the business is it fair to assume that a strong double digit growth rate is going to be able to continue.
As we look out over the next several quarters.
Oh look where were we had said to get down to that level, but just just lets say that you know, we're we're pretty bullish on yes.
Got it and then in contrast to that you know there are some comments here today that you made about inventory in the channel on commercial but there is some opportunity grown with Airbus and the eventual ramp up of the 737. So as we think of all of the announced rates. If there are no further changes to theirs.
Can you help us think about with the inventory in the channel that we have less visibility into when we could potentially see some easing of the pressure for your business and potentially starting to get back to growth. Yeah, well look you know overall and this includes the defense business. As you know we've made a comment we're going to return to growth for the full year next year. Okay. So.
That's the first thing all right. So you know.
We will talk more about that you know in our in our February call as far as you.
You know things really picking up I mean, you know like I mentioned in my remarks, one of the things that investors need to remember is that we're building a lot of balance in the business I'll say three years ago, We had a really big Raytheon business, we had a really big bowling business and we had some of the things that was it now we have.
You know much much bigger defense, you know breadth with many customers, who primes with with lots of headroom, there and we have our volume business, which we obviously appreciate and have had for decades, and then we have Airbus and other things happening. So so you know for us to pinpoint it not not sure.
That I've got to go there right now, but I will tell you that overall the portfolio is continue to get a lot of ballast and and when those build rates break will be there.
Got it really helpful last one for me you know.
Missiles is clearly an area of focus and trend for your portfolio. There had been a number of big missile type of program Awards recently and it is one of the areas that continues to get funding support in the budgets are there any other programs that we should think of it as major areas of opportunity for ducommun.
Well certainly look at I talked about our structural businesses. Okay. So you know where we really we really didnt have much in the past other than legacy Apache.
Back blades and those types of things. So so you know other than missiles, we're very bullish on structural products. We think there's a lot of opportunity there were actually good at it.
Okay, and we can actually make it make make good money with it so I'd say structures. The other thing I would say that missiles is all the electronics and were doing lots of stuff on radar with doing lots of stuff on box bills you know.
And that's outside of you know just putting you know making cards for the pay way missile and also so as use yeah, well, yet we'll get ready we're going I think we have an excellent investor meeting early or mid next year before the before the end of June we will give you more color on that but things are moving positively.
Got it thanks for all the color.
Okay. Thanks, again I appreciate it.
At this time there appears to be no further questions in queue. So I'll turn it back to Mr. Oswald for any closing remarks, well. Thank you and again I want to I want to thank everybody for participating today, obviously, yeah, we feel very good about what we presented on the call.
We're going to have an investor meeting first half of next year and we're looking forward to that and again talking about some of the exciting things that we're happy that will happen. We believe in the next few years.
No. We're just heads down it would just driving and staying safe so thats our ability to finish out the year, but overall, we're we're feeling better and better about things and we're excited about the future. So I'll leave it there are again good health everyone. Thank you for your time and have a nice evening.
This concludes today's conference call you may now disconnect.
Okay. Thank you.
[music].