Q2 2026 Ducommun Inc Earnings Call

August 6, 2026

Speaker #2: Good day, and welcome to the Ducommun second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session.

Operator: Good day and welcome to the Ducommun Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Suman Mookerji, Vice President and Chief Financial Officer. Please go ahead.

Speaker #2: To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker #2: To withdraw your question, press *11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Suman Mookerji, Vice President and Chief Financial Officer.

Speaker #2: Please go ahead.

Speaker #3: Thank you, and welcome to Ducommun's second quarter 2026 conference call. With me today is Steve Oswald, Chairman, President, and Chief Executive Officer. I am going to discuss certain limitations to any forward-looking statements regarding future events, projections, or performance that we may make during the prepared remarks or the Q&A session that follows.

Suman Mookerji: Thank you. Welcome to Ducommun's 2026 Q2 conference call. With me today is Steve Oswald, Chairman, President, and Chief Executive Officer. I am going to discuss certain limitations to any forward-looking statements regarding future events, projections or performance that we may make during the prepared remarks or the Q&A session that follows.

Speaker #3: Certain statements today that are not historical facts, including any statements as to the company's progress and value creation opportunity for shareholders under our Vision 2027 game plan for investors, beliefs about the company's Vision 2032 strategic plan, potential destocking headwinds and their impact on the company's business for the remainder of 2026, expectations related to the U.S. Department of War's long-term framework agreements for key missile programs with defense primes, our share of potential orders from those primes, the increase in production on many of those missile programs, and their impact on the growth of our defense business.

Suman Mookerji: Certain statements today that are not historical facts, including any statements as to the company's progress and value creation opportunity for shareholders under our VISION 2027 game plan, for investors Beliefs about the company's VISION 2032 strategic plan, potential destocking headwinds and their impact on the company's business for the remainder of 2026, expectations related to the US Department of War's long-term framework agreements for key missile programs with defense primes, our share of potential orders from those primes, the increase in production on many of those missile programs and their impact on the growth of our defense business, estimated synergies to be realized under the company's facility consolidation projects, and the outlook for the company's revenue in commercial aerospace and defense businesses for the full year 2026 are forward-looking statements under the Private Securities Litigation Reform Act of 1995 and are therefore prospective.

Speaker #3: Estimated synergies to be realized under the company's facility consolidation projects, and the outlook for the company's revenue and commercial aerospace and defense businesses for the full year 2026, are forward-looking statements under the Private Securities Litigation Reform Act of 1995 and are therefore prospective.

Speaker #3: 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.

Suman Mookerji: 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 have been correct. In addition, estimates of future operating results are based on the company's current business, which is subject to change. Particular risks facing Ducommun include, amongst others, the cyclicality of our end-use markets, the level of US government defense spending. Our customers may experience changes in production rates or delays in the launch and certification of new products. Timing of orders from our customers, which are subject to cancellation, modification, or rescheduling. Our ability to obtain additional financing and service existing debt to fund capital expenditures and meet our working capital needs.

Speaker #3: 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 have been correct.

Speaker #3: In addition, estimates of future operating results are based on the company's current business, which is subject to change. Particular risks facing Ducommun include amongst others the cyclicality of our end-use markets, the level of US government defense spending, our customers may experience changes in production rates or delays in the launch and certification of new products, timing of orders from our customers which are subject to cancellation, modification, or rescheduling, our ability to obtain additional financing and service existing debt to fund capital expenditures, and meet our working capital needs, legal and regulatory risks including pending litigation matters generally and as well as any potential losses arising from third-party subrogation claims related to the guidance performance under FHIR that may become material, the cost of expansion consolidation and acquisitions, competition, economic and geopolitical developments, including supply chain issues, our ability to successfully implement restructuring, realignment, and cost reduction activities that could reversely affect our ability to achieve our strategic objectives, international trade restrictions, and our ability to obtain necessary US government approvals for proposed sales to certain foreign customers, the impact of tariffs and elevated interest rates, risks associated with the prolonged partial or total US federal government shutdown, the ability to attract and retain key personnel and avoid labor disruptions, the ability to adequately predict protect and enforce intellectual property rights, pandemics, disasters, natural or otherwise and risk of cybersecurity attacks.

Suman Mookerji: Legal and regulatory risks, including pending litigation matters generally, as well as any potential losses arising from third-party subrogation claims related to the Gremlins performance under fire that may become material. The cost of expansion, consolidation, and acquisitions. Competition, economic, and geopolitical developments, including supply chain issues. Our ability to successfully implement restructuring, realignment, and cost reduction activities that could adversely affect our ability to achieve our strategic objectives. International trade restrictions and our ability to obtain necessary US government approvals for proposed sales to certain foreign customers. The impact of tariffs and elevated interest rates. Risks associated with a prolonged, partial, or total US federal government shutdown. The ability to attract and retain key personnel and avoid labor disruptions. The ability to adequately protect and enforce intellectual property rights. Pandemics, disasters, natural or otherwise, and risk of cybersecurity attacks.

Speaker #3: Please refer to our annual report on Form 10-K/A, quarterly report on Form 10-Q, and other reports filed from time to time with the SEC, as well as the press release issued today, for a detailed discussion of the risks.

Suman Mookerji: Please refer to our annual report on Form 10-K/A, quarterly report on Form 10-Q, and other reports filed from time to time with the SEC, as well as the press release issued today for a detailed discussion of the risks. Our forward-looking statements are subject to those risks. 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 SEC for a reconciliation of the GAAP to non-GAAP measures referenced on this call. We filed our Q2 2026 quarterly report on Form 10-Q with the SEC today. I would now like to turn the call over to Steve Oswald for a review of the operating results. Steve?

Speaker #3: Our forward-looking statements are subject to those risks. 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.

Speaker #3: This call also includes non-GAAP financial measures. Please refer to our filings with the SEC for a reconciliation of the GAAP to non-GAAP measures referenced on this call.

Speaker #3: We filed our Q2 2026 quarterly report on Form 10-Q with the SEC today. I would now like to turn the call over to Stephen Oswald for a review of the operating results.

Speaker #3: Please.

Speaker #4: Okay, thank you, Suman. Thanks, everyone, for joining us today for our second quarter conference call. Today, as usual, I'll give an update on the current situation at the company, after which Suman will review our financials in detail.

Stephen G. Oswald: Okay. Thank you, Suman. Thanks, everyone, for joining us today for our Q2 conference call. Today, and as usual, I'll give an update of the current situation at the company. Afterwards, Suman will review our financials in detail. Let me start off again on this quarterly call with Ducommun's VISION 2027 game plan for our investors, as we continue to make great progress in our fourth year of the plan, heading into the final year of the vision starting this January. The strategy and vision were developed out of the COVID pandemic over the summer and fall of 2022, unanimously approved by the Ducommun board in November 2022, and then presented the following month in New York to investors, where we had excellent feedback.

Steve Oswald: Okay. Thank you, Suman. Thanks, everyone, for joining us today for our Q2 conference call. Today, and as usual, I'll give an update of the current situation at the company. Afterwards, Suman will review our financials in detail. Let me start off again on this quarterly call with Ducommun's VISION 2027 game plan for our investors, as we continue to make great progress in our fourth year of the plan, heading into the final year of the vision starting this January. The strategy and vision were developed out of the COVID pandemic over the summer and fall of 2022, unanimously approved by the Ducommun board in November 2022, and then presented the following month in New York to investors, where we had excellent feedback.

Speaker #4: Let me start off again on this quarterly call with Ducommun's Vision 2027 game plan for investors. We continue to make great progress in our fourth year of the plan, heading into the final year of the Vision starting this January.

Speaker #4: The strategy and vision were developed out of the COVID pandemic over the summer and fall of 2022. They were unanimously approved by the Ducommun board in November 2022 and then presented the following month in New York to investors, where we had excellent feedback.

Speaker #4: Since that time, they've increased their revenue percentage of engineered product content, which is at 23% over the past year, up from 15% in 2022.

Stephen G. Oswald: Since that time, Ducommun's management has been executing the strategy by increasing the revenue percentage of engineered product content, which is at 23% over the past year and up from 15% in 2022. Consolidating our rooftop footprint in contract manufacturing. Continuing our focused acquisition program. Executing the offloading strategy with defense primes in high growth segments. Driving value-added pricing and expanding content on key commercial aerospace platforms. All of us here, as well as my fellow board members, continue to have a high level of conviction in the VISION 2027 strategy and financial goals and believe the market catalysts ahead present a unique value creation opportunity for our shareholders.

Steve Oswald: Since that time, Ducommun's management has been executing the strategy by increasing the revenue percentage of engineered product content, which is at 23% over the past year and up from 15% in 2022. Consolidating our rooftop footprint in contract manufacturing. Continuing our focused acquisition program. Executing the offloading strategy with defense primes in high growth segments. Driving value-added pricing and expanding content on key commercial aerospace platforms. All of us here, as well as my fellow board members, continue to have a high level of conviction in the VISION 2027 strategy and financial goals and believe the market catalysts ahead present a unique value creation opportunity for our shareholders.

Speaker #4: Consolidating our rooftop footprint in contract manufacturing, continuing our focused acquisition program. Executing the offloading strategy with segments, driving value-added pricing, and expanding content on key commercial aerospace platforms.

Speaker #4: Although it's here, as well as my fellow board members, we continue to have a high level of conviction in the Vision 2027 strategy and financial goals, and believe the market catalysts ahead present a unique value creation opportunity for our shareholders.

Speaker #4: The Q2 2026 results show again that the strategy initiatives are working, with growth and adjusted EBITDA margins continuing to stay on track to meet and exceed our Vision 2027 goals, along with revenues and the level of engineered products and aftermarket at the company.

Stephen G. Oswald: The Q2 2026 results show again that the strategy initiatives are working, with growth and adjusted EBITDA margins continuing to stay on track to meet and exceed our VISION 2027 goals, along with revenues and the level of engineered products and aftermarket at the company. For Q2, I am very happy to report that revenues reached a new quarterly record of $224 million, 12% growth over last year, our fifth consecutive quarter of over $200 million in revenue, and our 21st consecutive quarter with year-over-year revenue growth. We had strong growth across all our end markets, with commercial aerospace in particular showing continued strength this year with 16% year-over-year growth, a very positive sign. We saw production and deliveries continue to ramp, driven by higher OEM production rates and a gradual easing of the destocking impact.

Steve Oswald: The Q2 2026 results show again that the strategy initiatives are working, with growth and adjusted EBITDA margins continuing to stay on track to meet and exceed our VISION 2027 goals, along with revenues and the level of engineered products and aftermarket at the company. For Q2, I am very happy to report that revenues reached a new quarterly record of $224 million, 12% growth over last year, our fifth consecutive quarter of over $200 million in revenue, and our 21st consecutive quarter with year-over-year revenue growth. We had strong growth across all our end markets, with commercial aerospace in particular showing continued strength this year with 16% year-over-year growth, a very positive sign. We saw production and deliveries continue to ramp, driven by higher OEM production rates and a gradual easing of the destocking impact.

Speaker #4: For Q2, I'm very happy to report that revenues reached a new quarterly record of $224 million, a 12% growth over last year. This marks our fifth consecutive quarter of over $200 million in revenue and our 21st consecutive quarter with year-over-year revenue growth.

Speaker #4: We had strong growth across all our end markets, with commercial aerospace in particular showing continued strength this year with 16% year-over-year growth—a very positive sign.

Speaker #4: We saw production and deliveries continue to ramp, driven by higher OEM production rates and a gradual easing of the destocking impact. In addition, we benefited from new aftermarket content that drove incremental retrofit revenues on the 737 MAX.

Stephen G. Oswald: In addition, we benefited from new aftermarket content that drove incremental retrofit revenues on the 737 MAX. We still expect some destocking to remain as a headwind through the end of this year, the situation is improving. Military and space revenues grew 7% with continued strength in our missile portfolio and fixed-wing aircraft, partially offset by temporary weakness in our radar, space, and naval revenues. During the quarter, we also pulled ahead some production activity and associated revenues from the H2 to level-load production at our plants ahead of higher delivery commitments in the H2 of this year. Another major highlight in Q2 was the company's remaining performance obligations continued growth, reaching a record $1.16 billion, which is over $250 million higher than prior year and $85 million higher than just last quarter.

Steve Oswald: In addition, we benefited from new aftermarket content that drove incremental retrofit revenues on the 737 MAX. We still expect some destocking to remain as a headwind through the end of this year, the situation is improving. Military and space revenues grew 7% with continued strength in our missile portfolio and fixed-wing aircraft, partially offset by temporary weakness in our radar, space, and naval revenues. During the quarter, we also pulled ahead some production activity and associated revenues from the H2 to level-load production at our plants ahead of higher delivery commitments in the H2 of this year. Another major highlight in Q2 was the company's remaining performance obligations continued growth, reaching a record $1.16 billion, which is over $250 million higher than prior year and $85 million higher than just last quarter.

Speaker #4: We still expect some destocking to remain as a headwind through the end of this year, but the situation is improving. Military and space revenues grew 7%, with continued strength in our missile portfolio and fixed-wing aircraft, partially offset by temporary weakness in our radar, space, and naval revenues.

Speaker #4: During the quarter, we also pulled ahead some production activity and associated revenues from the second half to level load production at our plants, ahead of higher delivery commitments in the second half of this year.

Speaker #4: Another major highlight in Q2 was the company's remaining performance obligations continuing to grow, reaching a record $1.16 billion. This is over $250 million higher than the prior year, and $85 million higher than just last quarter.

Speaker #4: This represents a book-to-bill ratio of 1.4 times in the quarter and 1.3 times over the last 12 months. We added more than a quarter's worth of revenue to our backlog in the last year.

Stephen G. Oswald: This represents a book-to-bill ratio of 1.4 times in the quarter and 1.3 times over the last 12 months. We added more than a quarter's worth of revenue to our backlog in the last year, which is fantastic. Our defense business RPO grew $197 million year-over-year, and commercial aerospace grew $54 million. We closed on $310 million of bookings in Q2, and have closed on $1.1 billion in the past 12 months. This is great work for our business development team, and it still does not include our share of potential orders from defense primes under the seven-year missile framework agreements, which are still being negotiated by RTX and the government, also happy to see it is now completed as of last month for the PAC-3 and THAAD at Lockheed and L3Harris.

Steve Oswald: This represents a book-to-bill ratio of 1.4 times in the quarter and 1.3 times over the last 12 months. We added more than a quarter's worth of revenue to our backlog in the last year, which is fantastic. Our defense business RPO grew $197 million year-over-year, and commercial aerospace grew $54 million. We closed on $310 million of bookings in Q2, and have closed on $1.1 billion in the past 12 months. This is great work for our business development team, and it still does not include our share of potential orders from defense primes under the seven-year missile framework agreements, which are still being negotiated by RTX and the government, also happy to see it is now completed as of last month for the PAC-3 and THAAD at Lockheed and L3Harris.

Speaker #4: Which is fantastic. Our defense business RPO grew $197 million year over year, and commercial aerospace grew $54 million. We closed on $310 million of bookings in Q2 and have closed on $1.1 billion in the past 12 months.

Speaker #4: This is great work by our business development team and it still does not include our share of potential orders from Defense Primes under the seven-year missile framework agreements.

Speaker #4: Which are still being negotiated by RTX and the government, but also happy to see it has now completed as of last month for the PAC-3 and FAD at Lockheed and L3 IRIS.

Speaker #4: We continued to have discussions with the Defense Primes to support them on these major agreements and are well positioned as the incumbent supplier on many of the programs, which is great news for DCO and its shareholders.

Stephen G. Oswald: We continue to have discussions with the defense primes to support them on these major agreements and are well-positioned as the incumbent supplier of many of the programs, which is great news for DCO and shareholders. Production on many of these missile programs, such as the Tomahawk, PAC-3, and Standard Missile-3 and Standard Missile-6 are expected to grow several-fold. This will be a big driver of growth of the DCO defense business over the next few years. Our performance centers are prepared for this increase in production, with most capacity already in place. We will hit the ground running once the orders begin to flow. Gross margin grew by $9.9 million in Q2 to 28%, a 160-basis point improvement from 26.4% last year in Q2.

Steve Oswald: We continue to have discussions with the defense primes to support them on these major agreements and are well-positioned as the incumbent supplier of many of the programs, which is great news for DCO and shareholders. Production on many of these missile programs, such as the Tomahawk, PAC-3, and Standard Missile-3 and Standard Missile-6 are expected to grow several-fold. This will be a big driver of growth of the DCO defense business over the next few years. Our performance centers are prepared for this increase in production, with most capacity already in place. We will hit the ground running once the orders begin to flow. Gross margin grew by $9.9 million in Q2 to 28%, a 160-basis point improvement from 26.4% last year in Q2.

Speaker #4: Production on many of these missile programs, such as the Tomahawk, PAC-3, and Standard Missile 3 and 6, is expected to grow several-fold. This will be a big driver of growth for the DCO defense business over the next few years.

Speaker #4: Our performance centers are prepared for this increase in production, with most capacity already in place, and we will hit the ground running once the orders begin to flow.

Speaker #4: Gross margin grew by $9.9 million in the second quarter to 28%, a 160 basis point improvement from 26.4% last year in Q2. We continue to see the benefits of our Vision 2027 strategy and gross margin expansion.

Stephen G. Oswald: We continue to see the benefits of our VISION 2027 strategy and gross margin expansion due to DCO's engineered product portfolio with aftermarket, strategic value pricing initiatives, restructuring actions, and productivity improvements reading through to the P&L. Our cost-saving expectations of $13 million annually from our facility consolidation program has mostly been realized at this time. For adjusted operating income margin in Q2, the team delivered 11.9%, well above the prior year of 10.2%. This was supported by growth in adjusted operating income margins in both our operating segments. Adjusted EBITDA continues to improve towards our VISION 2027 goal of 18% in 2027 from 13% in 2022. DCO achieved 17.1% in the quarter, or $38.4 million, up $6.7 million from Q2 2025. We're also in great shape for 18% in 2027. GAAP EPS was $1.31 per diluted share in Q2 2026 versus $0.84 for Q2 2025.

Steve Oswald: We continue to see the benefits of our VISION 2027 strategy and gross margin expansion due to DCO's engineered product portfolio with aftermarket, strategic value pricing initiatives, restructuring actions, and productivity improvements reading through to the P&L. Our cost-saving expectations of $13 million annually from our facility consolidation program has mostly been realized at this time. For adjusted operating income margin in Q2, the team delivered 11.9%, well above the prior year of 10.2%. This was supported by growth in adjusted operating income margins in both our operating segments. Adjusted EBITDA continues to improve towards our VISION 2027 goal of 18% in 2027 from 13% in 2022. DCO achieved 17.1% in the quarter, or $38.4 million, up $6.7 million from Q2 2025. We're also in great shape for 18% in 2027. GAAP EPS was $1.31 per diluted share in Q2 2026 versus $0.84 for Q2 2025.

Speaker #4: Due to DCO's engineered product portfolio with aftermarket, strategic value pricing initiatives, restructuring actions, and productivity improvements reading through to the P&L, our cost-saving expectations of $13 million annually from our facility consolidation program have almost been mostly realized at this time.

Speaker #4: For adjusted operating income margin in Q2, the team delivered 11.9%, well above the prior year at 10.2%. This was supported by growth in adjusted operating income margins in both of our operating segments.

Speaker #4: Adjusted EBITDA continues to improve towards our Vision 2027 goal of 18% in 2027, up from 13% in 2022. DCO achieved 17.1% in the quarter, or $38.4 million, up $6.7 million from Q2 2025.

Speaker #4: We're also in great shape for 18% in 2027. GAP EPS was 1.31 a dollar 0.31 per diluted share in Q2 2026 versus 84 cents for adjustments, diluted EPS was $1.18 a share in Q2 versus 90 cents in the prior year quarter.

Stephen G. Oswald: With the adjustments, diluted EPS was $1.18 a share in Q2 versus $0.90 in the prior year quarter. A higher GAAP and adjusted diluted EPS during the quarter was driven by higher operating income. GAAP net income and EPS also benefit from a one-time clawback of executive compensation as a result of a restatement published earlier this year. As I mentioned earlier, we closed on over $1.1 billion in bookings over the past 12 months, a trailing 12-month book-to-bill of 1.3 times. With increased defense spending and positive momentum in commercial aerospace, we have strong tailwinds in both our primary end markets. On the outlook for H2 2026, we expect to see continued growth from both our defense and commercial aerospace businesses, but at more muted levels versus H1.

Steve Oswald: With the adjustments, diluted EPS was $1.18 a share in Q2 versus $0.90 in the prior year quarter. A higher GAAP and adjusted diluted EPS during the quarter was driven by higher operating income. GAAP net income and EPS also benefit from a one-time clawback of executive compensation as a result of a restatement published earlier this year. As I mentioned earlier, we closed on over $1.1 billion in bookings over the past 12 months, a trailing 12-month book-to-bill of 1.3 times. With increased defense spending and positive momentum in commercial aerospace, we have strong tailwinds in both our primary end markets. On the outlook for H2 2026, we expect to see continued growth from both our defense and commercial aerospace businesses, but at more muted levels versus H1.

Speaker #4: A higher gap in adjusted diluted EPS during the quarter was driven by higher operating income. GAAP net income and EPS also benefited from a one-time clawback of executive compensation as a result of a restatement published earlier this year.

Speaker #4: As I mentioned earlier, we closed on over $1.1 billion in bookings over the past 12 months, with a trailing 12-month book-to-bill of 1.3 times. With increased defense spending and positive momentum in commercial aerospace, we have strong tailwinds in both our primary end markets.

Speaker #4: On the outlook for the second half of 2026, we expect to see continued growth from both our defense and commercial aerospace businesses, but at more muted levels compared to the first half.

Speaker #4: We reiterate our previous guidance of mid- to high-single-digit revenue growth for the full year, and that holds. As I mentioned earlier, we pulled some forward production-related revenue recognition into the first half to level-load our facilities and to support higher levels of delivery commitments in the second half.

Stephen G. Oswald: We reiterate our previous guidance of mid to high single revenue growth for the full year. That holds. As I mentioned earlier, we pulled some forward production-related revenue recognition into H1 to level load our facilities and to support higher levels of delivery commitments in H2. This is expected to unwind in H2, resulting in low to mid-single digit growth in Q3 and Q4, and keeping our full-year expectations unchanged. Now let me provide some additional color on our markets, products, and programs. Beginning with our military and space sector, we saw revenues of $124 million compared to $116 million in Q2 2025. This represents 7% growth and was driven by another quarter of strong performance in our missile franchise that was up significantly.

Steve Oswald: We reiterate our previous guidance of mid to high single revenue growth for the full year. That holds. As I mentioned earlier, we pulled some forward production-related revenue recognition into H1 to level load our facilities and to support higher levels of delivery commitments in H2. This is expected to unwind in H2, resulting in low to mid-single digit growth in Q3 and Q4, and keeping our full-year expectations unchanged. Now let me provide some additional color on our markets, products, and programs. Beginning with our military and space sector, we saw revenues of $124 million compared to $116 million in Q2 2025. This represents 7% growth and was driven by another quarter of strong performance in our missile franchise that was up significantly.

Speaker #4: This is expected to unwind in the second half resulting in low to mid single-digit growth in Q3 and Q4, and keeping our full year expectations unchanged.

Speaker #4: Now let me provide some additional color on our markets, products, and programs. Beginning with our military and space sector, we saw revenues of $124 million compared to $116 million in Q2 2025.

Speaker #4: This represents 7% growth and was driven by another quarter of strong performance in our missile franchise, which was up significantly. We also had nice growth in fixed-wing aircraft, which was offset by year-over-year temporary declines in radar, naval, and space platforms.

Stephen G. Oswald: We also had nice growth in fixed-wing aircraft, which was offset by year-over-year temporary declines in radar, naval, and space platforms. This was due to timing of orders. I want to briefly expand on our missile business. DCO's missile business grew 68% in Q2 and is now up 29% over the past 12 months. I mentioned before that RTX, our largest customer, and Lockheed are expected to significantly increase production on many programs, including the PAC-3, SM-3, SM-6, Tomahawk, THAAD, and AMRAAM, and we are in discussions on multiple opportunities. DCO is well positioned on all these programs and in great shape with capacity at our operations to fully support the required ramp-up.

Steve Oswald: We also had nice growth in fixed-wing aircraft, which was offset by year-over-year temporary declines in radar, naval, and space platforms. This was due to timing of orders. I want to briefly expand on our missile business. DCO's missile business grew 68% in Q2 and is now up 29% over the past 12 months. I mentioned before that RTX, our largest customer, and Lockheed are expected to significantly increase production on many programs, including the PAC-3, SM-3, SM-6, Tomahawk, THAAD, and AMRAAM, and we are in discussions on multiple opportunities. DCO is well positioned on all these programs and in great shape with capacity at our operations to fully support the required ramp-up.

Speaker #4: And this was due to the timing of orders. I want to briefly expand on our missile business. DCO's missile business grew 68% in Q2 and is now up 29% over the past 12 months.

Speaker #4: I have mentioned before that RTX, our largest customer, and Lockheed are expected to significantly increase production on many programs, including the PAC-3, SM-3, SM-6, Tomahawk, THAAD, and AMRAAM. We are in discussions on multiple opportunities.

Speaker #4: DCO is well positioned on all these programs and in great shape with capacity at our operations to fully support the required ramp-up. DCO is a key supplier in these programs, and, as the orders for missile replenishment begin to work their way from announcement to firm orders to Congress, we later focus on capturing as much of this content as we can.

Stephen G. Oswald: DCO is a key supplier on these programs. As the orders from missile replenish will begin to work their way from announce to firm orders, the company is laser focused on capturing as much of this content as we can. This is an exceptional time to be operating in this segment. We are not only fortunate, but also excited for the opportunity to drive much higher lows of shareholder value from this growth. Within our commercial aerospace operations, Q2 revenue increased 16% year-over-year to $89 million, with strong growth in production and deliveries on single-aisle platforms from both Boeing and Airbus. Our 737 MAX platform also benefited from an aftermarket retrofit order.

Steve Oswald: DCO is a key supplier on these programs. As the orders from missile replenish will begin to work their way from announce to firm orders, the company is laser focused on capturing as much of this content as we can. This is an exceptional time to be operating in this segment. We are not only fortunate, but also excited for the opportunity to drive much higher lows of shareholder value from this growth. Within our commercial aerospace operations, Q2 revenue increased 16% year-over-year to $89 million, with strong growth in production and deliveries on single-aisle platforms from both Boeing and Airbus. Our 737 MAX platform also benefited from an aftermarket retrofit order.

Speaker #4: This is an exceptional time to be operating in this segment. We’re not only fortunate, but also excited for the opportunity to drive much higher levels of shareholder value from this growth.

Speaker #4: Within our commercial aerospace operations, second quarter revenue increased 16% year-over-year to $89 million, with strong growth in production and deliveries on single-aisle platforms from both Boeing and Airbus.

Speaker #4: Our 737 MAX platform has also benefited from an aftermarket retrofit order. This is incremental content of engineered products for us on the 737 MAX, and the retrofit demand is expected to sustain for the next few years, offering an opportunity for line-fit revenues as well in the future.

Stephen G. Oswald: This is an incremental content of engineered products for us on the 737 MAX. The retrofit demand is expected to sustain for the next few years with an opportunity for line-fit revenues as well in the future. This growth in our large commercial aerospace business help offset the declines in our business jet and commercial rotorcraft business during the quarter. We continue to be optimistic on the commercial aerospace outlook. Boeing just last week announced they're continuing to make progress on increasing the 737 MAX builds from 42 to 47, and the new production line at Everett is now up and running. It was also great to see the MAX 7 recently certified after more than a six-year delay. The MAX 10 is next. It'll be another big lift for our second-largest customer, BA.

Steve Oswald: This is an incremental content of engineered products for us on the 737 MAX. The retrofit demand is expected to sustain for the next few years with an opportunity for line-fit revenues as well in the future. This growth in our large commercial aerospace business help offset the declines in our business jet and commercial rotorcraft business during the quarter. We continue to be optimistic on the commercial aerospace outlook. Boeing just last week announced they're continuing to make progress on increasing the 737 MAX builds from 42 to 47, and the new production line at Everett is now up and running. It was also great to see the MAX 7 recently certified after more than a six-year delay. The MAX 10 is next. It'll be another big lift for our second-largest customer, BA.

Speaker #4: This growth in our large commercial aerospace business helped offset declines in our business jet and commercial rotorcraft businesses during the quarter. We continue to be optimistic about the commercial aerospace outlook.

Speaker #4: Boeing just last week announced they're continuing to make 737 MAX builds, increasing from 42 to 47, and the new production line endeavor is now up and running.

Speaker #4: It was also great to see the MAX 7 recently certified after more than a six-year delay. The MAX 10 is next.

Speaker #4: It'll be another big lift for our second-largest customer, BA. We see the impact of internal and external destocking coming to an end in the next couple of quarters, with a glide path for growth going into 2027.

Stephen G. Oswald: We see the impact of internal and external destocking coming to an end in the next couple of quarters with a glide path for growth going into 2027. We continue to monitor closely the supply chain challenges at Airbus with engines and note they're expecting rate increases in 2027 as well. In summary, the outlook for the next few years is the best I've seen since joining Ducommun. The future is very exciting for the company and its shareholders. We like the balance of defense and commercial aerospace businesses that we have as well. We are strongly positioned to take advantage of the overall industry tailwinds. With that, I'll have Suman review our financials in detail. Suman?

Steve Oswald: We see the impact of internal and external destocking coming to an end in the next couple of quarters with a glide path for growth going into 2027. We continue to monitor closely the supply chain challenges at Airbus with engines and note they're expecting rate increases in 2027 as well. In summary, the outlook for the next few years is the best I've seen since joining Ducommun. The future is very exciting for the company and its shareholders. We like the balance of defense and commercial aerospace businesses that we have as well. We are strongly positioned to take advantage of the overall industry tailwinds. With that, I'll have Suman review our financials in detail. Suman?

Speaker #4: We continue to closely monitor the supply chain challenges that Airbus has with engines, and note they’re expecting rate increases in 2027 as well. In summary, the outlook for the next few years is the best I’ve seen since joining Ducommun in Q4, and the future is very exciting for the company and its shareholders.

Speaker #4: We like the balance of defense and commercial aerospace businesses that we have as well, and are strongly positioned to take advantage of the overall industry tailwinds.

Speaker #4: With that, I'll hand it over to Suman for a detailed review of our financials. Suman?

Speaker #3: Thank you, Steve. As a reminder, please see the company's 10-Q and Q2 earnings release for a further description of information mentioned on today's call.

Suman Mookerji: Thank you, Steve. As a reminder, please see the company's 10-Q and Q2 earnings release for a further description of information mentioned on today's call. As Steve discussed, our Q2 results reflect another strong quarter of revenue with continued recovery in commercial aerospace, along with growth in our military end market. Gross margins and EBITDA margins both continued to show improvement on a year-over-year basis, and the synergies from our facility consolidation projects completed last year are now at the expected run rate. These actions, along with our strategic pricing initiatives, drove continued margin expansion in Q2 and keeps us on pace to achieve our VISION 2027 goal of 18% adjusted EBITDA percentage of sales. Turning to our Q2 results. Revenue for Q2 2026 was $224.5 million, versus $200.8 million for Q2 2025.

Speaker #3: As Steve discussed, our second quarter results reflect another strong quarter of revenue, with continued recovery in commercial aerospace along with growth in our military end markets.

Speaker #3: Gross margins and EBITDA margins both continue to show improvement on a year-over-year basis, and the synergies from our facility consolidation projects completed last year are now at the expected run rate.

Speaker #3: These actions, along with our strategic pricing initiatives, drove continued margin expansion in Q2 and keeps us on pace to achieve our vision 2027 goal of 18% adjusted EBITDA percentage of sales.

Speaker #3: Now, turning to our second quarter results. Revenue for the second quarter of 2026 was $224.5 million, versus $200.8 million for the second quarter of 2025.

Speaker #3: The year-over-year increase of 12% reflects strong growth in commercial aerospace of 16%, driven by growth on single-aisle platforms, including the 737 MAX and A320, as well as growth on wide-body platforms.

Suman Mookerji: The year-over-year increase of 12% reflects strong growth in commercial aerospace of 16%, driven by growth on single-aisle platforms including the 737 MAX and A320, as well as growth on wide-body platforms. The strength in the commercial aerospace business was supported by higher production and deliveries for OEM customers and aftermarket retrofit work on the MAX. We continue to see destocking in our commercial aerospace business and expect it to be largely caught up by the end of 2026. Our defense business grew 7% year-over-year, with continued strength in missiles and fixed-wing platforms, partially offset by temporary declines in radar, naval, and space platforms. The growth in our missile franchise was broad-based, with strength on several different programs, including PAC-3, SM-6, LRASM, Tomahawk, and the Naval Strike Missile. As Steve mentioned earlier, our missile business grew by 68% during the quarter and 29% over the past 12 months.

Speaker #3: The strength in the commercial aerospace business was supported by higher production and deliveries for OEM customers and aftermarket retrofit work on the MAX. We continue to see destocking in our commercial aerospace business and expect it to be largely caught up by the end of 2026.

Speaker #3: Our defense business grew 7% year-over-year with continued strength in missiles and fixed-wing platforms, partially offset by temporary declines in radar, naval, and space platforms.

Speaker #3: The growth in our missile franchise was broad-based, with strength on several different programs, including PAC-3, SM-6, MIR, Tomahawk, and the Naval Strike Missile. As Steve mentioned earlier, our missile business grew by 68% during the quarter and 29% over the past 12 months. With that, our missiles, radar, and electronic warfare programs combined now represent approximately 35% of our LTM defense revenues and more than 20% of total DCO revenue.

Suman Mookerji: With that, our missiles, radar, and electronic warfare programs combined now represent approximately 35% of our LTM defense revenues and more than 20% of total DCO revenue. It is a strong franchise with great platforms to drive significant upside for Ducommun in 2027 and beyond, as we see an uptick in OEM production activity on the various missile platforms. Overall, Q2 was a very strong revenue quarter for us, but did also benefit from some pull forward of production and related revenue from H2 as we look to level load activity in anticipation of higher deliveries in Q3 and Q4. We posted total gross profit of $62.9 million, or 28% of revenue for the quarter, versus $63 million or 26.4% of revenue in the prior year period.

Speaker #3: It's a strong franchise with great platforms to drive significant upside for Ducommun Q4 in 2027 and beyond, as we see an uptick in OEM production activity on the various missile platforms.

Speaker #3: Overall, Q2 was a very strong revenue quarter for us, but it did also benefit from some pull-forward of production and related revenue from the second half, as we look to level-load activity in anticipation of higher deliveries in Q3 and Q4.

Speaker #3: We posted total gross profit of $62.9 million, or 28% of revenue for the quarter, versus $53 million, or 26.4% of revenue in the prior-year period.

Speaker #3: The record gross margin was driven by realization of our planned synergies from the facility consolidation program, which are now at their full run-rate, along with the benefit of higher manufacturing volume.

Suman Mookerji: The record gross margin was driven by realization of our planned synergies from the facility consolidation program, which are now at their full run rate, along with the benefit of higher manufacturing volume. Operating income for Q2 was $28.3 million, or 12.6% of revenue, compared to operating income of $17.7 million, or 8.8% of revenue in the prior year period. The year-over-year increase of $10.6 million was primarily due to higher gross profit and flat SG&A, with the latter benefiting from the one-time compensation clawback. Adjusted operating income was $26.7 million, or 11.9% of revenue this quarter, compared to $20.6 million, or 10.2% of revenue in the comparable period last year. The adjusted operating income excluded the one-time benefit of compensation clawback and was up 170 basis points versus prior year.

Speaker #3: Operating income for the second quarter was $28.3 million, or 12.6% of revenue, compared to operating income of $17.7 million, or 8.8% of revenue, in the prior year period.

Speaker #3: The year-over-year increase of $10.6 million was primarily due to higher gross profit and flat SG&A, with the latter benefiting from the one-time compensation clawback.

Speaker #3: Adjusted operating income was $26.7 million, or 11.9% of revenue this quarter, compared to $20.6 million, or 10.2% of revenue, in the comparable period last year.

Speaker #3: The adjusted operating income excluded the one-time benefit of the compensation clawback and was up 170 basis points versus the prior year. The company reported net income for the second quarter of $20.4 million, or $1.31 per diluted share, compared to $12.8 million, or $0.84 per diluted share, a year ago.

Suman Mookerji: The company reported net income for Q2 of $20.4 million, or $1.31 per diluted share, compared to $12.8 million or $0.84 per diluted share a year ago. On an adjusted basis, the company reported net income of $18.4 million or $1.18 per diluted share, compared to adjusted net income of $13.6 million or $0.90 in Q2 2025. The higher net income and adjusted net income during the quarter were driven by the higher adjusted operating income. Now let me turn to our segment results. Our Structural Systems segment posted revenue of $93 million in Q2 2026 versus $91 million last year. The year-over-year change reflected $4 million higher revenue in our commercial aerospace business, driven by single-aisle platforms, including the Max and the A320, as well as wide-body platforms.

Speaker #3: On an adjusted basis, the company reported net income of $18.4 million, or $1.18 per diluted share, compared to adjusted net income of $13.6 million, or $0.90, in Q2 2025.

Speaker #3: The higher net income and adjusted net income during the quarter were driven by higher adjusted operating income. Now, let me turn to our segment results.

Speaker #3: Our Structural Systems segment posted revenue of $93 million in the second quarter of 2026, versus $91 million last year. The year-over-year change reflected $4 million higher revenue in our commercial aerospace business, driven by single-aisle platforms, including the MAX and the A320, as well as wide-body platforms.

Speaker #3: The military and space business within this segment was down $2 million on a year-over-year basis, with temporary weakness in military rotorcraft partially offset by growth in missiles.

Suman Mookerji: The military and space business within this segment was down $2 million on a year-over-year basis, with temporary weakness in military rotorcraft partially offset by growth in missiles. Structural Systems operating income for the quarter was $12.8 million or 13.7% of revenue, compared to $9.3 million or 10.2% of revenue for the prior year quarter. Excluding restructuring charges and other adjustments in both years, the segment operating margin was 15.7% in Q2 2026 versus 12.8% in Q2 2025. The increase in year-over-year margin was driven by savings from the facility consolidation program and higher manufacturing volume. Our Electronic Systems segment posted revenue of $131 million in Q2 2026 versus $110 million in the prior year period, an increase of 20%.

Speaker #3: Structural Systems operating income for the quarter was $12.8 million, or 13.7% of revenue, compared to $9.3 million, or 10.2% of revenue, for the prior year quarter.

Speaker #3: Excluding restructuring charges and other adjustments in both years, the segment operating margin was 15.7% in Q2 2026 versus 12.8% in Q2 2025. The increase in year-over-year margin was driven by savings from the facility consolidation program and higher manufacturing volume.

Speaker #3: Our Electronic Systems segment posted revenue of $131 million in the second quarter of 2026 versus $110 million in the prior-year period, an increase of 20%.

Speaker #3: The year-over-year change reflected $10 million in higher revenues in military and space applications, driven by strong growth in missiles and military fixed-wing aircraft, partially offset by temporary weakness in our radar and space business.

Suman Mookerji: The year-over-year change reflected $10 million in higher revenues in military and space applications, driven by strong growth in missiles and military fixed-wing aircraft, partially offset by temporary weakness in our radar and space business. Commercial aerospace in the quarter grew $8 million, driven by growth in Boeing platforms. Our industrial business also grew $3.8 million during Q2 due to timing of production orders. Electronic Systems operating income for Q2 was $25.5 million, or 19.4% of revenue, versus $20.5 million, or 18.6% of revenue in the prior year period. Excluding restructuring charges and other adjustments in both years, the segment operating margin was 19.7% in Q2 2026 versus 19.1% in Q2 2025. The year-over-year increase was driven by higher manufacturing volume. Turning to liquidity and capital resources.

Speaker #3: Commercial aerospace in the quarter grew $8 million, driven by growth on Boeing platforms. Our industrial business also grew $3.8 million during Q2 due to the timing of production orders.

Speaker #3: Electronic Systems operating income for the second quarter was $25.5 million, or 19.4% of revenue, versus $20.5 million, or 18.6% of revenue in the prior-year period.

Speaker #3: Excluding restructuring charges and other adjustments in both years, the segment operating margin was 19.7% in Q2 2026 versus 19.1% in Q2 2025. The year-over-year increase was driven by higher manufacturing volume.

Speaker #3: Turning to liquidity and capital resources, in Q2 2026 we generated $33.5 million in cash flow from operating activities, compared to $22.4 million in Q2 of last year.

Suman Mookerji: In Q2 2026, we generated $33.5 million in cash flow from operating activities compared to $22.4 million in Q2 of last year. Our strong cash generation was driven by higher net income, partially offset by higher working capital during the quarter. Year-to-date, cash flow from operating activities was $44.8 million, and year-to-date free cash flow was $38.3 million, representing free cash flow conversion against adjusted net income of 127%. In Q4 of last year, the company amended its credit agreement, which now included a $200 million term loan and a $450 million revolver. This new $650 million facility lowers our cost of capital and gives us incremental capacity to execute on our acquisition strategy. As of the end of Q2, we had available liquidity of $410 million, comprising of the unutilized portion of our revolver and cash on hand.

Speaker #3: Our strong cash generation was driven by higher net income, partially offset by higher working capital during the quarter. Year-to-date, cash flow from operating activities was $44.8 million, and year-to-date free cash flow was $38.3 million, representing free cash flow conversion against adjusted net income of 127%.

Speaker #3: In Q4 of last year, the company amended its credit agreement, which now includes a $200 million term loan and a $450 million revolver. This new $650 million facility lowers our cost of capital and gives us incremental capacity to execute on our acquisition strategy.

Speaker #3: As of the end of the second quarter, we had available liquidity of $410 million, comprising the unutilized portion of our revolver and cash on hand.

Speaker #3: Interest expense in Q2 was $3.5 million, compared to $3.0 million in Q2 of 2025. The year-over-year increase in interest cost was primarily due to higher debt balances, offset by lower interest rates on our debt due to more favorable terms in our new credit agreement.

Suman Mookerji: Interest expense in Q2 was $3.5 million, compared to $3 million in Q2 of 2025. The year-over-year increase in interest cost was primarily due to higher debt balances, offset by lower interest rates on our debt due to more favorable terms in our new credit agreement. Also, as a reminder, in November 2021, we had put in place an interest rate hedge that went into effect for a seven-year period starting January 2024 and pegs the one-month term SOFR at 170 basis points for $150 million of our debt. The hedge is still in place and will continue to drive significant interest cost savings in 2026 and beyond. To conclude the financial overview, I would like to say that the Q2 results continue to affirm that our VISION 2027 strategy is working and that we are well-positioned to achieve our VISION 2027 goals.

Speaker #3: Also, as a reminder, in November 2021, we put in place an interest rate hedge that went into effect for a seven-year period starting January '24, and pegs the one-month term SOFR at 170 basis points for $150 million of our debt.

Speaker #3: The hedge is still in place and will continue to drive significant interest cost savings in 2026 and beyond. To conclude the financial overview, I would like to say that the second quarter results continue to affirm that our Vision 2027 strategy is working, and that we are well positioned to achieve our Vision 2027 goals.

Speaker #3: I'll now turn it back to Steve for his closing remarks. Steve.

Suman Mookerji: I'll now turn it back to Steve for his closing remarks. Steve?

Speaker #1: Okay. Thanks, Suman. In closing, Q2 was another record quarter for DCO. I could not be happier. We ended the first half as well with record revenue and even better margins.

Stephen G. Oswald: Okay. Thanks, Suman. In closing, Q2 was another record quarter for DCO. I could not be happier. We ended the H1 as well with record revenue and even the margins are seeing strong tailwinds across our primary end markets. It was also our fifth consecutive quarter of revenue over $200 million. Gross margin and adjusted EBITDA margins were at 28% and 17.1% respectively. Wonderful news. On track to meet our VISION 2027 goals. In addition, the company's engineered product revenues over the past 12 months was 23%, in excellent shape as we drive higher OEM and aftermarket products through the P&L. As everyone knows, driving this percentage as high as possible is our number one strategic focus with 100% commitment.

Steve Oswald: Okay. Thanks, Suman. In closing, Q2 was another record quarter for DCO. I could not be happier. We ended the H1 as well with record revenue and even the margins are seeing strong tailwinds across our primary end markets. It was also our fifth consecutive quarter of revenue over $200 million. Gross margin and adjusted EBITDA margins were at 28% and 17.1% respectively. Wonderful news. On track to meet our VISION 2027 goals. In addition, the company's engineered product revenues over the past 12 months was 23%, in excellent shape as we drive higher OEM and aftermarket products through the P&L. As everyone knows, driving this percentage as high as possible is our number one strategic focus with 100% commitment.

Speaker #1: We're seeing strong tailwinds across our primary end markets. It was also our fifth consecutive quarter of revenue over $200 million. Gross margin and adjusted EBITDA margins were at 28% and 17.1%, respectively.

Speaker #1: Wonderful news, and we're on track to meet our Vision 2027 goals. In addition, the company's engineered product revenues over the past 12 months were up 23% and in excellent shape as we drive higher OEM and aftermarket products through the P&L.

Speaker #1: As everyone knows, driving this percentage as high as possible is our number one strategic focus, with 100% commitment. Finally, I look forward to sharing the next chapter of Ducommun.

Stephen G. Oswald: Finally, I look forward to sharing the next chapter of Ducommun, California's oldest company still operating today, when we unveil our VISION 2032 on 17 September at our investor day in New York. We could not be more positive about the future of DCO over the next six years and are excited to share the strategy and game plan with all of you next month. With that, now let's go to questions. Thank you.

Steve Oswald: Finally, I look forward to sharing the next chapter of Ducommun, California's oldest company still operating today, when we unveil our VISION 2032 on 17 September at our investor day in New York. We could not be more positive about the future of DCO over the next six years and are excited to share the strategy and game plan with all of you next month. With that, now let's go to questions. Thank you.

Speaker #1: California's oldest company, still operating today. When we unveil our Vision 2032 on September 17th at our Investor Day in New York, we could not be more positive about the future of DCO over the next six years.

Speaker #1: And we're excited to share the strategy and game plan with all of you next month. With that, let's go to questions. Thank you.

Speaker #2: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, press *11 again.

Operator: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment while we compile the Q&A roster. Our first question will come from the line of Jon Gacek with Citi. Your line is open.

Speaker #2: One moment while we compile the Q&A roster. Our first question will come from the line of John Goodin with Citi. Your line is open.

Speaker #4: Hey, guys. Thanks for taking my question. I wanted to just hone in on a couple of things from the prepared remarks, and then maybe ask a bigger-picture one.

Jon Gacek: Hey, guys. Thanks for taking my question. I wanted to just hone in on a couple of things from the prepared remarks and then maybe ask a bigger picture one. In the prepared remarks, the missile growth number, I think I heard 68%. That was a very large acceleration from last quarter. Obviously, there's a theme there, but I would love a little bit more color on whatever you're willing to share on the large inflection there. Separately, you mentioned a large retrofit order, which I thought was very interesting and perhaps offering a little bit more color there would be useful as well.

John Godyn: Hey, guys. Thanks for taking my question. I wanted to just hone in on a couple of things from the prepared remarks and then maybe ask a bigger picture one. In the prepared remarks, the missile growth number, I think I heard 68%. That was a very large acceleration from last quarter. Obviously, there's a theme there, but I would love a little bit more color on whatever you're willing to share on the large inflection there. Separately, you mentioned a large retrofit order, which I thought was very interesting and perhaps offering a little bit more color there would be useful as well.

Speaker #4: But in the prepared remarks, the missile growth number. I think I heard 68%. That was a very large acceleration from last quarter. I would love obviously, there's a theme there, but I would love a little bit more color on kind of whatever you're willing to share on the large inflection there.

Speaker #4: And then separately, you mentioned a large retrofit order, which I thought was very interesting. Perhaps offering a little bit more color there would be useful as well.

Speaker #1: Sure. Great, great to be with you. Thank you for the question, or the questions. I'll handle the first one. Yeah, we're thrilled with the 68%.

Stephen G. Oswald: Sure. Great to be with you. Thank you for the question or the questions. I'll handle the first one. We're thrilled with the 68%. A lot of it is PAC-3. Great job by our team, our whole group that supports the PAC-3. Lockheed, in general, is on this replenishment, even though this order was not for the 7 years. Obviously, 7 year was just done last month in July. Very focused on PAC-3. We are a major supplier for cards for the PAC-3, and that was a big part of the 68%. Sumant, want to handle the other one?

Steve Oswald: Sure. Great to be with you. Thank you for the question or the questions. I'll handle the first one. We're thrilled with the 68%. A lot of it is PAC-3. Great job by our team, our whole group that supports the PAC-3. Lockheed, in general, is on this replenishment, even though this order was not for the 7 years. Obviously, 7 year was just done last month in July. Very focused on PAC-3. We are a major supplier for cards for the PAC-3, and that was a big part of the 68%. Sumant, want to handle the other one?

Speaker #1: A lot of it is PAC-3. So, great job by our team, our whole group that supports the PAC-3. Lockheed in general is on this replenishment, even though this order was not for the seven-year.

Speaker #1: Obviously, seven-year was just on last month in July. They are very focused on PAC-3. We are a major supplier for cards for the PAC-3, and so that was a big part of the 68%.

Speaker #1: And Suman, I want to handle the other one.

Speaker #5: Yeah. And John, just to make sure, the second part outside of the missile growth—yes, the Carson business.

Suman Mookerji: Jon, just to make sure, the second part outside of the missile growth?

Stephen G. Oswald: It's the Carson-

Steve Oswald: It's the Carson-

Suman Mookerji: Yeah, the Carson business-

Jon Gacek: The retrofit

John Godyn: The retrofit

Speaker #4: The retrofit.

Suman Mookerji: Yeah. That really is a great win for us with engineered products. Carson is an engineered product business. We own the design IP in the revenues that come out of that performance center, and they were able to design a switch, which is going to be retrofitted on the Max. That was a big win, and eventually we expect that will also be part of the line fit, and will drive recurring revenue for us. Even prior to that, the retrofit order is a large fleet out there, and is going to drive revenue for us for the next few years, just the retrofit alone. It's a big win, and that helped with the Max.

Speaker #1: Yes, so that really is a great win for us with engineered products. Carson is an engineered product business. We own the design IP and the revenues that come out of that performance center.

Speaker #1: And they were able to design a switch, which is going to be retrofitted on the MAX. That was a big win. Eventually, we expect that will also be part of the line fit.

Speaker #1: And we'll drive recurring revenue for us. But even prior to that, the retrofit order is—it's a large fleet out there, and it's going to drive revenue for us for the next few years, just the retrofit alone.

Speaker #1: So it's a big win, and that helped with the MAX.

Stephen G. Oswald: Absolutely. Jon, that's a home run for us, that retrofit.

Steve Oswald: Absolutely. Jon, that's a home run for us, that retrofit.

Speaker #5: Absolutely. As John said, that's a home run for us—that retrofit.

Speaker #4: Excellent, excellent. And maybe if we just take a step back—and I'm sure we're going to hear more at the Investor Day—but just taking a step back on the margin outlook, I think sometimes the pushback that we hear from investors is on contract manufacturing exposure and the margins that that kind of generates.

Jon Gacek: Maybe if we just take a step back, and I'm sure we're going to hear more at the Investor Day, but just taking a step back on the margin outlook. I think sometimes, the pushback that we hear from investors is on contract manufacturing exposure and the margins that that kind of generates. I think you've demonstrated that you're able to generate higher than normal margins on contract manufacturing. Steve, maybe there's something to kind of dig in there a little bit and just shed some light on how your contract manufacturing is a little bit different, maybe a little bit more specialized, and how it's generating that margin profile.

John Godyn: Maybe if we just take a step back, and I'm sure we're going to hear more at the Investor Day, but just taking a step back on the margin outlook. I think sometimes, the pushback that we hear from investors is on contract manufacturing exposure and the margins that that kind of generates. I think you've demonstrated that you're able to generate higher than normal margins on contract manufacturing. Steve, maybe there's something to kind of dig in there a little bit and just shed some light on how your contract manufacturing is a little bit different, maybe a little bit more specialized, and how it's generating that margin profile.

Speaker #4: I think you've demonstrated that you're able to generate higher-than-normal margins on contract manufacturing. And Steve, maybe there's something to kind of dig in there a little bit and just shed some light on how your contract manufacturing is a little bit different—maybe a little bit more specialized—and how it's generating that margin profile.

Speaker #1: Yeah, it's a great question, and I think I'm happy to have this answer: contract manufacturing is a challenging business, but if you find the right niches, you can make good money.

Stephen G. Oswald: Yeah. It's a great question, I think I'm happy to have this answer, is that contract manufacturing is a challenging business. If you find the right niches, you can make good money and have some pricing power. That's a good example as our titanium business. We do superplastic forming and hot forming of titanium in the structures, which is a contract manufacturing build-to-print business. There's only a few folks that do that in the entire world. Outside of Toulouse, which Airbus has, even though they're a customer, they also have their own internal titanium operation. We're the largest, and there's very few that can do the work we do. That's one example. The other example I'll give you is our Joplin facility, which makes harnesses. All types of ruggedized harnesses, all types of applications for high heat, for pressure, for all types of environments.

Steve Oswald: Yeah. It's a great question, I think I'm happy to have this answer, is that contract manufacturing is a challenging business. If you find the right niches, you can make good money and have some pricing power. That's a good example as our titanium business. We do superplastic forming and hot forming of titanium in the structures, which is a contract manufacturing build-to-print business. There's only a few folks that do that in the entire world. Outside of Toulouse, which Airbus has, even though they're a customer, they also have their own internal titanium operation. We're the largest, and there's very few that can do the work we do. That's one example. The other example I'll give you is our Joplin facility, which makes harnesses. All types of ruggedized harnesses, all types of applications for high heat, for pressure, for all types of environments.

Speaker #1: And have some pricing power. And that's a good example, as our titanium business—we do superplastic forming and hot forming of titanium. In the Structures, which is a contract manufacturing, build-to-print business.

Speaker #1: And there are only a few folks that do that in the entire world. And outside of Toulouse, which Airbus has—even though they're a customer, they also have their own internal titanium operation.

Speaker #1: We're the largest, and there are very, very few that can do the work we do. So that's one example. The other example I'll give you is our Joplin facility, which makes harnesses.

Speaker #1: All types of ruggedized harnesses, all types of applications—for high heat, for pressure, for all types of environments. And very few people can do that, too.

Stephen G. Oswald: Very few people can do that, too. When you look at Ducommun and contract manufacturing, you can't look at us as we're just doing machining with 5 and 6 axis machines, and there's 100 companies that can do that worldwide. Okay? You really got to think about our CM business as just really things that are really hard to make, and there's few people doing it in the world.

Steve Oswald: Very few people can do that, too. When you look at Ducommun and contract manufacturing, you can't look at us as we're just doing machining with 5 and 6 axis machines, and there's 100 companies that can do that worldwide. Okay? You really got to think about our CM business as just really things that are really hard to make, and there's few people doing it in the world.

Speaker #1: So when you look at Ducommun and contract manufacturing, you can't look at us as if we're just doing machining with five- and six-axis machines. There are a hundred companies that can do that worldwide.

Speaker #1: Okay? You really have to think about our CM business as just things that are really hard to make, and there are very few people doing it in the world.

Speaker #4: Excellent. Thanks for the color, guys.

Jon Gacek: Excellent. Thanks for the color, guys.

John Godyn: Excellent. Thanks for the color, guys.

Speaker #1: All right, John. Thanks.

Stephen G. Oswald: Bye, Jon. Thanks.

Steve Oswald: Bye, Jon. Thanks.

Operator: One moment for our next question. That will come from the line of Mike Crawford with B. Riley Securities. Your line is open.

Speaker #2: One moment for our next question. And that will come from the line of Mike Crawford with B. Riley Securities. Your line is open.

Speaker #5: Thank you. So we know you're embedded on these large, traditional prime missile and munitions programs. But what are you doing to address all the opportunities coming with affordable mass and emerging new primes, such as Anduril?

Mike Crawford: Thank you. We know you're embedded on these large, traditional prime missile, and munitions programs. What are you doing to address all the opportunities coming with affordable mass and emerging new primes, such as like Anduril?

Speaker #1: Yeah. Well, first of all, great question again. We are engaged. We're engaged with AeroVironment. We're engaged with Anduril. Obviously, somewhat as well with Kratos.

Stephen G. Oswald: Yeah. Well, first of all, great question again. We are engaged. We're engaged with AeroVironment. We're engaged with Anduril. Obviously, somewhat as well with Kratos. We are absolutely on top of this, as far as trying to find areas where we can drive value. Do I see us on a $5,000 drone? I'm not sure. Okay. I do see us being able to provide value in different areas, such as composites, possibly RF, antennas, those type of things. We are actively quoting, actively engaged. We have high levels of relationship now with their management. We continue to move forward. We're right on top of it, Mike.

Steve Oswald: Yeah. Well, first of all, great question again. We are engaged. We're engaged with AeroVironment. We're engaged with Anduril. Obviously, somewhat as well with Kratos. We are absolutely on top of this, as far as trying to find areas where we can drive value. Do I see us on a $5,000 drone? I'm not sure. Okay. I do see us being able to provide value in different areas, such as composites, possibly RF, antennas, those type of things. We are actively quoting, actively engaged. We have high levels of relationship now with their management. We continue to move forward. We're right on top of it, Mike.

Speaker #1: So we are absolutely on top of this as far as trying to find areas where we can drive value. Do I see us on a $5,000 drone?

Speaker #1: I'm not sure, okay? But I do see us being able to provide value in different areas, such as composites, possibly RF, antennas—those types of things.

Speaker #1: So, we're actively quoting—actively engaged. We have high levels of relationship now with their management, and we continue to move forward. So, we're right on top of it, Mike.

Speaker #5: All right. Thanks, Steve. And just for one follow-up question: we know you've been super patient on M&A—I mean, super successful as well—and patient in recent years to not do anything that's not good for shareholders.

Mike Crawford: All right. Thanks, Steve. Just for one follow-up question. We know you've been super patient on M&A. Super successful as well, and patient in recent years to not do anything that's not good for shareholders. Do you ever get tempted to look at larger, more transformational deals? Related, is any other updates on the existing pipeline?

Speaker #5: But do you have a good temperament to look at larger and more transformational deals? And, related, are there any other updates on the existing pipeline?

Stephen G. Oswald: Mike, you're a great straight man, okay? Look forward to talking to you in September. Well, that's some good news for you. I do mean that, but that's Suman. You want to jump in real quick?

Steve Oswald: Mike, you're a great straight man, okay? Look forward to talking to you in September. Well, that's some good news for you. I do mean that, but that's Suman. You want to jump in real quick?

Speaker #1: Mike, you're a great straight man, okay? Look forward to talking to you in September. We'll have some good news for you—I do mean that.

Speaker #1: But with that, Suman, do you want to jump in real quick?

Suman Mookerji: Yeah, no, we continue to remain active in the market in terms of looking at opportunities. We've beefed up the team and so we are absolutely looking at a number of things that we're going to do. We're going to pull the trigger when we think the opportunity is right and we have the ability to create value for our shareholders. Stay tuned, and I think you asked another good question, which, as Steve said, we'll be better positioned to answer next month.

Speaker #5: Yeah, no, we continue to remain active in the market in terms of looking at opportunities. We've beefed up the team, and so we are absolutely looking at a number of things.

Speaker #5: And we're going to do we're going to pull the trigger when we think the opportunity is right. And there is we have the ability to create value for our shareholders.

Speaker #5: So we stay tuned. And I think you asked another good question, which, as Steve said, we'll be better positioned to answer.

Stephen G. Oswald: Yeah, more to come next month, Mike.

Steve Oswald: Yeah, more to come next month, Mike.

Speaker #1: Yeah. More to come next month, Mike.

Speaker #5: I'll be there. All right, thank you.

Mike Crawford: I'll be there. All right. Thank you.

Stephen G. Oswald: Great. Look forward to seeing you. Thank you. Thanks for coming all that way.

Steve Oswald: Great. Look forward to seeing you. Thank you. Thanks for coming all that way.

Speaker #1: Great. We look forward to seeing you. Thank you. Thanks for coming all that way.

Operator: One moment for our next question. That will come from the line of Ken Herbert with RBC Capital Markets. Your line is open.

Speaker #2: One moment for our next question. That will come from the line of Ken Herbert with RBC Capital Markets. Your line is open.

Ken Herbert: Yeah. Hey, Steve and Suman. I just wanted to follow up on the margin question, again, without getting too far ahead of potential September news. You've done a lot from a restructuring standpoint, facility, your manufacturing footprint. As we think about gross margins moving forward, obviously volume would be an important tailwind. Sounds like you're getting better price. Is there anything else we should think about from just an organizational structure standpoint? Anything else that could be a tailwind to margins beyond volume and price as we think about the potential over the next few years?

Speaker #5: I just wanted to follow up on the margin question. Again, without getting too far ahead of potential September news. But you've done a lot from a restructuring standpoint, facility, and manufacturing footprint.

Speaker #5: As we think about gross margins, moving forward, obviously, volume would be an important tailwind. Sounds like you're getting better price. Is there anything else we should think about from a just an organizational structure standpoint, anything else that could be a tailwind to margins beyond volume and price as we think about sort of the potential over the next few years?

Suman Mookerji: Ken, great question. We certainly believe there is a lot of margin runway ahead of the company. Again, more color to be provided on Investor Day. You noted a couple of key drivers. I would say the other big driver for us is going to be the continued shift to engineered products. That's been an important part of our story over the last four or five years, well, ever since Steve took on leadership of the company. It's going to continue to be part of our story going forward, and that will help improve our margin. Moving to higher IP products, which are more engineered, where we're able to make better margins.

Speaker #1: Ken, great question. We certainly believe there is a lot of margin runway ahead for the company. Again, more color will be provided on Investor Day.

Speaker #1: You noted a couple of key drivers. I would say the other big driver for us is going to be the continued shift to engineered products.

Speaker #1: And that's been an important part of our story over the last four or five years—well, ever since Steve took on leadership of the company.

Speaker #1: And it's going to continue to be part of our story going forward. That will help improve our margin as we move to higher-IP products, which are more engineered and where we're able to make better margins.

Speaker #1: Yeah. Ken, the other thing is we just—and just at the top, the next level down is that our engineering, on the engineered product side, is just so much better.

Stephen G. Oswald: Yeah. Ken, the other answer, just the next level down is that our engineering, Ken, on the engineered product side is just so much better. Great example is this retrofit, with the Max.

Steve Oswald: Yeah. Ken, the other answer, just the next level down is that our engineering, Ken, on the engineered product side is just so much better. Great example is this retrofit, with the Max.

Speaker #1: So, a great example is this retrofit with the MAX.

Ken Herbert: Are you-

Speaker #5: How are you?

Stephen G. Oswald: You know what I mean?

Steve Oswald: You know what I mean?

Speaker #1: Yeah. Yeah. Go ahead, please.

Ken Herbert: Yeah. Are you?

Stephen G. Oswald: Yeah, go ahead. Please.

Steve Oswald: Yeah, go ahead. Please.

Speaker #5: I'm sorry, Steve.

Ken Herbert: I'm sorry, Steve.

Speaker #1: That's okay.

Stephen G. Oswald: That's okay.

Steve Oswald: That's okay.

Speaker #5: I was just going to ask, is most of the missile exposure engineered products? Because it just seems like you've got phenomenal opportunity there. But there is significant mixed benefit.

Ken Herbert: I was just going to ask, is most of the missile exposure engineered products? It just seems like you've got phenomenal opportunity there, but a significant mixed benefit is just going to face headwinds from growth in a lot of the non-engineered products parts of the portfolio.

Speaker #5: It's just going to face headwinds from growth in a lot of the non-engineered products, parts of the portfolio. No, that's a good point as well.

Stephen G. Oswald: Go ahead.

Steve Oswald: Go ahead.

Suman Mookerji: No, that's a good point as well. That's where kind of acceleration in M&A is going to play a factor as well. Again, more to come at Investor Day. We are growing our engineered products organically too. If you look at the performance over the last 4 years under VISION 2027 with the one acquisition which contributed maybe 300 basis points to the mix shift. We have gone from 15% to 23% of revenue from engineered products. That's reflective of the strong organic growth in the business, and there is an expectation with the investments made in that business that we will continue to see strong organic growth. That supplemented with M&A will help keep moving the shift.

Speaker #5: And that's where acceleration in M&A is going to play a factor as well. Again, more to come at Investor Day.

Speaker #5: But we are growing our engineered products organically too. If you look at the performance over the last four years and revision to 2027, with the one acquisition—which contributed maybe 300 basis points to the mix shift—we have gone from 15% to 23% of revenue from engineered products.

Speaker #5: So, that's reflective of the strong organic growth in the business. And there is an expectation, with the investments made in that business, that we will continue to see strong organic growth.

Speaker #5: And that, supplemented with M&A, will help keep moving the shift. I think the other question you had around missiles—a lot of the missile work is these ruggedized interconnects or cables, which are not in our definition of engineered product.

Suman Mookerji: I think the other question you had around missiles, a lot of the missile work is these ruggedized interconnects or cables, which are not, in our definition, engineered product, but they are highly proprietary in terms of the process capability that we have. They aren't technically part of engineered.

Speaker #5: But they are highly proprietary in terms of the process and capability that we have. However, they aren't technically part of engineering.

Stephen G. Oswald: Yeah. It leans more to CM on the missile, Ken. Again, we're working. It's obviously built out more engineered products and we're really happy where we are, and I think we're going to have a really nice story for you guys next month on that.

Steve Oswald: Yeah. It leans more to CM on the missile, Ken. Again, we're working. It's obviously built out more engineered products and we're really happy where we are, and I think we're going to have a really nice story for you guys next month on that.

Speaker #1: Yeah, it leans more to CM on the missile, Ken. But again, we're working—it's obviously built out more engineered products. And we're really happy where we are.

Speaker #1: And I think we're going to have a really nice Q2 at that.

Ken Herbert: No, it sounds great. If I could, just one final question. Where are you from a capacity standpoint? As you're seeing the growth like in the rugged interconnects in these areas, or do you have sufficient capacity in Joplin and these other centers of excellence to drive that? Or are you looking at maybe more CapEx or hiring to really support that?

Speaker #5: If I could just ask one final question. Where are you from a capacity standpoint? I mean, as you're seeing the growth in the rugged interconnects in these areas, do you have sufficient capacity and job plans in these other centers of excellence to drive that?

Speaker #5: Or are you looking at maybe more CapEx or hiring to really support that?

Speaker #1: Yeah, hiring for sure, Ken. Thankfully, on the capital side and footprint side, we're in really good shape. Obviously, we're going to have to make some investments over the next few years.

Stephen G. Oswald: Yeah. Hiring for sure, Ken. Okay. Thankfully on the capital side and footprint side, we're in really good shape. Obviously, we're going to have to make some investments over the next few years. Joplin, for instance, the guys are doing a great job. We just opened up another part of the building that was really not being used for another 25,000, 30,000 square feet. The Tomahawk is going to go in there. That's being lined out. It's going to be a world-class facility. We're hiring quite a bit in Joplin, for instance. I think we probably hired over 80, 90 people since January. That's a lot for us. We're moving forward, and I think we'll be in good shape.

Steve Oswald: Yeah. Hiring for sure, Ken. Okay. Thankfully on the capital side and footprint side, we're in really good shape. Obviously, we're going to have to make some investments over the next few years. Joplin, for instance, the guys are doing a great job. We just opened up another part of the building that was really not being used for another 25,000, 30,000 square feet. The Tomahawk is going to go in there. That's being lined out. It's going to be a world-class facility. We're hiring quite a bit in Joplin, for instance. I think we probably hired over 80, 90 people since January. That's a lot for us. We're moving forward, and I think we'll be in good shape.

Speaker #1: But job plan, for instance, the guys are doing a great job. We just opened up another part of the building that was really not being used—for another 25,000 to 30,000 square feet.

Speaker #1: The Tomahawk is going to go in there, and that's being lined out. It's going to be a world-class facility. But we're hiring quite a bit.

Speaker #1: And job plan, for instance, I think we probably hired over 80 or 90 people since January. So that's a lot for us. So we're moving forward.

Speaker #1: And I think we'll be in good shape.

Speaker #5: Perfect. Thanks, Steve. Thanks, Suman.

Ken Herbert: Perfect. Thanks, Steve. Thanks, Suman.

Stephen G. Oswald: All right, Ken. Good to be with you. Thanks.

Steve Oswald: All right, Ken. Good to be with you. Thanks.

Speaker #1: All right, Ken. Good to be with you. Thanks.

Speaker #2: Thank you. As a reminder, if you would like to ask a question, please press *11. Our next question will come from Alexandra Mandari with Truist Securities. Your line is open.

Operator: Thank you. As a reminder, if you would like to ask a question, please press *11. Our next question will come from Alexandra Mandery with Truist Securities. Your line is open.

Alexandra Mandery: Hey, nice results, thanks for taking my question. In relation to missiles, have you started taking a look at your supply chain there to secure components to align with the demand? What might those pinch points be?

Speaker #6: Hey, nice results, and thanks for taking my question. In relation to missiles, have you started taking a look at your supply chain there to secure components to align with the demand?

Speaker #6: And what might those pinch points be?

Speaker #1: Yeah, it's a good question. Look, it's always a concern. I think we have a really effective supply chain group. We've been doing this game for a long time, as you know.

Stephen G. Oswald: Yeah, it's a good question. Look, it's always a concern. I think we have a really effective supply chain group. We've been doing this game for a long time, as you know. It's a big part of our business. We know how to look at the market. We certainly do some buffer stock when needed. We feel overall that with the capacity and the footprint that we are just still underutilized, right? We just got to start going way up as far as the hiring, which is obviously ongoing right now. We obviously have to monitor it, but we feel good about the supply chain. We're not uptight about really any kind of components other than we need to manage it and we do that right now. I think it's all green light.

Steve Oswald: Yeah, it's a good question. Look, it's always a concern. I think we have a really effective supply chain group. We've been doing this game for a long time, as you know. It's a big part of our business. We know how to look at the market. We certainly do some buffer stock when needed. We feel overall that with the capacity and the footprint that we are just still underutilized, right? We just got to start going way up as far as the hiring, which is obviously ongoing right now. We obviously have to monitor it, but we feel good about the supply chain. We're not uptight about really any kind of components other than we need to manage it and we do that right now. I think it's all green light.

Speaker #1: There's a big part of our business, so we know how to look at the market. We know we certainly do some buffer stock when needed.

Speaker #1: We feel overall that with the capacity and the footprint that we still are—which is still underutilized, right—which is going to start going way up as far as the now.

Speaker #1: We obviously have to monitor it, but we feel good about the supply chain. We're not uptight about, really, any kind of components, other than, you know, we just need to manage it.

Speaker #1: And we do that right now. So, I think it's all green light.

Alexandra Mandery: Great. Thank you.

Speaker #6: Great. Thank you.

Speaker #1: Thank you for the question.

Stephen G. Oswald: Thank you for the question.

Steve Oswald: Thank you for the question.

Speaker #2: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call over to Mr. Stephen Oswald for any closing remarks.

Operator: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call over to Mr. Steve Oswald for any closing remarks.

Speaker #1: Okay, great. Well, let me just wrap it up first. Thank you again for joining us for the Q2 call. As I said in my press release, which I did over the past few days.

Stephen G. Oswald: Okay, great. Well, let me just wrap it up. First, thank you again for joining us for the Q2 call. As I said in my press release which I did over the past few days, the first sentence is, "I could not be happier," and that's true. The H1 and this quarter's been wonderful for DCO, wonderful for our employees, our customers, and obviously our shareholders as equally important. We're looking forward to another great H2 in 2026. We're also very excited about our Investor Day next month. We hope you can join us. Again, thank you for being with us today, and have a safe day.

Steve Oswald: Okay, great. Well, let me just wrap it up. First, thank you again for joining us for the Q2 call. As I said in my press release which I did over the past few days, the first sentence is, "I could not be happier," and that's true. The H1 and this quarter's been wonderful for DCO, wonderful for our employees, our customers, and obviously our shareholders as equally important. We're looking forward to another great H2 in 2026. We're also very excited about our Investor Day next month. We hope you can join us. Again, thank you for being with us today, and have a safe day.

Speaker #1: I cannot be happier. And that's true. The first six months in this quarter have been wonderful for DCO, wonderful for our employees, and wonderful for our customers.

Speaker #1: And obviously, our shareholders are equally important. So we're looking forward to another great second half in 2026, and we're also very excited about our Investor Day next month.

Speaker #1: We hope you can join us again. Thank you for being with us today, and have a safe day.

Operator: This concludes today's program. Thank you all for participating. You may now disconnect.

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