Ducommun Inc (DCO) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to our Q3 2020 Ducommun Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Chris Witty, Investor Relations' moderator. Thank you. Please go ahead, sir.

Good day, ladies and gentlemen, and welcome to Ducommun's third quarter conference call. (Operator Instructions) I'd now like to go over a brief safe harbor statement.

Thank you, and welcome to Ducommun's Third Quarter Conference Call. With me today are Steve Oswald, Chairman, President and CEO; and Chris Wampler, Vice President, Interim Chief Financial Officer and Treasurer and Controller and Chief Accounting Officer.

I'm 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 question-and-answer session that follows. Certain statements today that are not historical facts, including any statements as to the future market conditions, results of operations and financial projections are forward-looking statements under the Federal Private Securities Litigation Reform Act of 1995 and are therefore prospective. These forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company's current business, which is subject to change.

Particular risks facing Ducommun include, among others, the cyclicality of our end-use markets, the impact of COVID-19 on our operations or customers; the level of U.S. government defense spending; timing of orders from our customers; legal and regulatory risks; management changes; the cost of expansion and acquisitions; competitions; and disasters, either natural or otherwise. These risks and others are described in our annual report on Form 10-K filed with the SEC, and 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 2020 third quarter Form 10-Q with the SEC today.

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

Well, thank you, Chris, and thanks, everyone, for joining us today for our third quarter conference call. As in the second quarter call, I hope that you and your families are healthy and continuing to get through this pandemic as best as possible.

Today, as you know, I will give an update of the current situation at the company, after which, Chris Wampler will review our financials in detail. The company remains focused first and foremost on the health and safety of our employees. The team has done an excellent job with the safety protocols put in place since March. We continue to work with authorities on best practices. The amount of cases is also less than 55 year-to-date, and we remain diligent on communication with weekly updates through our human resources team.

As mentioned in the press release, Ducommun's third quarter results really shined despite the continued unprecedented challenges due to the pandemic in the commercial aerospace markets. All the actions, initiatives and hard work since we began this journey in 2017 have shown in the strong operating results for Q3.

Our defense business again was the real star, along with cost reductions, having the right product portfolio, operational leadership and leveraging the Ducommun operating model of lean and highly focused performance centers. This was particularly evident as well in the margin expansion for gross profit, operating income and EBITDA despite year-over-year headwind from commercial aerospace.

The quality of earnings, too, was very high with the company reaching $0.69 per share on an adjusted basis, almost flat to 2019, despite overall revenue being down 17% from Q3 last year. It is a great story for our investors and, as mentioned in our Q2 call, we see a return to revenue growth in 2021 and very good years ahead in 2022 and 2023.

As mentioned, the company's third quarter revenue was down 17% year-over-year, all due to the commercial aerospace markets and on the low end of our expectation communicated in the last earnings call of being down 16% to 20%. Ducommun's defense business, however, showed great strength being up 41% versus prior year. Though not ever wanting to show negative growth, the revenue number is impressive for not only the pandemic impact, but also overcoming another $30 million of 737 MAX headwind in the quarter.

Ducommun's defense business continues to show excellent progress with big opportunities ahead. The majority of the gains in defense included radar systems for Northrop Grumman, increases for our new weapon systems business, Nobles Worldwide, along with ViaSat, the Patriot, UAVs at General Atomics, the F-15 and the TOW program. I mentioned in our last call about Ducommun's new efforts with UAVs.

Again, we are thrilled to be a strategic partner with GA, anticipate our first month of over $1 million in revenue in December, with 2021 bringing higher and higher levels of volume. The TOW missile program for the Raytheon Missiles and Defense business mentioned in previous calls is now in full production at Monrovia, California for the case and at other Ducommun sites which are providing electronic products.

As we move forward in time, we see greater and greater value for customers when we leverage both our structure and electronic systems product lines, providing a one-company approach for defense Primes. We're on track for over $35 million in revenue in 2021 for this program alone, an increase from $12 million in revenue this year. This partnering across the company at this type of revenue level is something new at Ducommun, and we are excited to see this progress. Also, as you see in the 10-Q, Northrop Grumman was the #2 customer in the quarter for the first time in our history.

NG is a key part of Ducommun's defense growth strategy, and we continue to expand our business with them supporting F-35 projects, major radar programs and structural applications. I've mentioned in the past, a key theme for the company is account share opportunities for Ducommun at defense Primes other than Raytheon. And NG is a great example. We're just getting started, and the company sees lots of new areas to develop within the defense markets.

The other bright spot for the quarter was ending Q3 with a backlog of $506 million for the defense business, which is another all-time record for Ducommun. The total backlog was $796 million for the company, sequentially down from Q2 but still is a great number based on the environment. Defense business grew year-over-year by 36% in bookings bolstered by strong orders across numerous key defense platforms, which include the F-18, as mentioned previously, the TOW missile, UAVs, F-35, Aegis, weapon systems for ground vehicles at Nobles and others, and this part of Ducommun continues to deliver. Obviously, the strength helped offset commercial aerospace order pressure.

As in Q2, cost actions have continued in Q3. You can certainly see the effectiveness of our actions and the positive growth profit margin expansion year-over-year and a solid operating income percentage along with EPS. The team has certainly done a great job in 2020 moving quickly and managing this difficult environment with no material pandemic-related costs incurred or major restructuring.

In regards to the Q4 outlook, our significant backlog in defense with the many growth programs mentioned earlier will provide the same strong revenue. We estimate that revenue will again be led by defense, but the business overall, as mentioned in the Q2 call, will be down year-over-year by 14% to 18% due to commercial aerospace. Adjusted operating margins outlook will now be above 8% in Q4, which is an improvement from the previous call in Q2 of the outlook of 7% to 8%.

Ducommun also has a great long-term future, and we look forward, as mentioned earlier, to return to revenue growth for the full year in 2020 alone, along with very good years in 2022 and 2023. This will be accomplished by leveraging our new built-out defense portfolio, which is currently over 90 programs. Ducommun's strong position in commercial aerospace, especially on narrow-body with a better than 2:1 ratio with wide-bodies, share gain at Airbus, our Engineered Products portfolio and the recent acquisitions.

We're also actively in the market for M&A. And with our track record these past 3 years, I believe it will only be an accelerator to higher results in the future.

Now let me provide some additional color on our markets, products and programs. Beginning with our military and space sector, we posted third quarter revenue of $113.9 million. Once again, representing strong growth versus 2019, up 41%. We drove revenue across a broad variety of defense platforms for nearly every aspect of our product portfolio.

As mentioned earlier, we saw increases in demand for our military fixed-wing aircraft programs with particularly strong revenue, as mentioned earlier, from Northrop Grumman, Nobles Worldwide, ViaSat, Patriot, GA, F-15 and the TOW missile. The third quarter military and space revenue represented 76% of Ducommun's revenue in the period. We also continue to be very well positioned for further growth across our defense platforms over the next several quarters in all sectors. And again, ended the third quarter with an all-time record high backlog of $506 million, which is up an impressive 36% year-over-year, and that represents 6% of Ducommun's overall backlog.

Within our commercial aerospace operations, third quarter revenue declined year-over-year to $26 million, as expected, driven by build rate declines on the 737 MAX as well as many other programs impacted by the COVID-19 pandemic. Ducommun also has effectively adjusted costs and managed the downturn and is well positioned once rates stabilize and increase over the long term. Ducommun's expansion with Airbus since 2017 is clearly going to be a benefit in the future and puts important balance in our portfolio.

The backlog within commercial aerospace sector stands at roughly $269 million at the end of the third quarter. The majority of the decline, obviously, is due to the 737 MAX program.

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

Thank you, Steve, and good afternoon, everyone. As a reminder, please see the company's filings and Q3 earnings release for a further description of information mentioned on today's call.

As Steve discussed, we are pleased with our third quarter results as they once again reflect the strength and diversity of our business, even as we continue to navigate the impacts of the ongoing pandemic. We remain confident in our ability to continue to provide strong returns for our shareholders through these challenging times. Now I'll move on to the details of our overall results.

Revenue for the third quarter of 2020 was $150.4 million versus $181.1 million in the third quarter of 2019. This performance reflected $33.4 million of higher sales within the military and space sector, offset by $62.9 million of lower revenue from our commercial aerospace customers.

As Steve mentioned, nearly all of our commercial platforms saw year-over-year declines due to the economic impact of COVID-19 on our customers, continued grounding of the 737 MAX and a decrease in air travel in general. Ducommun's overall backlog at the end of the third quarter was approximately $796 million. Our military and space backlog is at an all-time high of $506 million. As a reminder, we define backlog as potential revenue based on customer purchase orders and long-term agreements, with firm fixed prices and expected delivery dates of 24 months or less.

We posted strong gross profit for the quarter as gross margins rose to 22.3% from 21.2% in the prior year's comparable period. The increase year-over-year was primarily due to favorable product mix and reduced discretionary spending, along with -- it was partially offset by unfavorable manufacturing volume.

Total gross profit fell to $33.5 million from $38.3 million last year as a result of lower commercial revenue. Despite the top line headwind from COVID-19 and the related issues impacting domestic travel, we've continued to drive margin expansion.

SG&A was $22.1 million in the third quarter versus $23.7 million last year, reflecting our ongoing cost control savings, as Steve discussed. The company reported operating income for the third quarter of $10.3 million or 6.8% of revenue and adjusted operating income of $12.4 million or 8.2% of revenue compared to $14.6 million or 8.1% of revenue in the prior year period. The year-over-year decline in operating income dollars was due to lower revenue, partially offset by higher gross margins and lower SG&A.

Interest expense was $3.1 million in the third quarter of 2020 versus $4.4 million in the prior year period as lower interest rates more than offset the impact from higher debt levels. As a reminder, our interest expense has been favorably impacted by the credit refinancing we did in Q4 of 2019, as the Term Loan A was added, along with the replacement of our revolving credit line of credit, lowered our overall rate interest rate exposure. The increased debt outstanding was primarily due to funding the company's acquisition of Nobles in October 2019, and that we drew down $50 million in Q1 to have cash on hand during the pandemic.

The company reported net income for the third quarter of $6.5 million or $0.54 per diluted share and adjusted net income of $8.3 million or $0.69 per diluted share compared to net income of $8.3 million or $0.70 per diluted share for the third quarter of 2019. Our adjusted net income gives effect for the impact of our restructure activities and our Guaymas fire-related expenses. The similar adjusted EPS year-over-year exhibits a strong quality of earnings as we expanded gross margins, expanded adjusted operating margins and incurred lower interest expense in the third quarter compared to the prior year period. Adjusted EBITDA for the third quarter was $21.6 million or 14.4% of revenue compared to $23.6 million or 13.1% of revenue for the comparable period in 2019.

Now let me turn to the segment results. Our Electronic Systems segment posted revenue of $103.5 million in the third quarter of 2020 versus $90.6 million in the prior year period. These results reflect a $23.1 million increase in sales to the company's military and space customers, partially offset by $9 million of lower revenue across our commercial aerospace platforms. Electronic Systems posted operating income for the third quarter of $14.9 million or 14.4% of revenue versus $9.7 million or 10.7% of revenue in the prior year period. The strong performance reflects favorable volume, improved product mix along with robust cost controls.

Our Structural Systems segment posted revenue of $46.9 million in the third quarter of 2020 versus $90.5 million last year. The year-over-year decrease was due to $53.9 million of lower sales across commercial aerospace applications reflecting current demand dynamics, as Steve discussed, partially offset by $10.3 million of higher revenue within the company's military and space markets.

Structural Systems posted operating income for the quarter of $1.8 million or 3.8% of revenue compared to $12.9 million or 14.2% of revenue last year. The year-over-year operating margin decline reflects unfavorable manufacturing volumes and $1.8 million of aggregate expenses tied to the restructuring activities and the Guaymas facility fire, without which adjusted operating margin was 7.7% in the third quarter of 2020.

Corporate, general and administrative expense. CG&A expenses for the third quarter of 2020 were $6.4 million or 4.2% of revenue versus $7.9 million or 4.4% of revenue in 2019. The decrease in CG&A expense was mainly due to lower professional service fees of $1.1 million.

Turning to liquidity and capital resources. We have available liquidity of $125 million comprised of $75 million of cash on hand plus the remaining $50 million on our revolver at the end of the third quarter of 2020. We generated $4.9 million of cash from operations during the third quarter of 2020 compared with $12 million during the prior year period. This performance reflected working capital investment to support customer demand and lower net income.

We continue to be in compliance with our debt covenants, and our credit facilities do not mature until 2024 and 2025. As a reminder, our leverage ratio covenant ceiling is 4.75. Our leverage ratio was roughly 2.9 at the end of the third quarter of 2020. Cash generation and cash management within our already efficient operating structure remains a top priority, and we expect to generate positive free cash flow in Q4.

In terms of capital expenditures, we spent $3.2 million during the third quarter and anticipate spending between $12 million to $14 million in 2020. This estimate does not include the capital expenditures for Guaymas as we replace the capability destroyed in the fire in June of this year. We expect the related insurance proceeds will support these reinvestment requirements. In alignment with our cash conservation initiatives, this anticipated level will result in a capital spending decrease of more than 20% versus 2019.

Our year-to-date effective rate of income tax expense is roughly 15% as of the third quarter. For the full year of 2020, we expect an effective rate of approximately 10%. We anticipate having a significant release of FIN 48 reserves during the fourth quarter that will significantly reduce our fourth quarter tax expense.

With employee safety top of mind, we continue to also focus on execution to drive strong and resilient performance as we satisfy customer demand. We anticipate that our electronic and structural applications on a multitude of key platforms spanning both commercial and military end markets will continue to serve us well.

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

Thanks, Chris. Well, we're certainly proud of these results this quarter and the overall track record of performance in 2017. We continue to meet our commitments. As mentioned, plan to start to growing the business again next year. I would add as well that we do have the right footprint, operating system, cost structure, discipline and leadership to continue performing in the face of this current crisis and feel very confident in our future.

I'm also pleased to announce at this time that Ducommun will have an investor meeting, our second, during the first half of next year. We look forward to sharing the exciting things ahead in 2021 and subsequent years with our many stakeholders, and we will be following up.

As in the Q2 call, I also want to thank our customers, shareholders and all of our business partners for their continued support as we work through these difficult times together. We have now given out as well more than $1.1 million from the newly formed Ducommun foundation start last year to the local area of charities where we operate to help our neighbors and communities. In Q3, we have partnered too with 3 new organizations to help improve equality in our nation and assist small business recovery due to the social unrest in Los Angeles.

In closing, I'd like to again this quarter take this time to thank as well Ducommun employees. I'm proud of them and all their efforts dealing with the many challenges from the pandemic. Our team shows up at the operation every day, and though stressful, gets the job done with excellent results for our customers and nation.

And with that, I will turn it over for questions.

(Operator Instructions) And your first question comes from the line of Ken Herbert with Canaccord.

I just wanted to first ask about margins in the Structural segment. Was there much of an impact in the quarter from the fire in Guaymas? Or was there anything else in particular you'd call out that pushed those maybe down a little more than we were expecting in the quarter?

Ken, this is Chris. Yes, from where we were in Q1, we did reset much more toward where we were with that baseline. And it was much more a combination of the volume. As you could see, the volume was down double-digit percentage from where we had been running. And then also -- and also then just a little bit on the mix as well. But no, the Guaymas fire expenses, specifically though, were added back to get to the adjusted margins of the 7.7%.

Okay. Okay. That's helpful. And I appreciate the sort of the incremental color on the fourth quarter, and it sounds like things are maybe a little bit incrementally better on the margins with what you're guiding to. Is -- could you give any more detail on that, either in terms of segment or programs or just what's helping with the confidence in the execution?

Yes. Ken, this is Chris. As we look at Q4, I mean, again, just -- as we work through the reset with everybody else in the world in Q2, part of it was getting the bearings straight, taking the activities to sort of get where we needed to on the cost side. And then as we now look to the rest of this year, we're pretty doubting on what work we're going to do, what work we can get out and feeling like we've got 2 quarters now that we've operated in this environment and feel comfortable about putting that information or those metrics out there.

Ken, this is Steve. Yes, we feel real good about our run rates. Obviously, we've been doing this now for 6 months, and we see good things ahead.

That's excellent. And just obviously, defense is doing really well, and you gave a little more detail on some of your key programs like the TOW and work with Northrop. How would you characterize, Steve, just the new business environment because it looks like you're really taking share at some of your customers even in a good backdrop. But what kind of runway do you have on the share gain within the defense side?

I think it's quite a bit. I mean we're going to cover more on the investor meeting, okay? We're going to give, I think, some really good detail. But I will just tell you that since I've been in the job here, okay, Raytheon was a wonderful customer, and they've been with us for a long time, and we've been with them. But if you look -- as you look past that, we really were not penetrated well. We had really no business development strategy. And so we really got our act together the last couple of years, and now it's coming through. I mean this TOW program is real money for us. I mean to go from start at 0 to 12 this year, we've only been working it for just a while, and then go to 35-plus. And that includes not only the structure team, but also a couple of sites for electronics. So we think it's -- we think the sky is pretty high on this one.

That's excellent. And just finally, Chris, one clarification. Did you say the full year tax rate assume 10%? Did I get that correctly?

You did, Ken. It will be -- again, there's a significant FIN 48 release that will take place -- that we should anticipate taking place here in Q4. So when you look at the full year, dial it in close to 10%.

And your next question comes from the line of Michael Ciarmoli with Truist Securities.

Nice results here given the backdrop. I guess 76% of revenues, we'll have to consider you guys a defense contractor...

Michael, take the multiple...

Yes, yes, I don't know. I don't know if it's in better shape right now. Yes, but -- on Aero, do you think we're at bottom? And I guess what really took another leg down sequentially. I know you called out the MAX, but I guess 2 things. Do you think we're at bottom here? And what really worsened sequentially? Was it just kind of dialing in the lower rates? Or any more color there?

A couple of things. First, look, we're cautiously -- I know this is -- and I don't want to be part of the chorus here, but we're cautiously optimistic that, first of all, we're going to get a certification sooner than later on MAX. But Mike, you know the issue is all the inventory, not only the planes, but also everything in the chain, okay? So we're -- we feel like we're really kind of bottom me out here, I can't put a -- get right on the top of the pinhead here, but we're close if we're not there. So one of the nice things in the story for us is that, yes, we -- obviously, 787 and some other things as well have had some pressure. But our Airbus business is fairly good. And they're still doing fairly well in the narrow-body. So we're -- we hear what you're saying. We feel like we're looking good going forward.

Okay. And then just, I guess, segueing into margins. I know Ken was just asking on the structural system, 7.7%. You talked about next quarter potentially being above 8% consolidated. Should we think as sort of the 77 as a launching point, maybe not even a launching point, just maybe very, very gradual improvement from these levels? Because it certainly seems like you've got the electronic systems kind of really dialed in the margin front there.

Yes. I think what I would do is look at -- again, the businesses are just small enough. They're not -- it's not all linear in terms of quarter-to-quarter. The mix and the volume has a big impact. So as we look to continue to expand it, it's sort of a range. And we'd like to view that you even talk about the volume on structures that we were at the trough, we'd like to be coming out of this as soon as we possibly can, and that hopefully is in Q4, we start emerging. Your phrasing is right. I mean that's going to be a slow buildup from there. And that's what we're building in.

Yes. Michael, I'll also add that we'll have more information at the investor meeting. Okay? Not about the balance for 2020, but in the future.

Got it. And then just last one, the Electronic Systems. I think you got 40% roughly incremental margins year-over-year sequentially. I mean it would seem like your -- some of the defense programs you're talking about ramping assuming you're getting more volume and learning curves there. You guys seem pretty comfortable with that sort of margin level, if not even building as you maybe get some more volume through the facilities.

I think the volume will help. I think, again, on a range, you look at where electronics has been, it's in -- we're at the top end of the range we've been. So assuming we can hold a strong mix, then we can look to inch it. But otherwise, I mean, I think that, that 12 -- 11, 12 to 14 is sort of where we're at. And we're looking to reset that higher as we go.

Absolutely. Absolutely. Yes, I think to your point, Mike, is important about maybe not so much in the next quarter or 2, but we'll be scaled players certainly over there. Okay? And we'll see that.

And your next question comes from Aman Gulani with B. Riley Securities.

Congrats on the quarter. Nice to see the traction with Northrop. I mean you've increased revenue from like $8 million to almost $22 million sequentially. But trying to get a sense for the revenue levels with Northrop going forward. Is this something that could sort of be sustained in the fourth quarter and maybe going forward on a run rate basis in fiscal '21?

Sure. So look, Northrop is one of our best stories. Again, this is the theme I've been talking about where, quite frankly, I'm not sure Northrop knew everything we could do 2 years ago, okay? And now they do. I mean, like I mentioned, we're doing radar systems for them. We're doing projects in F-35, and we're doing structural applications. So that's the other thing I've been talking about is that we are moving, I think, in the right direction as well on our structural business to drive a lot more of really good growth, steady defense business. So I think the story is good with Northrop. It's just going to get better.

Got it. And last question for me regarding capital allocation. And what sort of like leverage ratio do you feel comfortable with until you like sort of make your next acquisition? And like generally, how does the pipeline look on the defense side? Are you seeing some niche structural capabilities that Ducommun might be interested in acquiring on the defense side?

Let me take the leverage first and then Steve can chime in. Sure. No, on the leverage, I mean, again, we're just under 3 with where we're at now. We've talked through the last couple of years about staying in the 3s. We are covenant-light. We could go to 4.75. We're very comfortable with it in the 3s. But having said that, we're running more at a 3.0, or in this quarter, a little less than that. And until the next acquisition comes, I mean, we should be in that neighborhood.

Yes. I'll just mention on the M&A and where we're at. We're fairly, at least on the structural side, we're fairly tight. And I think we have some really good focus on what we're going to do and what we're not going to do, okay? And so we're obviously taking some pressure right now because of the build rates. But if there's something that really fits that is really niche-y, that's products hard to make, those types of things, we'll look at it. But we still are always leaning towards what we've done in the past with Nobles and LDS and the others. We're looking to build the engineering side of the business in the aftermarket.

(Operator Instructions) And your next question comes from the line of Michael Eisen with RBC Capital Markets.

Really strong quarter for the defense side of the business with growth of over 40%, the backlog grew, bookings were strong, and you have these new business wins you've been talking about for some time. So as I look at that side of the business, is it fair to assume that a strong double-digit growth rate is going to be able to continue as we look out over the next several quarters?

Look, we're -- we had said to get down to that level, but just let's say that we're pretty bullish on it, yes.

Got it. And then in contrast to that, there are some comments here today that you made about inventory in the channel on commercial, but there is some opportunity grown with Airbus and the eventual ramp-up of the 737. So as we think of all of the announced rates, if there are no further changes to those, can you help us think about with the inventory in the channel that we have less visibility into when we could potentially see some easing of the pressure for your business and potentially starting to get back to growth?

Yes. Yes. Well, look, overall, and this includes the defense business, we've made a commitment we're going to return to growth for the full year next year, okay? So that's the first thing. All right. So -- and we will talk more about that in our February call. As far as things really picking up. I mean like I mentioned in my remarks, one of the things that investors need to remember is that we're building a lot of balance in the business. Okay? Three years ago, we had a really big Raytheon business. We had a really big Boeing business, and we had some other things and that was it.

Now we have much, much bigger defense breadth with many customer -- many Primes with lots of headroom there. And we have our Boeing business, which we obviously appreciate and have for decades. And then we have Airbus and other things happening. So for us to pinpoint it, not sure that I'm going to go there right now. But I will tell you that, overall, the portfolio is continuing to get a lot of ballast. And when those build rates break, we'll be there.

Got it. Really helpful. And last one for me. Missiles is clearly an area of focus and strength for your portfolio. There have been a number of big missile type program awards recently, and it is one of the areas that continues to get funding support in the budgets. Are there any other programs that we should think of as major areas of opportunity for Ducommun?

Well, certainly, look, I talked about our structural businesses, okay? So where -- we really didn't have much in the past other than legacy Apache, back blades and those types of things. So other than missiles, we're very bullish on structural products. We think there's a lot of opportunity there. We're actually good at it, okay? And we can actually make good money with it. So I'd say structures.

The other thing I would say other than missiles is all the electronics. And we're doing lots of stuff on radar. We're doing lots of stuff on box bills. And that's outside of just putting -- making cards for the Paveway missile. So as you -- again, we'll get ready. We're going to -- we'll have an excellent investor meeting, early or mid next year before the end of June. We will give you more color on that. But things are moving positively.

At this time, there appears to be no further questions in queue. So I'll turn it back to Mr. Oswald for any closing remarks.

Well, thank you. And again, I want to thank everybody for participating today. Obviously, we feel very good about what we presented on the call. We're going to have an investor meeting first half of next year, and we're looking forward to that. And again, talking about some of the exciting things that will happen, we believe, in the next few years.

We're just heads down, and we're just driving and staying safe to the best of our ability to finish out the year. But overall, we're feeling better and better about things, and we're excited about the future. So I'll leave it there. Again, good health to everyone. Thank you for time, and have a nice evening.

This concludes today's conference call. You may now disconnect.