Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2013 Ducommun Earnings Conference Call. My name is Sheila, I'm your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to Mr. Chris Witty. Please proceed, sir.

Thank you, and welcome to Ducommun's 2013 Fourth Quarter Conference Call. With me today is Tony Reardon, Chairman and CEO; and Joe Bellino, Vice President, Treasurer and CFO. I would now like to provide a brief Safe Harbor statement. This conference call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company's actual performance to be materially different from the performance indicated or implied by such statements. All statements, other than statements of historical facts included in this conference call, are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the company's expectations are disclosed in this conference call and in the company's Annual Report and Form 10-K for the fiscal year ended December 31, 2013. All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this conference call. I'd like to turn it over now to Tony Reardon for a review of the operating results. Tony?

Thank you, Chris, and thank you, everyone, for joining us today. I'll begin by providing an overview of our performance, after which I'll turn the call over to Joe Bellino to review our financial results. In the fourth quarter, Ducommun reported revenue of $188 million down slightly versus 2012, primarily due to our lower shipments of both military and commercial helicopter products and weaker sales within our avionics and electronic control systems markets. The year-over-year decline also reflects a 4.9% decrease in our non-A&D revenue. These sales declines were partially offset by strength across our fixed wing commercial aircraft and missile defense-related electronics markets. We recorded a net loss of $4.5 million or $0.42 per share -- per diluted share, primarily driven by the previously announced program charges at Ducommun AeroStructures, lower revenue and unfavorable product mix in our Ducommun LaBarge technology operations. Joe will discuss the quarter in more detail in a moment. For 2013 as a whole, while the revenue fell slightly to $737 million, Ducommun reported a number of noteworthy operating achievements that bode well for our business over the long term. We generated nearly $46 million of cash from operations during the year, enabling the company to reduce its debt by $33 million. The debt reduction and the repricing of our bank term debt earlier last year was -- has lowered our interest expense by approximately $3 million year-over-year as we continue to focus on deleveraging the balance sheet going forward. In addition, in 2013, our commercial aerospace revenue rose to a record of $213 million and our backlog here remains very strong. We expect further expansion across this portion of our business, where the only meaningful decline last year was within the helicopter sector, which came off a stellar 2012 year. I will get into…

Thanks, Tony, and good day, everyone. Earlier today, we reported the results for the fourth quarter of 2013 as well as the full year results. Net sales for the fourth quarter were $188 million, a 3.1% decline compared to the $194 million in our fourth quarter of 2012. The revenue decline year-over-year was primarily due to lower shipments of military and commercial helicopter products, as well as a 4.9% decrease in non-A&D revenues. These sales declines were partially offset though, by strength across our fixed wing commercial aircraft business, as well as our missile defense-related electronics platforms. Ducommun reported a net loss for the fourth quarter of 2013 of $4.5 million or a net loss of $0.42 per fully diluted share. This compares to a net income of $3.4 million last year or $0.32 per diluted share in the fourth quarter of 2012. As previously reported during the fourth quarter, we reported a pretax program-related charges net amount of $8.8 million or $0.51 per share after tax, which is comprised of 2 program-related charges of $14.1 million in the Ducommun AeroStructures segment, partially offset by reduced accrued compensation and benefit expenses of $5.3 million. Of the $14.1 million in pretax charges, $7 million was recorded as a noncash asset impairment charge and $7.1 million was a combination of recording a $5.2 million charge for forward loss contracts and $1.9 million in inventory reserves. Adjusted EBITDA, which adds back only the noncash $7 million asset impairment charge for the fourth quarter, was $16.8 million or nearly 9% of revenues and this compares to an adjusted EBITDA in last year's fourth quarter of $22.7 million or 11.7% of revenue. Looking at results by business segments. Ducommun AeroStructures, which we referred to as DAS. In reviewing the results by the business segment, DAS…

Thank you, Joe. Before opening the call to questions, I'd like to wrap up with a few comments about our areas of focus for 2014 and beyond. We're proud of the diverse array of products and technologies we now offer our customers, and we know where we need to concentrate our efforts going forward to improve the company's outlook and increase shareholder value. First, we're focused on further expansion within the commercial airplane market with its numerous opportunities going forward. There's also plenty of room to grow in the engine market, as well as in the commercial and military electronics markets. Second, we're dedicated to growing our non-A&D business as quickly as possible. This area has been a laggard for the past year and we believe that there are many opportunities to expand our position and penetrate new customers. This is clearly a priority. And third, we will take all necessary steps to improve margins and drive cash flow generations with the goal of deleveraging the company, and thus, further strengthening our balance sheet. I can assure you that we are constantly looking at all facets of our business to find new sources of growth, greater operating efficiencies and ways to improve Ducommun's competitiveness and increase our value to our customers. Last year was successful in some ways and disappointing in others, but the company is stronger, leaner and ready to excel in today's challenging environment. With that, Sheila, I'll now open up the call for questions.

[Operator Instructions] And the first question comes from the line of Edward Marshall of Sidoti & Company. Edward Marshall - Sidoti & Company, LLC: So if I look at the particular quarter and I start to think about the margins in the structures business and some of the charges that you've taken, I assume by taking these charges, you're reducing your fixed cost associated with these programs, is that the right way to look at it? And therefore, maybe margins should slightly improve in 2014 for this business.

Yes. That's right, Ed. I mean, basically, it should take these -- the 2 programs to a 0 cost base on the forward reserves and we would have the effect hopefully of improving the margins in that business, yes. Edward Marshall - Sidoti & Company, LLC: Okay. Do you care to take a stab for the 2 businesses as far as what you think those -- the normalized margins in that business should be overall, for both DAS and DLT? I mean, if I back out the charges, for instance, the $14.1 million out of DAS, and that's the right way to do it, right, Joe? And that gets me to about 10.5% operating margin which is, I guess, almost technically one of your highest margins of the year, second best, I guess. Would you care to take a stab kind of for...

Well, we've spent a lot of time looking and in calculating the forward cost reserves and the cost curves available to produce that is -- we believe is going to -- we're going to incur in 2014 to complete the contracts. And in looking at that, Ed, we have seen nice improvements sequentially and we're getting some momentum here in this quarter in terms of getting down the cost curve. So we believe that'll translate to sequentially, improvement in margins. Edward Marshall - Sidoti & Company, LLC: Year-over-year '14 versus '13, I'm assuming.

Both sequentially. Yes, exactly.

One of my other comments, Ed, was that, in addition to the operating income in the fourth quarter at the DAS segment was impacted by some -- these programs represented a somewhat of a drag on our operating income in completing those projects during the fourth quarter. So we believe we've gotten this behind us and we're moving in the right direction. Edward Marshall - Sidoti & Company, LLC: Okay. If I look at -- and by the way, on these charges, did you actually receive a benefit of $5.3 million? Did you reverse those accruals? Because I assume the full $14.1 million, and I looked in the K as well, it looks like it ran through cost of goods, so where did that $5.3 million get -- where did you reverse the accrual in the P&L?

The $5.3 million came in a blended part. Part of our cost of goods sold and part of it was in SG&A. Edward Marshall - Sidoti & Company, LLC: Okay. Do you have the split?

No. Edward Marshall - Sidoti & Company, LLC: Okay. When I look at the segment, you had 3 -- you had the end markets by segment, it's good to see growth in both noncore -- in each of the noncore businesses sequentially. And you mentioned that you had -- it felt like you've hit bottom there. What are you measuring that by? Is it backlog? I guess orders, book-to-bill? What are you looking at that could ultimately...

Well, ultimately, the way we're going to determine the non-A&D business uptick will be on increased backlog, which is driven by the bookings. So what we're -- what we saw in the fourth quarter was, it was down again year-over-year, but up against third quarter. So we did see some increased bookings going into the third quarter and into the fourth. The energy market seems to have picked up force towards the last -- part of last year. So we're not ready to cry victory yet, Ed. We still have a long way to go with those markets. But we're seeing some stabilization, if you will, across-the-board. But the way we measure growth in that market is by increased bookings. And that will forecast revenue base for, at least, 1 quarter and it's usually 90- to 180-day lead time in that market. Edward Marshall - Sidoti & Company, LLC: Going back to that, the $5.3 million, is that -- does that also show up in the AeroStructures segment operating profit, the reversal?

No, that's across the company.

Some of it is -- some of it is in the DAS segment, some in the DLT segment, some in corporate SG&A. Edward Marshall - Sidoti & Company, LLC: Okay. And so, how do I work these charges back out of the model? I mean, if I look at this $14.1 million, it looks like it's an $0.84 impact on a -- and then the $5.3 million comes through various lines.

Well, we had -- your question was, how do we assess the impact? I would say, the easiest way to do that is to look at the corporation in total. And the talking points I made in helping you assess it is $14.1 million less $5.3 million is the $8.8 million pretax charges which is about $5.5 million aftertax using a 37.3% tax rate. And on 10.9 million shares, it's the $0.51. That's the math of it. It's -- I think, from the outside, since we don't break that all down into those 3 sectors that I talked about, how the accrued compensation is impacted, it's probably better to look at it total corporate and then make your own estimates of those based on your experience. Edward Marshall - Sidoti & Company, LLC: Right. But looking at the margins of the individual segments to get a good read on the operating structure and kind of to extrapolate that forward, it would be best to kind of look at the numbers with that backed out, wouldn't that be the right way to...? So having that number accordingly to segment would be helpful; I think. Anyway, we could follow back up with that at a later date.

And the next question comes from the line of Patrick McCarthy of FBR. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: I was wondering if -- you had talked about some of the new business initiatives that are on the table. And I was wondering if maybe you could talk a little bit about the cadence and the timing, and whether you would anticipate any of that to be impactful for 2014, either from a bookings perspective or from a revenues perspective.

Patrick, I think that from a bookings perspective, we definitely expect to see some of that business in '14. And if it's booked early enough, we have a number of open RFQs right now. So if it's booked early enough within this quarter or the early part of the second quarter, it's possible that we could see some revenue on it. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: And you -- in the past, you don't obviously mention the Airbus opportunities. Are there other ones that you can mention as well?

Well, we're working on programs in the 3 sectors I mentioned. So we have open RFQs in the engine section and with engine manufacturers, we have open RFQs, there's also in the electronics, military and commercial arena. So and then as well as with Boeing. So we've got quite a bit of open RFQs out there that we're working on to close down. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: Okay. And then of the international side, you've mentioned that there are international opportunities. Is that through an OEM, or do you have direct relationships there that you're leveraging?

No. It's primarily through the OEMs. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: Okay. And then, just quickly, do you have anything on the F-16 program, particularly on the international side?

We do, on the F-16 program. We have a radar system on that.

And the next question comes the line of Mark Jordan of Noble Financial.

A question relative to the business activities that generated the charges. Out of DAS, of the $315 million in revenue last year, what percent or what was the level of revenues related to the Embraer and the 777 wing tip programs that now going forward will be breakeven?

The Embraer program, Mark, you asked about what the revenue were related to it, it was still in the development stage. And on our call, we talked about the development efforts that have been going through about from '09 through the end of '13. And in the call, Tony commented, we'll start actually delivering production parts in the second half of 2014. So that was negligible. I commented on -- in our last call that the wing tip 777 programs were rather modest compared to a sizable amount of business that we have on the 777.

Okay. Going back to leveraging off some previous questions, if you were to look at the charges generated on an after-tax basis, the $0.51 loss. The company reported an overall loss of $0.42, which would imply that the base company was profitable to the tune of approximately $0.09 a share. Obviously, below where people would have been looking prior to the announcement. Is this a case where the company was faced with a major -- a couple of major contract issues that had to be addressed, and sort of the decks were washed clean and that's lowered the rest of the profitability of the company in the quarter?

I think, Mark, that there were a couple of things. So Joe did commented -- in his comments about the impact in the fourth quarter for these programs on the DAS earnings. So there was something -- write down, some lack of profitability on those programs which did impact the total AeroStructures earnings. The other impact was in the Ducommun LaBarge Technologies sector where, there was a combination of lower revenue than expected in terms of the non-A&D sales which impacted profitability, as well as an unfavorable profit -- or product mix that we had going through on the electronic side of the business. So those were the combinations of the shortfall in the profitability.

Mark, and then to help quantify this that we put in our disclosures, of the $14.1 million that we took, $7 million was the asset impairment, I'm giving to you, $1.9 million was in inventory reserve write-offs. But there was $5.2 million on the forward loss reserves. So that was the projected amount for us to meet the fulfillments of the contracts what we expect in the future of cash -- of cash requirements given where our -- where we are in our cost curve and the relationship of our selling price to our costs in these contracts. So proper accounting requires that we acknowledge those at some point in time when we determine that those contracts are unprofitable. And by us acknowledging that after doing a body of work, it related to the $7 million asset impairment that we couldn't get profitable on the tooling part of that business.

Okay. And then just to clarify another point, looking at the profitability potential of DAS on an operating basis, over the last 7 quarters, that business has averaged about 9.5%, 9.7% operating profit. With these moves, then you would say that the forward-looking profit opportunity -- margin opportunity in DAS should be at least in the same ballpark if it cannot be improved over time?

Yes, we'd probably look at about -- Mark, as far as the -- and your question was around the profitability of the DAS with regards to impact of these reserves, I would say about 50 basis points would be reasonable over the period of the year.

[Operator Instructions] And your next question comes from the line of Mike Crawford of B. Riley and Company.

Can you talk about what, if any revenue, synergies you might be seeing, like with Raytheon, your other customers as a result of the LaBarge acquisition?

Okay, Mike. You're talking about just what kind of synergies we're getting out of the customers from the acquisition. I think that there's a number of them. Raytheon is clearly one of them, where we have an opportunity to look at multiple applications across the board. We're still, if you look at our order base from the existing Ducommun LaBarge Technologies, there were some existing business units which we're selling to Raytheon prior to the acquisition. And then, of course, we picked up content with the existing acquisition. But I think we've done a pretty good job of working with Raytheon and expanding the base across the board on that, have not really penetrated on the AeroStructures side of the business. However, if you go across the board and look at customers like AgustaWestland, where we had very strong presence with regards to the structures business, we have penetrated that pretty deeply and look to improve our base with them, on their helicopter programs with the DLT side of the business. So as you look across, we have customers that we have introduced across-the-board on both sides of the business. I can tell you that some of the engine manufacturers were able to penetrate -- the engine manufacturer with both segments of the business, and I think that's, as we had previously only worked with them on the structure side of the business. So we're utilizing the existing contact base to further penetrate the company. And we're really selling One Ducommun, I think that's really the most important thing. We've really taken that company and focused on the branding of Ducommun itself, and we're -- we don't go to the market as DLT or DAS. We go to the market as Ducommun. So as we walk in, we're looking for the cross section of applications, whether it's on an industrial application or if it's on a commercial and military application.

And specifically related to your question on the Raytheon revenue synergies, we have increased our sales to Raytheon because of the dynamics that One Ducommun and other factors that Tony talked about from 7% in 2012 to 10% here in 2013. So it's working.

Okay. And then relative to your various programs, can you talk about the level of operational maturity where when you are building tools and ramping up on programs, there's going to be a lower margin and a steeper learning curve, but then margin should be improving as you go forward. And so I know you have a number of different programs at different stages, but if you could characterize where you stand today and where you expect to be in 2014, in terms of that dynamic being more of a headwind or more of a tailwind for your margins in 2014?

I think, Mike, in terms of the product mix in 2014 with regards to new business versus existing base, I would say that we have -- we do have a number of programs in development that are going through, like right now. But a large portion of our programs are in existing production that will impact the revenue base this year. However, we will be in the investment side in terms of tooling and prototype development for a number of platforms. So I would expect that from a margin standpoint, we should be in a position to be able to put ourselves in a position to go forward and improve margins year-over-year.

Okay. And then, last question. What is it in the non-A&D space that is leading towards the uptick in bookings and what looks like could be a recovery of that business for you?

The primary driver has been the oil and gas market, Mike. We saw an uptick, as I talked about earlier, in the third quarter in terms of bookings in that market. So that's kind of kicked in and that's been driven primarily by this reorganization, we believe, in our strategy from the strategic business units. However, some of the other markets are still soft. And so we're not, as I said before, not declaring victory in that marketplace yet.

The next question comes from the line of J.B. Groh of D.A. Davidson. Alex Heinen - D.A. Davidson & Co., Research Division: It's Alex in for J.B. today. So first of all, the C-17 wind down, are you guys expecting that to be pretty linear throughout 2014? Or is that going to be a little bit more lumpy towards the end of the year?

They will probably be lumpy, Alex, towards the end of the year. So we've manufactured the C-17 in a number of business units. So some units will have earlier sales falloff than others. Alex Heinen - D.A. Davidson & Co., Research Division: Okay. And then overall, that program is -- pretty good margin on that program, yes?

Yes. Alex Heinen - D.A. Davidson & Co., Research Division: And then, second one, what are you expecting tax rate for 2014 to be?

31%.

And the next question comes from the line of Mark Jordan of Noble Financial.

Just a quick follow-up. Any guidance that you might have in terms of seasonality in the business in 2014? For example, this past year, the first quarter was by far the weakest from a revenue standpoint. Any comments you could have on what we might -- we should be thinking about?

We've looked at patterns over the last 3 years including the pro forma '11. And the typical scenario is, if we look at the full year by quarter in 2012 -- 2013, Mark, it will be very similar. The strongest quarter is usually the second or third quarter and then the other 2 quarters fall into line, the first quarter and the fourth quarter. We expect -- as we looked at 3 years’ worth of data, they seem to have a repeating pattern.

I would now like to turn the call over to Tony Reardon for closing remarks.

Thank you, Sheila, and thank you, everyone, for joining us today. And we certainly look forward to talking to you in the next quarter. Thank you.