Ducommun Incorporated (DCO) Q4 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Ducommun Q4 2017 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Chris Witty, moderator of this call. Sir, you may begin.

Thank you, and welcome to Ducommun's 2017 Fourth Quarter Conference Call. With me today are Steve Oswald, President and CEO; and Doug Groves, Vice President, Chief Financial Officer and Treasurer. 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 future market conditions, results of operations, our restructuring plan and financial projections, are forward-looking statements under the Federal Private Securities Litigation Reform Act of 1995 and, therefore, are perspective. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company's current business, which is subject to change. Particular risks facing Ducommun include, among others, the cyclicality of our end-use markets, the level of U.S. government defense spending, legal and regulatory risks, management changes, the cost of expansion and acquisitions and competition. 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 Form 10-K filed with the SEC for a reconciliation of the non-GAAP measures referenced on this call to the most similar GAAP measures. We have filed our Form 10-K with the SEC today, and you will find a link to all our filings on the company's website under the Investor Relations tab. I would now like to turn the call over to Mr. Steve Oswald for a review of the operating results. Steve?

Okay. Thanks, Chris. And thank you, everyone, for joining us today for our 2017 fourth quarter conference call. I'll begin providing an overview of recent developments, after which, Doug Groves, will review our financial results in detail. So we just completed a very important year for Ducommun, one of which will lay the foundation for future growth through several initiatives designed to strengthen our core capabilities. As you know, we purchased Lightning Diversion Systems or LDS last September, bolstering our electronics business proprietary technology suitable for numerous aerospace and defense applications. I'm pleased to announced that -- you know the LDS has been fully integrated into the company, and that its leader, Dave Wilmot has taken additional responsibility here at Ducommun to help drive the growth of our electronic segment. Dave is off to a great start in the company as a key part of my leadership team. We also announced last quarter, the company will begin implementing a multi-stage structuring program to cut costs, improve operating efficiency and ultimately, increase our asset utilization, particularly with regards to our structure's operation, where we need a good amount of improvement. While the structures margins are predictably low due to our investment in next-generation programs and the expansion of our Parsons facility, this was a big focus for the Q4 restructuring activities. Therefore, as expected, we began by taking $8.8 million of restructuring charges in the Q4, reflecting actions taken across the entire company, which Doug will review shortly. The Structural segment, as mentioned, was 65% of this cost or $5.8 million, where significant work needs to be done. The charges in total encompass severance, lease termination and fixed asset impairments meant to start the process of consolidating functions and eliminating redundancies across the organization. We reduced the number of Vice Presidents in the company in our operations from 12 to 6, took out one entire layer of management to flatten the organization and consolidated our business units from 6 to 3. Due to these changes that were difficult to make, we are much more nimble, transparent and close to the customer. We have also closed some small facilities, written off excess machinery and equipment and continuing the process of exiting fully performing programs such as certain regional and business jet platforms and a few helicopter programs, as we discussed in the past. Our overall adjusted operating margin for Q4 was 5%, excluding restructuring expenses and certain one-time inventory purchase accounting adjustments related to the LDS acquisition. This is versus 5.2% in Q3 and 6.4% last year. While we are working out many of the changes and headwinds from 2017, I fully expect, and you should, too, better margins in 2018. We remain on track to complete the company's restructuring program with 2018 and realize approximately $14 million in annual savings, starting next year. And we are driving and committed to be a much better, stronger and innovative supplier to the aerospace and defense industries. Another positive development for our investors in the company as we enter the year with a significant uptake in our backlog to a record $726 million. This backlog cuts across both our military and commercial segments and is a great sign for the year ahead. So I'm feeling very good about 2018. As we work hard, take steps and position the company for faster growth, higher margins and stronger customer relationships, all leveraging our proprietary processes, technology and highly-skilled staff. Now let me provide some color on our end-use markets, products and programs. Beginning with our military and space sector, we posted fourth quarter revenue of $63.8 million, down slightly from last year, primarily due to some timing of certain deliveries. While greater rack shipments were lower year-over-year in Q4 as our structural components for military helicopters, we saw a strong growth in the missile defense platform, particularly for Raytheon's Paveway laser-guided systems. This became one of our top defense-related programs for last year. For 2017 as a whole, to comment on military and space revenue, it was just under $260 million, up 13% from 2016 $229 million. Our backlog, again a great story, grew as well, ending 2017 at $277 million versus $256 million beginning of the year, with most of the increase due to awards across our innovative defense and electronic applications. Given this level of contract activity, I feel confident that Ducommun will again mark solid performance across military and space platforms this year as well. This is due to the key programs we're on, the ongoing need for technology upgrades with our customers and, of course, the potential for increased defense spending. With our commercial aerospace operations, fourth quarter sales were $64.1 million, up just slightly from-- last year, again reflecting shipment timing. Notably, we saw a nice gain in revenue for a large fixed [indiscernible] aircraft applications, particularly on the Boeing 737 platforms and the Airbus A320 family. Revenues on this platforms were up 28% in 2017 and now represent almost 40% of our commercial aerospace business. We also saw our business on Airbus platforms grow almost 30% in 2017 as we continue to win content with this important end-new customer. It's worth noting as well, as previously discussed, to comment as exited fully performing regional and business jet platforms as well as exiting a couple of the helicopter programs, which I've mentioned. We ended 2017 with record commercial aerospace backlog of $418 million, up $60 million from where we were at the start of the year. This clearly shows the momentum we're building across the commercial landscape as well as benefit from increased build rates with the large airframe portion of our business. In addition, while we made some decisions to exit certain unattractive platforms, the regional business jet space was still bullish on certain opportunities. For example, we're excited about our wins with Gulfstream and look forward to the ramp-up in 2018 of the G500 and G600 series, a new family of large-cabin long-range business jets. Ducommun is a sole source supplier of titanium auxillary power inlet duct and the cooler ducts for these aircrafts, which we'll supply out of our Parsons facility. Along with attractive wins such as this, where we're supplying value-added solutions that leverage our titanium expertise, we also see plenty of room for growth within the jet engine market along with our core narrow-body programs. We're making good progress on many new product introductions we've discussed in the past and expect most of them to be in production the first half of this year. These development programs have been somewhat of a drag on margins but are now seeing marketplace success. And given the completion of our Parsons expansion this spring, which will result in slow but steady improvements to our operating leverage along with ongoing ramp-up of new platforms. Such programs remain on track, including Boeing 737 MAX, our largest. And we're excited about the additional business our state-of-the-art titanium applications can win. I've seen a lot of progress in Q4 from the team, especially in support of all the organizational changes, and now position the company well for higher growth, margin expansion and improved return for shareholders. With that, I'll now have Doug review our financial results in detail. Doug?

Thank you, Steve, and good day, everyone. Revenues for the fourth quarter of 2017 was $142.3 million, nearly equivalent to the fourth quarter of 2016. This performance reflects $0.9 million of higher sales with the company's commercial aerospace customers and slight gains within our industrial end-use markets offset by $1.3 million of lower revenue across our military and space markets due to shipment timing. Ducommun's backlog rose to $726 million at the end of this quarter, its highest level ever, again, highlighting the key programs we serve as well as the critical components in modules we provide to aerospace OEMs. Moving to gross profit. Our gross margin was 18.1% in the fourth quarter versus 19.5% in the prior year's comparable period. This decline in gross margin year-over-year was primarily due to product mix and is part of our restructuring activities, $0.5 million in inventory write-offs related to an exited commercial helicopter program. SG&A was $20.1 million in the fourth quarter versus $18.6 million in 2016, with the increase primarily reflecting higher compensation and benefit costs and higher professional service fees. The company reported an operating loss for the fourth quarter of $2.7 million or negative 1.9% of revenue versus operating income of $9 million or 6.3% of revenue in the prior year period. The year-over-year decrease in operating income was primarily due to the restructuring charges that were $8.7 million greater than in the fourth quarter of 2016 and higher amortization of intangible assets related to the LDS acquisition. As Steve mentioned, we implemented several cost-cutting initiatives in November, which, for the quarter, included $5.8 million of charges within our Structural Systems segments, $1.2 million with our Electronic Systems segment, and $1.8 million at the corporate level. These charges represent the initial stage of our restructuring plan, which encompass certain headcount reductions, facility consolidations and fixed asset impairments. We will take further measures in 2018 to eliminate approximately $14 million in annualized expenses and rightsize the company. And we anticipate approximately $1 million in charges to be booked in the first quarter of 2018, primarily within the structures business and a total of approximately $10 million this year in restructuring charges. As previously noted, these charges will be a mix of cash outlays, typically for severance and facility consolidation and noncash items, including the write-off of machinery and equipment. For the fourth quarter, excluding the aforementioned restructuring charges as well as $1.1 million of expense tied to the LDS purchase accounting adjustments in cost to goods sold, Ducommun's adjusted operating margin was 5%. Interest expense was $2.7 million in the fourth quarter of 2017 versus $2.0 million last year due to higher utilization of our revolving credit facility for the acquisition of LDS. The company reported net income for the fourth quarter of $9.5 million or $0.82 per diluted share compared to $2.8 million or $0.25 per diluted share for the fourth quarter of 2016. On an adjusted basis, net income was $4.6 million or $0.41 per diluted share compared to $4.8 million or $0.43 per diluted share on adjusted basis in 2016. The year-over-year increase in GAAP net income reflects $17.5 million of lower tax expense due to congress enacting the Tax Cuts and Jobs Act in December 201&, which required the company to remeasure its deferred tax assets and liabilities as of December 31, 2017. The impact from this tax legislation was a $13 million benefit, which was partially offset by the restructuring charges I just mentioned as well as slightly higher SG&A expenses versus the fourth quarter of 2016. Note that the prior year period did include a $1.2 million net working capital adjustment for which there was no tax-related benefit, and a $0.8 million net of tax adjustment related to the finalization of a divestiture. Going forward, our expected tax rate will be approximately 18% to 19% before ending restructuring charges. Adjusted EBITDA for the fourth quarter of 2017 was $13.6 million or 9.6% of revenue compared to 15.1% or 10.6% of revenue for the comparable period of 2016. Now let me turn to the segment results. Our Structural Systems segment posted revenue of $65.1 million in the fourth quarter of 2017 versus $60.8 million last year. The year-over-year increase was primarily due to $4 million of higher sales across our commercial aerospace applications, particularly on large single-aisle platforms. Structural Systems posted an operating loss for the quarter of $2.7 million or negative 4.1% of revenue compared to operating income of $3.2 million or 5.2% of revenue last year. The year-over-year decrease was primarily due to a restructuring charge of $5.8 million, as I previously mentioned, and unfavorable product mix. Excluding the restructuring charges, Structures' adjusted operating margin was 4.8% for the 2017 fourth quarter. As Steve discussed, we're evaluating and implementing a series of measures to enhance manufacturing efficiency and improve asset utilization across our Structures' business, which we anticipate will result in higher margins beginning later this year and into 2019. Margins should also benefit with the ramp-up of the new programs at our Parsons complex and the associated increase operating leverage. Turning to the electronics segment. Our electronic segment posted revenue of $77.2 million in the fourth quarter versus $81.7 million in the prior year period. These results reflect $3.2 million of lower sales to our commercial aerospace customers and $1.5 million decrease in revenue within our military and space end-use markets, all due to shipment timing. Electronic Systems posted operating income for the fourth quarter of $6.8 million or 8.8% of revenue versus $9.2 million or 11.3% of revenue in the prior year period. As I previously mentioned, the fourth quarter included a $1.2 million restructuring charge and $1.1 million of higher cost of goods sold tied to revaluing inventory from the LDS acquisition last year. Excluding the restructuring charges and higher cost of goods sold, electronic's operating margin was 11.7% for the 2017 fourth quarter. Corporate general and administrative expenses, CG&A, for the fourth quarter, was $6.9 million or 4.8% of the total company revenue compared to $3.4 million or 2.4% of revenue last year. The higher CG&A expense was primarily due to restructuring charges of $1.8 million, as I mentioned, and higher compensation and benefit cost and higher professional service fees. Turning to liquidity and capital resources. We generated $8.1 million of cash from operations in the fourth quarter of 2017 and $35.4 million for the full year, which was down from $43.3 million in 2016 due to lower net income and a decrease in accounts payable. We also paid down $6.6 million of debt in the quarter and expect to pay down $25 million to $30 million in 2018 absent any acquisitions. In terms of CapEx, we spent $4 million in the fourth quarter, which $2.6 million was related to the Parsons facility expansion. We anticipate spending approximately $15 million to $17 million in 2018, which is much less than the $27.6 million in 2017, as we largely completed the investment related to our Parsons' facility expansion. Overall, we ended the year well-positioned for further growth and higher margins due to our restructuring initiatives, the expansion of the new development programs and the steps being taken to leverage our proprietary processes, technology and titanium expertise on these new platforms. I'll now turn it back over to Steve for his closing remarks. Steve?

Okay. Thanks, Doug. Okay. So I've just completed my first year last month at Ducommun. And overall, I'm pleased with the progress. I've told the investors that I'd take some time fully assessing the company's strengths and weaknesses and actively work and be decisive in building this business into a much better and higher-performing organization. During 2017, we laid our plans to do just that. Pleased to say we're on track with various initiatives to enhance margins and accelerate growth. The first phase of our restructuring plan is complete. We have a great deal more in store for 2018 that will position us to achieve approximately $14 million in annualized cost reductions, starting next year. And we will achieve it. At the same time, we're advancing our innovative technology applications and winning new business with likes of Boeing, Airbus, Gulfstream and Ratheon. With our backlog up over $85 million in just a year and building as we move into 2018, it's clear that Ducommun's people are working hard in bringing value-added solutions to all our customers. We'll continue to invest in the business, finish the Parsons expansion this spring and look at opportunistic acquisitions as appropriate. The bottom line is that we'll see numerous ways to improve top line growth, even while focusing on enhancing profitability and long-term asset utilization. I want to build Ducommun to an enterprise where all parts of the business are running efficiently and operating at their optimum potential, whether it's electronics or structural applications, on defense or on commercial platforms. We're clearly moving in the right direction. And I want to also let everyone know I appreciate the patience of the investment community as you put these necessary changes in place for our long-term success. With that, operator, we'll now open the call for questions.

[Operator Instructions]. Our first question comes from Edward Marshall with Sidoti & Company.

So my first topic, I guess, is on restructuring. I just wanted to get a sense. As you're getting into this, do you see opportunity for upside to that $14 million? And secondly, how much of that $14 million in savings do you see recognized in Q1?

Yes. So Ed, the first part of your question, we're working that hard. I wouldn't say there's upside. I mean, we're definitely committed to that number that we've communicated. And obviously, if there's further opportunity, we'll take advantage of that. For this year, of that $14 million, about 30% of that flows through in '18, with the rest of that flowing through in '19. So I would say in Q1, there's less than $1 million, but it'll ramp as we get through the year because a lot of the restructuring activities, while being done in Q4, are also ongoing, of course, through Q1 and will go through the rest of the year.

Got it. And the tally, it seems like it came in a little bit light. Maybe I didn't get the full tally, but it was $8.8 million Q4. And you talked about $10 million for '18. That's about almost $19 million that's coming in shy of that $22 million to $24 million. Was there something in 3Q? Or do expect something in 2019?

Yes. So in the $10 million number we were estimating, we knew that we were going to have these adjustments related to the purchase accounting that we did with LDS because we had to mark that inventory up to its fair value. And then as that sold through Q4, that came back off the balance sheet as an artifact of the purchase accounting. So that's how you kind of get to the $10 million, which is what we had guided to. And as we look at -- as I mentioned in the comments, we're looking at probably another $10 million in 2018. So a total now of about $20 million versus the $22 million that we talked about three months ago. And that's just really more of an artifact as we work through our various detailed plans and get more clarity on exactly what this is going to look like.

Great. And you talked about some of the development programs that had an effect on the margins that you kind of work through for the past couple of years, trying to get them up to speed. Do you think that's kind of -- going to start to peel off there? What was the drag on the margin for 2017 that those programs caused?

Well, we didn't give an exact number. I know that question has been asked in the past. Because it's a combination of a lot of different things, Ed. There's process and efficiency. There's a certain -- there's a higher level of scrap as you're bringing these new programs on. And so we're really focused on this and know that we're expecting the margin to increase as a lot of that inefficiency and scrap get behind us.

Okay. And I guess, lastly, you said the tax rate for '18 should be between 18% to 19%. That's the adjustment for the tax [indiscernible]. Is that right?

That's right, yes, before any restructuring charges. So with structuring charges layered in, the effective tax rate will go down even lower than that, probably 10% to 12%.

You're next question comes from Ben Cleave from Noble Capital Markets.

So a couple of questions on the restructuring here. On the last call, you indicated kind of 60-40 split between noncash and cash expenses. I'm wondering, first of all, that 60-40 split still in line with your estimates? And then second, are those cash expenses skewed more towards Q4? Or do you think those are still coming up down the road? Or is that 60-40 breakdown pretty consistent across all quarters?

Yes. That's pretty consistent. If you look at our 10-K that we filed today, you'll see that we took severance-related charges of about $4 million in the fourth quarter. We paid out about $1.3 million of that severance in the fourth quarter, with the remainder to be paid out in 2018. So we paid the severance out for terminated employees over time not in one lump sum.

Okay, perfect. And then a couple of questions regarding LDS. So now that you have a few months of their operations side in the past year, I'm wondering about what you see. Is there opportunity to expand their footprint? Do see opportunities to expand their market with legacy Ducommun clients that they may be didn't penetrate before? Or do you see them as having a pretty commanding market position, such that growth is going to be driven by volume increases -- excuse me, driven by volume from increases in the fleet rather than additions of new programs or new customers?

Yes. This is Steve Oswald. We absolutely see the latter of your comments. LDS, we're thrilled to have them, is really the leader in the space. So we really see, as far as where the growth is going to come, it's really going to be technology and connected planes and all the things that we're anticipating. So I think good things are ahead for the company. But I'd say it's more on the latter than the former.

Okay. Perfect. And then lastly, we talked about negotiations for the -- for that acquisition having multiple players. And so I'm curious regarding their business development efforts leading up to the acquisition. Did they take their foot off the gas from a business development standpoint? Are they focused on negotiations for the acquisition? Or do you think that they -- did they keep their foot on the gas and really come into Ducommun with a solid pipeline of opportunities? I -- basically, I'm trying to understand how much they can grow organically in '18, '19.

Yes. Foot on the floor for LDS. I mean, it's a great group and very focused. And like I said, as you know, I mean, acquisitions can be tricky. I'm happy report that the integration was a big success, and they haven't missed a beat. So more to come.

Okay, perfect. And then one last question on LDS. Can you quantify the backlog contribution that they gave or the -- and/or the Q4 revenue contribution?

Yes. No, we purposely, when we did the acquisition, didn't disclose that for competitive reasons. And their backlog, when you look at our growth, is not a significant portion of that. A lot of the backlog growth we're seeing is in the structures part of our commercial aerospace business.

Okay. Fair enough. And then two more questions. One, a point of clarification. Did you say the A320 and 737 MAX represented 28% of your overall revenue, or that 28% of your overall revenue? Or was that 28% of a segment revenue or commercial revenue? I couldn't figure that out.

Sure. No, the 28% was the growth year-over-year. And those two platforms -- and we said that the single-aisle platforms are now approaching 40% of the total revenue in the commercial aerospace segment of the company.

Okay, okay. Okay, perfect. And then last question for me is the long turning space revenue that was a bit lower due to the timing. Is there a chunk of that revenue that you think is going to get pushed into the first quarter? Or is it that -- are the delays -- are timing-related delays going to be longer than that?

No. I don't think they're going to be longer than that. I mean, you saw the backlog creep up from Q3 to Q4 in military and space. And we're seeing a nice order flow there. So it's not going to -- it won't leak out more than a quarter or two.

Okay. Okay, perfect. And I guess, actually, one last one for me. CapEx for the year, $26.5 million. How much of that was related Parsons?

Sure. There was almost $15 million related to the Parsons' expansion in 2017 that obviously won't reoccur.

And our next question comes from Ken Herbert with Canaccord.

I just wanted to first ask. Considering the importance of, obviously, the 737 and then the A320, a lot of speculation lately about these rates ultimately going above what Boeing and Airbus have announced. Can you just comment if we do see those announcements before too long, what the requirements of you would be in terms of CapEx? Or how maybe we should think about any incremental investments to support higher rates, specifically on the 737?

Yes. This is Steve. So we're hearing the same things and -- about the uptick. And we're out absolutely talking to customers about it. We really don't see, especially with all the investment we've put into Parsons and the investments we've put into New York, which is a big part of the supply chain for those platforms, we've got capacity. So I don't really see any pressure on CapEx for the uptake. I just see us hopefully just gaining some operating leverage.

Okay. Well, that's great to hear. And then, obviously, a lot of pressure from your customers on pricing of these programs. Can you talk, maybe without specifics, but just talk in general either about the narrow-body platforms, maybe with the backdrop of higher rates but across the board, have you seen any recent incremental increased pressure from your customers regarding pricing? Or how do you feel about visibility of pricing in the -- on the structure side, in particular in the '18? And are the contracts fairly well-established? Or what's the risk around that, I guess, in the next fiscal year?

No. Ken, I would say -- this is Doug. The contracts are fairly well-established. And obviously, as rates go up, there is a price down in some of them. As Steve kind of alluded to, we've been out talking to customers. And of course, for the narrow-body, we'll be at 47 by the summer. And then they're already signaling the 52 a little earlier than 2019. So our contracts are pretty well-established. So the pressure isn't any different that it has been as we go through contract renewals each contract, each year.

Okay. And then just finally, Steve. Obviously, I think LDS looks like it's obviously going to be a homerun and should be a great acquisition and sort of takes around of what you set out to do initially. Can you talk about maybe the pipeline today, the types of opportunities you're seeing a little bit on maybe where you could see things moving forward? And how's your strategy on M&A evolving now that you've got one under your belt, so to speak?

Yes, sure. I'm happy to do it. So first of all, just for investors and just in general, I mean, we -- one thing we did needed to do, we needed to build the confidence in the company, and we've done that, okay? So as I mentioned, I've brought in a top-flight person, Suman Mookerji, the lead. Our M&A, and with Doug and everybody else in the leadership team, we have a lot of experience in acquisition. So I think we can check the box pretty strong that we have the confidence in the company to go and make these things happen. So LDS is absolutely wonderful for us. It was definitely a tough process, but we came out and we won. And as we look to 2018, we're busy. We're active. We're looking at things. We're still in this strategy. And I don't see that changing about really driving for engineered products, things that we like, but they're going to certainly be this year. They're going to -- it's going to be a bolt-on approach only for things that we really feel fit well with us and that we can do something with. And that's certainly how we felt about LDS. So just -- I'd say, stay tuned, and more to come. But we are active. And if I see anything this year at least, in the calendar year, it will be a bolt-on.

[Operator Instructions]. The next question comes from Aman Gulani from B. Riley FBR.

Just one question here for me. On the commercial side, you say that A320neo is your biggest opportunity with Airbus? Or do you see other potential opportunity to the Airbus aside from the A320?

Well, we've certainly -- we have content on the 350, the 330, but obviously, the 320 has got the most legs under it from a volume standpoint. And we're finding that a lot of the things that we're doing on 737, which is the biggest program we have in the company, are attractive to Airbus, just from a technology, a material standpoint. So we've been growing Airbus quite steadily as a customer and continue to pursue opportunities on all the platforms. We're certainty looking at the A320 as the biggest opportunity because that's where the highest build rates are going to be.

And this is Steve. I'd agree with that. Before I started, obviously, Ducommun and Airbus were working out, I think, some really good things. And as I mentioned in past calls, I mean, 2017 was sort of the year where the press releases were done, and we actually had to make product that met spec and ship it out. So -- and that's what we've done. So I think that's a good news story overall. I think going forward, Airbus at Ventura have been partners, and they're actually helping us to get better. So we see more growth ahead. And certainly, we've got good opportunities, I think, across the entire commercial platform.

[Operator Instructions]. All right, speakers. I'm showing no further questions. I'd like to turn the call back over to Stephen Oswald, CEO, for any closing remarks.

Okay, I'm going to wrap it up here. Just again, I want to thank everyone for calling in today. I think it's a very solid report for Q4. I think we've done some really good things, and more to come. Again, I want to thank the investor community for their support this past and the patience as we put together these plans and continue to strengthen and grow Ducommun. So again, my thanks on behalf of Doug and myself, and have a nice afternoon.

Ladies and gentlemen, this is the operator, once more. This concludes the program, and you may all disconnect. Everyone, have a great day.