Ducommun Incorporated

Good day and thank you for standing by. Welcome to the third quarter 2023 Do Common 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Suman Mukherjee, Duke Commons Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you, and welcome to Duke Commons 2023 Third Quarter Conference Call. With me today is Steve Oswald, Chairman, President, and Chief Executive 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 Q&A session that follows. Certain statements today that are not historical facts, including any statements as to future market conditions, results of operations, and financial projections, are forward-looking statements under the Private Securities Litigation Reform Act of 1995 and are therefore prospective. These forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual remarks 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 the common include, amongst others, the cyclicality of our end-use markets, the level of U.S. government defense spending, timing of orders from our customers, legal and regulatory risks, the cost of expansion and acquisitions, competition, economic and geopolitical development, including supply chain issues and rising interest rates, pandemics and disasters, 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 Q3 2023 quarterly report on Form 10Q with the SEC today. I would now like to turn the call over to Steve Oswald for a review of the operating results. Steve.

Thank you, Suman, and thanks, everyone, for joining us today for our third quarter conference call. Today, and as usual, I will give an update of the current situation at the company, after which Suman will review our financials in detail. Q3 was an outstanding quarter. as we grow our top line both year-over-year and sequentially, delivering revenue growth of 5% versus 2022 and reaching a new all-time quarterly record of full revenue of $196.3 million, the previous high being in 2012. As mentioned in the press release, the ramp-up of our wide-body aircraft business, which was welcome news, along with a return to growth of our military business, helped to drive revenue and achieve this new milestone. We have big goals for 2027, discussed at our investor meeting last December, and we need to be realizing this level of revenue, and of course higher, as we move forward over the next few years. The continued recovery in commercial aerospace once again delivered in Q3, with Boeing's twin aisle platform business in aggregate being up almost 170% year over year. Great to see, along with Airbus A220 also having good growth up 33% year over year. Overall commercial aerospace with Boeing and Airbus and others was up 14% from Q3 2022. Despite the continued challenges with the quality repairs reducing the max fuselage build rates. We are now in our ninth quarter as well of year-over-year revenue growth for commercial aerospace, a continued excellent sign overall for the industry. I'm happy to report the commons defense business was also up year-over-year in Q3, mainly due to the Apache program's strong demand, other military and space products, the Mir missile, and other military rotary wing platforms. The business delivered good performance of 109 million in revenue for the quarter. And it was encouraging to see the return to growth for this very important business for the common. The company posted excellent gross margins of 22.7%, up 200 basis points year over year from 20.7%, a breakout number for the business, even as we continue to work through our many restructuring activities. We did benefit from favorable product mix and higher volume in Q3. The team also delivered adjusted operating income margins of 8.9%, along with an all-time high adjusted EBITDA of $29.3 million, an increase of $3.3 million year over year. The Commons adjusted EBITDA margins of 14.9% in Q3 was very strong, and we anticipate adjusted EBITDA to be solid this year with stronger numbers in 2024 once the plant closures and restructuring activities are completed. A good amount of value creation is ahead for the company and shareholders. The quality of earnings was solid with GAAP diluted EPS of 22 cents a share versus 69 cents a share for Q3 2022. And with the adjustments, diluted EPS was 70 cents a share compared to diluted EPS of 96 cents in the prior year. Some key drivers for the lower GAAP diluted EPS include higher interest expense due to higher interest rates, higher restructuring charges, and higher inventory purchase accounting adjustments. Switching to the total company backlog performance, while it decreased sequentially, it was up slightly year-over-year and remained solid at 959 million at the end of Q3 2023. The backlog held flat sequentially, the defense backlog held flat sequentially at 494 million after a significant jump in Q2 2023. It represents a 6% increase on a year-over-year basis. We were pleased with this and a positive sign that the overall DCO defense visit remains in good shape with more positive news to come. The commercial aerospace backlog, however, decreased slightly year over year, primarily due to the industry issues with single aisle production rates, specifically the MAX mentioned earlier, but still ended Q3 2023 at $423 million. For offloading for defense primes, the work continues. We're expecting roughly $90 million for the full year as committed to, mainly in our circuit card business for RTX. As communicated, the long-term run rate of these defense programs already commercialized or in development for offloading will be over $125 million by 2025 once the transition work is completed. In Q3 as well, our team delivered another excellent quarter managing the supply chain as evidenced by the record quarterly revenue along with significant gross margin expansion compared to a year ago. This is another great example of our operating process, company culture, dedicated employees, and leadership. As we move towards the conclusion of the year, I am now narrowing down the previous revenue guidance of mid to high single digit for the year to now a range of 6% to 6.5%. We are happy with this number. especially overcoming the max delays we all know about, which have created a more modest pace in commercial aerospace single aisle production rates in 2023. Before I move to providing our market and program details, I thought it was a good time to spotlight our MagSeal acquisition, which we closed in December of 2021. I think we have found a good balance disclosing information on our acquisitions per shareholder request of course, without harming our competitiveness. I did want to highlight the success at the Rhode Island-based design and manufacture of magnetic seals for aerospace and defense applications. In just over seven quarters of the common ownership, the progress has been excellent. We have grown revenue by more than 75%, with adjusted operating income growing by more than 200%. Maxfield's backlog also grew more than 75% during this ownership period. For background, the company was a family-owned business prior to our acquisition with low involvement from the owners and limited capital. As for our playbook, first, we were able to retain the key leaders post-acquisition. Second, enable them to drive a high level of performance through capital investments in operations, including state-of-the-art new manufacturing equipment to improve productivity. Third, add sales and engineering resources to drive customer engagement and new product development. And fourth, adjusting their channel strategy to bring them closer to the customer where it makes sense. This is our most recent deal with a track record now. And I believe this is a compelling example of how we create value through common shareholders when we spend money on acquisitions. I also want to take this time to congratulate Bob Gard and the MagSeal team on their outstanding performance and look forward to their continued success for many years to come. Now let me provide some additional color on our markets, products, and programs. Beginning with our military and space sector, we saw a return to growth and exceeded $100 million in quarterly revenue to post-third quarter revenues $108.7 million compared to $106.3 million in Q3 2022. The significant increase in demand for the Apache tail rotor blades of almost 250% year-over-year was the main driver, but we also saw increased demand for other military and space products, the Mir missile and other military rotary wing platforms as well as the Bell V-22 rotary wing platform. The third quarter's military and space revenue represented 55% of the Commons revenue in the period, down from 57% last year, and this trend will continue to reflect more balance with commercial aerospace, which we like. We also ended the third quarter with a solid backlog of $494 million, an increase of 6% year-over-year, and represent 52% of the Commons total backlog. In our commercial aerospace operations, third quarter revenue increased 14% year-over-year to $77.9 million, driven mainly by bill rate increases on large aircraft platforms, including the twin-aisle commercial aircraft platforms as well as the A220 platform, commercial rotary wing aircraft platforms, and other commercial aerospace platforms. The comet expects continued growth, although at a more modest pace, and commercial aerospace as the industry navigates various supply chain component issues. I'm also happy to report our delivery and quality to common customers continues to be a bright spot as we move forward. The backlog within our commercial aerospace sector stands at $423 million at the end of the third quarter, and while it was $8 million lower or a 2% decrease year-over-year from Q3 2022, it was still a very solid number given the temporary weakness in commercial aerospace. With that, I'll have Suman review our financial results in detail.

Suman? Thank you, Steve. As a reminder, please see the company's Q3 10Q and Q3 earnings release for a further description of information mentioned on today's call. As Steve discussed, our third quarter results reflect another period of strong performance. Once again, we saw a significant increase in our commercial aerospace revenues. We remain encouraged by the continued strength in domestic and global travel, which should support higher long-term demand for aircraft as we work through some temporary near-term weakness in single-aisle production rates. In addition, we saw a return to growth in our military and space revenues, mainly due to timing of certain programs such as the Apache. During the quarter, we also continue to make progress on our restructuring program, and I will provide some more color shorts. With all this, we feel like we are positioned to finish up 2023 on a solid note. Now, turning to our third quarter results. Revenue for the third quarter of 2023 was $196.3 million versus $186.6 million for the third quarter of 2022. The year-over-year increase reflects $9.6 million of growth across our commercial aerospace platforms and $2.4 million of higher revenue within the military and space sector. The return to growth in military and space revenue in the third quarter was very encouraging. UConn's total backlog at the end of the third quarter was 959 million. In Q2 2023, we saw a significant jump in our defense backlog by 50 million to 494 million. During Q3 2023, we were able to maintain the defense backlog at that same level of 494 million. The backlog for our commercial aerospace business dropped during the quarter from $465 million at the end of Q2 to $423 million at the end of Q3 as a result of the ongoing industry issues in commercial aerospace bill rates. 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 total gross profit of $44.6 million, or 22.7% of revenue for the quarter, versus $38.6 million, or 20.7% of revenue in the prior year period. We continue to share adjusted gross margins as we have certain non-GAAP cost of sales items relating primarily to inventory step-up amortization on our recent acquisitions, and partially to the impact from the Guaymas fire on our operations. On an adjusted basis, our gross margins were 24.1% in Q3 2023 versus 21.5% in Q3 2022. The improvement in gross margin was driven by favorable product mix, better pricing, and improved scale in our commercial aerospace businesses. We continue to work through a difficult operating environment with supply chain and labor. However, through our proactive efforts, including strategic buys and our inventory investments, we have been able to avoid any significant impacts thus far on our business. New Common reported operating income for the third quarter of $8.6 million, or 4.4% of revenue, compared to $13.2 million, or 7.1% of revenue, in the prior year period. Adjusted operating income was $17.5 million or 8.9% of revenue this quarter compared to $17.2 million or 9.2% of revenue in the comparable period last year. The company reported net income for the third quarter of 2023 of $3.2 million or $0.22 per diluted share compared to net income of $8.5 million or $0.69 per diluted share a year ago. On an adjusted basis, The company reported net income of $10.3 million, or $0.70 per diluted share, compared to net income of $11.9 million, or $0.96 in Q3 2022. The lower adjusted net income during the quarter, despite a higher level of adjusted operating income, was driven mainly by higher interest costs. This was primarily due to the impact of the Fed's rate hike on short-term interest rates. I will discuss this along with our interest rate hedge, which takes into effect on January 1, 2024, shortly. Now let me turn to our segment results. Our structural system segment posted revenue of $85.5 million in the third quarter of 2023 versus $73.2 million last year. The year-over-year increase reflects $6.7 million of higher sales across our commercial aerospace applications, mainly for twin-aisle aircraft and on the A220, and 5.6 million of higher revenue within the military and space markets, mainly from the ramp up in sales in the Apache program. Structural systems operating income for the quarter was 6.7 million, or 7.9% of revenue, compared to 6.7 million, or 9.1% of revenue last year. Excluding restructuring charges and other adjustments in both years, The segment operating margin was 15.7% in Q3 2023 versus 13.3% in Q3 2022. This significant year-over-year improvement was driven by favorable product mix, better pricing, and higher manufacturing volume or scale in the business, as our commercial aerospace revenues have continued to grow. This has been a great quarter for our structural systems segment. systems segment posted revenue of $110.7 million in the third quarter of 2023 versus $113.4 million in the prior year period. The decline was mainly due to lower revenues with the company's military and space customers, including the impact and timing of reduction in sales on legacy platforms such as the F-18, not synchronized with growth in sales from the company's position on next-gen platforms. Systems operating income for the third quarter was $12.7 million or 11.5% of revenue versus $13.9 million or 12.2% of revenue in the prior year period. Excluding restructuring charges and other adjustments in both years, the segment operating margin was 13.4% in Q3 2023 versus 12.9% in Q3 2022. The higher operating income as a percentage of revenue primarily due to favorable product mix and pricing actions. Next, I would like to provide an update on our ongoing restructuring program. As a reminder, and as discussed previously, we commenced the restructuring initiative back in Q2 2022. These actions are being taken to accelerate the achievement of our strategic goals and to better position the company for stronger performance in the short and long term. This includes the shutdown of our facilities in Monrovia, California, and Berryville, Arkansas, and transfer of majority of that work to our low-cost operation in Guaymas, Mexico, with the remainder going to other existing performance centers in the United States. We continue to make progress on these transitions with excellent employee retention and engagement, and are also working diligently with our customers, Boeing and RTX, to obtain the requisite approval. During Q3 2023, we recorded $4 million in restructuring charges. The majority of these charges were severance and benefits related, as we continue to wind down the two operations. The recertification process is ongoing, and we plan to close both factories fully in the first half of 2024. We expect to incur $7 to $9 million in restructuring expenses through 2024, and that will conclude the spending. Upon the completion of our restructuring program, we expect to generate 11 to 13 million in annual savings from our actions and expect a portion of those savings to be realized starting in H2 2024. We anticipate selling the land and buildings at both Monrovia, California, and variable Arkansas, and as communicated in the past, have begun a sale process for the Monrovia facility. Starting next to liquidity and capital resources. During Q3 2023, we generated $14.3 million in cash flow from operating activities, which was up from $9.2 million in Q2 of 2023. As at the end of the third quarter, we have available liquidity of $198 million comprising of the unutilized portion of our revolver and cash on hand. Our existing credit facility was put in place in July 2022 at an opportune time in the credit market, allowing us to reduce our spread, increase the size of our revolver, and allowing us the flexibility to execute on our acquisition strategy. Our debt is currently 100% floating and linked to the SOFR. As a result, and as I highlighted before, the increase in our interest costs from $3 million in Q3 2022 to $5.4 million in Q3 2023 was driven by the run-up in short-term rates due to the Fed rate hike. In November 2021, we had put in place an interest rate hedge that goes into effect for a seven-year period starting January 2024, and which will peg the one-month term so far at 170 basis points for $150 million of our debt. This will help drive significant interest cost savings in 2024 and beyond. Steve highlighted the success we have had with our max-deal acquisition. We have a proven strategy and playbook that we intend to continue to deploy on future acquisitions with deal sizes ranging from $50 million to $50 million to achieve the target we have laid out in our Vision 2027 plan. This strategy can be funded with debt while still maintaining our net leverage below Forex. We have laid out a hypothetical scenario on page 11 of our earnings release presentation to illustrate this point based on a cadence of one to two transactions each year with a total enterprise value of 100 million annually. In summary, we feel confident that we can execute on our M&A game plan through a combination of additional debt and operating cash flows while continuing to be prudent about leverage. To conclude the financial overview for Q3 2023, I would like to say that we are in a good place with most of the year now behind us and look forward to finishing up a strong 2023. I'll now turn it back over to Steve for his closing remarks. Steve?

Okay, thanks, Shimon. In closing, just a few thoughts here. So Q3 obviously was a great quarter, many highlights for the company and our shareholders. Achieving record quarterly revenue along with an all-time high adjusted EBITDA in Q3 are wonderful milestones to be proud of, and I'm thrilled for the common team. It also means that we are ahead of schedule on the Vision 2027 we shared at the Investor Day last December and are committed to reaching those goals. Lastly, my continued thanks as well to our employees, investors, and all other stakeholders for your continued support. As we look forward to finishing up a successful 2023. Okay, let's go to questions. Thank you for listening.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. And please stand by while we compile the Q&A roster. One moment for our first question. And our first question comes from Mike Crawford of B Reilly. Mike, your line is open. Mike, if your line is muted, please unmute and please rejoin using the call me feature if that doesn't work.

One moment for our next question.

And our next question comes from Michael Tirmoli of Truist.

Hey, good afternoon, guys. Thanks for taking the questions here. Nice results. Steve or Suman, the restructuring and the annualized savings, it sounds like maybe that's sliding to the right a little bit. I mean, I know you kind of said only a portion and it's more second half. Do I have that correct? And what's sort of happening there to kind of prevent that full run rate from being realized, you know, really kicking off starting in earlier 24th?

Yeah, Mike, fair question. And it has moved a bit. You know, we're a little bit, you know, at the mercy of Boeing and RTX, right? Because, you know, they got a lot of suppliers that want to move a lot of different things around. And so we're doing our best. Like Simone said in his notes, we're diligent with both those large OEMs. But, you know, we did see a bit of a delay. Not that anything on our end, But, you know, we're trying to get people down to these new factories to approve these processes, and it's going to be a little bit longer. But I will tell you that we'll be done for sure by the end of June.

Okay. You called out certification. Is that presumably what it's for, getting the proper sign-off? And, I mean, clearly, yes, both of those guys have a lot going on.

Yeah, absolutely. So much, you know, I was at the Boeing conference in March. They said they have a – a thousand parts that suppliers want to move. And so, you know, we're one of many, but, you know, I think overall the good news is we're moving forward and we do have a target and that's going to happen at the end of June. So that I can tell you.

Got it. I mean, I know you're not going to give 24 guidance here, but I'm assuming then we should probably maybe temper our margins a bit. I mean, you just put up great margins in the quarter. You know, it sounds like you're certainly dealing with some of the arrow challenges and there were some sequential downticks there. But, you know, just can you maybe, you know, kind of level set us, you know, maybe using, you know, this quarter's margins as a starting point or a launching point and how to think about the trajectory?

Yes, great question, Mike. Right. We have really strong margins, and margins have progressed sequentially over the course of this year in a very nice manner. I would expect the margin to improve, especially given the timing of the restructuring, for next year to be more in the second half versus the first half.

Okay. Because the margin that we posted this quarter looks pretty good, right, as far as rolling forward.

Absolutely, yeah. Okay. Okay. Got it. That's helpful. Last one for me, commercial arrow. I mean, you know, you're, I understand what's been going on out there. We're still seeing pretty good growth among the peers. I mean, maybe you guys got a little bit disproportionately hit here because of outsized exposure and concentration on Macs, but it's this, Can you maybe give us a sense where you are on max rates and kind of where you expect to be or just kind of what the general state of the union is there on that program?

Sure, yeah. We're sort of mid-20s. You know, we're certainly excited about what we heard as far as maybe going up to 500, you know, from recall. So we're enthusiastic about that. But to be honest with you, the strike – And then the, you know, the quality repairs, you know, kind of just flatten us out a bit on the max. And as you know, it's a pretty big program. But I think the good news is, because we were pretty much dead in the water last year, is that the wide-body business is kind of going back, even though at a smaller level. It's a really good sign for DCO.

Got it. Helpful. Thanks, guys. I'll jump back in the queue here.

Thank you. One moment for our next question. And our next question comes from Mike Crawford of B. Reilly Securities.

Can you guys hear me this time? We can hear you, Mike, loud and clear. Excellent, excellent. I'm glad to hear that. So thanks for sharing your playbook on MagSeal. Is there a similar walkthrough you can share with your plans for BLR Aerospace?

Uh, we're, we're, you know, look, you know, you guys kind of got the playbook, right? So, you know, but I think, uh, we're going to use pretty much what we did with Max deal. Uh, you know, we'll be in touch, right. You know, as we go forward here, it's, it's still, it's still real early on PLR. So that's, that's about all I want to say, but we're, we have high hopes like we've had the other four and we're going to use the same playbook.

Okay. Thanks. And then since you started your initial sales process in Monrovia, it's, Are you prepared at this time to provide any expectations on potential value you might receive for selling that property?

Mike, we have an ongoing sale process, but we're not yet at a stage where we can share details around the expectations there. But as we move along the sale process, we'll keep shareholders updated.

Yeah, I think, Mike, by December, We'll have communication out. Okay, so you can count on it. Sooner than later, Mike.

Okay, thanks. And then can you share your expectations on inventory purchase accounting adjustments that we might see in the fourth quarter and or next year from where you're standing today? Okay.

The inventory purchase accounting adjustments during the current quarter were mainly on account of inventory that had to be marked up for the BLR acquisition. And we do expect that to continue through Q1 and Q2 of next year. It will kind of depend on the rate of revenue, but certainly in Q1, we'll see it in Q4. of 2023, and then certainly in Q1, and depending on revenue, maybe a little bit in Q2, but not beyond that.

Okay. Thanks, Suman. Then final question for me is just relative to the renewed growth in military and space, I'd really like to hear your thoughts on space in particular, given all of the investment that's going into that sector at this moment.

You know, Mike, I'm going to give you a high-level view. I mean, we certainly support the space programs, but we lean more towards the military side, I mean, candidly. So, you know, we do see a lot of investments ongoing. I mean, we're looking at interesting things. Most of that's come out of Carson, and we might have a few other support, you know, as we do ruggedized harnesses for NASA and for other things. But, you know, we're probably not the best people to ask.

okay all right well thank you thank you as a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced to withdraw your question please press star 1 1 again and one moment for our next question our next question comes from jason gursky of city

Good morning, everybody. I wanted to just dive in a little bit more about the relationship that you all have with Spirit. You mentioned some of the dynamics going on there with the 3-7. It makes good sense, I think, to see a little bit of pause here in 23 and then recovery in 24. But part of the narrative with you all has been bringing in some more work from them. And I'm just kind of curious maybe to get an update from you. They've got new leadership there. Sounds like they've got, you know, somebody at the helm there that is, you know, pretty focused on operations. So just kind of curious if you've got some sort of readout for us on kind of your initial interactions there and try to figure out whether there is an opportunity for the work that you do with them to potentially grow even more as they wrap their heads around and hands around all that's on their plate.

Sure. And Jason, thanks for calling in. Good to be with you. So look, we're close to spirit. We were close to Tom, the CEO, and I know things have changed, and I know Patrick's in there now. We obviously are expecting a new sort of level of energy there, and I think We're going to see that. I think they're doing some smart things early on, so we're encouraged. You know, as far as program gain, I mean, I talk about these skins for the fuselage, right, which is going to be a big deal for us, but, you know, we're still working on the tooling, and we're going to hopefully get that moving, you know, towards the end of the year where we're going to get things approved, and we're going to start building more program share for the MAX, which we already have, you know, pretty good share. But, you know, I think that they're through the labor issue, as we all know. I know they just did some things on the capital side. You know, and I think hopefully we're through these quality issues because, you know, we're a VOI person there at Spirit. So we're right in the middle of the operation. They're pulling our products. We're certainly making sure we have the inventory there in the factory. We have, again, a strong relationship. I'm absolutely positive about it. I mean, unless we see something that, you know, and God forbid another, you know, quality problem, which, you know, really sets everybody back and uses a lot of time for people to do this. So I think thumbs up for Spirit. I think it's still going to be sort of a flattish, you know, first three months as, you know, it's a big operation, right? But I think they're going to, I think you're going to see better things in 2024, and we're certainly counting on it.

Right. Okay, great. And then on the wide-body side, did these ramping volumes come as a surprise to you all? I'm just trying to get a sense of whether something's coming in better than expectations on that side of things. And

um you know if you could just offer a little bit more fidelity on on where you're seeing that strength that'd be helpful thanks yeah so certainly uh we're 787 players so uh you know so we did see you know some some some take up in that we think it's going to be much much better in 2024 well one thing we don't talk about is that we're on the a330 believe it or not we have a pretty good position on a330 and uh year over year that really popped okay as far as you know we know that's not the biggest priority in the airbus lineup for their products but you know we're a player on that all through our titanium operations so that was a positive and sometimes you're just going to get spares and other things and believe it or not we got some uh some good news year over year on 747 so you know those are the kind of things but we're we're counting on the uh the 87 because we not only uh provide titanium other things in the 87 we provide engineered products We provide diffusion, lightning diffusion systems for the 787 at very high margins. So we're all in on the 8-7 going forward.

Okay, great. Thank you very much.

Thanks, Jason. Appreciate it.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Mr. Steve Oswald for closing remarks.

OK, thank you and thank you everybody for joining us today. Appreciate you listening and hanging in there. I thought again we had an excellent quarter. I want to thank everyone for their support. Certainly coming out of a couple of tough years with COVID and starting to move forward with a lot of good things for shareholders and for and for our team here. So again, thank you. Just want to say one last thing I want to just thank our veterans as we move up to Veterans Day. on Saturday, and thank you for your service and to the families that support them. We are proud to be a part of helping the warfighter. Thank you. Have a great day.

This concludes today's conference call. Thank you all for participating, and have a good day, and you may now disconnect.