Ladies and gentlemen, thank you for standing by, and welcome to our Q3 2020 Ducommun Earnings Conference Call. Please be advised that today's conference is being recorded. 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 3rd Quarter Conference Call. At this time, all participants are in a listen only mode. Following management's prepared remarks, we'll hold a Q and A session. And now I'd like to go over a brief Safe Harbor statement. Thank you, and welcome to Ducommun's 3rd 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 comments 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 and financial projections, are forward looking statements under the Federal Private Securities Litigation Reform Act of 1995 and are therefore a 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-nineteen 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 ks 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 20 2Q3 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 Q3 conference call. As in the Q2 call, I hope that you and your families are healthy and continuing to get through this pandemic as best as possible. Today, in a short while I will give an update of the current situation at the company, after which Chris Swapp will review our financials in detail. Company remains focused 1st 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 our communication with weekly updates through our human resources team. As mentioned in the press release, Ducommun's 3rd quarter results really shined despite the continued unprecedented challenges due to the pandemic and 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 is 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 dollars 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 20222023. As mentioned, the company's 3rd quarter revenue was down 17 percent 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 everyone wanted to show negative growth, the revenue number is impressive for not only the pandemic impact, but also overcoming another $30,000,000 of 7.37 MAX headwind in the quarter. The common defense business continues to show excellent progress with big opportunities ahead. The majority of the game 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-fifteen and the TOW program. I mentioned on our last call about Ducommun's new efforts with UAVs.
Again, we are thrilled to be a strategic partner with GA, anticipate our 1st month of over $1,000,000 in revenue in December with 2021 bringing higher and higher levels of volume. The Raytheon Missiles and Defense business mentioned in previous calls is now in full production at Monrovia, California for the CAES 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 $35,000,000 in revenue in 2021 for this program alone, an increase from $12,000,000 in revenue this year. This partnering across the company at this type of revenue level is something new and too common and we are excited to see this progress.
Also as you see in the 10 Q, Northrop Grumman was the number 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-thirty five projects, major radar programs and structural applications. I've mentioned in the past, a key theme for the company is account share opportunities for recombinant 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 $506,000,000 for the defense business, which is another all time record for Ducommun.
The total backlog was $796,000,000 for the company, sequentially down from Q2, but still is a great number based on the environment. The defense business grew year over year by 36% in bookings, bolstered by strong orders across numerous key defense platforms, which include the F-eighteen, as mentioned previously, the TOW missile, UAVs, F-thirty 5, AEGIS, weapon systems for ground vehicles and nobles and others and this part of Ducommun continues to deliver. Obviously, the strength helps 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 gross profit margin expansion year over year at 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%. Tucano also has a great long term future, and we look forward, as mentioned earlier, to a return to revenue growth for the full year in 2020 along with very good years in 2022 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:one 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 and 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 3rd quarter revenue of $113,900,000 once again representing strong growth versus 2019 of 41%. We drove revenue across a broad brand of defense platforms including nearly every aspect of our product portfolio. As mentioned earlier, we saw increases in demand for our military fixed wing aircraft programs, particularly strong revenue as mentioned earlier from Northrop Grumman, Nobles Worldwide, Viasat, Patriot, GA, F-fifteen and the TOW missile. The 3rd quarter military and space revenue represented 76% of the common revenue in the period. We also continue to be very well positioned with further growth across our defense platforms over the next several quarters in all sectors.
And again ended the 3rd quarter with an all time record high backlog of $506,000,000 which is up an impressive 36 percent year over year and that represents 60% of the common's overall backlog. Within our commercial aerospace operations, 3rd quarter revenue declined year over year to $26,000,000 as expected driven by build rate declines in the 7/37 MAX as well as many other programs impacted by the COVID-nineteen pandemic. Tacomet also has effectively adjusted costs and manage a downturn and is well positioned once rates stabilize and increase over the long term. Tucomit'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 $269,000,000 at the end of the Q3.
The majority of the decline obviously is due to the 7 37 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 Q3 results as they once again reflect the strength and diversity of our business even as we continue to navigate the impact 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 Q3 of 2020 was 150,400,000 dollars versus $181,100,000 in the Q3 of 2019. This performance reflected $33,400,000 of higher sales within the military and space sector, offset by $62,900,000 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-nineteen 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 Q3 was approximately $796,000,000 Our military and space backlog is at an all time high of 506,000,000 dollars 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 partially and was partially offset by unfavorable manufacturing volume. Total gross profit fell to $33,500,000 from $38,300,000 last year as a result of lower commercial revenue. Despite the top line headwind from COVID-nineteen and the related issues impacting domestic travel, we've continued to drive margin expansion. SG and A was $22,100,000 in the 3rd quarter versus $23,700,000 last year, reflecting our ongoing cost control savings as Steve discussed. The company reported operating income for the Q3 of $10,300,000 or 6.8 percent of revenue and adjusted operating income of $12,400,000 or 8.2 percent of revenue compared to $14,600,000 or 8.1 percent 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 and A. Interest expense was $3,100,000 in the Q3 of 2020 versus $4,400,000 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 $50,000,000 in Q1 to have cash on hand during the pandemic. The company reported net income for the Q3 of $6,500,000 or $0.54 per diluted share and adjusted net income of $8,300,000 or $0.69 per diluted share compared to net income of $8,300,000 or $0.70 per diluted share for the Q3 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 Q3 compared to the prior year period. Adjusted EBITDA for the Q3 was $21,600,000 or 14.4 percent of revenue compared to $23,600,000 or 13.1 percent of revenue for the comparable period in 2019. Now let me turn to the segment results. Our Electronics Systems segment posted revenue of $103,500,000 in the Q3 of 2020 versus $90,600,000 in the prior year period.
These results reflect a $23,100,000 increase in sales to the company's military and space customers, partially offset by $9,000,000 of lower revenue across our commercial aerospace platforms. Electronic Systems posted operating income for the Q3 of $14,900,000 or 14.4 percent of revenue versus $9,700,000 or 10 point 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 $46,900,000 in the Q3 of 2020 versus $90,500,000 last year. The year over year decrease was due to $53,900,000 of lower sales across commercial aerospace applications, reflecting current demand dynamics, as Steve discussed, partially offset by $10,300,000 of higher revenue within the company's military and space markets.
Structural Systems posted operating income for the quarter of $1,800,000 or 3.8 percent of revenue compared to 12,900,000 dollars or 14.2 percent of revenue last year. The year over year operating margin decline reflects unfavorable manufacturing volumes and $1,800,000 of aggregate expenses tied to the restructuring activities and the Glamis facility fire, without which adjusted operating margin was 7.7% in the Q3 of 2020. Corporate general and administrative expense. CG and A expenses for the Q3 of 2020 were $6,400,000 or 4.2 percent of revenue versus 7,900,000 or 4.4 percent of revenue in 2019. The decrease in CG and A expense was mainly due to lower professional service fees of 1,100,000 dollars Turning to liquidity and capital resources.
We have available liquidity of $125,000,000 comprised of $75,000,000 of cash on hand plus the remaining $50,000,000 on our revolver at the end of the Q3 of 2020. We generated $4,900,000 of cash from operations during the Q3 of 2020 compared with $12,000,000 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 2025. As a reminder, our leverage ratio covenant ceiling is 4.75.
Our leverage ratio was roughly 2.9 at the end of the Q3 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 $3,200,000 during the Q3 and anticipate spending between $12,000,000 to $14,000,000 in 2020. This estimate does not include the capital expenditures for Guaymas as we replace the capabilities 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 Q3. 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 Q4 that will significantly reduce our 4th 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 demands.
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 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 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 $1,100,000 from the newly formed Ducommun Foundation started last year to the local area 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.
And your first question comes from the line of Ken Herbert with Canaccord.
Hi, good afternoon, Steve and Chris.
Hi, Ken. Ken, good afternoon.
Hey, 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 then just a little bit on the mix as well. But no, the Guaymas fire expenses specifically though, we 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 Q4 and it sounds like things are maybe a little bit incrementally better on the margins with what you're guiding to. 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 dialed in 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. We feel real good about our run rates. Obviously, we've been doing this now for 6 months and we see good things ahead.
Well, that's excellent. And just obviously defense doing really well, and you gave a little more detail on some of your key programs like the toe 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 in the investor meeting, okay? We're going to give, I think, somewhat some really good detail. But I will just tell you that since I've been in the job here, okay, Raytheon was they were a wonderful customer and they've been with us for a long time and we've been with them. But if 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. So 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 in this one.
That's excellent. And just finally, Chris, one clarification. Did you say the full year tax rate assumed 10%? Did I get that correctly?
You did, Ken. It will be again, there's a significant FIN 48 release that will take play that should we anticipate taking place here in Q4. So when you look at the full year, dial it in close to 10%.
Perfect. All right. Thanks guys. Great quarter.
Ken, thanks a lot. Appreciate it as always.
And your next question comes from the line of Michael Ciarmoli with Truist Securities.
Hey, good evening, gentlemen. Thanks for taking the questions. Nice results here given the backdrop. I guess, 76% of revenues will have to consider you guys a defense contractor.
Mike, we'll take the multiple. Those balls in your cart.
Yes, yes. I don't know if they're in better shape right now. 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 two 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 or later on MAX. But Mike, the issue is all the inventory, not only the planes, but also everything in the chain, okay? So we feel like we're really kind of bottoming 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 have well 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 systems 7.7%. You talked about next quarter potentially being above 8% consolidated. Should we think as sort of the 7.7% 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 on 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 does 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 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's hopefully is in Q4, we start emerging. Your phrasing is right. I mean, that's going to be a slow build up from there and that's what we're building in.
Yes. Mike, I'll also add that I'll also add that we'll have more information at the Investor Meeting, okay, not about the dollar 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 talked 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 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 that your point Mike is important about maybe not so much in the next quarter or 2, but we'll be scale players, sort of in the way, okay? And we'll see that.
Got it. All right, perfect. Thanks, guys. I'll jump back in the queue here.
Sure. Thanks. Appreciate it.
And your next question comes from Ayman Ghislani with B. Riley Securities.
Hey, guys. Thanks for taking my question and congrats on the quarter. Nice to see the traction with Northrop. I mean, you've increased revenue from like $8,000,000 to almost $22,000,000 sequentially. So just trying to get a sense for the revenue levels with Northrop going forward.
Is this something that could sort of be sustained in the Q4 and maybe going forward on a run rate basis in fiscal 2021?
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-thirty 5 and we're doing structural application. 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 Grish, it's going to get better.
Got it. And just last question from me regarding capital allocation. 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 new 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. On the leverage, I mean, again, we're just under 3 with where we're at now. We've talked throughout a 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 the next acquisition comes, I mean, we should be in that neighborhood.
Yes. I'll just mention on the M and A and where 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 we're 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 and the aftermarket.
Thanks, guys. I'll pass it on.
Okay. Thanks a lot.
And your next question comes from the line of Michael Eisen with RBC Capital Markets.
Hey, good afternoon gentlemen. Thanks for taking the questions.
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take my questions. Yes, I'd like to take my questions. Yes, I'd like to take my questions. Yes, I'd like to take my questions. Yes, I'd like to take my questions.
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to take my. Really strong quarter for the defense side of the business with growth of over 40% and the backlog grew, bookings were strong. 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 hesitant 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 growing 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. Well, look, overall and this includes the defense business, we 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?
3 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. 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 on the missiles is all the electronics. We're doing a lot 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 and again, we'll get ready. We're going to I think 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.
Got it. Thanks for all the color.
Okay. Thanks again. Appreciate it.
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 everyone. Thank you for time and have a nice evening.