Good day, ladies and gentlemen, and welcome to the Ducommun Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, October 28, 2013. I would now like to turn the conference over to the moderator, Mr. Chris Witty.

Thank you, and welcome to Ducommun's third quarter conference call. With me today is Tony Reardon, Chairman, President and CEO; and Joe Bellino, Vice President, Treasurer and CFO. I would now like to provide a brief Safe Harbor statement. This conference call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company's actual performance to be materially different from the performance indicated or implied by such statements. All statements, other than statements of historical facts included in this conference call, are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the company's expectations are disclosed in this conference call and in the company's annual report and Form 10-K for the fiscal year ended December 31, 2012. All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this conference call. I would like to turn it over now to Tony Reardon for a review of the operating results. Tony?

Thank you, Chris. And thank you, everyone, for joining us today. I'll begin by providing a brief overview of the quarter, including some market color, after which I'll turn the call over to Joe Bellino to go over our financial results and some detail. Starting with the quarter, while our aerospace & defense sales rose 5% year-over-year, total revenue declined slightly, primarily due to the continued weakness in our non-A&D segments, similar to last quarter. Non-A&D revenue fell 25% compared to this third quarter of 2012, but was in-line sequentially with the second quarter and our non-A&D backlog has stabilized. We expect this portion of our business will be challenging for the next few quarters. However, we believe that we have a sound strategy in these areas and have positioned ourselves to grow when the market starts to turn around. In the meantime, our commercial aerospace business remains very strong, with a backlog near record levels, as we benefit from higher build rates, increasing content and numerous business opportunities. Our business within the defense sector was also solid across both our structural and technologies platforms where we are clearly benefiting from being on a large number of key programs that we believe will stay funded into the future. Our backlog here, while sometimes variable quarter-to-quarter, remains in good shape. In fact, our total backlog of $609 million does not include or reflect additional DoD bookings we expect to receive in the coming months for follow-on orders across both DAS and DLT. And while there are still some uncertainties with our non-A&D segments, we're prepared to manage the business through these challenges. Our operating income was $12 million this quarter, versus $14 million in the third quarter of 2012. The drop in income was primarily due to lower non-A&D sales, along…

Thanks, Tony, and good day, everyone. After the market closed today, we released our results for the third quarter of 2013. Overall sales of $181 million were down approximately 1.5%, compared to sales of $184 million in last year's third quarter. The decrease was driven primarily by continued softness in our non-aerospace & defense end-use markets, which were partially offset by solid growth in large commercial aerospace products and ongoing demand within our defense technologies. Net income was $4.6 million or $0.42 per diluted share, compared with $5.1 million or $0.48 per diluted share last year. As I will discuss in a moment, despite operating income being down, we were able to partially offset these declines with lower interest rate expenses and lower income taxes. Ducommun's overall decrease in sales this quarter, particularly in the Ducommun LaBarge Technologies, DLT, business segment, non-end-use markets unfavorably impacted our company-wide operating income, in terms of both dollars and in terms of percentage of revenue. Operating income for the quarter was $12.0 million or 6.6% of revenue, compared with $14 million or 7.7% of revenue in the comparable period last year. During the quarter, we also recorded a $1.1 million inventory reserve related primarily toward technologies products. We view this charge as nonrecurring, as it reflects the recognition resulting from the revaluation of certain products in the technology area which were either obsolete or they're adjusted to more accurately reflect their current value. Overall, the inventory reserve allowance that we recorded impacted our operating margins, overall, by 60 basis points. Despite lower margins within DLT, we were pleased to see operating margins at Ducommun AeroStructures, DAS, hold steady. Lower corporate G&A expenses also reflected solid cost control management. In the third quarter, we generated approximately $19 million in adjusted EBITDA or 10.6% of revenue,…

Thank you, Joe. Before opening the call for questions, let me again just review where we stand today. This quarter, Ducommun had strong shipments across most of our commercial and military platforms. Our backlog is solid and we're benefiting from new business initiatives, increased content and robust build rates across our commercial programs. We are also pursuing a number of growth opportunities and are optimistic about the future, given the breadth of our offerings and our well-known brand in the marketplace. Our non-A&D business remains a challenge and we're focused on improving this area over the near term. I'm cautiously optimistic about our progress here, and have full confidence in our team to win new business and drive better asset utilization while increasing our presence in these markets. We will continue our strategy in this manner, but anticipate that over the fourth quarter of 2013, will be much more -- will be much the same as -- or in the third quarter, with our growth in the commercial aerospace operations offsetting some weakness in our non-A&D business. Managing our cost base and working to improve margins is a major focus of the team, and we've made a number of changes in investments to improve our business and we're continuing to work hard in expanding our margins. Cash flow generation remains a highlight to Ducommun and we're using the cash to pay down debt in a sensible manner. As we have said in the past, we are committed to strengthening our balance sheet and reducing interest expense going forward. And we are clearly making progress in this regard. We've also constantly looked -- are looking for ways to reduce cost and improve efficiencies to keep our operations lean and drive higher returns, as well as reducing our working capital. As we look ahead, we know that 2014 is just around the corner. It will bring new challenges, most likely in the defense arena, but new opportunities as well, both in commercial aerospace and in our non-A&D markets. We are making a name for ourselves as a dedicated respected provider of high-technology electronic and structural applications, and we plan to leverage this growth going forward, no matter what is happening in the larger geopolitical environment. We will continue to invest in new applications and business development, because we know that this is the path forward to winning new content, new platforms and new customers. We are positioning Ducommun for top line growth and improved operating results over the long term. With that, Dominique, I'd like to open up the call for questions please?

[Operator Instructions] And your first question comes from the line of Mark Jordan of Noble Financial.

A question relative to fourth quarter's tax rate. Could you tell us if you are expecting to be able to realize any extraordinary tax benefits in that period other than the standard investment tax credits? And, therefore, a sense of what a reasonable tax rate range might be for the quarter?

We expect it to be between 25% and 27% in the fourth quarter. The benefits that we derived in the third quarter were result of us filing our year-end returns in the third quarter, and that's when we true up our tax obligations. We got -- we received additional R&D tax credits and other benefits of the law, manufacturer's deduction and other things in the third quarter.

Okay. A question relative to -- we saw that you filed amendments to your bank lines in terms of coverage ratios, increasing those clearly to levels well above where you are currently. Given the de-leveraging, I guess, what was the catalyst for wanting to go ahead and make those changes?

Mark, the catalyst were 2. One, is that the accommodative monetary policy of the Fed has led to loosening in the credit environment, certainly, number one; the second was our overall performance of solid cash flows. So we used this as an opportunistic opportunity to visit with our revolving credit members and loosen them. The genesis of this was when we did the transaction, and I think it was completed in June of 2011, the stepdowns by the lenders were quite sharp in the first 2 years. Now that we've paid down, we will have paid, according to our comments here today, $60 million in the last 4 -- 5 quarters. We're in a lot stronger position from a leverage standpoint, so we used that as an opportunity to just slightly raise our covenant restrictions. We don't want to diminish the fact, the importance of keeping our eye on performance measures, but we also recognize the benefits that Ducommun should derive from its cash flow management.

Okay. You've mentioned opportunities with Airbus. Is that dependent upon Airbus continuing to grow and develop their assembly facility in Mobile? Or would this also potentially be servicing assembly opportunities in Europe?

At this time, it's primarily servicing operations in Europe, Mark. So the operations in Mobile, we don't expect to see any change there, that's going to be 3 or 4 years before they get baseline there. So the new opportunities that we're looking at are primarily for European content right now.

Your next question comes from the line of Edward Marshall of Sidoti & Company. Edward Marshall - Sidoti & Company, LLC: I wanted to ask about the -- you talked about defense shipments shifting. And I was curious if you could quantify, potentially quantify, the impacts maybe in both businesses, DAS and DLT, if you have that?

Well, I think that when you look at the 2 of them, on DAS, clearly, as we -- we're pretty stable in the quarter. We did have, on the defense side, some changes in mix. The helicopter programs were down year-over-year in terms of revenue, and that's primarily because of the pullback on the war, so that was probably the biggest change. If you look year-over-year on the DAS side, the Black Hawk is down because of the war and modification programs, which have come to an end. So -- but that business is relatively stable. On the DLT side, the growth was primarily driven by the radar systems for F-18 and F-15 programs, and we're down slightly in some business with Northrop and L3. And that's some of the lumpiness we've talked about in terms of the order releases and slowness in receiving program releases there. Edward Marshall - Sidoti & Company, LLC: When I look at -- you talked a lot about the non-A&D pieces of DLT. And I look at the individual pieces as it -- the Q's been out. And I look at the -- on a sequential basis, it looks like there is improvement in natural resources and industrial. Not to get too granular, but I did want to point out, what's going on, on the medical division? I see, sometimes, this $8 million run rate comes popping out. Is there an inventory shift there that happens? Is it seasonal impacts or is it just a lumpy business and that just something we're going to have to deal with going forward?

It's pretty much a lumpy business. And then we're also working out some products and increasing our volume on others. Edward Marshall - Sidoti & Company, LLC: And the inventory charge, you said it was in technology. Which market, in particular, was -- did that flow through?

The -- it's -- well, if it's in technology -- it's primarily in the defense technologies products. Product configurations was one contributor as these technologies evolve and it's -- relatively speaking, they're somewhat rapid. And so we have revalued those, those and then also some other technology. I would relate it Ed -- not to any specific program, but to obsolescence and product reconfiguration of technology products. Edward Marshall - Sidoti & Company, LLC: And was that under the core Ducommun business? Or was that part of the...

The -- it's in the umbrella. We look at the entire umbrella of DLT. So it was -- we really don't get that granular. Edward Marshall - Sidoti & Company, LLC: Right. But was it under the old Ducommun business or was it under the old LaBarge business? I think it...

It's about half-and-half. Edward Marshall - Sidoti & Company, LLC: Okay. And then on that inventory, what's the effective tax rate in the quarter? I mean I know there's a lot of movement here, there's this $700,000...

We have been running a low tax rate all year because of the R&D tax credits that we took from 2012 and '13 for GAAP reporting purposes. But you'd probably take that out. But it's -- it was -- I would use 20% as an incremental tax rate this year, because we are accruing quarterly the 2013 federal and state R&D tax credits because legislation was approved at the beginning of the year, the retro to 2012 and applicable to 2013. Edward Marshall - Sidoti & Company, LLC: And was the third quarter charge for 2012 or 2013?

'13.

Your next question comes from the line of Ken Herbert of Canaccord.

I just wanted to first drill down again into the non-A&D sales. I mean, it looks like the lap -- the comparables get very easy when you get into the first quarter of '14. And based on your commentary, it sounds like maybe flat, sequentially, which implies down again in the fourth quarter. Do we see these sales start to tick up again in the first quarter of '14?

I don't think that quick, Ken. I think, when we talked about the past, we have not seen the -- this is primarily short-order backlog so we'll see it in 1 quarter ahead of time, as the orders start to pick up, and we haven't seen that significant of a pick up, it's been steady-state. So I would not anticipate that the first quarter of 2014 will be an uptick, no.

When we've done our own modeling, Ken, on these, usually, whatever the level of backlogs of the non-A&D products, in general, we ship 50% to 55% of those products in the sequential quarter.

Okay. Okay, that's helpful. And, I guess, then the related question is you've talked a lot about opportunities from cross-selling and other things in this business. Can you give any specifics for the non-A&D business again and what you're doing on the cost structure here to obviously, maybe, bring it in-line with the new business reality?

Yes. Well, actually, we've done a lot, but the other side of that coin is we've also invested in some market growth opportunities. So we've actually, on the industrial side, we've really restructured that business based from a cost standpoint. On the market side, where we we're servicing the medical, as well as the oil and gas market, we've actually invested some money in those programs, so that as we look at the technology-base going forward and changing the way that we're going to go to the market, we've put a little investment in there, so that's kind of offset some of the cost reductions that we've put in place. But we will be -- our plan is to be much more aggressive, going forward, in those areas.

Okay. Okay, that's helpful. And just finally, when you -- I know you went through this in the prepared remarks a bit. But as I look at the AeroStructures' margin, are you still facing much of a headwind from new wins or what's the visibility you have on improvement in AeroStructures' margins past the fourth quarter and into 2014?

I think, in 2014 we should start to see some improvement. We're still going through some headwinds. But mostly, it's -- as Boeing has changed, let's -- I'll just use the 787 for example because that's a pretty good example. As you move from the -8 to -9, we're seeing a lot of configuration changes. So it's not significant development, but it's enough development that it's changing the product. And so we're still manufacturing the -8 and then changing over for the -9 configuration. So there's some R&D work that we're putting into place there. It's not -- it's offset and cut back a little bit. But the other thing is we're having a shift in some of the markets. So the -- and you'll notice the commercial aerospace, we talk about that -- or excuse me, the commercial helicopters is down, that was pretty high-margin programs and those are kind of cutting back a little bit.

We are seeing more opportunities as we still have some lingering development costs. And we do see opportunities for expansion, because some of these programs are still relatively new, 2 years old, and they generally take 3 to 4 years. And so we're expecting in 2014 continued improvements and see it reflected in the margins.

Yes.

Okay. And then just finally, is C-17 a significant headwind in '14 or is that primarily in '15 when you think about margins and the top line?

It's primarily '15.

Okay. So you'll start to see much of that then next year? I mean you mentioned you're going to get another...

Yes, we'll see some in the last half of the year, but most of it is in the '15.

But as I've spoke before, we expect to receive -- finalized our orders from Boeing-Long Beach for 10 new aircraft, and that equates somewhere between $23 million to $25 million. And if we could finalize at the end of this year, it will show up in our bookings. But as Tony said, in the fourth quarter, we'll start to see that program rapidly cut back and we'll be -- we're planning for that now.

Your next question comes from the line of Patrick McCarthy of FBR. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: I have 3 quick ones. First, on the gross margins in the quarter. I know the inventory obviously has an impact there and that's a piece of it, but even adjusting for that, it still feels a little bit light. And I'm wondering if that's a function of mix or a high-margin product that didn't go through the pipeline as much this quarter, relative to past quarters. And then maybe just a feel for what direction it goes from here on out?

When we break out the DLT portfolio between the core defense technologies business that was legacy DTI and acquired DLT, those remained very solid, by and large. There's good contract management. There's good -- we have a lot of strength and we have a strong competitive position. Most of it is, Patrick, if you trend the sales in the non-A&D, it has been shrinking sequentially. That, along with, as Tony mentioned, the investment in some marketing expenses and some development expenses in some of those markets, which we expense as incurred, have been the primary impact on the margins. It resides in DLT and then it flows up to the overall operating income. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: Okay. And going forward, do you anticipate some more of those expenses until the strategy gets kind of in place mid next year or somewhere along that line?

Yes, I'd say next year. I would like -- we believe that those will start showing positive impacts by mid-first quarter 2014. And certainly by the second quarter, it will manifest itself even more pronounced. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: Okay. I understand. Okay. You had mentioned growing the business at both Boeing and Airbus, and I was wondering if there are any milestones you could give us as to whether that's absolute dollars or percentage of revenue for the total company that you're kind of looking for maybe in the next year, 1.5 years, as you do that?

Great question, Patrick, and we have. I can't really give you that granular of a number because, well, first of all, for competitive reasons, but second of all, there's a number of programs that we're working on across both platforms. We're seeing nice opportunities at Boeing on -- continue on the 787 program, for example, and some programs on the 737 MAX. And then we are seeing opportunities at Airbus and at some engine manufacturers for new-model aircraft. So on the new-model aircraft on the Airbus program, we won't see a big pickup in revenue, although we are looking at some significant programs until probably late-2015 or '16. But on some of the legacy programs, there's opportunities to pick up some revenue as early as, probably, mid next year. Patrick J. McCarthy - FBR Capital Markets & Co., Research Division: Okay, great. Great. And then just my final quick one. It's really on the backlog. And looking at the backlog for fourth quarter, obviously, there's some, at least, 3 big ones you're going after. Do you have a sense as to what level of backlog you intend to end the year at? Would it be a book-to-bill in excess of 1, significantly in excess of 1, around 1?

I think, with the ones we talked about, again, the bookings on the 737, that's our largest program now on the commercial side. And then I mentioned the $25 million for the C-17. So that $609 million, we think that it should be in the $620 million range.

$620 million to $630 million, yes.

Your next question comes from the line of J. B. Groh of D. A. Davidson. J. B. Groh - D.A. Davidson & Co., Research Division: Tony, could you maybe help us sort of frame that opportunity on MAX? I mean, we kind of know what your 737 content is, but how -- what are we shooting for here in terms of...

I think it would be incremental. Some of the applications that we're carrying right over from the NG to the MAX, and then a couple of the applications that we're working on, they're going to be slow to come out, right, on the MAX because, structurally, it depends on how far they are along. And then we do have some opportunities on the technology side as well. But as you look at the structures, which we're more entrenched on the 737, it would be an incremental pickup to the existing baseline and depending on -- we have -- we're looking at a couple opportunities that are very close. And I think that they won't be significant dollars, but they'll be good dollars for shipment -- or ship-set increase. J. B. Groh - D.A. Davidson & Co., Research Division: Okay. And then in terms of prioritization of free cash flow, it sounds like paying down debt is still the top priority versus acquisitions?

That's correct, at this point in time.

Your next question comes from the line of Mike Crawford of B. Riley.

Raytheon, again, was a 10% customer in the quarter. Is that because of the F-18 radar racks or because you're doing just more work with Raytheon, in general?

It's a combination of both, it's because of the pickup in the radar racks, but we are doing more work with Raytheon, in general. We have a much broader base with Raytheon than we did, say, 1 year ago.

That's one of the synergies from the acquisition DLT -- acquiring DLT, had a significant amount of content with Raytheon in a variety of operations. And so our -- at the top level, we've really more further promoted those relationships and brought some more for our technology [indiscernible].

Okay. And then when the C-17 production winds down in Q4 of next year, is there expected tooling or other costs impact that are going to affect margins in that period or in the subsequent period when you're ramping up with a different program? Or it's just too early to tell?

It's too early to tell. But we-are looking to replace that right now, Mike. So like I said, we've got a couple things that are going on that could, if one of them pops, one of the 3 that we have are -- that we're working on, one of those tools will be a significant pickup and will not totally offset that business. That's a big piece of business for us, but will put us in good shape. So from an investment standpoint, there'll probably more on the startup side on that. And then we have to determine the tooling but -- and how that's costed out. But generally, it should be not along the lines of what the investment was, say, on the C-17 program.

[Operator Instructions] And your next question comes from the line of Stephen Carlson [ph] of Waddell & Reed.

On CapEx, you mentioned, I just want to make sure I heard you right on that. Did you say $11 million will be spent in the fourth quarter or $11 million will be spent on...

$11 million. It's -- we've spent $7 million so far. We'll spend $11 million for the entire 2013.

Right, right. Okay. That's what I thought you meant, okay. And then just on the C-17, clarify kind of how much business that is -- how much was it last year or how much was it kind of last 12 months or so kind of ballpark?

At the rate of 10, it's about a $22 million to $25 million program.

Okay. And then do you have the numbers just for cash tax and cash interest for the quarter?

Our cash interest for the quarter is -- our interest we accrue less the 3 months of interest on the 9.75% $200 million note. That's pretty easy calculation. I don't have those numbers right in front of me. The taxes, we made some prepayments and we've put in about $2.5 million of taxes. And from a provision standpoint, we recorded 0.

So the cash tax was $2.5 million?

Cash tax, yes, because we've made some prepayments for year end.

There appears to be no additional questions in the queue. I will like to hand the call back to Mr. Tony Reardon, Chairman, President and CEO, for final remarks.

We like to thank everybody for joining the call today. And thank you, once again, for your continued interest and support, and we look forward to speaking with you next quarter. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation, you may now disconnect, and have a wonderful day.