Good day, and thank you for standing by. Welcome to the First Quarter 2024 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 first speaker today, Suman Mookerji, Chief Financial Officer. Please go ahead.

Thank you, and welcome to Ducommun's 2024 First Quarter Conference Call. With me today is Steve Oswald, Chairman, President, and CEO. 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, 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 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 Ducommun include, amongst others, the cyclicality of our end-use markets, the level of U.S. government defense spending, our customers may experience delays in the launch and certification of new products, timing of orders from our customers, legal and regulatory risks, the cost of expansion and acquisitions, competition, economic and geopolitical developments, including supply chain issues and rising or high interest rates, the ability to attract and retain key personnel and avoid labor disruptions, the ability to adequately protect and enforce intellectual property rights, pandemics, disasters, natural or otherwise, and risk of cybersecurity attacks. Please refer to our annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed from time to time with the SEC, as well as the press release issued today for a detailed discussion of the risks. 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 Q1 2024 quarterly report on Form 10-Q with the SEC today. I would now like to turn the call over to Steve Oswald for a review of the operating results. Steve?

Okay. Thank you, Suman. Thanks, everyone, for joining us today for our first quarter conference call. Today, as usual, I will give an update on the current situation of the company. Afterwards, Suman will review our financials in detail. Let me start off with an update on our continued progress towards Vision 2027. For background, this vision and strategy was developed coming out of the COVID pandemic over the summer and fall of 2022. Unanimously approved by the Ducommun Board in November 2022, and then presented to investors the following month in New York. We had excellent feedback. Since that time, the Ducommun management has been executing the Vision 2027 strategy by consolidating its facility footprint, continuing its targeted acquisition program, increasing the revenue proportion of engineered products and aftermarket content, executing our offloading strategy with defense primes and high-growth segments of the defense budget and by expanding content on key commercial aerospace platforms. We all have conviction in the Vision 2027 goals and strategy and believe the near-term and midterm catalysts along with strong results ahead for DCO present a unique long-term value creation opportunity for shareholders. The Q1 2024 results were a very good example of the strategy at work. Q1 was an outstanding quarter and a great start to the year for Ducommun. Revenues exceeded $190 million for the third consecutive quarter and amounted to $190.8 million, growing 5.3% over the prior year. Strong growth in our commercial aircraft businesses across both Boeing and Airbus, along with our rotorcraft business, helped drive revenue during the quarter. Recovery on the 787 was notable, with revenues more than doubling over the prior year period, as well as strong growth on the A320 platform where we make the skins for the entire fuselage. Overall, commercial aerospace with Airbus and Boeing and others was up 11% from Q1 2023, despite Boeing and Spirit facing continued challenges with MAX quality issues. We have now grown our year-over-year revenue in our commercial aerospace business for 11 consecutive quarters, demonstrating the resilience of our business even in a challenging OEM environment. Our defense business grew 1% year-over-year, driven by strong demand for the Black Hawk, Apache, and F-35 platforms, as well as selected naval programs, including the Phalanx close-in weapon system and other weapon systems for submarines. Growth was partially offset by declines in legacy programs such as the F-18, which we have talked about in the past, and a pause in the TOW missile production, for which we expect a new contract and anticipate starting shipments again in 2025. Defense business was almost $100 million in revenue in the first quarter. We remain optimistic about the growth ahead. As we go through a timing transition on certain programs, the ever-growing backlog in defense tells the story, up $125 million from last year, and $42 million from Q4 2023. Defense backlog now stands at over $0.5 billion at $569 million. Significant wins with RTX in Q1 were an important driver for the increased defense backlog. The SPY-6 program is part of the U.S. Navy's family of radars that performs air and missile defense on seven classes of ships, representing a giant leap for the fleet. SPY-6 radars are integrated, meaning they can defend against ballistic missiles, cruise missiles, hypersonic missiles, hostile aircraft, and surface ships simultaneously. Ducommun has been provided one card for the program as this is part of the offloading strategy we've been working on, and I'm very happy to report that we've been awarded a second card from RTX for the SPY-6 in Q1 after 18 months of work. These are a slow transition, as I've mentioned in the past, and it should be. But now it pays off, and the order for two cards in Q1, one new and one follow-on, was over $50 million. This is also great news as we are now building out a much bigger business in RADAR support, complementing our long-term track record in missile support. The new card award deliveries are expected to begin in 2025, and the current card shipments are ongoing. As communicated on the overall offloading program, we anticipate that the long-term run rate of the SPY-6 and other defense programs already commercialized or in development will now be $135 million in 2025, an increase of $10 million over our prior target of $125 million for 2025. It has been a long journey, but well worth it. Another real highlight in Q1 was gross margin of 24.6% for the quarter, up 430 basis points year-over-year from 20.3% as we continue to realize benefits from our strategic value pricing initiatives, productivity improvements, growing the engineered product portfolio, and initial restructuring savings. We also made significant reductions in the scope of our operations in our Berryville, Arkansas facility during Q1, with several programs fully transitioned to Ducommun's Joplin, Missouri facility, roughly 200 miles away. This has allowed us to start realizing a portion of the savings expected from the Berryville closure during the first quarter, with one more program left to transition with RTX. We also continue to make a full effort with Boeing Commercial and Boeing Defense on the MAX spoilers and Apache Tail Rotor, respectively, working with them on approvals and building buffer. We are on the final transition phase with some headwinds in Q2 and Q3 of this year, but long-term, we are driving to a great outcome for Ducommun, Boeing, and our shareholders. For adjusted operating income margins in Q1, the team delivered 9% compared to 7.5% in Q1 2023, a great result driven by the continued growth in our engineered products businesses and with our restructuring savings beginning to kick in during the quarter. Adjusted EBITDA was another great start in Q1 at 14.4% of revenue compared to 12.7% in Q1 2023, a 170 basis point improvement year-over-year gives Ducommun a great start to 2024 as we work towards the 18% for the Vision 2027 goals. The GAAP diluted EPS was $0.46 a share in Q1 2024 versus $0.42 a share for Q1 2023. And with the adjustments, diluted EPS was a solid $0.70 a share compared to a diluted EPS of $0.63 a share in the prior year quarter. The higher GAAP and adjusted EPS was driven by improved operating income as well as lower interest costs during the quarter. The company's consolidated balance sheet increased sequentially and compared to the prior year quarter. Total company backlog ended Q1 at a record of $1.46 billion, increasing over $52 million sequentially, and was $85 million year-over-year. Defense backlog, as mentioned earlier, also increased by $125 million compared to the prior year quarter, ending at a record $569 million. Strong defense backlog reaffirms that Ducommun's defense business remains well-positioned with more positive news to come. The commercial aerospace backlog decreased slightly year-over-year, primarily due to industry issues with single-aisle production rates and the MAX issues mentioned earlier with Boeing and Spirit. However, our commercial aerospace backlog still grew relative to Q4 2023 at $442 million. In Q1, our team delivered another good quarter managing the supply chain, as evidenced by another quarter of positive revenue growth and significant gross margin expansion compared to the prior year period. The revenue guidance for the remainder of 2024 remains uncertain surrounding Boeing, Spirit, and the FAA at this point regarding the MAX. The best approach is to again guide to mid-single digits and look for further updates on the next earnings call. We do see a slowdown in the MAX bill rates, not for the wrong reasons, in Q2 and Q3 this year, where commercial aerospace will be a bit lighter due to the situation. Despite softness in the MAX, which is a major program for us, we are comforted by continued strength on other programs such as the 787 and Airbus programs including the A320. The best part is the MAX fill rate will eventually be at a much higher level, and we continue to work on gaining more share. Strong bookings and growing backlog in the defense business is also supportive of our revenue outlook. Now let me provide some additional color on our markets, products, and programs. Beginning with our military and space sector, we experienced revenue of just below $100 million, at $98.9 million compared to $97.7 million in Q1 2023. While growth was muted, we saw positive signs in our military helicopter products, including strong demand in the Black Hawk program with revenues growing over 70%, and also for Apache tail rotor blades, which grew more than 50% year-over-year. Our naval business also performed well, with strong growth in the Phalanx close-in weapon system used on surface ships as well as other weapon systems for submarines. The first quarter's military and space revenue represented 52% of Ducommun revenue in the period, down from 59% back in 2022 and 70% in 2021. We expect that this trend will continue, reflecting more balance with commercial aerospace, which we prefer. We also ended the first quarter with a backlog of $569 million, an increase of $125 million year-over-year, representing 54% of Ducommun's total backlog. In our commercial aerospace operations, first quarter revenue continued to grow, increasing 11% year-over-year to $80 million driven mainly by bill rate increases on large aircraft platforms, including the 737 MAX, 787, and A320 platforms, along with growth on commercial rotary wing aircraft platforms and regional and business jets. As many of you are aware, the FAA announced in January that it will increase its oversight of Boeing to get FAA-approved for production rate increases for the 737 MAX. This will likely cap production on the 737 MAX. We do, however, expect the long-term trend to remain very positive once the issues are fully addressed. This rate limitation did not have a significant impact on our first quarter results. The backlog within our commercial aerospace business was $442 million at the end of the first quarter, increasing over $12 million sequentially, a solid number given the temporary weakness in the commercial aerospace markets. With that, I'll have Suman review our financial results in detail. Suman?

Thank you, Steve. As a reminder, please see the company's Q1 10-Q and Q1 earnings release for further description of information mentioned on today's call. As Steve discussed, our first-quarter results reflected another period of strong performance. Despite industry headwinds, we again 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 of the industry issues impacting single-aisle production rates. In addition, we are encouraged by the record backlog we achieved in the first quarter, especially in our military and space end-user segment. With all this, we feel like we are beginning 2024 with good momentum that will continue to drive our performance. Now turning to our first quarter results. Revenue for the first quarter of 2024 was $190.8 million versus $181.2 million for the first quarter of 2023. The year-over-year increase of 5.3% reflects growth in all three of our end-user segments, highlighted by $8.1 million of growth across our commercial aerospace platforms and $1.3 million of growth in our military and space platforms. We posted total gross profit of $46.9 million or 24.6% of revenue for the quarter versus $36.8 million or 20.3% of revenue in the prior year period. We continue to provide adjusted gross margins as we have certain non-GAAP cost of sales items in the current and prior periods relating to inventory step-up amortization on our recent acquisitions, restructuring charges, and the impact from the Guaymas fire on our operations. On an adjusted basis, our gross margins were 25% in Q1 2024 versus 21.1% in Q1 2023. The improvement in gross margin was driven by our growing engineered products portfolio, strategic pricing initiatives, productivity improvements, and some initial restructuring savings. We continue to make progress working through a difficult operating environment with supply chain and labor. Through our proactive efforts, including strategic buys and our inventory investments, we have been able to avoid any significant impact thus far on our business. During the first quarter of 2024, we increased our inventory by $9.8 million from year-end 2023 to position our performance centers to meet our 2024 delivery commitments. We also grew our contract assets net of contract liabilities by $15 million. We continue to look for opportunities to unwind our working capital investments to improve our cash flow. Ducommun's reported operating income for the first quarter was $12.6 million or 6.6% of revenue compared to $6.4 million or 3.5% of revenue in the prior year period. Adjusted operating income was $17.1 million or 9% of revenue this quarter compared to $13.6 million or 7.5% of revenue in the comparable period last year. The company reported net income for the first quarter of 2024 of $6.8 million or $0.46 per diluted share compared to net income of $5.2 million or $0.42 per diluted share a year ago. On an adjusted basis, the company reported net income of $10.4 million or $0.70 per diluted share compared to net income of $7.9 million or $0.63 in Q1 2023. The higher net income and adjusted net income during the quarter were driven by the higher operating income and adjusted operating income. Additionally, our interest rate hedge helped to reduce our year-over-year interest expense. Now let me turn to our segment results. Our Structural Systems segment posted revenue of $83.3 million in the first quarter of 2024 versus $75.6 million last year. The year-over-year increase reflected $5.7 million of higher sales across our commercial aerospace applications, including the 787, 737 MAX, and the A320, in addition to selected commercial rotorcraft platforms, and $2.1 million of higher revenue within the military and space markets driven by strength in the Black Hawk and Apache programs. Structural Systems operating income for the quarter was $2.9 million or 3.4% of revenue compared to $4.7 million or 6.3% of revenue for the prior year quarter. Excluding restructuring charges and other adjustments in both years, the segment operating margin was 7.8% in Q1 2024 versus 12.9% in Q1 2023. This can be attributed to higher costs in our Monrovia plant as it winds down production, reducing operating margins year-over-year. Our Electronic Systems segment posted revenue of $107.5 million in the first quarter of 2024 versus $105.6 million in the prior year period. The increase was mainly due to growth across the commercial aerospace platforms and certain military platforms, including the F-35 and naval programs such as the Phalanx close-in weapon system and submarine launch missile systems, partially offset by the impact and timing of reductions in legacy platforms such as the F-18. Electronic Systems operating income for this first quarter was $19 million or 17.6% of revenue versus $10 million or 9.4% of revenue in the prior year period. Excluding restructuring charges and other adjustments in both years, the segment operating margin was 18.4% in Q1 2024 versus 11.6% in Q1 2023. The year-over-year increase was due to favorable product mix, including growth in our engineered products portfolio, strategic pricing initiatives, as well as savings from the restructuring program beginning to kick in during the quarter. The restructuring savings were driven by the transition of product lines from our Berryville performance center to other facilities. Next, to provide an update on restructuring. As a reminder, and as previously discussed, we commenced a restructuring initiative back in 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 the transfer of that work to our low-cost operation in Guaymas, Mexico, and 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 their requisite approvals. During Q1 2024, we recorded $1.4 million in restructuring charges. The majority of these charges were severance and related benefits as we continue to wind down the two operations. The recertification process is ongoing, and we plan to complete production at both facilities by the end of the second quarter. We expect to incur an additional $5 million to $6 million in restructuring expenses through the end of 2024 as we complete the program. Upon the completion of our restructuring program, we expect to generate $11 million to $13 million in annual savings from our actions and are beginning to see the realization of these actions in this year. We anticipate selling the land and building at both Monrovia, California, and Berryville, Arkansas. Turning next to liquidity and capital resources. During Q1 2024, we used $1.6 million in cash flow from operating activities, which was an improvement compared to Q1 2023 usage of $18.9 million. The improvement was due to a smaller increase in inventories and higher contract liabilities, partially offset by the higher contract assets. As of the end of the first quarter, we had available liquidity of $208.1 million, comprising of the unutilized portion of our revolver and cash on hand. Our existing credit facility was put in place in July 2023 at an opportune time in the credit markets, allowing us to reduce our spread, increase the size of our revolver and providing us the flexibility to execute on our acquisition strategy. Interest expense was $3.9 million compared to $4.2 million in Q1 of 2023. The year-over-year improvement in interest cost despite a higher debt balance was due to the interest rate hedge going into effect. In November 2021, we implemented an interest rate hedge that went into effect for a 7-year period starting January 2024 and pegs the 1-month term so far at 170 basis points for $150 million of our debt. The hedge resulted in interest savings of $1.3 million in Q1 2024 and will continue to drive significant interest cost savings in 2024 and beyond. To conclude the financial overview for Q1 2024, I would like to say that we had a strong start to 2024 and anticipate a strong balance of the year.

Okay. Thanks, Suman. In closing, Q1 was an excellent quarter, a record in some cases, with many highlights for the company and our shareholders. The strong start to the year with solid revenue and earnings growth certainly strengthens our path to delivering on the goals we set out in Vision 2027. 2024 is also our 175th year of continuous operation, a great achievement, and we'll be recognizing that throughout the year. I did the math recently; the door at the company has been continuously open for over 43,000 business days, a long time in a young country like the United States. What a great story with a very bright future ahead for the company, our shareholders, and all other stakeholders. Thank you for listening. Let's now open it up for questions.

Our first question comes from Mike Crawford of B. Riley Securities.

Steve, what are some of the main pressure points you're trying to avoid with the strategic inventory buys, like would it be titanium, which is becoming a problem for some? What else are you trying to get?

Yes. Titanium is definitely a significant factor. As the widebody A350 and other platforms increase production, and considering the situation in Russia, we have taken proactive measures over the past couple of years and are in a strong position with our titanium supply. Additionally, we have strategically purchased materials related to our card business. Although there is less drama now compared to earlier times, we made purchases in advance for specific card needs since it's an essential and increasingly vital area for us. So, I would highlight these two points, and I believe we are in a solid position. As for long-term planning, excluding titanium, we will likely continue to approach matters like circuit cards on a day-to-day basis, but that's the update I have.

Okay. Excellent. You mentioned the F-18 as a legacy platform that is declining. Another platform that might eventually follow suit is the Black Hawk, although it's currently performing well. What are some of the other key platforms that are experiencing growth for you? And on the flip side, which platforms may be phasing out due to transition?

Sure. Sure. I'd say, look, you are spot on, the F-18 is the one. We all know about the F-18, we know what's happening in St. Louis. We are going to see, I think, still good business in depot maintenance and other areas. So that's still going to be an okay program for us. Of course, the biggest one is the F-18. I talked about the TOW missile. Again, these things are timing-related. So we're going to see the TOW come back. We're going to start shipping again by 2025. I mean, as far as the positive side, we couldn't be happier with the Black Hawk business. That business is going great for us; the Apache is also doing well. I also mentioned that we're just starting to move higher in the Seahawk at Sikorsky as well. So our rotary business was terrific. Despite the F-18, we still had great volume in the F-35 and some other programs. And we're feeling very good, especially with the backlog, Mike, and it's getting the second card.

With some of the other missile programs, if I may add, are also giving us strength, including the MIRV missile, the standard missile, and as Steve previously pointed out, the SPY-6 radar and next-generation jammer. So missiles and radar programs are helping offset the decline in the legacy programs.

As a transition timing.

Okay. Just one final one for me, related to the rotary platform. So – and last, it's now just over a year since you acquired BLR Aerospace. And I know one of the goals there was to perhaps get some of their unique structures into military aircraft. Is there some progress there?

We're currently working on that, and you’re absolutely right, Mike. Our main opportunity lies with the Black Hawk, particularly through the National Guard. We have a lot of initiatives underway; these things obviously require time. However, we are optimistic. With recent developments regarding the engine replacement on that program, we see additional opportunities ahead. So stay tuned.

Our next question comes from Michael Ciarmoli of Truist Securities.

Nice results. Maybe kind of a two-part question, I guess, Steve or Suman, just the margins, really strong in the ES segment. You commented on pricing, and I know you mentioned value-based pricing, and I think that's something we hear pretty often now. Anything you guys are doing differently with pricing outside of just taking advantage of the whole inflationary environment? And then, how do we think about these Electronic Systems margins going forward? I think that was a record level. I'd hate to kind of say, okay, let's extrapolate this, but it sounded like you also got some mix in there. Any color on both of those items?

Yes, Mike, a great question. We're really happy with the Electronic Systems margins this quarter. As you noted, pricing is a key factor. And certainly, as you've seen across the aftermarket in the industry, pricing has been strong, and we have seen the same. Beyond that, there are a couple of other things at play here. Two themes are key drivers of our Vision 2027 strategy: growing the engineered products portfolio. As that continues to grow as a percentage of the revenue in the Engineered Electronic Systems business, the drop-through is really good. So we've had good growth in engineered product businesses. The second is the consolidation of the footprint strategy, and that has also started kicking in this quarter with programs getting fully transitioned from our Berryville Performance Center to our Joplin Performance Center, and we are taking out a significant amount of cost early in the quarter out of the Berryville facility, which now has a skeleton crew and only one active program. Those other programs are now being produced out of Joplin without much addition to overhead and SG&A in that business. So that's really driving the margins, those two factors. And outside of some minor impacts of product mix, I think the general trend is sustainable. The current margins we are seeing within a narrow band is sustainable going forward.

Can you quantify the run-rate consolidation savings? You mentioned an annualized rate of 11% to 13%. Is there any way to provide more detail on that?

Still in the early stages of that. It's over $1 million during the current quarter.

I think it's a good story. I mean, look, we're thrilled with the number, right? You're spot on about the 18%. So we're excited about that. We think that again, as we move into the second year of Vision 2027, these things are coming together, and we're obviously driving value pricing across the board, right? So that's going to help.

Got it. And then I guess conversely, on structural systems, it sounds like you're just dealing with overhead under-absorption issues as you transition. Should we expect that margin rate to persist the next two quarters? It doesn't sound like anything really out of the normal except for just the kind of wind-down drag.

Yes. I mean our Monrovia Performance Center, which is being wound down, revenues were almost one-third of what they were on a year-over-year quarter basis, almost half on a sequential quarter basis. So that's naturally going to create a significant amount of drag on margins. As you can imagine, in the facility being wound down, it's not that easy. So we do expect that to linger for the next one to two quarters, but gradually improve.

Yes. Mike, for everyone on the call, Monrovia is located near Los Angeles and is about the size of an aircraft carrier, so it's a significant facility. It has been operational for quite some time, which suggests promising developments ahead. We're very close to finalizing things with the Monrovia facility.

Got it. Last one for me, Stephen. I don't want to put words in your mouth or numbers here. But I think you started the defense offloading; I don't know if that was really in earnest in late '20 or '21. But if you're thinking $135 million by '25. I mean I could go back and take your '20 defense revenue run rate, and I could get something north of $550 million by '25. Obviously, you're losing some work in there, F-18, I'm sure there are some other programs. But how should we think about this defense growth trajectory? Again, it might not be apples-to-apples the way I'm thinking about it, but I can come up with some pretty sharp growth there.

Yes, you're right. I'm looking at the numbers as we speak. With a company like GA, we've had a couple of really good years with them, but that whole market has been disrupted due to lower-cost UAVs. Therefore, our volume is down there. We discussed the F-18 and some other projects. However, many of our current orders are repeat business, and we’re receiving several promising new contracts such as the next-generation jammer from RTX. We believe that outlook is accurate. Even though they might say they loved what we were doing and came to us for help, the same applies to the SPY-6. While it may not be a direct comparison, the overall situation seems positive. We aim to launch the new programs soon, although there are some delays. Our focus is on maintaining steady current business alongside the new initiatives.

Our next question comes from Ken Herbert of RBC Capital Markets.

Steve, when we look at the gross margins in the first quarter, is there any reason that they wouldn't step down in the second quarter? Or is this gross margin run rate something we should model moving forward?

I'll take a first stab at that, Ken. We're really happy with the gross margins in the first quarter. As I said, on the electronics side, driven by engineered products, restructuring savings, and those were the key drivers. If you look at the overall company, they were partially offset by the headwinds we had in Monrovia's structural business. Outside of that, I would say marginal benefits from product mix during the quarter, these gross margins within a fairly narrow band are sustainable. I mean if you were to look at our adjusted gross margin in Q4, it was 23.2% last year, and it's now 25%. So if you look at year-over-year, it's a big difference, and especially with some of the adjustments, but I think we've been able to take more of the adjustments into the GAAP gross margin, which is a really good thing. I would say we feel confident about these margins moving forward within that narrow range.

Great. And can you level set us on your expected, I guess, either MAX deliveries this year or sort of a monthly or quarterly production rate? It sounds like there's maybe a step down sequentially from the first to the second to the third quarter, but maybe an anticipated uptick in the back of the year. Can you comment on where you are with that program and how we should think about the cadence for the year?

Yes, Ken, good question. We had a fairly good first quarter because there was a lot of things still happening, right, until this terrible situation happened in January, and then lots of things came after that. So Q1 was pretty good. April has been a bit lighter. So we're anticipating a little bit lighter action on it. Remember, we're both feeding Spirit, which is a major customer, as well as Boeing OEM. Right now, we're thinking maybe it’s in the mid-20s, lower to mid-20s for the second quarter. We'll have to figure out the third when we get there, based on their progress. But we see it coming back. The nice thing is for our shareholders and for all of us, we've been working hard on gaining share on the MAX, as well as the A320. So we are working on those types of projects. I think, Ken, we're going to see a little dip, maybe into the mid-20s. Certainly, it's been a little lighter in April, but nothing we're concerned about. We want to be transparent here, but we have the 787, which I know has its own problems, but we're seeing a nice bounce back there and also have confidence in our Airbus business as well as GS.

Great. And just finally, Steve, where would you see the opportunity on the A320 or even the A220 to take share? What could be the timing around some of the share gains with Airbus on the narrowbody portfolio?

Yes. We're looking probably within 12 months. We're working on something right now. We'll see how it goes; these things obviously take time. But we think within 12 months, we might have something going again on the A320. The A320 is a major program for us, and we foresee good things there.

Our next question comes from the line of Jason Gursky of Citi.

Steve, I wanted to ask more about Vision 2027, especially the M&A aspect, as I believe you are looking to achieve some inorganic growth. This question is two-part. There’s a company that recently went public, giving it access to more funds, and it claims it will heavily invest in acquiring proprietary product companies. I'm curious about the current competitive landscape for assets. So first, how does the pipeline look and what is the competitive environment like? Additionally, I would like to know your perspective on the size and scale of potential acquisitions you might consider. Lastly, could you discuss the dynamics with one of your major customers, Spirit, and the Airbus work? It seems likely that if Boeing acquires Spirit, that Airbus work will need to be reassigned. What might your interest be in taking on some of that work, considering your M&A strategy?

Good to be with you. Regarding our Vision 2027 and acquisitions, we have set a preliminary target of $75 million. We're being conservative with this estimate since it’s just 2024 and we have several years ahead of us. Overall, we feel positive about our position. Although modest, we are pleased with our progress in acquisitions, which we believe has been beneficial for both shareholders and the company. We're focusing on acquisitions that enhance our current engineered product portfolio and are committed to growing in that area. We anticipate pursuing more bolt-on acquisitions where we can achieve consolidation. For the next couple of years, this is our strategy. Concerning Spirit, we ship directly to Toulouse for the A320 and collaborate directly with them. We currently do not have any work for Airbus related to Spirit, which is more involved with the A350, a segment we're not participating in at this time but would consider. Based on recent news regarding challenges in Europe, we acknowledge it will be tough. Nonetheless, we are prepared and have the capacity, which could present opportunities for us.

Yes. I mean we've been actively looking at businesses. I would say there's been a pickup in deal flow in late Q1 and coming into Q2. We're seeing more assets come to market. The competitive environment I wouldn't say has dramatically changed. The company you referenced that went public recently has been around and looking for similar assets for over 10 years. We've come across them in the past, so I don't see that dynamic changing now. We will continue to be aggressive for businesses that we really like and where we think we can drive significant value for our shareholders. We can continue to do that, despite the competitive environment. Timing is always difficult to predict on M&A.

And Jason, just to chime in here. We're also very excited about organic growth. We really want to get; hopefully, the MAX will find its way by the end of the year. I mean if they're at 50, at some point in the future, a drop through and everything, we feel very good about our current operation, too, delivering.

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

Thank you very much for joining us today. We are extremely pleased with our performance in Q1. I want to express my gratitude to my team and everyone who works diligently every day. Our persistent efforts are what define us. As we move past March, we are optimistic about having a fantastic year for our shareholders, our company, and all our stakeholders. Thanks again for being here. Wishing you a great and safe day. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.