Group 1: Company Overview - Ducommun (DCO) is a notable stock within the Aerospace sector, which consists of 58 individual stocks and ranks 5 in the Zacks Sector Rank [2] - Ducommun currently holds a Zacks Rank of 1 (Strong Buy), indicating strong analyst sentiment and a positive earnings outlook [3] Group 2: Performance Comparison - Year-to-date, Ducommun has returned 35.9%, outperforming the average Aerospace sector gain of 26.3% [4] - Another outperforming stock in the Aerospace sector is Airbus Group (EADSY), which has returned 33.4% year-to-date [4] - Ducommun is part of the Aerospace - Defense Equipment industry, which includes 33 companies and has an average gain of 26.1% this year, further highlighting Ducommun's strong performance [5] Group 3: Industry Insights - The Aerospace - Defense industry, which includes 24 stocks, is currently ranked 87 and has moved +26.4% since the beginning of the year [6] - Investors should monitor both Ducommun and Airbus Group for potential continued strong performance in the Aerospace sector [6]

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Group 1 - Ducommun Incorporated (NYSE: DCO) is identified as a Tier 1 supplier to the aerospace, defense, and space sectors [1] - Since a Strong Buy rating was issued in March 2025, DCO shares have increased by 20%, significantly outperforming the S&P 500, which declined by 0.9% [1] Group 2 - The Aerospace Forum aims to uncover investment opportunities within the aerospace, defense, and airline industries, leveraging data-informed analysis [2] - The analyst behind The Aerospace Forum has a background in aerospace engineering, providing context to industry developments and their potential impact on investment strategies [2]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $194.1 million, a 1.7% increase from $190.8 million in Q1 2024, marking the sixteenth consecutive quarter of year-over-year revenue growth [8][22] - Gross margin increased to 26.6%, up from 24.6% year-over-year, achieving a new quarterly record [12][23] - Adjusted EBITDA reached 15.9% of sales, a record high, reflecting strong operational performance [13][37] - GAAP diluted EPS was $0.69, compared to $0.46 in Q1 2024, while adjusted diluted EPS was $0.83, up from $0.70 [14][28] Business Line Data and Key Metrics Changes - Military and space revenue grew by 15% year-over-year, driven by missile and electronic warfare programs [9][19] - Commercial aerospace revenue declined by 10% to $72 million, marking the first decline in 15 quarters, primarily due to lower demand for the 737 MAX [10][20] - Industrial business revenue decreased to $9 million as the company pruned non-core operations [21] Market Data and Key Metrics Changes - The defense backlog increased by $15 million year-over-year to $620 million, while the commercial aerospace backlog decreased by $31 million to $411 million [14][20] - The company reported that 95% of its revenue is generated in the U.S., with minimal exposure to tariffs due to its manufacturing footprint [17][26] Company Strategy and Development Direction - The Vision 2027 strategy aims to increase the revenue percentage from engineered products to over 25%, with current contributions at 23% [8][15] - The company is focused on consolidating its manufacturing footprint and pursuing targeted acquisitions to enhance growth [8][34] - Continued emphasis on value-added pricing and expanding content on key commercial aerospace platforms is part of the strategic plan [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in commercial aerospace in the second half of 2025, despite current headwinds [16][100] - The company anticipates mid-single-digit revenue growth for 2025, supported by strong defense activity and recovery in commercial aerospace [16][101] - Management highlighted the importance of maintaining a balanced portfolio between defense and commercial sectors to mitigate risks [68] Other Important Information - The company is undergoing a restructuring initiative aimed at improving operational efficiency and reducing costs, with expected annual savings of $11 million to $13 million [33][34] - Cash flow from operating activities improved to $800,000 in Q1 2025, compared to a cash outflow of $1.6 million in Q1 2024 [35] Q&A Session Summary Question: How would you characterize any delay in ship set rates to Boeing and Spirit? - Management noted that rates from Boeing are in the low twenties and Spirit is ramping up to the mid to high twenties, with optimism for continued growth despite destocking impacts [40][41] Question: What is the outlook for the M&A pipeline? - Management confirmed ongoing diligence on multiple opportunities and expressed confidence in completing a deal this year, focusing on niche engineered product businesses [52][54] Question: How do you see growth rates between commercial aerospace and defense for the remainder of the year? - Management expects continued strength in defense and a recovery in commercial aerospace, aiming for mid-single-digit growth for the full year [67][101] Question: What are the potential new work scopes in commercial and defense? - Management highlighted opportunities with Spirit AeroSystems and ongoing bidding for new work with major defense customers like RTX [80][83]

Financial Data and Key Metrics Changes - Q1 2025 revenue was $194.1 million, a 1.7% increase from $190.8 million in Q1 2024, marking the sixteenth consecutive quarter of year-over-year revenue growth [9][25] - Gross margin increased to 26.6%, up 200 basis points from 24.6% year-over-year, achieving a new quarterly record [13][26] - Adjusted EBITDA reached 15.9%, a record as a percentage of sales, up from 14.4% in the prior year [14][31] - GAAP diluted EPS was $0.69, compared to $0.46 in Q1 2024, while adjusted diluted EPS was $0.83, up from $0.70 [14][31] Business Line Data and Key Metrics Changes - Military and space revenue grew by 15% year-over-year to $114 million, driven by missile and electronic warfare programs [10][21] - Commercial aerospace revenue declined by 10% to $72 million, marking the first decline in 15 quarters, primarily due to lower demand for the 737 MAX [11][22] - Industrial business revenue decreased to $9 million as the company continues to prune non-core operations [23] Market Data and Key Metrics Changes - The defense backlog increased by over $15 million year-over-year to $620 million, representing 59% of the total backlog [15][21] - The commercial aerospace backlog decreased by $31 million to $411 million due to lower OEM production rates [16][22] - The company expects a recovery in commercial aerospace as production rates ramp up in 2025 [22] Company Strategy and Development Direction - The company is executing its Vision 2027 strategy, aiming to increase the revenue percentage from engineered products, which accounted for 23% in 2024, up from 19% in 2023 [9][17] - The strategy includes targeted acquisitions, consolidation of manufacturing operations, and expansion in high-growth segments of the defense budget [9][10] - The company is focused on maintaining a strong mix of defense and commercial aerospace to mitigate risks associated with market cyclicality [10][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in commercial aerospace and continued strength in defense, reaffirming guidance for mid-single-digit revenue growth for 2025 [18][70] - The company does not anticipate significant impacts from tariffs on its revenues, as 95% of its revenue is generated in the U.S. [19][29] - Management highlighted the importance of maintaining operational efficiency and strong relationships with key customers like Boeing and Spirit [83][84] Other Important Information - The company has ceased operations in two facilities, expecting to realize cost savings as production ramps up in other locations [13][36] - Cash flow from operating activities improved to $800,000 in Q1 2025, compared to a use of $1.6 million in Q1 2024 [38] - The company is actively pursuing M&A opportunities, focusing on niche engineered product businesses that span both defense and commercial aerospace [54][56] Q&A Session Summary Question: How would you characterize any delay in ship set rates to Boeing and Spirit? - Management noted that Boeing is producing in the low twenties and Spirit is ramping up to the mid to high twenties, with expectations for continued growth despite destocking impacts [43][45] Question: Are you tracking towards your M&A placeholder for Vision 2027? - Management confirmed they are tracking multiple opportunities and remain confident in completing a deal this year [54][56] Question: What are your expectations for growth rates between commercial aerospace and defense for the remainder of the year? - Management expects continued strength in defense and a recovery in commercial aerospace, aiming for mid-single-digit growth overall [68][70]

Core Viewpoint - Ducommun (DCO) reported quarterly earnings of $0.83 per share, exceeding the Zacks Consensus Estimate of $0.59 per share, and showing an increase from $0.70 per share a year ago, representing an earnings surprise of 40.68% [1][2] Financial Performance - The company achieved revenues of $194.11 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.74% and increasing from $190.85 million year-over-year [2] - Over the last four quarters, Ducommun has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - Ducommun shares have declined approximately 8% since the beginning of the year, compared to a 3.9% decline in the S&P 500 [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.72 on revenues of $198.67 million, and for the current fiscal year, it is $3.28 on revenues of $820.35 million [7] Industry Context - The Aerospace - Defense Equipment industry, to which Ducommun belongs, is currently ranked in the top 12% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Disclosures Forward-Looking Statements: This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be preceded by, followed by or include the words "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions. These statements are based on the beliefs and assumptions of the Company's management. Generally, forward-looking statements include information concerning the Company' ...

First Quarter 2025 Results [Overview and Highlights](index=1&type=section&id=First%20Quarter%202025%20Recap) Ducommun reported a strong start to 2025 with a **2% revenue increase to $194.1 million**, driven by defense strength offsetting commercial aerospace weakness, achieving record **26.6% gross margins** and **15.9% Adjusted EBITDA margins** Q1 2025 Financial Highlights vs. Q1 2024 | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $194.1 | $190.8 | +$3.3 | +2% | | Net Income | $10.5 | $6.8 | +$3.7 | +53% | | Diluted EPS | $0.69 | $0.46 | +$0.23 | +50% | | Gross Margin | 26.6% | 24.6% | +200 bps | - | | Adjusted EBITDA | $30.9 | $27.4 | +$3.5 | +13% | | Adjusted EBITDA Margin | 15.9% | 14.4% | +150 bps | - | - Revenue growth was driven by strength in the defense business, particularly in missiles, electronic warfare, military radar, and rotary-wing aircraft platforms, offsetting anticipated weakness from Boeing 737 MAX production rates and commercial in-flight entertainment products[5](index=5&type=chunk) - The company is making significant progress on its VISION 2027 plan, highlighted by achieving a new quarterly record for gross margins and the second-highest Adjusted EBITDA, keeping it on track for its **18% Adjusted EBITDA goal**[6](index=6&type=chunk)[8](index=8&type=chunk) - Ducommun expects minimal impact from tariffs as over **95% of its revenue** is generated from U.S. facilities, and it has limited supply chain exposure to China with plans to mitigate raw material tariff impacts[7](index=7&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) Net revenue increased to **$194.1 million** from **$190.8 million** year-over-year, driven by military and space growth offsetting commercial aerospace and industrial declines, while net income surged **53% to $10.5 million** due to higher gross profit and improved cash flow from operations Revenue Change by End-Use Market (YoY) | End-Use Market | Revenue Change (YoY, in millions) | | :--- | :--- | | Military and Space | +$14.6 | | Commercial Aerospace | -$8.2 | | Industrial | -$3.1 | - Gross profit rose to **$51.6 million (26.6% of revenue)** from **$46.9 million (24.6% of revenue)** YoY, primarily due to a favorable product mix and higher manufacturing volume[12](index=12&type=chunk) - Operating income for Q1 2025 was **$16.6 million (8.5% of revenue)**, a **$4.0 million** increase from **$12.6 million (6.6% of revenue)** in Q1 2024, with Non-GAAP adjusted operating income at **$19.2 million (9.9% of revenue)**[13](index=13&type=chunk) - Net cash provided by operations was **$0.8 million**, an improvement from a **$1.6 million** use of cash in Q1 2024, mainly due to better working capital management and higher net income[15](index=15&type=chunk) [Business Segment Performance](index=3&type=section&id=Business%20Segment%20Information) Electronic Systems revenue grew slightly to **$109.7 million** with declining operating income, while Structural Systems revenue increased modestly to **$84.4 million** with operating income surging to **$10.4 million** due to higher volume and favorable product mix Segment Performance Summary (Q1 2025 vs Q1 2024) | Segment | Q1 2025 Revenue (in millions) | YoY Change | Q1 2025 Operating Income (in millions) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Electronic Systems | $109.7 | +2.1% | $18.1 | -4.9% | | Structural Systems | $84.4 | +1.3% | $10.4 | +262% | [Electronic Systems](index=3&type=section&id=Electronic%20Systems) Electronic Systems revenue grew **2.1% to $109.7 million** due to military and space gains offsetting commercial aerospace declines, but operating income decreased to **$18.1 million (16.5% margin)** due to lower volume and higher costs - Revenue growth was fueled by a **$12.3 million** increase in military and space sales, partially offset by a **$7.0 million** decrease in commercial aerospace revenue[18](index=18&type=chunk) - Operating income fell by **$0.8 million** year-over-year, with the operating margin contracting to **16.5%** from **17.6%**, primarily due to lower manufacturing volume and increased manufacturing costs[17](index=17&type=chunk) [Structural Systems](index=4&type=section&id=Structural%20Systems) Structural Systems revenue increased **1.3% to $84.4 million** due to military and space growth offsetting commercial aerospace declines, with operating income surging to **$10.4 million (12.3% margin)** driven by higher volume, favorable mix, and lower costs - Revenue drivers included a **$2.3 million** increase from military rotary-wing platforms, which was partially offset by a **$1.3 million** decline in commercial aerospace, including the Boeing 737 MAX[25](index=25&type=chunk) - Operating income surged by **$7.5 million** year-over-year, and the operating margin expanded significantly to **12.3%** from **3.4%**, due to higher volume, favorable mix, and lower manufacturing costs[19](index=19&type=chunk) [Backlog](index=12&type=section&id=NON-GAAP%20BACKLOG*%20BY%20REPORTING%20SEGMENT) Total company backlog stood at **$1,053.6 million** as of March 29, 2025, a slight decrease from year-end 2024, with Electronic Systems backlog increasing and Structural Systems backlog decreasing Backlog by Segment (in thousands) | Segment | March 29, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Electronic Systems** | **$566,336** | **$555,966** | | Military and space | $451,366 | $459,546 | | Commercial aerospace | $92,165 | $76,291 | | **Structural Systems** | **$487,229** | **$504,853** | | Military and space | $168,335 | $165,239 | | Commercial aerospace | $318,894 | $339,614 | | **Total Ducommun** | **$1,053,565** | **$1,060,819** | - The company's remaining performance obligations under ASC 606 were **$986.0 million** as of March 29, 2025[47](index=47&type=chunk) Financial Statements and Reconciliations [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 29, 2025, total assets were **$1,128.6 million**, total liabilities **$435.6 million**, and total shareholders' equity **$693.0 million**, reflecting slight asset growth and liability reduction from year-end 2024 Balance Sheet Summary (in thousands) | Account | March 29, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $578,537 | $568,081 | | Total Assets | $1,128,615 | $1,126,101 | | Total Current Liabilities | $173,372 | $175,474 | | Total Liabilities | $435,608 | $443,571 | | Total Shareholders' Equity | $693,007 | $682,530 | [Condensed Consolidated Statements of Income](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For Q1 2025, Ducommun reported net revenues of **$194.1 million**, gross profit of **$51.6 million**, and net income of **$10.5 million ($0.69 diluted EPS)**, showing favorable growth compared to Q1 2024 Income Statement (in thousands, except per share amounts) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net Revenues | $194,114 | $190,847 | | Gross Profit | $51,597 | $46,943 | | Operating Income | $16,577 | $12,622 | | Net Income | $10,511 | $6,849 | | Diluted EPS | $0.69 | $0.46 | [GAAP to Non-GAAP Reconciliations](index=8&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) The company provides reconciliations for non-GAAP measures, with Q1 2025 Adjusted EBITDA at **$30.9 million**, Non-GAAP adjusted operating income at **$19.2 million**, and Non-GAAP adjusted net income at **$12.6 million ($0.83 diluted EPS)**, primarily excluding amortization, restructuring, and stock-based compensation GAAP Net Income to Adjusted EBITDA Reconciliation (Q1 2025, in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | GAAP net income | $10,511 | | Interest expense | $3,263 | | Income tax expense | $2,803 | | Depreciation | $4,277 | | Amortization | $4,307 | | Stock-based compensation expense | $5,347 | | Restructuring charges | $426 | | **Adjusted EBITDA** | **$30,934** | GAAP to Non-GAAP Operating Income Reconciliation (Q1 2025, in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | GAAP operating income | $16,577 | | Restructuring charges | $426 | | Inventory purchase accounting adjustments | $0 | | Amortization of acquisition-related intangible assets | $2,232 | | **Non-GAAP adjusted operating income** | **$19,235** | GAAP to Non-GAAP Net Income & EPS Reconciliation (Q1 2025) | Metric | GAAP (in thousands) | Non-GAAP Adjusted (in thousands) | | :--- | :--- | :--- | | Net Income | $10,511 | $12,637 | | Diluted EPS | $0.69 | $0.83 |

Company Overview - Ducommun Incorporated is a provider of value-added innovative products and manufacturing solutions in the aerospace, defense, and industrial markets, established in 1849 [2] - The company specializes in two core areas: Electronic Systems and Structural Systems, producing complex products and components for commercial aircraft, military and space programs, and industrial applications [2] Upcoming Events - Stephen G. Oswald, the chairman, president, and CEO of Ducommun, will participate in the 2025 Truist Securities Industrials & Services Conference on May 8, 2025 [1] - One-on-one investor meetings are scheduled throughout the day, and institutional investors can contact Truist to arrange these meetings [1]

Core Insights - Ducommun Incorporated has appointed Clay Bringhurst as the vice president of its engineered products business, while he will continue to lead BLR Aerospace [1][2] - The promotion aligns with Ducommun's VISION 2027 Strategy, focusing on enhancing its engineered products business as a priority for future growth [3] Company Overview - Ducommun Incorporated is a global supplier of innovative solutions for the aerospace and defense industry, founded in 1849, specializing in complex products and components for commercial aircraft, military, and space programs [4] Leadership Background - Clay Bringhurst joined Ducommun in 2019 through the acquisition of Nobles Worldwide and has held various leadership roles, including president of Nobles and BLR Aerospace [3] - Prior to joining Ducommun, Bringhurst was senior director of strategy and business development at Northrop Grumman and served as a Captain in the U.S. Marine Corps [3]