Core Insights - Ducommun (DCO) reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.80 per share, and showing an increase from $0.83 per share a year ago, resulting in an earnings surprise of +10.00% [1] - The company achieved revenues of $202.26 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.89% and up from $197 million year-over-year [2] - Ducommun's stock has increased by approximately 43.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.99 on revenues of $214.4 million, and for the current fiscal year, it is $3.68 on revenues of $826.5 million [7] - The estimate revisions trend for Ducommun was favorable prior to the earnings release, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Aerospace - Defense Equipment industry, to which Ducommun belongs, is currently ranked in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Ducommun's Q2 2025 performance highlights strong revenue growth, record margins, and significant net income increase, aligning with its long-term financial goals [Overall Performance Summary](index=1&type=section&id=Overall%20Performance%20Summary) Ducommun reported strong Q2 2025 results, with revenues over $200 million, record margins, and 63% net income growth, aligning with VISION 2027 goals | Financial Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Net Revenue | $202.3 million | +3% | | Gross Margin | 26.6% | +60 bps | | Net Income | $12.6 million | +63% | | Diluted EPS | $0.82 | +58% | | Adjusted EBITDA | $32.4 million | +8% | | Adjusted EBITDA Margin | 16.0% | +80 bps | - Strong quarterly results were led by the **defense business**, particularly missile programs, radar, and military rotary-wing aircraft platforms, offsetting commercial aerospace headwinds[5](index=5&type=chunk) - The company is progressing towards its **VISION 2027 financial goal of 18% Adjusted EBITDA**, with Q2 margins showing continued expansion[6](index=6&type=chunk) - The tariff environment is not expected to materially impact the financial outlook, as **over 95% of revenue** is from domestic facilities, with active mitigation of raw material tariff exposures[7](index=7&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) Ducommun's Q2 2025 consolidated financials show a 3% revenue increase to $202.3 million, driven by military and space, with net income up 63% to $12.6 million and improved cash flow [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Net revenue grew **3% year-over-year to $202.3 million**, driven by a **$16.5 million increase in military and space**, offsetting declines in commercial aerospace and industrial markets | End-Use Market | Revenue Change (YoY) | Key Drivers | | :--- | :--- | :--- | | Military & Space | +$16.5 million | Higher rates on missile, rotary-wing aircraft, and radar platforms | | Commercial Aerospace | -$9.0 million | Lower revenues from Boeing and lower rates on rotary-wing aircraft | | Industrial | -$2.3 million | Selective pruning of non-core business | [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Q2 2025 profitability improved significantly, with net income surging **63% to $12.6 million**, gross margin expanding **60 basis points to 26.6%**, and operating income rising to **$17.2 million** | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $12.6 million | $7.7 million | +$4.9 million (+63%) | | Gross Profit | $53.7 million | $51.2 million | +$2.5 million | | Gross Margin | 26.6% | 26.0% | +60 bps | | Operating Income | $17.2 million | $13.9 million | +$3.2 million | - Gross margin increase was primarily driven by lower manufacturing costs and reduced restructuring charges from the Monrovia performance center wind-down[11](index=11&type=chunk) [Cash Flow and Interest Expense](index=2&type=section&id=Cash%20Flow%20and%20Interest%20Expense) Cash from operations significantly increased to **$22.4 million** in Q2 2025 from **$3.5 million** in Q2 2024, driven by higher net income and working capital management, while interest expense decreased - Net cash provided by operations increased substantially to **$22.4 million** in Q2 2025 from **$3.5 million** in Q2 2024[14](index=14&type=chunk) - Cash flow improvement was primarily due to higher net income, increased accounts payable, and a smaller increase in contract assets[14](index=14&type=chunk) - Interest expense fell by **$1.0 million** year-over-year due to lower interest rates and a reduced debt balance[13](index=13&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) Electronic Systems drove Q2 2025 growth with an **8.7% revenue increase** and expanded operating margin, while Structural Systems saw a **3.7% revenue decline** due to reduced commercial aerospace demand [Electronic Systems](index=2&type=section&id=Electronic%20Systems) Electronic Systems delivered strong results, with net revenue increasing **8.7% to $110.2 million** and operating income growing **$4.2 million to $21.0 million**, expanding operating margin to **19.0%** | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Revenue | $110.2 million | $101.4 million | | Operating Income | $21.0 million | $16.8 million | | Operating Margin | 19.0% | 16.6% | - Revenue growth was primarily due to higher rates on selected missiles, radar, fixed-wing aircraft platforms, and a classified program[18](index=18&type=chunk) [Structural Systems](index=3&type=section&id=Structural%20Systems) Structural Systems revenue decreased **3.7% to $92.0 million**, primarily from a **$6.2 million reduction in Boeing commercial aerospace**, leading to a **$1.0 million decline in operating income** and margin contraction to **10.4%** | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Revenue | $92.0 million | $95.6 million | | Operating Income | $9.5 million | $10.6 million | | Operating Margin | 10.4% | 11.0% | - Revenue decline was driven by lower revenues from Boeing, partially offset by higher rates on selected military rotary-wing aircraft platforms[25](index=25&type=chunk) [Corporate General and Administrative (CG&A) Expenses](index=3&type=section&id=Corporate%20General%20and%20Administrative%20%28CG%26A%29%20Expenses) Q2 2025 Corporate General and Administrative (CG&A) expenses were **$13.3 million (6.6% of revenue)**, a slight decrease from the prior year, primarily due to lower professional services fees [CG&A Expense Details](index=3&type=section&id=CG%26A%20Expense%20Details) CG&A expenses decreased slightly year-over-year, driven by a **$1.0 million reduction in professional services fees**, partially offset by a **$0.6 million increase in compensation and benefits** | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | CG&A Expenses | $13.3 million | $13.4 million | | CG&A as % of Revenue | 6.6% | 6.8% | [Financial Statements and Reconciliations](index=6&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents unaudited financial statements for Q2 2025, including condensed balance sheets, income statements, GAAP to non-GAAP reconciliations, and backlog breakdown [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 28, 2025, Ducommun's balance sheet shows total assets of **$1.14 billion**, total liabilities of **$433.0 million**, and shareholders' equity increased to **$707.8 million** | Balance Sheet Item | June 28, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $598.2 million | $568.1 million | | Total Assets | $1,140.8 million | $1,126.1 million | | Total Current Liabilities | $184.5 million | $175.5 million | | Total Liabilities | $433.0 million | $443.6 million | | Total Shareholders' Equity | $707.8 million | $682.5 million | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 income statement highlights a year-over-year increase in net revenue to **$202.3 million** and net income to **$12.6 million**, or **$0.82 per diluted share** | Income Statement Item (Q2) | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net Revenues | $202.3 million | $197.0 million | | Gross Profit | $53.7 million | $51.2 million | | Operating Income | $17.2 million | $13.9 million | | Net Income | $12.6 million | $7.7 million | | Diluted EPS | $0.82 | $0.52 | [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) The company provides GAAP to non-GAAP reconciliations, showing Q2 2025 Adjusted EBITDA at **$32.4 million (16.0% of revenue)** and non-GAAP adjusted net income at **$13.4 million** GAAP Net Income to Adjusted EBITDA Reconciliation (Q2) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | GAAP net income | $12,553 | $7,724 | | Adjustments (Interest, Tax, D&A, etc.) | $19,855 | $22,249 | | **Adjusted EBITDA** | **$32,408** | **$29,973** | GAAP to Non-GAAP Net Income Reconciliation (Q2) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | GAAP net income | $12,553 | $7,724 | | Total adjustments | $877 | $4,748 | | **Non-GAAP adjusted net income** | **$13,430** | **$12,472** | [Non-GAAP Backlog by Reporting Segment](index=13&type=section&id=Non-GAAP%20Backlog%20by%20Reporting%20Segment) As of June 28, 2025, total backlog was **$1.018 billion**, a decrease from **$1.061 billion** at year-end 2024, with declines across both Electronic and Structural Systems, mainly in military and space | Backlog (in thousands) | June 28, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Consolidated Total** | **$1,017,872** | **$1,060,819** | | Military and space | $592,580 | $624,785 | | Commercial aerospace | $404,080 | $415,905 | | **Electronic Systems Total** | **$532,871** | **$555,966** | | **Structural Systems Total** | **$485,001** | **$504,853** | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides logistical and legal information, including investor call details, a corporate overview, forward-looking statements disclaimer, and non-GAAP financial measure definitions

Quarterly Revenue Tops $200M; Record Quarterly Gross Margin; Net Income Increase of 63% Year-over-Year COSTA MESA, Calif., Aug. 07, 2025 (GLOBE NEWSWIRE) -- Ducommun Incorporated (NYSE: DCO) ("Ducommun" or the "Company") today reported results for its second quarter ended June 28, 2025. Second Quarter 2025 Recap "Another excellent quarter for Ducommun as we continue to make solid progress towards our VISION 2027 goals with both gross margin and Adjusted EBITDA margin and dollars at record levels. Net revenu ...

Company Overview - Ducommun (DCO) is a stock within the Aerospace sector, which consists of 58 individual stocks and currently holds a Zacks Sector Rank of 6 [2] - Ducommun has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, with the consensus estimate for full-year earnings having increased by 12% in the past quarter [3] Performance Comparison - Year-to-date, Ducommun has gained approximately 40.7%, outperforming the Aerospace sector's average return of 26.9% [4] - Another notable performer in the Aerospace sector is GE Aerospace (GE), which has returned 61.5% year-to-date [4] Industry Context - Ducommun is part of the Aerospace - Defense Equipment industry, which includes 33 companies and currently ranks 147 in the Zacks Industry Rank, with an average gain of 26.6% this year [5] - GE Aerospace belongs to the Aerospace - Defense industry, which consists of 24 stocks and is ranked 63, with a year-to-date increase of 27% [6]

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]

Company Overview - Ducommun (DCO) currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook compared to the market [3] Price Performance - DCO shares have increased by 0.94% over the past week, outperforming the Zacks Aerospace - Defense Equipment industry, which rose by 0.15% [5] - Over the last month, DCO's price change is 13.92%, significantly higher than the industry's 7.41% [5] - In the last quarter, DCO shares have surged by 60.02%, and over the past year, they have gained 46.68%, while the S&P 500 has only moved 16.27% and 12.91% respectively [6] Trading Volume - DCO's average 20-day trading volume is 153,468 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, one earnings estimate for DCO has increased, raising the consensus estimate from $3.65 to $3.68 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions during the same period [9] Conclusion - Given the strong price performance, positive earnings outlook, and high momentum score, DCO is positioned as a promising investment opportunity [11]

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]

Core Viewpoint - Ducommun Incorporated will participate in the B. Riley Securities Annual Investor Conference on May 22, 2025, with one-on-one investor meetings scheduled throughout the day [1] Company Overview - Ducommun Incorporated, founded in 1849, provides value-added innovative products and manufacturing solutions primarily in the aerospace, defense, and industrial markets [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]

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]