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 |

Core Insights - Ducommun Incorporated reported a strong start to 2025 with record gross margins and solid progress towards its VISION 2027 goals, achieving a net revenue of $194.1 million, a 2% increase year-over-year, primarily driven by the defense sector [3][6] - The company experienced a gross margin growth of 200 basis points year-over-year, reaching 26.6%, and adjusted EBITDA margins exceeded $30 million for the second time, reflecting a 150 basis point increase from the previous year [4][11] Financial Performance - Net income for Q1 2025 was $10.5 million, representing a 53% increase year-over-year, with diluted earnings per share rising to $0.69 from $0.46 in Q1 2024 [7][39] - Adjusted EBITDA for the quarter was $30.9 million, a 13% increase from $27.4 million in Q1 2024, equating to 15.9% of revenue [11][39] - Gross profit increased to $51.6 million, or 26.6% of revenue, compared to $46.9 million, or 24.6% of revenue, in the prior year [9][30] Business Segments - The Electronic Systems segment reported net revenue of $109.7 million, up from $107.5 million in Q1 2024, while the Structural Systems segment saw revenue rise to $84.4 million from $83.3 million [13][15] - Operating income for the Electronic Systems segment was $18.1 million, or 16.5% of revenue, while the Structural Systems segment achieved an operating income of $10.4 million, or 12.3% of revenue, marking significant year-over-year improvements [14][17] Market Dynamics - The defense sector showed strong demand for missiles, electronic warfare, military radar, and rotary-wing aircraft platforms, which helped offset weaker demand in commercial aerospace, particularly for the Boeing 737 MAX [3][8] - The company is closely monitoring the tariff environment but does not anticipate significant impacts on its financial outlook due to its domestic manufacturing base, which generates over 95% of revenue [5][6] Operational Efficiency - Corporate General and Administrative expenses increased to $11.9 million, or 6.1% of total revenue, primarily due to higher compensation and benefits costs [18] - The company reported a net cash provided by operations of $0.8 million, a turnaround from net cash used in operations of $1.6 million in Q1 2024, attributed to improved net income and smaller increases in contract assets and inventories [12]

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]

Core Viewpoint - The market anticipates a year-over-year decline in Ducommun's earnings due to lower revenues, with a focus on how actual results will compare to these estimates [1][2]. Earnings Expectations - Ducommun is expected to report quarterly earnings of $0.59 per share, reflecting a year-over-year decrease of 15.7% [3]. - Revenues are projected to be $190.8 million, indicating no change from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 0.69% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Ducommun is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +23.73% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive reading is a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [8]. - Ducommun currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat despite the positive Earnings ESP [11]. Historical Performance - In the last reported quarter, Ducommun exceeded the expected earnings of $0.70 per share by delivering $0.75, resulting in a surprise of +7.14% [12]. - The company has beaten consensus EPS estimates in all of the last four quarters [13]. Conclusion - While Ducommun may not appear to be a strong candidate for an earnings beat, investors should consider other influencing factors before making investment decisions [16].

Core Viewpoint - Ducommun Incorporated reaffirms its commitment to American manufacturing, with 95% of its revenue generated from U.S.-based operations, and expects minimal impact from recent tariffs due to its operational structure [1][2]. Company Overview - Ducommun Incorporated is a global supplier of innovative manufacturing solutions for the aerospace, defense, and industrial markets, specializing in complex products for commercial aircraft, military, and space programs [3]. Operational Insights - The company operates primarily in the U.S., with only one international facility in Guaymas, Mexico, which is compliant with the United States-Mexico-Canada Agreement [1]. - The strong domestic presence positions the company favorably under new U.S. trade policies, allowing it to maintain high standards of quality and on-time delivery [2].

Group 1 - Ducommun (NYSE: DCO) reported its fourth quarter and full-year earnings on February 27, missing EPS estimates but beating revenue expectations [1] - The stock prices declined following the earnings report, indicating market reaction to the mixed results [1] - The Aerospace Forum aims to identify investment opportunities in the aerospace, defense, and airline sectors, leveraging data analytics for informed analysis [1] Group 2 - The investing group provides direct access to data analytics monitors, enhancing the investment research process [1]

Ducommun (DCO) Q4 2024 Earnings Call February 27, 2025 09:10 PM ET Company Participants Suman Mookerji - Senior VP, CFO, Controller & TreasurerStephen Oswald - Chairman, President & CEOKen Herbert - Managing DirectorMike Crawford - SMD & Head of Discovery GroupJeremy Jason - Equity Research AssociateAlexandra Mandery - Equity Research Associate Operator Good day and thank you for standing by. Welcome to the Fourth Quarter twenty twenty four Ducommun Earnings Conference Call. At this time, all participants a ...

Financial Data and Key Metrics Changes - Q4 2024 revenue was $197.3 million, a 2.6% increase from $192.2 million in Q4 2023, marking the 15th consecutive quarter of year-over-year revenue growth [11][36] - GAAP diluted EPS increased to $0.45 per share in Q4 2024 from $0.34 per share in Q4 2023, while adjusted diluted EPS rose to $0.75 from $0.70 [22][40] - Adjusted EBITDA for Q4 2024 was $27 million, representing a year-over-year increase of 13.8% and an expansion of 180 basis points [20][21] Business Line Data and Key Metrics Changes - Military and space revenue grew 5% year-over-year to $109 million in Q4 2024, driven by missile programs [28][12] - Commercial aerospace revenue increased 4% year-over-year to $82 million, supported by growth in the A220 and S-92 platforms [31][16] - Structural Systems segment revenue rose to $90.3 million in Q4 2024 from $85.6 million in the prior year, while Electronic Systems segment revenue was $107 million, slightly up from $106.7 million [41][43] Market Data and Key Metrics Changes - The defense backlog increased by $98 million year-over-year to $625 million, with new orders contributing to this growth [23][24] - The commercial aerospace backlog decreased by $14 million sequentially, attributed to the Boeing strike [32][24] - Full year 2024 revenue for the company reached a record $786 million, with commercial aerospace growing 8% and military and space business growing 4% [24][25] Company Strategy and Development Direction - The Vision 2027 strategy aims to increase the revenue percentage of engineered products to over 25%, achieving 23% in 2024, up from 19% in 2023 [10][26] - The company is focusing on consolidating its manufacturing footprint and pursuing targeted acquisitions to enhance its market position [10][9] - The strategic offloading of non-core industrial businesses is intended to refocus resources on aerospace and defense sectors [25][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in military and space sectors, particularly with new orders and defense spending trends [12][60] - The company anticipates mid-single-digit revenue growth for 2025, with a stronger second half expected as production rates recover [28][55] - Management highlighted the importance of strategic pricing initiatives and productivity improvements in driving margin expansion [20][21] Other Important Information - The company reported a strong consolidated backlog of $1.06 billion, reflecting resilience despite market headwinds [23][24] - Restructuring initiatives are expected to yield annual savings of $11 million to $13 million, with synergies ramping up in late 2025 and into 2026 [47][48] - Legal fees related to an unsolicited acquisition offer totaled $3.145 million year-to-date, but these expenses are not expected to continue in 2025 [108][109] Q&A Session Summary Question: Can you provide any color on expectations for defense and commercial markets? - Management indicated that the first half of 2025 may face destocking headwinds, particularly in the commercial aerospace sector, but expects improvement in the second half [58][61] Question: How does Ducommun sit amid potential defense budget reprioritization? - Management feels confident about their diversified product offerings and does not rely heavily on any single program, which mitigates risks from budget changes [79][80] Question: What are the plans for capacity in the IMC business as demand changes? - Management is looking for more space to accommodate high demand for Appleton products, despite anticipating a slowdown in ViaSat work [84][85] Question: Can you elaborate on the margin hit in Structural Systems? - Management noted that the margin decline was evenly split between unfavorable mix and one-time expenses, with expectations for recovery in Q1 [93][94] Question: What are the implications of legal fees for unsolicited acquisition offers? - Management clarified that these fees were necessary to protect shareholder interests and are not expected to recur in 2025 [108][109]