Ducommun(DCO)2025-02-27 11:08Financial Performance - Net revenues for 2024 were $786.6 million, an increase of 3.7% from $757.0 million in 2023[166][168]. - Net income for 2024 was $31.5 million, or $2.10 per diluted share, compared to $15.9 million, or $1.14 per diluted share in 2023[166][181]. - Adjusted EBITDA for 2024 was $116.6 million, representing 14.8% of net revenues[166]. - Gross profit margin increased to 25.1% in 2024 from 21.6% in 2023, driven by a higher mix of engineered products and strategic pricing actions[172]. - Total net revenues for 2024 increased by 3.9% to $786.6 million compared to $757.0 million in 2023[183]. - Adjusted EBITDA for 2024 was $116.6 million, reflecting a 14.8% increase from $101.5 million in 2023[193]. - Net income for 2024 was $31.5 million, an increase from $15.9 million in 2023, while Adjusted EBITDA rose to $116.6 million from $101.5 million[199]. - Adjusted EBITDA as a percentage of net revenues improved to 14.8% in 2024 from 13.4% in 2023[199]. Revenue Sources - Revenues from military and space markets increased by $16.1 million, while commercial aerospace revenues rose by $23.8 million in 2024[169]. - Revenues from military and space end-use markets increased by $14.0 million, while commercial aerospace revenues rose by $26.2 million[191]. - The company reported a decrease of $10.4 million in revenues from industrial end-use markets due to pruning non-core business[186]. - Electronic Systems segment net revenues rose by 0.3% to $431.4 million, while Structural Systems segment revenues increased by 8.7% to $355.2 million[183]. - The top ten customers accounted for 59.7% of net revenues in 2024, with Boeing contributing 8.2%[170][171]. Expenses and Charges - SG&A expenses rose by $18.9 million in 2024, primarily due to increased professional services fees and higher compensation costs[173]. - Restructuring charges decreased by $7.2 million in 2024, reflecting the winding down of a restructuring plan initiated in April 2022[174]. - Corporate General and Administrative expenses increased by $9.8 million, primarily due to higher professional services fees and stock-based compensation[190]. Tax and Interest - The effective tax rate for 2024 was 14.7%, up from 2.8% in 2023, primarily due to higher pre-tax income[176]. - Interest expense decreased by $5.5 million in 2024, attributed to interest rate swaps and a lower debt balance[175]. - The weighted-average interest rate on debt decreased to 7.25% in 2024 from 7.53% in 2023[205]. Cash Flow and Debt - Cash and cash equivalents decreased to $37.1 million in 2024 from $42.9 million in 2023, while total debt reduced to $243.2 million from $266.0 million[205]. - Net cash provided by operating activities increased to $34.2 million in 2024 from $31.1 million in 2023, driven by higher net income and improved accounts payable[216]. - Net cash used in investing activities significantly decreased to $13.9 million in 2024 from $133.5 million in 2023, primarily due to the absence of acquisitions[217]. - Net cash used in financing activities during 2024 was $26.0 million, a decrease from net cash provided of $99.0 million in 2023, primarily due to $85.1 million net proceeds from common stock issuance and $23.8 million net borrowings in the prior year that did not reoccur[218]. - The company had borrowings of $243.2 million under its 2022 Credit Facilities as of December 31, 2024[248]. Capital Expenditures and Future Outlook - Capital expenditures totaled $14.4 million in 2024, down from $19.1 million in 2023[183]. - The company expects to spend $23.0 million to $25.0 million on capital expenditures in 2025 to support growth in existing programs and new contract awards[213]. Backlog and Future Contracts - Total backlog increased to $1,060.8 million in 2024, with military and space backlog rising to $624.8 million, while commercial aerospace backlog decreased to $415.9 million[202]. Goodwill and Asset Valuation - Goodwill for Electronic Systems and Structural Systems was evaluated at $117.4 million and $127.2 million, respectively, with fair values exceeding carrying values, indicating no impairment[241]. - The company engages valuation specialists to assist in determining the fair value of assets acquired and liabilities assumed in business combinations[235]. Revenue Recognition and Contract Estimates - The company recognizes revenue under ASC 606, utilizing a five-step model, with the majority of performance obligations satisfied over time[224]. - Contract estimates are based on various assumptions, including labor productivity and material costs, and adjustments are recognized under the cumulative catch-up method[229]. - Provisions for estimated losses on contracts are recorded when identified, requiring estimates of future revenue and costs[231]. - Acquired other intangible assets are amortized over estimated economic lives ranging from 2 to 23 years, generally using the straight-line method[242]. - The company assesses inventory carrying value and reduces it to net realizable value based on customer orders and internal demand forecasts[244]. Interest Rate Impact - A hypothetical 10% increase or decrease in the interest rate would have an immaterial impact on the company's financial condition and results of operations[251].