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Ducommun(DCO) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights 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 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 headwinds5 - The company is progressing towards its VISION 2027 financial goal of 18% Adjusted EBITDA, with Q2 margins showing continued expansion6 - 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 exposures7 Consolidated Financial Performance 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 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 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-down11 Cash Flow and Interest Expense 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 202414 - Cash flow improvement was primarily due to higher net income, increased accounts payable, and a smaller increase in contract assets14 - Interest expense fell by $1.0 million year-over-year due to lower interest rates and a reduced debt balance13 Business Segment Performance 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 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 program18 Structural Systems 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 platforms25 Corporate General and Administrative (CG&A) Expenses 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 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 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 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 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 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 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 This section provides logistical and legal information, including investor call details, a corporate overview, forward-looking statements disclaimer, and non-GAAP financial measure definitions