Ducommun Incorporated Reports First Quarter 2025 Results

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]