Ducommun (NYSE:DCO) 2025 Conference Summary Company Overview - Ducommun was founded in 1849 and is the oldest company in California, originally established as a general store in Los Angeles before transitioning into the aerospace sector in the 1930s [5][6] - The current management team has been in place since 2017, focusing on transforming the business and streamlining operations [7][8] Financial Performance - The company's market capitalization has grown 4x over the past eight years, with EBITDA increasing by 125% during the same period [9] - Current revenue is just over $800 million, with an LTM EBITDA margin of 15.5%, tracking at 16% in the last three quarters [9][10] - Record backlog of $1.03 billion and a book-to-bill ratio of 1.6 in Q3, indicating strong demand [10] Business Segments - Revenue mix is increasingly skewed towards military applications, with double-digit growth in the defense business over the last three quarters [10][11] - The company has significant exposure to narrow-body aircraft, including the Boeing 737 MAX and Airbus A220, and is well-positioned for recovery in commercial aerospace [11][12] Strategic Initiatives - Vision 2027 plan aims to grow revenues from $700 million in 2022 to nearly $1 billion by 2027, with EBITDA margins expanding from 13% to 18% [19][20] - Engineered products are a key focus, with a target of increasing their share from 15% in 2022 to over 25% by 2027; currently at 23% [22][23] - Cost-saving measures include consolidating manufacturing facilities, with expected synergies of $11 million to $13 million from recent moves [25] Market Dynamics - The defense sector remains robust, with strong order flow and high double-digit growth in missile and radar systems [28][29] - Anticipated recovery in commercial aerospace driven by increased production rates from Boeing and Airbus [11][44] - Current inventory levels are higher than typical due to strategic investments made during the pandemic, which positions the company well for future cash flow improvements [54] M&A Strategy - The company has successfully completed five acquisitions under the current management, contributing to revenue and margin growth [26][35] - Active pursuit of additional acquisition opportunities, with a focus on engineered products, despite a competitive M&A landscape [56] Tariff Impact - Ducommun's manufacturing footprint is primarily in the U.S., with 95% of revenues generated domestically, resulting in limited exposure to tariffs [30][31] Conclusion - Ducommun is positioned for significant growth in both defense and commercial aerospace sectors, with a strong focus on engineered products and strategic acquisitions to enhance its market position and financial performance [28][40]