Ducommun(US:DCO)2022-05-08 16:13Financial Data and Key Metrics Changes - Ducommun reported Q1 2022 revenue of $163.5 million, up from $157.2 million in Q1 2021, reflecting a year-over-year growth of 4% [20][5] - Gross profit for Q1 2022 was $32.5 million, with a gross margin of 19.9%, compared to $33.1 million and 21.1% in Q1 2021 [21][26] - GAAP diluted EPS increased to $0.66 in Q1 2022 from $0.55 in Q1 2021, while adjusted diluted EPS rose to $0.67 from $0.66 [6][25] Business Line Data and Key Metrics Changes - The commercial aerospace segment saw a revenue increase of 53% year-over-year, driven by significant growth in Boeing 737 MAX and Airbus A320 family programs [5][7] - Military and space revenue was $99.3 million in Q1 2022, a decrease compared to the previous year, but still represented about 70% of total revenue [15][27] - The structural segment posted revenue of $66 million, up from $58 million, while the electronic systems segment revenue decreased to $97.5 million from $99.1 million [27][28] Market Data and Key Metrics Changes - The total backlog reached an all-time high of $943 million, with a defense backlog of $509 million and a commercial backlog of $376 million [21][10] - The book-to-bill ratio for Q1 was 1.2, indicating strong order intake relative to revenue [10] - The business aviation portfolio revenue increased by 70% year-over-year, indicating strong demand in that segment [12] Company Strategy and Development Direction - The company is focused on maintaining operational excellence and is actively seeking M&A opportunities to enhance growth [12][14] - A restructuring initiative was announced to better position the company for future performance, with expected pre-tax charges of $10 million to $14 million [14][30] - The company anticipates high single-digit revenue growth for the full year 2022, driven by commercial aerospace recovery and a strong defense backlog [11][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in commercial aerospace and the potential for increased defense spending due to geopolitical tensions [41][11] - The impact of COVID-19 and weather-related challenges in Q1 was acknowledged, but management expects improved operational performance in Q2 [44][45] - The company is well-positioned with a strong supply chain and inventory management to navigate current market challenges [35][22] Other Important Information - The company reported a liquidity position of $119 million and made voluntary paydowns on term loans amounting to $30 million [29][30] - Capital expenditures for Q1 were $4.8 million, with an anticipated full-year spending of $16 million to $18 million [30][29] Q&A Session Summary Question: Current production rates for the 737 MAX - Management confirmed alignment with Boeing and Airbus production rates, expressing confidence in titanium inventories [34] Question: Margins and inflation impacts - Management noted that while inflationary pressures exist, they are manageable and expect margins to improve moving forward [36][37] Question: Demand signals from defense customers - Increased activity in defense was noted, with management optimistic about future opportunities due to geopolitical tensions [41] Question: Weakness in military and space programs - Timing of orders was cited as a reason for the decrease, with management confident in the strong backlog [43][44] Question: Restructuring initiative related to M&A integration - Management clarified that the restructuring is focused on legacy operations rather than acquired entities [47]