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Ducommun Incorporated Reports听First Quarter 2025 Results

Excellent Start to 2025; Record Quarterly Gross Margins

COSTA MESA, Calif., May 06, 2025 (GLOBE NEWSWIRE) -- Ducommun Incorporated (NYSE: DCO) (鈥淒ucommun鈥� or the 鈥淐ompany鈥�) today reported results for its first quarter ended March听29, 2025.

First Quarter 2025 Recap

• Net revenue was $194.1 million, an increase of 2% over Q1 2024
• Net income of $10.5 million (increase of 53% year-over-year), or $0.69 per diluted share, or 5.4% of revenue, up 180 bps year-over-year
• Non-GAAP adjusted net income of $12.6 million (increase of 21% year-over-year), or $0.83 per diluted share
• Gross margin of 26.6%, year-over-year growth of 200 bps
• Adjusted EBITDA of $30.9 million (increase of 13% year-over-year), or 15.9% of revenue, up 150 bps year-over-year
  

鈥淎n excellent start to 2025 for Ducommun as we continue to make good progress towards our VISION 2027 goals with record gross margins during the quarter along with strong Adjusted EBITDA margins. Net revenue grew 2% to $194.1 million driven by strength in our defense business which helped us overcome the anticipated weakness in commercial aerospace production rates along with destocking,鈥� said Stephen G. Oswald, chairman, president and chief executive officer. 鈥淒efense in Q1 saw strong demand for select missiles, electronic warfare, military radar and military rotary-wing aircraft platforms along with new programs such as the Next Generation Jammer and AMRAAM ramping up. This did offset weaker demand on Boeing 737 MAX and commercial in-flight entertainment products.

鈥淭he Company also returned to normalized gross margin growth, expanding 200 bps year-over-year from 24.6% to 26.6%, a new quarterly record, which is an outstanding achievement. Adjusted EBITDA margins as well exceeded $30 million for the second time, expanding 150 bps year-over-year from 14.4% to 15.9%. The Adjusted EBITDA margins in Q1 again, reaffirms our current strategy and keeps Ducommun on track to meet the VISION 2027 financial goal of 18% Adjusted EBITDA.

鈥淲e continue to monitor the tariff environment on a real time basis but do not currently expect it to have a significant impact on our financial outlook. We are largely a U.S. manufacturer with U.S. workers and our domestic facilities generate more than 95% of Ducommun鈥檚 revenue. The other good news is we have limited supply chain exposure to China and are putting in plans to largely mitigate any raw materials tariff exposures through either duty exemptions on military products or by passing through to our customers under the terms of our contracts.

鈥淚n December 2022, we laid out our VISION 2027 Plan to investors and as we begin year three of the Plan in 2025, we are well positioned for another strong year towards the goals.鈥�

First Quarter Results

Net revenue for the first quarter of 2025 was $194.1 million compared to $190.8 million for the first quarter of 2024. The year-over-year increase was primarily due to the following in the Company's key end-use markets:

• $14.6 million higher revenue in the Company鈥檚 military and space end-use markets due to higher rates on selected missile, electronic warfare, radar, and rotary-wing platforms; partially offset by
• $8.2 million lower revenue in the Company鈥檚 commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and in-flight entertainment products, and lower rates on rotary-wing aircraft platforms.

In addition, revenue for the Company鈥檚 industrial end-use markets for the first quarter of 2025 decreased $3.1 million compared to the first quarter of 2024 mainly due to the Company鈥檚 selective pruning of non-core business.

Net income for the first quarter of 2025 was $10.5 million, or 5.4% of revenue, or $0.69 per diluted share, compared to $6.8 million, or 3.6% revenue, or $0.46 per diluted share, for the first quarter of 2024. This reflects higher gross profit of $4.7 million and lower restructuring charges of $0.9 million, partially offset by higher selling, general and administrative (鈥淪G&A鈥�) expenses of $1.6 million.

Gross profit for the first quarter of 2025 was $51.6 million, or 26.6% of revenue, compared to gross profit of $46.9 million, or 24.6% of revenue, for the first quarter of 2024. The increase in gross profit as a percentage of net revenue year-over-year was primarily due to favorable product mix and higher manufacturing volume.

Operating income for the first quarter of 2025 was $16.6 million, or 8.5% of revenue, compared to $12.6 million, or 6.6% of revenue, in the comparable period last year. The year-over-year increase of $4.0 million was primarily due to higher gross profit and lower restructuring charges, partially offset by higher SG&A expenses. Non-GAAP adjusted operating income for the first quarter of 2025 was $19.2 million, or 9.9% of revenue, compared to $17.1 million, or 9.0% of revenue, in the comparable period last year. The year-over-year increase was primarily due to higher GAAP operating income, partially offset by lower add backs of restructuring charges and inventory purchase accounting adjustments.

Adjusted EBITDA for the first quarter of 2025 was $30.9 million, or 15.9% of revenue, compared to $27.4 million, or 14.4% of revenue, for the comparable period in 2024.

Interest expense for the first quarter of 2025 was $3.3 million compared to $3.9 million in the comparable period of 2024. The year-over-year decrease was primarily due lower interest rates along with a lower debt balance.

During the first quarter of 2025, the net cash provided by operations was $0.8 million compared to net cash used in operations of $1.6 million during the first quarter of 2024. The higher net cash provided by operations during the first quarter of 2025 was primarily due to a smaller increase in contract assets, smaller increase in inventories, and higher net income, partially offset by higher accounts receivable and a smaller increase in accounts payable.

Business Segment Information

Electronic Systems

Electronic Systems segment net revenue for the quarter ended March听29, 2025 was $109.7 million, compared to $107.5 million for the first quarter of 2024. The year-over-year increase was primarily due to the following in the Company's key end-use markets:

• $12.3 million higher revenue within the Company鈥檚 military and space end-use markets due to higher rates on electronic warfare and selected missiles and radar platforms; partially offset by
• $7.0 million lower revenue in the Company鈥檚 commercial aerospace end-use markets due to lower in-flight entertainment revenues and lower rates on large aircraft platforms.

In addition, revenue for the Company鈥檚 industrial end-use markets for the first quarter of 2025 decreased $3.1 million compared to the first quarter of 2024 mainly due to the Company鈥檚 selective pruning of non-core business.

Electronic Systems segment operating income for the quarter ended March听29, 2025 was $18.1 million, or 16.5% of revenue, compared to $19.0 million, or 17.6% of revenue, for the comparable quarter in 2024. The year-over-year decrease of $0.8 million was primarily due to lower manufacturing volume and higher other manufacturing costs, partially offset by favorable product mix. Non-GAAP adjusted operating income for the first quarter of 2025 was $18.6 million, or 16.9% of revenue, compared to $19.8 million, or 18.4% of revenue, in the comparable period last year.

Structural Systems

Structural Systems segment net revenue for the quarter ended March听29, 2025 was $84.4 million, compared to $83.3 million for the first quarter of 2024. The year-over-year increase was primarily due to the following:

• $2.3 million higher revenue within the Company鈥檚 military and space end-use markets due to higher rates on selected rotary-wing aircraft platforms, partially offset by lower rates on selected fixed-wing aircraft platforms; partially offset by
• $1.3 million lower revenue within the Company鈥檚 commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and lower rates on rotary-wing aircraft platforms.

Structural Systems segment operating income for the quarter ended March听29, 2025 was $10.4 million, or 12.3% of revenue, compared to $2.9 million, or 3.4% of revenue, for the comparable quarter in 2024. The year-over-year increase of $7.5 million was primarily due to higher manufacturing volume, favorable product mix, and lower other manufacturing costs. Non-GAAP adjusted operating income for the first quarter of 2025 was $12.6 million, or 14.9% of revenue, compared to $6.5 million, or 7.8% of revenue, in the comparable period last year.

Corporate General and Administrative (鈥淐G&A鈥�) Expenses

CG&A expenses for the first quarter of 2025 were $11.9 million, or 6.1% of total Company revenue, compared to $9.2 million, or 4.8% of total Company revenue, for the comparable quarter in the prior year. The year-over-year increase in CG&A expenses was primarily due to higher compensation and benefits costs of $1.7 million and higher other corporate expenses of $0.9 million.

Conference Call

A teleconference hosted by Stephen G. Oswald, the Company鈥檚 chairman, president and chief executive officer, and Suman B. Mookerji, the Company鈥檚 senior vice president, chief financial officer will be held today, May听6, 2025 at 10:00 a.m. PT (1:00 p.m. ET) to review these financial results. To access the conference call, please pre-register using the following registration link:

Registrants will receive a confirmation with dial-in details. Mr. Oswald and Mr. Mookerji will be speaking on behalf of the Company and anticipate the call (including Q&A) to last approximately 45 minutes. A live webcast of the event can be accessed using the link above. A replay of the webcast will be available on the Ducommun website at .

Additional information regarding Ducommun's results can be found in the Q1 2025 Earnings Presentation available at .

About Ducommun Incorporated

Ducommun Incorporated delivers value-added innovative manufacturing solutions to customers in the aerospace, defense and industrial markets. Founded in 1849, the Company specializes in two core areas - Electronic Systems and Structural Systems - to produce complex products and components for commercial aircraft platforms, mission-critical military and space programs, and sophisticated industrial applications. For more information, visit .

Forward Looking Statements

This press release and any attachments include 鈥渇orward-looking statements,鈥� within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, any statements about the Company's VISION 2027 Strategy and its progress towards the goals stated therein, as well as expectations relating to the impact of tariffs on the Company's financial outlook. The Company generally uses the words 鈥渕ay,鈥� 鈥渨ill,鈥� 鈥渃ould,鈥� 鈥渆xpect,鈥� 鈥渁nticipate,鈥� 鈥渂elieve,鈥� 鈥渆stimate,鈥� 鈥減lan,鈥� 鈥渋ntend,鈥� 鈥渃ontinue鈥� and similar expressions in this press release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: whether the anticipated pre-tax restructuring charges will be sufficient to address all anticipated restructuring costs, including related to employee separation, facilities consolidation, inventory write-down and other asset impairments; whether the expected cost savings from the restructuring will ultimately be obtained in the amount and during the period anticipated; whether the restructuring in the affected areas will be sufficient to build a more cost efficient, focused, higher margin enterprise with higher returns for the Company's shareholders; the strength of the real estate market, the duration of any lease entered into as part of any sale-leaseback transaction, the amount of commissions owed to brokers, and applicable tax rates; the impact of the Company鈥檚 debt service obligations and restrictive debt covenants; the Company鈥檚 end-use markets are cyclical; the Company depends upon a selected base of industries and customers; a significant portion of the Company鈥檚 business depends upon U.S. Government defense spending; the Company is subject to extensive regulation and audit by the Defense Contract Audit Agency; contracts with some of the Company鈥檚 customers contain provisions which give the its customers a variety of rights that are unfavorable to the Company; further consolidation in the aerospace industry could adversely affect the Company鈥檚 business and financial results; the Company鈥檚 ability to successfully make acquisitions, including its ability to successfully integrate, operate or realize the projected benefits of such businesses; the possibility of labor disruptions adversely affecting our business; the Company relies on its suppliers to meet the quality and delivery expectations of its customers; the Company uses estimates when bidding on fixed-price contracts which estimates could change and result in adverse effects on its financial results; the impact of existing and future laws and regulations; the impact of existing and future accounting standards and tax rules and regulations; environmental liabilities could adversely affect the Company鈥檚 financial results; cyber security attacks, internal system or service failures may adversely impact the Company鈥檚 business and operations; the ultimate geographic spread, duration and severity of the coronavirus (COVID-19) outbreak, and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or treat its impact, and other risks and uncertainties, including those detailed from time to time in the Company鈥檚 periodic reports filed with the Securities and Exchange Commission. You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein, could cause the Company鈥檚 results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, the Company does not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this news release, May听6, 2025, or to reflect the occurrence of unanticipated events or otherwise. Readers are advised to review the Company鈥檚 filings with the Securities and Exchange Commission (which are available from the SEC鈥檚 EDGAR database at www.sec.gov).

Note Regarding Non-GAAP Financial Information

This release contains non-GAAP financial measures, including Adjusted EBITDA (which excludes interest expense, income tax expense, depreciation, amortization, stock-based compensation expense, restructuring charges, and inventory purchase accounting adjustments), including as a percentage of revenue, non-GAAP operating income, including as a percentage of net revenues, non-GAAP net income, non-GAAP earnings per share, and backlog. In addition, certain other prior period amounts have been reclassified to conform to current year鈥檚 presentation.

The Company believes the presentation of these non-GAAP measures provide important supplemental information to management and investors regarding financial and business trends relating to its financial condition and results of operations. The Company鈥檚 management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company鈥檚 actual and forecasted operating performance, capital resources and cash flow. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company discloses different non-GAAP financial measures in order to provide greater transparency and to help the Company鈥檚 investors to more meaningfully evaluate and compare Ducommun鈥檚 results to its previously reported results. The non-GAAP financial measures that the Company uses may not be comparable to similarly titled financial measures used by other companies.

The Company defines backlog as customer placed purchase orders and long-term agreements (鈥淟TAs鈥�) with firm fixed price and expected delivery dates of 24 months or less. The majority of the LTAs do not meet the definition of a contract under ASC 606 and thus, the backlog amount disclosed herein may or may not be greater than the remaining performance obligations disclosed under ASC 606. Backlog is subject to delivery delays or program cancellations, which are beyond the Company鈥檚 control. Backlog is affected by timing differences in the placement of customer orders and tends to be concentrated in some of the Company鈥檚 programs.

CONTACT:
Suman Mookerji, Senior Vice President, Chief Financial Officer, 657.335.3665

[Financial Tables Follow]

* Under ASC 606, the Company defines performance obligations as customer placed purchase orders with firm fixed price and firm delivery dates. The remaining performance obligations disclosed under ASC 606 as of March听29, 2025 were $986.0 million. The Company defines backlog as customer placed purchase orders and long-term agreements (鈥淟TAs鈥�) with firm fixed price and expected delivery dates of 24 months or less. Backlog as of March听29, 2025 was $1,053.6 million compared to $1,060.8 million as of December听31, 2024.