Ducommun Incorporated (NYSE:DCO) (“Ducommun” or the “Company”)
today reported results for its fourth quarter and year ended
December 31, 2017.
Fourth Quarter 2017 Recap
- Revenue of $142.3 million
- GAAP net income of $9.5 million, or $0.82 per diluted
share
- Adjusted net income for the quarter was $4.6 million, or $0.41
per diluted share, which excludes net of tax, $12.6 million tax
benefit from adoption of Tax Cuts Jobs Act, $6.9 million
restructuring charges, and $0.9 million inventory purchase
accounting adjustment
- Adjusted EBITDA of $13.6 million
- Backlog of $726.5 million
“I am happy to report that we closed 2017 with
several major accomplishments as we move into a busy year ahead,”
said Stephen G. Oswald, the Company’s president and chief executive
officer. “Along with posting solid revenue and making progress
towards higher margins, our backlog surged to over $720 million
this quarter - marking a milestone for the Company that once again
illustrates the enduring demand for our applications, the value we
provide, and the key programs we serve.
“We took the initial steps this quarter, as
previously announced, to further streamline our operations and
improve margins, particularly within the structures business. We
have a good amount of work to do this year as well but remain on
track to reduce some $14 million of annualized cost out of the
Company starting in 2019. Overall, I am optimistic about the future
for Ducommun as we take additional measures to increase margins,
accelerate top line growth, and improve returns to our
shareholders.”
Fourth Quarter Results
Net revenue for the fourth quarter of 2017 was
$142.3 million, compared to $142.5 million for the fourth quarter
of 2016. The decrease year-over-year was primarily due to the
following:
- $1.3 million lower revenue within the Company’s military and
space end-use markets mainly due to timing of certain orders which
impacted scheduled deliveries on the Company’s fixed-wing and
helicopter platforms; partially offset by
- $0.9 million higher revenue in the Company’s commercial
aerospace end-use markets mainly due to added content with existing
customers; and
- $0.2 million higher revenue within the Company’s industrial,
medical and other (“Industrial”) end-use markets.
Net income for the fourth quarter of 2017 was
$9.5 million, or $0.82 per diluted share, compared to $2.8 million,
or $0.25 per diluted share, for the fourth quarter of 2016.
Adjusted net income for the fourth quarter 2017 was $4.6 million,
or $0.41 per adjusted diluted earnings per share, compared to $4.8
million, or $0.43 per adjusted diluted share for the fourth quarter
of 2016. The year-over-year increase in GAAP net income was
primarily due to the following:
- $17.5 million lower income tax expense mainly due to the
reduction of the U.S. corporate tax rate as a result of the Tax
Cuts and Jobs Act (“Tax Act”) enacted in December 2017 which
required the Company to remeasure its deferred tax assets and
liabilities at December 31, 2017; partially offset by
- $8.7 million (of which, $0.5 million was recorded as cost of
sales) higher restructuring charges as a result of the Company
approving and commencing a restructuring plan in November 2017 that
is expected to increase operating efficiencies;
- $1.4 million higher selling, general, and administrative
(“SG&A”) expense mainly due to higher compensation and benefit
costs and higher professional service fees; and
- $1.1 million of inventory purchase accounting adjustments in
the fourth quarter of 2017.
Gross profit for the fourth quarter of 2017 was
$25.7 million, or 18.1% of revenue, compared to gross profit of
$27.8 million, or 19.5% of revenue, for the fourth quarter of 2016.
The decrease in gross margin percentage year-over-year was
primarily due to unfavorable product mix and, as part of our
restructuring activities, $0.5 million in inventory write-offs.
Operating loss for the fourth quarter of 2017
was $(2.7) million, or (1.9)% of revenue, compared to operating
income of $9.0 million, or 6.3% of revenue, in the comparable
period last year. The year-over-year decrease in operating income
in the fourth quarter of 2017 was primarily due to higher
restructuring charges of $8.7 million, higher SG&A expenses of
$1.4 million, and higher amortization of intangible assets from the
acquisition of LDS in the fourth quarter of 2017.
Adjusted operating income for the fourth quarter
of 2017 was $7.1 million, or 5.0% of revenue, compared to adjusted
operating income of $9.1 million, or 6.4% of revenue, in the
comparable period last year.
Interest expense for the fourth quarter of 2017
was $2.7 million compared to $2.0 million in the comparable period
of 2016. The year-over-year increase was primarily due to a higher
utilization of the Company’s revolving credit facility, mainly for
the acquisition of Lightning Diversion Systems, LLC (“LDS”).
Adjusted EBITDA for the fourth quarter of 2017
was $13.6 million, or 9.6% of revenue, compared to $15.1 million,
or 10.6% of revenue, for the comparable period in 2016.
The Company’s backlog as of December 31, 2017
was $726.5 million compared to $641.3 million as of December 31,
2016, which reflects an increase of $60.3 million in Commercial
aerospace, $21.0 million in military and space, and $3.9 million in
Industrial.
Business Segment
Information
Structural Systems
Structural Systems reported net revenue for the
current quarter of $65.1 million, compared to $60.8 million for the
fourth quarter of 2016. The year-over-year increase was primarily
due to the following:
- $4.1 million higher revenue within the Company’s commercial
aerospace end-use markets mainly due to build rate increases and
added content with existing customers, which favorably impacted the
Company’s large airframe platforms; and
- $0.2 million higher revenue within the Company’s military and
space end-use markets mainly due to higher demand, which favorably
impacted the Company’s helicopter platforms.
Structural Systems segment operating loss for
the current-year fourth quarter was $(2.7) million, or (4.1)% of
revenue, compared to operating income of $3.2 million, or 5.2% of
revenue, for the fourth quarter of 2016. The year-over-year
decrease was primarily due to restructuring charges of $5.8
million.
Adjusted operating income for the fourth quarter
of 2017 was $3.1 million, or 4.8% of revenue, compared to adjusted
operating income of $3.2 million, or 5.2% of revenue, in the
comparable period last year.
Electronic Systems
Electronic Systems reported net revenue for the
current quarter of $77.2 million, compared to $81.7 million for the
fourth quarter of 2016. The year-over-year decrease was primarily
due to the following:
- $3.2 million lower revenue within the Company’s commercial
aerospace end-use markets mainly due to timing of certain orders
which impacted scheduled deliveries on certain of the Company’s
large airframe programs; and
- $1.5 million lower revenue within the Company’s military and
space end-use markets mainly due to timing of certain orders which
impacted scheduled deliveries on certain of the Company’s
fixed-wing and helicopter platforms; partially offset by
- $0.2 million higher revenue within the Company’s Industrial
end-use markets.
Electronic Systems operating income for the
current year fourth quarter of $6.8 million, or 8.8% of revenue,
compared to $9.2 million, or 11.3% of revenue, for the comparable
quarter in 2016. The year-over-year decrease was primarily due to
restructuring charges of $1.2 million and higher amortization of
intangible assets from the acquisition of LDS.
Adjusted operating income for the fourth quarter
of 2017 was $9.1 million, or 11.7% of revenue, compared to adjusted
operating income of $9.4 million, or 11.5% of revenue, in the
comparable period last year.
Corporate General and Administrative
(“CG&A”) Expense
CG&A expense for the fourth quarter of 2017
was $6.9 million, or 4.8% of total Company revenue, compared to
$3.4 million, or 2.4% of total Company revenue, in the comparable
quarter in the prior year. The increase in CG&A expense in the
current year quarter was primarily due to restructuring charges of
$1.8 million, higher professional service fees, and higher
compensation and benefit costs.
Conference Call
A teleconference hosted by Stephen G. Oswald,
the Company’s president and chief executive officer, and Douglas L.
Groves, the Company’s vice president, chief financial officer and
treasurer, will be held today, February 28, 2018 at 2:00 p.m. PT
(5:00 p.m. ET) to review these financial results. To participate in
the teleconference, please call 844-239-5278 (international
574-990-1017) approximately ten minutes prior to the conference
time. The participant passcode is 8195996. Mr. Oswald and Mr.
Groves will be speaking on behalf of the Company and anticipate the
call (including Q&A) to last approximately 45 minutes.
This call is being webcast and can be accessed
directly at the Ducommun website at www.ducommun.com. Conference
call replay will be available after that time at the same link or
by dialing 855-859-2056, passcode 8195996.
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 www.ducommun.com.
Forward Looking Statements
This press release and any attachments include
“forward-looking statements,” 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, earnings guidance, the Company’s restructuring plan and
any statements about the Company’s plans, strategies and prospects.
The Company generally uses the words “may,” “will,” “could,”
“expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” 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 impact of the
Company’s debt service obligations and restrictive debt covenants;
the Company’s end-use markets are cyclical; the Company depends
upon a selected base of industries and customers; a significant
portion of the Company’s 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’s 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’s business and financial results; the Company’s
ability to successfully make acquisitions or enter into joint
ventures, including its ability to successfully integrate, operate
or realize the projected benefits of such businesses; 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’s
financial results; cyber security attacks, internal system or
service failures may adversely impact the Company’s business and
operations; and other risks and uncertainties, including those
detailed from time to time in the Company’s 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’s 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 or to reflect the occurrence of
unanticipated events or otherwise. Readers are advised to review
the Company’s filings with the Securities and Exchange Commission
(which are available from the SEC’s EDGAR database at www.sec.gov,
at various SEC reference facilities in the United States and
through the Company’s website).
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), adjusted net income
(which excludes impact from the adoption of the Tax Cuts and Jobs
Act, restructuring charges, inventory purchase accounting
adjustments, and divestiture related adjustments), and adjusted
operating income (which excludes restructuring charges and
inventory purchase accounting adjustments).
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’s management uses these non-GAAP financial measures along
with the most directly comparable GAAP financial measures in
evaluating the Company’s 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’s investors to more
meaningfully evaluate and compare Ducommun’s 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.
CONTACTS:
Douglas L. Groves, Vice President, Chief Financial Officer and
Treasurer, 657.335.3665Chris Witty, Investor Relations,
646.438.9385, cwitty@darrowir.com
|
[Financial Tables Follow] |
|
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONSOLIDATED
BALANCE SHEETS(Unaudited)(In thousands) |
|
|
|
December 31, 2017 |
|
December 31, 2016 |
Assets |
|
|
|
|
Current Assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
2,150 |
|
|
$ |
7,432 |
|
Accounts
receivable, net |
|
74,064 |
|
|
76,239 |
|
Inventories |
|
122,161 |
|
|
119,896 |
|
Production cost of contracts |
|
11,204 |
|
|
11,340 |
|
Other
current assets |
|
11,435 |
|
|
11,034 |
|
Total
Current Assets |
|
221,014 |
|
|
225,941 |
|
Property and Equipment,
Net |
|
110,252 |
|
|
101,590 |
|
Goodwill |
|
117,435 |
|
|
82,554 |
|
Intangibles, Net |
|
114,693 |
|
|
101,573 |
|
Non-Current Deferred
Income Taxes |
|
261 |
|
|
286 |
|
Other Assets |
|
3,098 |
|
|
3,485 |
|
Total
Assets |
|
$ |
566,753 |
|
|
$ |
515,429 |
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
Current
Liabilities |
|
|
|
|
Current
portion of long-term debt |
|
$ |
— |
|
|
$ |
3 |
|
Accounts
payable |
|
51,907 |
|
|
57,024 |
|
Accrued
liabilities |
|
28,329 |
|
|
29,279 |
|
Total
Current Liabilities |
|
80,236 |
|
|
86,306 |
|
Long-Term Debt, Less
Current Portion |
|
216,055 |
|
|
166,896 |
|
Non-Current Deferred
Income Taxes |
|
15,981 |
|
|
31,417 |
|
Other Long-Term
Liabilities |
|
18,898 |
|
|
18,707 |
|
Total
Liabilities |
|
331,170 |
|
|
303,326 |
|
Commitments and
Contingencies |
|
|
|
|
Shareholders’
Equity |
|
|
|
|
Common
stock |
|
113 |
|
|
112 |
|
Additional paid-in capital |
|
80,223 |
|
|
76,783 |
|
Retained
earnings |
|
161,364 |
|
|
141,287 |
|
Accumulated other comprehensive loss |
|
(6,117 |
) |
|
(6,079 |
) |
Total
Shareholders’ Equity |
|
235,583 |
|
|
212,103 |
|
Total
Liabilities and Shareholders’ Equity |
|
$ |
566,753 |
|
|
$ |
515,429 |
|
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF OPERATIONS(Quarterly Information Unaudited)(In
thousands, except per share amounts) |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
Net Revenues |
|
$ |
142,258 |
|
|
$ |
142,486 |
|
|
$ |
558,183 |
|
|
$ |
550,642 |
|
Cost of Sales |
|
116,565 |
|
|
114,700 |
|
|
455,363 |
|
|
444,449 |
|
Gross Profit |
|
25,693 |
|
|
27,786 |
|
|
102,820 |
|
|
106,193 |
|
Selling, General and
Administrative Expenses |
|
20,074 |
|
|
18,647 |
|
|
79,435 |
|
|
77,443 |
|
Restructuring
Charges |
|
8,360 |
|
|
182 |
|
|
8,360 |
|
|
182 |
|
Operating (Loss)
Income |
|
(2,741 |
) |
|
8,957 |
|
|
15,025 |
|
|
28,568 |
|
Interest Expense |
|
(2,673 |
) |
|
(1,995 |
) |
|
(8,261 |
) |
|
(8,274 |
) |
(Loss) Gain on
Divestitures, Net |
|
— |
|
|
(1,211 |
) |
|
— |
|
|
17,604 |
|
Other Income, Net |
|
357 |
|
|
74 |
|
|
845 |
|
|
215 |
|
(Loss) Income Before
Taxes |
|
(5,057 |
) |
|
5,825 |
|
|
7,609 |
|
|
38,113 |
|
Income Tax (Benefit)
Expense |
|
(14,541 |
) |
|
2,989 |
|
|
(12,468 |
) |
|
12,852 |
|
Net Income |
|
$ |
9,484 |
|
|
$ |
2,836 |
|
|
$ |
20,077 |
|
|
$ |
25,261 |
|
Earnings Per Share |
|
|
|
|
|
|
|
|
Basic
earnings per share |
|
$ |
0.84 |
|
|
$ |
0.25 |
|
|
$ |
1.78 |
|
|
$ |
2.27 |
|
Diluted
earnings per share |
|
$ |
0.82 |
|
|
$ |
0.25 |
|
|
$ |
1.74 |
|
|
$ |
2.24 |
|
Weighted-Average Number
of Common Shares Outstanding |
|
|
|
|
|
|
|
|
Basic |
|
11,246 |
|
|
11,182 |
|
|
11,290 |
|
|
11,151 |
|
Diluted |
|
11,504 |
|
|
11,383 |
|
|
11,558 |
|
|
11,299 |
|
|
|
|
|
|
|
|
|
|
Gross Profit % |
|
18.1 |
% |
|
19.5 |
% |
|
18.4 |
% |
|
19.3 |
% |
SG&A % |
|
14.1 |
% |
|
13.1 |
% |
|
14.2 |
% |
|
14.1 |
% |
Operating (Loss) Income
% |
|
(1.9 |
)% |
|
6.3 |
% |
|
2.7 |
% |
|
5.2 |
% |
Net Income % |
|
6.7 |
% |
|
2.0 |
% |
|
3.6 |
% |
|
4.6 |
% |
Effective Tax (Benefit)
Rate |
|
(287.5 |
)% |
|
51.3 |
% |
|
(163.8 |
)% |
|
33.7 |
% |
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESBUSINESS SEGMENT
PERFORMANCE(Unaudited) (In thousands) |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
%Change |
|
December 31, 2017 |
|
December 31, 2016 |
|
%of Net Revenues2017 |
|
%of Net Revenues2016 |
|
% Change |
|
December 31, 2017 |
|
December 31, 2016 |
|
% of Net Revenues 2017 |
|
% of Net Revenues 2016 |
Net
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Systems |
|
7.0 |
% |
|
$ |
65,088 |
|
|
$ |
60,823 |
|
|
45.8 |
% |
|
42.7 |
% |
|
(2.0 |
)% |
|
$ |
241,460 |
|
|
$ |
246,465 |
|
|
43.3 |
% |
|
44.8 |
% |
Electronic Systems |
|
(5.5 |
)% |
|
77,170 |
|
|
81,663 |
|
|
54.2 |
% |
|
57.3 |
% |
|
4.1 |
% |
|
316,723 |
|
|
304,177 |
|
|
56.7 |
% |
|
55.2 |
% |
Total Net
Revenues |
|
(0.2 |
)% |
|
$ |
142,258 |
|
|
$ |
142,486 |
|
|
100.0 |
% |
|
100.0 |
% |
|
1.4 |
% |
|
$ |
558,183 |
|
|
$ |
550,642 |
|
|
100.0 |
% |
|
100.0 |
% |
Segment
Operating (Loss) Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Systems |
|
|
|
$ |
(2,670 |
) |
|
$ |
3,150 |
|
|
(4.1 |
)% |
|
5.2 |
% |
|
|
|
$ |
5,477 |
|
|
$ |
16,497 |
|
|
2.3 |
% |
|
6.7 |
% |
Electronic Systems |
|
|
|
6,782 |
|
|
9,214 |
|
|
8.8 |
% |
|
11.3 |
% |
|
|
|
30,940 |
|
|
28,983 |
|
|
9.8 |
% |
|
9.5 |
% |
|
|
|
|
4,112 |
|
|
12,364 |
|
|
|
|
|
|
|
|
36,417 |
|
|
45,480 |
|
|
|
|
|
Corporate
General and Administrative Expenses (1) |
|
|
|
(6,853 |
) |
|
(3,407 |
) |
|
(4.8 |
)% |
|
(2.4 |
)% |
|
|
|
(21,392 |
) |
|
(16,912 |
) |
|
(3.8 |
)% |
|
(3.1 |
)% |
Total
Operating (Loss) Income |
|
|
|
$ |
(2,741 |
) |
|
$ |
8,957 |
|
|
(1.9 |
)% |
|
6.3 |
% |
|
|
|
$ |
15,025 |
|
|
$ |
28,568 |
|
|
2.7 |
% |
|
5.2 |
% |
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(Loss) Income |
|
|
|
$ |
(2,670 |
) |
|
$ |
3,150 |
|
|
|
|
|
|
|
|
$ |
5,477 |
|
|
$ |
16,497 |
|
|
|
|
|
Other
Income |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
200 |
|
|
141 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
1,981 |
|
|
2,005 |
|
|
|
|
|
|
|
|
8,860 |
|
|
8,688 |
|
|
|
|
|
Restructuring Charges |
|
|
|
5,802 |
|
|
— |
|
|
|
|
|
|
|
|
5,866 |
|
|
— |
|
|
|
|
|
|
|
|
|
5,113 |
|
|
5,155 |
|
|
7.9 |
% |
|
8.5 |
% |
|
|
|
20,403 |
|
|
25,326 |
|
|
8.4 |
% |
|
10.3 |
% |
Electronic Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
6,782 |
|
|
9,214 |
|
|
|
|
|
|
|
|
30,940 |
|
|
28,983 |
|
|
|
|
|
Other
Income |
|
|
|
357 |
|
|
— |
|
|
|
|
|
|
|
|
645 |
|
|
— |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
3,681 |
|
|
3,426 |
|
|
|
|
|
|
|
|
13,888 |
|
|
14,087 |
|
|
|
|
|
Restructuring Charges |
|
|
|
1,190 |
|
|
182 |
|
|
|
|
|
|
|
|
1,190 |
|
|
182 |
|
|
|
|
|
Inventory
Purchase Accounting Adjustments |
|
|
|
1,111 |
|
|
— |
|
|
|
|
|
|
|
|
1,235 |
|
|
— |
|
|
|
|
|
|
|
|
|
13,121 |
|
|
12,822 |
|
|
17.0 |
% |
|
15.7 |
% |
|
|
|
47,898 |
|
|
43,252 |
|
|
15.1 |
% |
|
14.2 |
% |
Corporate
General and Administrative Expenses (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss |
|
|
|
(6,853 |
) |
|
(3,407 |
) |
|
|
|
|
|
|
|
(21,392 |
) |
|
(16,912 |
) |
|
|
|
|
Other
Income |
|
|
|
— |
|
|
74 |
|
|
|
|
|
|
|
|
— |
|
|
74 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
34 |
|
|
9 |
|
|
|
|
|
|
|
|
97 |
|
|
85 |
|
|
|
|
|
Stock-Based Compensation Expense |
|
|
|
411 |
|
|
428 |
|
|
|
|
|
|
|
|
4,675 |
|
|
3,007 |
|
|
|
|
|
Restructuring Charges |
|
|
|
1,782 |
|
|
— |
|
|
|
|
|
|
|
|
1,782 |
|
|
— |
|
|
|
|
|
|
|
|
|
(4,626 |
) |
|
(2,896 |
) |
|
|
|
|
|
|
|
(14,838 |
) |
|
(13,746 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
$ |
13,608 |
|
|
$ |
15,081 |
|
|
9.6 |
% |
|
10.6 |
% |
|
|
|
$ |
53,463 |
|
|
$ |
54,832 |
|
|
9.6 |
% |
|
10.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Systems |
|
|
|
$ |
3,462 |
|
|
$ |
5,512 |
|
|
|
|
|
|
|
|
$ |
20,679 |
|
|
$ |
15,661 |
|
|
|
|
|
Electronic Systems |
|
|
|
763 |
|
|
1,331 |
|
|
|
|
|
|
|
|
5,019 |
|
|
3,032 |
|
|
|
|
|
Corporate
Administration |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
775 |
|
|
— |
|
|
|
|
|
Total
Capital Expenditures |
|
|
|
$ |
4,225 |
|
|
$ |
6,843 |
|
|
|
|
|
|
|
|
$ |
26,473 |
|
|
$ |
18,693 |
|
|
|
|
|
(1) Includes costs not allocated to either
the Structural Systems or Electronic Systems operating
segments.
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP
EARNINGS AND EARNINGS PER SHARE RECONCILIATION(Unaudited)(In
thousands, except per share amounts) |
|
|
|
Three Months Ended |
|
Years Ended |
GAAP To
Non-GAAP Earnings |
|
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
GAAP Net income |
|
$ |
9,484 |
|
|
$ |
2,836 |
|
|
$ |
20,077 |
|
|
$ |
25,261 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Tax Cuts
Jobs Act (1) |
|
(12,590 |
) |
|
— |
|
|
(12,590 |
) |
|
— |
|
Restructuring charges (2) |
|
6,879 |
|
|
— |
|
|
6,929 |
|
|
— |
|
Inventory
purchase accounting adjustments (2) |
|
871 |
|
|
— |
|
|
968 |
|
|
— |
|
Divestiture of Miltec operation net working capital adjustment
(3) |
|
— |
|
|
1,211 |
|
|
— |
|
|
1,211 |
|
Divestiture of Miltec operation tax basis adjustment (4) |
|
— |
|
|
795 |
|
|
— |
|
|
795 |
|
Gain on
divestitures, net (4) |
|
— |
|
|
— |
|
|
— |
|
|
(13,625 |
) |
Total
adjustments |
|
(4,840 |
) |
|
2,006 |
|
|
(4,693 |
) |
|
(11,619 |
) |
Adjusted net
income |
|
$ |
4,644 |
|
|
$ |
4,842 |
|
|
$ |
15,384 |
|
|
$ |
13,642 |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
GAAP Earnings
Per Share To Non-GAAP Earnings Per Share |
|
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
GAAP Diluted Earnings
Per Share (“EPS”) |
|
$ |
0.82 |
|
|
$ |
0.25 |
|
|
$ |
1.74 |
|
|
$ |
2.24 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Tax Cuts
Jobs Act (1) |
|
(1.09 |
) |
|
— |
|
|
(1.09 |
) |
|
— |
|
Restructuring charges (2) |
|
0.60 |
|
|
— |
|
|
0.60 |
|
|
— |
|
Inventory
purchase accounting adjustments (2) |
|
0.08 |
|
|
— |
|
|
0.08 |
|
|
— |
|
Divestiture of Miltec operation net working capital adjustment
(3) |
|
— |
|
|
0.11 |
|
|
— |
|
|
0.11 |
|
Divestiture of Miltec operation tax basis adjustment (4) |
|
— |
|
|
0.07 |
|
|
— |
|
|
0.07 |
|
Gain on
divestitures, net (4) |
|
— |
|
|
— |
|
|
— |
|
|
(1.21 |
) |
Total
adjustments |
|
(0.41 |
) |
|
0.18 |
|
|
(0.41 |
) |
|
(1.03 |
) |
Adjusted Diluted
EPS |
|
$ |
0.41 |
|
|
$ |
0.43 |
|
|
$ |
1.33 |
|
|
$ |
1.21 |
|
|
|
|
|
|
|
|
|
|
Shares used for
adjusted diluted EPS |
|
11,504 |
|
|
11,383 |
|
|
11,558 |
|
|
11,299 |
|
(1) Net impact of Tax Cuts Jobs Act and $0.5
million in 2016 state income tax adjustments.
(2) Includes effective tax rate of 21.6% for 2017
adjustments.
(3) Net working capital adjustment did not have an
impact on our effective tax rate and thus, no effective tax rate
was applied to this item.
(4) Includes effective tax rate of 22.6% for 2016
adjustments.
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP
OPERATING INCOME AND AS A PERCENTAGE OF NET REVENUES
RECONCILIATION(Unaudited)(In thousands) |
|
|
|
Three Months Ended |
|
Years Ended |
GAAP To
Non-GAAP Operating Income |
|
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
GAAP Operating (loss)
income |
|
$ |
(2,741 |
) |
|
$ |
8,957 |
|
|
$ |
15,025 |
|
|
$ |
28,568 |
|
GAAP Operating (loss)
income - Structural Systems |
|
$ |
(2,670 |
) |
|
$ |
3,150 |
|
|
$ |
5,477 |
|
|
$ |
16,497 |
|
Adjustment: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
5,802 |
|
|
— |
|
|
5,866 |
|
|
— |
|
Adjusted
operating income - Structural Systems |
|
3,132 |
|
|
3,150 |
|
|
11,343 |
|
|
16,497 |
|
GAAP Operating income -
Electronic Systems |
|
6,782 |
|
|
9,214 |
|
|
30,940 |
|
|
28,983 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
1,190 |
|
|
182 |
|
|
1,190 |
|
|
182 |
|
Inventory
purchase accounting adjustments |
|
1,111 |
|
|
— |
|
|
1,235 |
|
|
— |
|
Adjusted
operating income - Electronic Systems |
|
9,083 |
|
|
9,396 |
|
|
33,365 |
|
|
29,165 |
|
GAAP Operating loss -
Corporate |
|
(6,853 |
) |
|
(3,407 |
) |
|
(21,392 |
) |
|
(16,912 |
) |
Adjustment: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
1,782 |
|
|
— |
|
|
1,782 |
|
|
— |
|
Adjusted
operating income - Corporate |
|
(5,071 |
) |
|
(3,407 |
) |
|
(19,610 |
) |
|
(16,912 |
) |
Total adjustments |
|
$ |
9,885 |
|
|
$ |
182 |
|
|
$ |
10,073 |
|
|
$ |
182 |
|
Adjusted operating
income |
|
$ |
7,144 |
|
|
$ |
9,139 |
|
|
$ |
25,098 |
|
|
$ |
28,750 |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
GAAP To
Non-GAAP Operating Income As A Percentage of Net
Revenues |
|
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
GAAP Operating (loss)
income as a % of net revenues |
|
(1.9 |
)% |
|
6.3 |
% |
|
2.7 |
% |
|
5.2 |
% |
GAAP Operating (loss)
income - Structural Systems |
|
(4.1 |
)% |
|
5.2 |
% |
|
2.3 |
% |
|
6.7 |
% |
Adjustment: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
8.9 |
% |
|
— |
% |
|
2.4 |
% |
|
— |
% |
Adjusted
operating income - Structural Systems |
|
4.8 |
% |
|
5.2 |
% |
|
4.7 |
% |
|
6.7 |
% |
GAAP Operating income -
Electronic Systems |
|
8.8 |
% |
|
11.3 |
% |
|
9.8 |
% |
|
9.5 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
1.5 |
% |
|
0.2 |
% |
|
0.4 |
% |
|
0.1 |
% |
Inventory
purchase accounting adjustments |
|
1.4 |
% |
|
— |
% |
|
0.4 |
% |
|
— |
% |
Adjusted
operating income - Electronic Systems |
|
11.7 |
% |
|
11.5 |
% |
|
10.6 |
% |
|
9.6 |
% |
GAAP Operating loss -
Corporate |
|
(4.8 |
)% |
|
(2.4 |
)% |
|
(3.8 |
)% |
|
(3.1 |
)% |
Adjustment: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
1.3 |
% |
|
— |
% |
|
0.3 |
% |
|
— |
% |
Adjusted
operating income - Corporate |
|
(3.5 |
)% |
|
(2.4 |
)% |
|
(3.5 |
)% |
|
(3.1 |
)% |
Total adjustments |
|
6.9 |
% |
|
0.1 |
% |
|
1.8 |
% |
|
— |
% |
Adjusted operating
income as a % of net revenues |
|
5.0 |
% |
|
6.4 |
% |
|
4.5 |
% |
|
5.2 |
% |
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESBACKLOG BY
REPORTING SEGMENT(Unaudited)(In thousands) |
|
|
|
(In thousands)December 31, |
|
|
2017 |
|
2016 |
Consolidated
Ducommun |
|
|
|
|
Military and space |
|
|
|
|
Defense
electronics |
|
$ |
216,508 |
|
|
$ |
197,577 |
|
Defense
structures |
|
60,921 |
|
|
58,877 |
|
Commercial
aerospace |
|
417,981 |
|
|
357,668 |
|
Industrial |
|
31,068 |
|
|
27,130 |
|
Total |
|
$ |
726,478 |
|
|
$ |
641,252 |
|
Structural
Systems |
|
|
|
|
Military and space
(defense structures) |
|
$ |
60,921 |
|
|
$ |
58,877 |
|
Commercial
aerospace |
|
361,586 |
|
|
319,518 |
|
Total |
|
$ |
422,507 |
|
|
$ |
378,395 |
|
Electronic
Systems |
|
|
|
|
Military and space
(defense electronics) |
|
$ |
216,508 |
|
|
$ |
197,577 |
|
Commercial
aerospace |
|
56,395 |
|
|
38,150 |
|
Industrial |
|
31,068 |
|
|
27,130 |
|
Total |
|
$ |
303,971 |
|
|
$ |
262,857 |
|
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