Ducommun Incorporated (NYSE: DCO) (“Ducommun” or the “Company”)
today reported results for its fourth quarter and year ended
December 31, 2023.
Fourth Quarter
2023 Recap
- Revenue of $192.2
million
- GAAP net income of
$5.1 million, or $0.34 per diluted share
- Adjusted net income
for the quarter of $10.4 million, or $0.70 per diluted share
- Cash flow from
operating activities of $26.5 million
“I am very happy to report that the Company
reached an all time revenue record in 2023 with the previous
high-level mark set in 2012. Q4 numbers were also very good as we
continue the top-line growth story for Ducommun, led once again by
a strong commercial aerospace market recovery,” said Stephen G.
Oswald, chairman, president and chief executive officer. “Quarterly
revenue exceeded $190 million for the second consecutive quarter
and increased to approximately $192 million, driving record full
year revenue of $757 million. Gross margins for the quarter grew
120 bps year-over-year to 21.7% and 130 bps for the full year to
21.6%, as we began realizing some of the benefits from our
strategic pricing initiatives and productivity improvements
including revenue per employee increasing 16% for the full year
2023 compared to 2022.
“Ducommun also ended the year with a solid
backlog* of approximately $994 million, with military and space
backlog being a bright spot, up $70 million to $527 million from
2022. Looking ahead to 2024, the record order bookings and the
anticipated growth in production rates at both Boeing and Airbus
should provide continued tailwind to our commercial aerospace
business. The significant growth in backlog in our military and
space business and our continued success with off-loading
initiatives should be a catalyst for growth in our defense
business. The Company had a record year in 2023 and 2024 is shaping
up to be another strong year as Ducommun also celebrates its 175th
continuous year in business since being founded in 1849.”
Fourth Quarter Results
Net revenue for the fourth quarter of 2023 was
$192.2 million, compared to $188.3 million for the fourth quarter
of 2022. The 2.1% increase year-over-year was primarily due to the
following:
- $12.1 million
higher revenue within the Company’s commercial aerospace end-use
markets due to higher build rates on large aircraft platforms and
rotary-wing aircraft platforms, partially offset by lower build
rates on other commercial aerospace platforms; partially offset
by
- $5.6 million lower
revenue within the Company’s military and space end-use markets due
to lower build rates on various missile platforms and military
fixed-wing aircraft platforms, partially offset by higher build
rates on military rotary-wing aircraft platforms and other military
and space platforms.
Net income for the fourth quarter of 2023 was
$5.1 million, or $0.34 per diluted share, compared to $8.1 million,
or $0.65 per diluted share, for the fourth quarter of 2022. The
decrease in net income year-over-year was primarily due to higher
selling, general and administrative (“SG&A”) expenses of $5.0
million, lower other income, net of $2.1 million, and higher
interest expense of $1.9 million, partially offset by higher gross
profit of $3.1 million, and lower income tax expense of $1.8
million. The higher SG&A expenses were due to BLR Aerospace
L.L.C. (“BLR”) expenses of $4.7 million (96% of the total increase
in SG&A expenses) which did not exist in the prior year period
as the acquisition of BLR was completed during Q2 2023. Adjusted
net income was $10.4 million, or $0.70 per diluted share, for the
fourth quarter of 2023, compared to $10.6 million, or $0.85 per
diluted share, for the fourth quarter of 2022.
Gross profit for the fourth quarter of 2023 was
$41.7 million, or 21.7% of revenue, compared to gross profit of
$38.6 million, or 20.5% of revenue, for the fourth quarter of 2022.
The increase in gross margin percentage year-over-year was
primarily due to favorable product mix and favorable manufacturing
volume, partially offset by higher other manufacturing costs.
Operating income for the fourth quarter of 2023
was $8.9 million, or 4.6% of revenue, compared to $9.7 million, or
5.1% of revenue, in the comparable period last year. The
year-over-year decrease was primarily due to higher SG&A
expenses, partially offset by higher gross profit, both of which
were noted above. Adjusted operating income for the fourth quarter
of 2023 was $15.9 million, or 8.3% of revenue, compared to $15.2
million, or 8.1% of revenue, in the comparable period last
year.
Interest expense for the fourth quarter of 2023
was $5.4 million compared to $3.5 million in the comparable period
of 2022. The year-over-year increase was primarily due to higher
interest rates and a higher outstanding debt balance.
Adjusted EBITDA for the fourth quarter of 2023
was $23.0 million, or 12.0% of revenue, compared to $24.5 million,
or 13.0% of revenue, for the comparable period in 2022. The
Adjusted EBITDA was impacted by the loss of manufacturing volume
and inefficiencies at our Monrovia, California and Berryville,
Arkansas performance centers as we wind down their operations.
During the fourth quarter of 2023, the net cash
provided by operations was $26.5 million compared to $32.1 million
during the fourth quarter of 2022. The lower net cash provided by
operations year-over-year was primarily due to lower accounts
payable, lower accrued and other liabilities mainly due to tax
payments made, and lower net income, partially offset by lower
inventories and lower contract assets.
* The Company defines backlog as potential
revenue and is based on customer placed purchase orders and
long-term agreements (“LTAs”) with firm fixed price and expected
delivery dates of 24 months or less. Backlog as of
December 31, 2023 was $993.6 million compared to $960.8
million as of December 31, 2022. 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 under ASC 606 as of December 31, 2023
were $963.5 million compared to $853.0 million as of
December 31, 2022.
Business Segment
Information
Electronic Systems
Electronic Systems reported net revenue for the
current quarter of $106.7 million, compared to $120.0 million for
the fourth quarter of 2022. The year-over-year decrease was
primarily due to the following:
- $10.6 million lower
revenue within the Company’s military and space end-use markets due
to lower build rates on various missile platforms and military
fixed-wing aircraft platforms; and
- $0.3 million lower
revenue within the Company’s commercial aerospace end-use
markets.
Electronic Systems operating income for the
current year fourth quarter was $9.8 million, or 9.2% of revenue,
compared to $13.0 million, or 10.8% of revenue, for the comparable
quarter in 2022. The year-over-year decrease was primarily due to
unfavorable product mix and the loss of manufacturing volume and
inefficiencies at our Berryville performance center as we wind down
their operations, partially offset by lower restructuring charges.
Adjusted operating income for the fourth quarter of 2023 was $10.9
million, or 10.2% of revenue, compared to $15.5 million, or 12.9%
of revenue, in the comparable period last year.
Structural Systems
Structural Systems reported net revenue for the
current quarter of $85.6 million, compared to $68.2 million for the
fourth quarter of 2022. The year-over-year increase was primarily
due to the following:
- $12.3 million higher revenue within the
Company’s commercial aerospace end-use markets due to higher build
rates on large aircraft platforms and regional and business
aircraft platforms, partially offset by lower build rates on other
commercial aerospace platforms; and
- $5.0 million higher revenue within the
Company’s military and space end-use markets due to higher build
rates on military rotary-wing aircraft platforms, a portion of
which was related to BLR, partially offset by lower build rates on
various missile platforms.
Structural Systems operating income for the
current-year fourth quarter was $6.6 million, or 7.7% of revenue,
compared to $4.4 million, or 6.4% of revenue, for the fourth
quarter of 2022. The year-over-year increase was primarily due to
favorable product mix and favorable manufacturing volume, partially
offset by higher other manufacturing costs. Adjusted operating
income for the fourth quarter of 2023 was $12.5 million, or 14.6%
of revenue, compared to $7.4 million, or 10.8% of revenue, in the
comparable period last year.
Corporate General and Administrative
(“CG&A”) Expense
CG&A expense for the fourth quarter of 2023
was $7.5 million, or 3.9% of total Company revenue, compared to
$7.7 million, or 4.1% of total Company revenue, in the comparable
quarter in the prior year.
Conference Call
A teleconference hosted by Stephen G. Oswald,
the Company’s chairman, president and chief executive officer, and
Suman B. Mookerji, the Company’s senior vice president, chief
financial officer will be held today, February 15, 2024, 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:
https://register.vevent.com/register/BI4ed1636063724d6f83ac25f5e5aae26d
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 Ducommun.com.
Additional information regarding Ducommun's
results can be found in the Q4 2023 Earnings Presentation available
at Ducommun.com.
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 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, any statements about the anticipated growth in
commercial aerospace build rates and expected continued success
with offloading initiatives to grow our defense business. The
Company generally uses the words “may,” “will,” “could,” “should,”
“expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend,”
“continue” 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: the
impact of the Company’s debt service obligations and restrictive
debt covenants; the cyclicality of the Company’s end-use markets;
the Company's ability to generate sufficient amounts of cash to run
the business; the Company's dependence upon a selected base of
industries and customers; a significant portion of the Company’s
business being dependent upon U.S. Government defense spending; the
Company's ability to obtain necessary export approvals and licenses
for proposed sales to foreign customers; the Company being subject
to extensive regulation and audit by the Defense Contract Audit
Agency; some of the Company’s contracts with customers containing
provisions which give the its customers a variety of rights that
are unfavorable to the Company; further consolidation in the
aerospace industry adversely affecting the Company’s business and
financial results; the Company’s ability to successfully make
acquisitions, including its ability to successfully integrate,
operate or realize the projected benefits of such businesses; the
Company's reliance on its suppliers to meet the quality and
delivery expectations of its customers; the Company's use of
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
such as the Cybersecurity Maturity Model Certification applicable
to government contracts and sub-contracts, and environmental,
social and governance requirements; the Company's ability to
attract and retain key personnel and avoid labor disruptions; the
impact of existing and future accounting standards and tax rules
and regulations; the potential for environmental liabilities and
litigation matters being resolved adversely against the Company may
negatively affect the Company’s financial results; cyber security
attacks, internal system or service failures, which may adversely
impact the Company’s business and operations; the Company's ability
to adequately protect and enforce its intellectual property rights;
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 facilitate commercial
aerospace end-use markets' recovery from those impacts, 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, February 15, 2024, 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).
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, Guaymas
fire related expenses, other fire related expenses, insurance
recoveries related to loss on operating assets, insurance
recoveries related to business interruption, inventory purchase
accounting adjustments, loss on extinguishment of debt, and other
debt refinancing costs), non-GAAP operating income and as a
percentage of net revenues, non-GAAP earnings, non-GAAP earnings
per share, and backlog. In addition, certain other prior period
amounts have been reclassified to conform to current year’s
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’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.
We define backlog as potential revenue and is
based on customer placed purchase orders and long-term agreements
(“LTAs”) 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 is greater than the remaining performance obligations
disclosed under ASC 606. Backlog is subject to delivery delays or
program cancellations, which are beyond our control. Backlog is
affected by timing differences in the placement of customer orders
and tends to be concentrated in several programs to a greater
extent than our net revenues. Backlog in industrial markets tends
to be of a shorter duration and is generally fulfilled within a
three month period. As a result of these factors, trends in our
overall level of backlog may not be indicative of trends in our
future net revenues.
CONTACT:
Suman Mookerji, Senior Vice
President, Chief Financial Officer, 657.335.3665 |
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(Unaudited)(Dollars In thousands) |
|
|
|
December 31,2023 |
|
December 31,2022 |
Assets |
|
|
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
42,863 |
|
$ |
46,246 |
Accounts receivable, net |
|
|
104,692 |
|
|
103,958 |
Contract assets |
|
|
177,686 |
|
|
191,290 |
Inventories |
|
|
199,201 |
|
|
171,211 |
Production cost of contracts |
|
|
7,778 |
|
|
5,693 |
Other current assets |
|
|
17,349 |
|
|
8,938 |
Total Current Assets |
|
|
549,569 |
|
|
527,336 |
Property and Equipment,
Net |
|
|
111,379 |
|
|
106,225 |
Operating lease right-of-use
assets |
|
|
29,513 |
|
|
34,632 |
Goodwill |
|
|
244,600 |
|
|
203,407 |
Intangibles, Net |
|
|
166,343 |
|
|
127,201 |
Deferred Income Taxes |
|
|
641 |
|
|
— |
Other Assets |
|
|
18,874 |
|
|
22,705 |
Total
Assets |
|
$ |
1,120,919 |
|
$ |
1,021,506 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable |
|
$ |
72,265 |
|
$ |
90,143 |
Contract liabilities |
|
|
53,492 |
|
|
47,068 |
Accrued and other liabilities |
|
|
42,260 |
|
|
48,820 |
Operating lease liabilities |
|
|
7,873 |
|
|
7,155 |
Current portion of long-term debt |
|
|
7,813 |
|
|
6,250 |
Total Current Liabilities |
|
|
183,703 |
|
|
199,436 |
Long-Term Debt, Less Current
Portion |
|
|
256,961 |
|
|
240,595 |
Non-Current Operating Lease
Liabilities |
|
|
22,947 |
|
|
28,841 |
Deferred Income Taxes |
|
|
4,766 |
|
|
13,953 |
Other Long-Term
Liabilities |
|
|
16,448 |
|
|
12,721 |
Total Liabilities |
|
|
484,825 |
|
|
495,546 |
Commitments and
Contingencies |
|
|
|
|
Shareholders’ Equity |
|
|
|
|
Common stock |
|
|
146 |
|
|
121 |
Additional paid-in capital |
|
|
206,197 |
|
|
112,042 |
Retained earnings |
|
|
421,980 |
|
|
406,052 |
Accumulated other comprehensive income |
|
|
7,771 |
|
|
7,745 |
Total Shareholders’ Equity |
|
|
636,094 |
|
|
525,960 |
Total Liabilities and
Shareholders’ Equity |
|
$ |
1,120,919 |
|
$ |
1,021,506 |
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOME(Quarterly Information Unaudited)(Dollars in thousands,
except per share amounts) |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
Net Revenues |
|
$ |
192,231 |
|
|
$ |
188,268 |
|
|
$ |
756,992 |
|
|
$ |
712,537 |
|
Cost of Sales |
|
|
150,535 |
|
|
|
149,675 |
|
|
|
593,805 |
|
|
|
568,240 |
|
Gross Profit |
|
|
41,696 |
|
|
|
38,593 |
|
|
|
163,187 |
|
|
|
144,297 |
|
Selling, General and
Administrative Expenses |
|
|
30,973 |
|
|
|
26,011 |
|
|
|
119,728 |
|
|
|
98,351 |
|
Restructuring Charges |
|
|
1,792 |
|
|
|
2,888 |
|
|
|
14,542 |
|
|
|
6,158 |
|
Operating Income |
|
|
8,931 |
|
|
|
9,694 |
|
|
|
28,917 |
|
|
|
39,788 |
|
Interest Expense |
|
|
(5,449 |
) |
|
|
(3,515 |
) |
|
|
(20,773 |
) |
|
|
(11,571 |
) |
Loss on Extinguishment of
Debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(295 |
) |
Other Income, Net |
|
|
290 |
|
|
|
2,400 |
|
|
|
8,235 |
|
|
|
5,400 |
|
Income Before Taxes |
|
|
3,772 |
|
|
|
8,579 |
|
|
|
16,379 |
|
|
|
33,322 |
|
Income Tax (Benefit)
Expense |
|
|
(1,338 |
) |
|
|
498 |
|
|
|
451 |
|
|
|
4,533 |
|
Net Income |
|
$ |
5,110 |
|
|
$ |
8,081 |
|
|
$ |
15,928 |
|
|
$ |
28,789 |
|
Earnings Per Share |
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.35 |
|
|
$ |
0.67 |
|
|
$ |
1.16 |
|
|
$ |
2.38 |
|
Diluted earnings per share |
|
$ |
0.34 |
|
|
$ |
0.65 |
|
|
$ |
1.14 |
|
|
$ |
2.33 |
|
Weighted-Average Number of
Common Shares Outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
14,636 |
|
|
|
12,124 |
|
|
|
13,717 |
|
|
|
12,074 |
|
Diluted |
|
|
14,890 |
|
|
|
12,423 |
|
|
|
13,972 |
|
|
|
12,366 |
|
|
|
|
|
|
|
|
|
|
Gross Profit % |
|
|
21.7 |
% |
|
|
20.5 |
% |
|
|
21.6 |
% |
|
|
20.3 |
% |
SG&A % |
|
|
16.1 |
% |
|
|
13.8 |
% |
|
|
15.8 |
% |
|
|
13.8 |
% |
Operating Income % |
|
|
4.6 |
% |
|
|
5.1 |
% |
|
|
3.8 |
% |
|
|
5.6 |
% |
Net Income % |
|
|
2.7 |
% |
|
|
4.3 |
% |
|
|
2.1 |
% |
|
|
4.0 |
% |
Effective Tax (Benefit)
Rate |
|
(35.5 |
)% |
|
|
5.8 |
% |
|
|
2.8 |
% |
|
|
13.6 |
% |
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESBUSINESS SEGMENT
PERFORMANCE(Unaudited)(Dollars in thousands) |
|
|
|
Three Months Ended |
|
Years Ended |
|
|
%Change |
|
December 31, 2023 |
|
December 31, 2022 |
|
% of Net Revenues2023 |
|
% of Net Revenues2022 |
|
%Change |
|
December 31, 2023 |
|
December 31, 2022 |
|
% of Net Revenues2023 |
|
% of Net Revenues2022 |
Net
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
(11.1 |
)% |
|
$ |
106,679 |
|
|
$ |
120,036 |
|
|
55.5 |
% |
|
63.8 |
% |
|
(2.4 |
)% |
|
$ |
430,136 |
|
|
$ |
440,638 |
|
|
56.8 |
% |
|
61.8 |
% |
Structural Systems |
|
25.4 |
% |
|
|
85,552 |
|
|
|
68,232 |
|
|
44.5 |
% |
|
36.2 |
% |
|
20.2 |
% |
|
|
326,856 |
|
|
|
271,899 |
|
|
43.2 |
% |
|
38.2 |
% |
Total Net Revenues |
|
2.1 |
% |
|
$ |
192,231 |
|
|
$ |
188,268 |
|
|
100.0 |
% |
|
100.0 |
% |
|
6.2 |
% |
|
$ |
756,992 |
|
|
$ |
712,537 |
|
|
100.0 |
% |
|
100.0 |
% |
Segment Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
$ |
9,837 |
|
|
$ |
12,974 |
|
|
9.2 |
% |
|
10.8 |
% |
|
|
|
$ |
42,086 |
|
|
$ |
49,876 |
|
|
9.8 |
% |
|
11.3 |
% |
Structural Systems |
|
|
|
|
6,587 |
|
|
|
4,386 |
|
|
7.7 |
% |
|
6.4 |
% |
|
|
|
|
23,460 |
|
|
|
17,225 |
|
|
7.2 |
% |
|
6.3 |
% |
|
|
|
|
|
16,424 |
|
|
|
17,360 |
|
|
|
|
|
|
|
|
|
65,546 |
|
|
|
67,101 |
|
|
|
|
|
Corporate General and
Administrative Expenses (1) |
|
|
|
|
(7,493 |
) |
|
|
(7,666 |
) |
|
(3.9 |
)% |
|
(4.1 |
)% |
|
|
|
|
(36,629 |
) |
|
|
(27,313 |
) |
|
(4.8 |
)% |
|
(3.8 |
)% |
Total Operating Income |
|
|
|
$ |
8,931 |
|
|
$ |
9,694 |
|
|
4.6 |
% |
|
5.1 |
% |
|
|
|
$ |
28,917 |
|
|
$ |
39,788 |
|
|
3.8 |
% |
|
5.6 |
% |
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
$ |
9,837 |
|
|
$ |
12,974 |
|
|
|
|
|
|
|
|
$ |
42,086 |
|
|
$ |
49,876 |
|
|
|
|
|
Other Income |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
222 |
|
|
|
— |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
|
3,650 |
|
|
|
3,474 |
|
|
|
|
|
|
|
|
|
14,276 |
|
|
|
13,974 |
|
|
|
|
|
Stock-Based Compensation Expense |
|
|
|
|
141 |
|
|
|
165 |
|
|
|
|
|
|
|
|
|
462 |
|
|
|
186 |
|
|
|
|
|
Restructuring Charges |
|
|
|
|
673 |
|
|
|
2,162 |
|
|
|
|
|
|
|
|
|
6,412 |
|
|
|
3,786 |
|
|
|
|
|
|
|
|
|
|
14,301 |
|
|
|
18,775 |
|
|
13.4 |
% |
|
15.6 |
% |
|
|
|
|
63,458 |
|
|
|
67,822 |
|
|
14.8 |
% |
|
15.4 |
% |
Structural Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
6,587 |
|
|
|
4,386 |
|
|
|
|
|
|
|
|
|
23,460 |
|
|
|
17,225 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
|
4,441 |
|
|
|
4,553 |
|
|
|
|
|
|
|
|
|
18,060 |
|
|
|
17,212 |
|
|
|
|
|
Stock-Based Compensation Expense |
|
|
|
|
128 |
|
|
|
89 |
|
|
|
|
|
|
|
|
|
387 |
|
|
|
163 |
|
|
|
|
|
Restructuring Charges |
|
|
|
|
1,221 |
|
|
|
726 |
|
|
|
|
|
|
|
|
|
8,334 |
|
|
|
2,900 |
|
|
|
|
|
Inventory Purchase Accounting Adjustments |
|
|
|
|
2,724 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
5,531 |
|
|
|
1,381 |
|
|
|
|
|
Guaymas Fire Related Expenses |
|
|
|
|
— |
|
|
|
1,015 |
|
|
|
|
|
|
|
|
|
3,896 |
|
|
|
4,466 |
|
|
|
|
|
Other Fire Related Expenses |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
477 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
15,101 |
|
|
|
10,769 |
|
|
17.7 |
% |
|
15.8 |
% |
|
|
|
|
60,145 |
|
|
|
43,347 |
|
|
18.4 |
% |
|
15.9 |
% |
Corporate General and Administrative Expenses (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
|
|
(7,493 |
) |
|
|
(7,666 |
) |
|
|
|
|
|
|
|
|
(36,629 |
) |
|
|
(27,313 |
) |
|
|
|
|
Depreciation and Amortization |
|
|
|
|
59 |
|
|
|
59 |
|
|
|
|
|
|
|
|
|
235 |
|
|
|
235 |
|
|
|
|
|
Stock-Based Compensation Expense |
|
|
|
|
1,007 |
|
|
|
2,586 |
|
|
|
|
|
|
|
|
|
14,196 |
|
|
|
10,395 |
|
|
|
|
|
Restructuring Charges |
|
|
|
|
23 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
109 |
|
|
|
— |
|
|
|
|
|
Other Debt Refinancing Costs |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
224 |
|
|
|
|
|
|
|
|
|
|
(6,404 |
) |
|
|
(5,021 |
) |
|
|
|
|
|
|
|
|
(22,089 |
) |
|
|
(16,459 |
) |
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
22,998 |
|
|
$ |
24,523 |
|
|
12.0 |
% |
|
13.0 |
% |
|
|
|
$ |
101,514 |
|
|
$ |
94,710 |
|
|
13.4 |
% |
|
13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
$ |
1,255 |
|
|
$ |
2,886 |
|
|
|
|
|
|
|
|
$ |
6,007 |
|
|
$ |
10,717 |
|
|
|
|
|
Structural Systems |
|
|
|
|
2,084 |
|
|
|
1,801 |
|
|
|
|
|
|
|
|
|
13,127 |
|
|
|
8,834 |
|
|
|
|
|
Corporate Administration |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Total Capital Expenditures |
|
|
|
$ |
3,339 |
|
|
$ |
4,687 |
|
|
|
|
|
|
|
|
$ |
19,134 |
|
|
$ |
19,551 |
|
|
|
|
|
|
(1) Includes costs not allocated to either the Electronic
Systems or Structural Systems operating segments.
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP OPERATING
INCOME AND AS A PERCENTAGE OF NET REVENUES
RECONCILIATION(Unaudited)(Dollars in thousands) |
|
|
|
Three Months Ended |
|
Years Ended |
GAAP To Non-GAAP
Operating Income |
|
December 31,2023 |
|
December 31,2022 |
|
%of Net Revenues2023 |
|
%of Net Revenues2022 |
|
December 31,2023 |
|
December 31,2022 |
|
%of Net Revenues2023 |
|
%of Net Revenues2022 |
GAAP Operating income |
|
$ |
8,931 |
|
|
$ |
9,694 |
|
|
|
|
|
|
$ |
28,917 |
|
|
$ |
39,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating income -
Electronic Systems |
|
$ |
9,837 |
|
|
$ |
12,974 |
|
|
|
|
|
|
$ |
42,086 |
|
|
$ |
49,876 |
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
222 |
|
|
|
— |
|
|
|
|
|
Restructuring charges |
|
|
673 |
|
|
|
2,162 |
|
|
|
|
|
|
|
6,412 |
|
|
|
3,786 |
|
|
|
|
|
Amortization of acquisition-related intangible assets |
|
|
373 |
|
|
|
373 |
|
|
|
|
|
|
|
1,493 |
|
|
|
1,493 |
|
|
|
|
|
Adjusted operating income - Electronic Systems |
|
|
10,883 |
|
|
|
15,509 |
|
|
10.2 |
% |
|
12.9 |
% |
|
|
50,213 |
|
|
|
55,155 |
|
|
11.7 |
% |
|
12.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating income -
Structural Systems |
|
|
6,587 |
|
|
|
4,386 |
|
|
|
|
|
|
|
23,460 |
|
|
|
17,225 |
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
1,221 |
|
|
|
726 |
|
|
|
|
|
|
|
8,334 |
|
|
|
2,900 |
|
|
|
|
|
Inventory purchase accounting adjustments |
|
|
2,724 |
|
|
|
— |
|
|
|
|
|
|
|
5,531 |
|
|
|
1,381 |
|
|
|
|
|
Guaymas fire related expenses |
|
|
— |
|
|
|
1,015 |
|
|
|
|
|
|
|
3,896 |
|
|
|
4,466 |
|
|
|
|
|
Other fire related expenses |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
477 |
|
|
|
— |
|
|
|
|
|
Amortization of acquisition-related intangible assets |
|
|
1,922 |
|
|
|
1,237 |
|
|
|
|
|
|
|
6,795 |
|
|
|
4,956 |
|
|
|
|
|
Adjusted operating income - Structural Systems |
|
|
12,454 |
|
|
|
7,364 |
|
|
14.6 |
% |
|
10.8 |
% |
|
|
48,493 |
|
|
|
30,928 |
|
|
14.8 |
% |
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating loss -
Corporate |
|
|
(7,493 |
) |
|
|
(7,666 |
) |
|
|
|
|
|
|
(36,629 |
) |
|
|
(27,313 |
) |
|
|
|
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
23 |
|
|
|
— |
|
|
|
|
|
|
|
109 |
|
|
|
— |
|
|
|
|
|
Other debt refinancing costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
224 |
|
|
|
|
|
Adjusted operating loss - Corporate |
|
|
(7,470 |
) |
|
|
(7,666 |
) |
|
|
|
|
|
|
(36,520 |
) |
|
|
(27,089 |
) |
|
|
|
|
Total adjustments |
|
|
6,936 |
|
|
|
5,513 |
|
|
|
|
|
|
|
33,269 |
|
|
|
19,206 |
|
|
|
|
|
Adjusted operating income |
|
$ |
15,867 |
|
|
$ |
15,207 |
|
|
8.3 |
% |
|
8.1 |
% |
|
$ |
62,186 |
|
|
$ |
58,994 |
|
|
8.2 |
% |
|
8.3 |
% |
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP EARNINGS AND
EARNINGS PER SHARE RECONCILIATION(Unaudited)(Dollars in thousands,
except per share amounts) |
|
|
|
Three Months Ended |
|
Years Ended |
GAAP To Non-GAAP
Earnings |
|
December 31,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
GAAP Net income |
|
$ |
5,110 |
|
|
$ |
8,081 |
|
|
$ |
15,928 |
|
|
$ |
28,789 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring charges (1) |
|
|
1,534 |
|
|
|
2,310 |
|
|
|
11,884 |
|
|
|
5,349 |
|
Guaymas fire related expenses (1) |
|
|
— |
|
|
|
812 |
|
|
|
3,117 |
|
|
|
3,573 |
|
Other fire related expenses (1) |
|
|
— |
|
|
|
— |
|
|
|
382 |
|
|
|
— |
|
Insurance recoveries related to loss on operating assets (1) |
|
|
(129 |
) |
|
|
— |
|
|
|
(4,579 |
) |
|
|
— |
|
Insurance recoveries related to business interruption (1) |
|
|
(103 |
) |
|
|
(1,920 |
) |
|
|
(1,831 |
) |
|
|
(4,320 |
) |
Inventory purchase accounting adjustments (1) |
|
|
2,179 |
|
|
|
— |
|
|
|
4,425 |
|
|
|
1,105 |
|
Amortization of acquisition-related intangible assets (1) |
|
|
1,836 |
|
|
|
1,288 |
|
|
|
6,630 |
|
|
|
5,159 |
|
Loss on extinguishment of debt (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
236 |
|
Other debt refinancing costs (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
179 |
|
Total adjustments |
|
|
5,317 |
|
|
|
2,490 |
|
|
|
20,028 |
|
|
|
11,281 |
|
Adjusted net income |
|
$ |
10,427 |
|
|
$ |
10,571 |
|
|
$ |
35,956 |
|
|
$ |
40,070 |
|
|
|
Three Months Ended |
|
Years Ended |
GAAP Earnings Per
Share To Non-GAAP Earnings Per Share |
|
December 31,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
GAAP Diluted Earnings Per Share (“EPS”) |
|
$ |
0.34 |
|
|
$ |
0.65 |
|
|
$ |
1.14 |
|
|
$ |
2.33 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring charges (1) |
|
|
0.11 |
|
|
|
0.19 |
|
|
|
0.85 |
|
|
|
0.43 |
|
Guaymas fire related expenses (1) |
|
|
— |
|
|
|
0.06 |
|
|
|
0.22 |
|
|
|
0.29 |
|
Other fire related expenses (1) |
|
|
— |
|
|
|
— |
|
|
|
0.03 |
|
|
|
— |
|
Insurance recoveries related to loss on operating assets (1) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.33 |
) |
|
|
— |
|
Insurance recoveries related to business interruption (1) |
|
|
(0.01 |
) |
|
|
(0.15 |
) |
|
|
(0.13 |
) |
|
|
(0.35 |
) |
Inventory purchase accounting adjustments (1) |
|
|
0.15 |
|
|
|
— |
|
|
|
0.32 |
|
|
|
0.09 |
|
Amortization of acquisition-related intangible assets (1) |
|
|
0.12 |
|
|
|
0.10 |
|
|
|
0.47 |
|
|
|
0.42 |
|
Loss on extinguishment of debt (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Other debt refinancing costs (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Total adjustments |
|
|
0.36 |
|
|
|
0.20 |
|
|
|
1.43 |
|
|
|
0.91 |
|
Adjusted Diluted EPS |
|
$ |
0.70 |
|
|
$ |
0.85 |
|
|
$ |
2.57 |
|
|
$ |
3.24 |
|
|
|
|
|
|
|
|
|
|
Shares used for adjusted diluted
EPS |
|
|
14,890 |
|
|
|
12,423 |
|
|
|
13,972 |
|
|
|
12,366 |
|
|
(1) Includes effective tax rate of 20.0% for both 2023 and 2022
adjustments.
DUCOMMUN INCORPORATED AND SUBSIDIARIESNON-GAAP BACKLOG* BY
REPORTING SEGMENT(Unaudited)(Dollars in thousands) |
|
|
|
(In thousands) |
|
|
December 31,2023 |
|
December 31,2022 |
Consolidated
Ducommun |
|
|
|
|
Military and space |
|
$ |
527,143 |
|
$ |
457,354 |
Commercial aerospace |
|
|
429,494 |
|
|
450,092 |
Industrial |
|
|
36,931 |
|
|
53,374 |
Total |
|
$ |
993,568 |
|
$ |
960,820 |
Electronic
Systems |
|
|
|
|
Military and space |
|
$ |
397,681 |
|
$ |
361,582 |
Commercial aerospace |
|
|
87,994 |
|
|
125,590 |
Industrial |
|
|
36,931 |
|
|
53,374 |
Total |
|
$ |
522,606 |
|
$ |
540,546 |
Structural
Systems |
|
|
|
|
Military and space |
|
$ |
129,462 |
|
$ |
95,772 |
Commercial aerospace |
|
|
341,500 |
|
|
324,502 |
Total |
|
$ |
470,962 |
|
$ |
420,274 |
|
* The Company defines backlog as potential
revenue and is based on customer placed purchase orders and
long-term agreements (“LTAs”) with firm fixed price and expected
delivery dates of 24 months or less. Backlog as of as of
December 31, 2023 was $993.6 million compared to $960.8
million as of December 31, 2022. 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 under ASC 606 as of December 31, 2023
were $963.5 million compared to $853.0 million as of
December 31, 2022.
Ducommun (NYSE:DCO)
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