GuruFocus -
- Revenue: $201.4 million, up 2.6% year-over-year from $196.3 million.
- Gross Margin: 26.2%, up from 22.7% year-over-year.
- Adjusted Gross Margin: 26.5%, compared to 24.1% in Q3 2023.
- Operating Income: $15.3 million, 7.6% of revenue, compared to $8.6 million, 4.4% of revenue in the prior year.
- Adjusted Operating Income: $21.1 million, 10.5% of revenue, compared to $17.5 million, 8.9% of revenue in Q3 2023.
- Net Income: $10.1 million, $0.67 per diluted share, compared to $3.2 million, $0.22 per diluted share a year ago.
- Adjusted Net Income: $14.8 million, $0.99 per diluted share, compared to $10.3 million, $0.70 in Q3 2023.
- EBITDA: $31.9 million, 15.8% margin, up 90 basis points year-over-year.
- Backlog: $1.044 billion, up $85 million year-over-year.
- Military and Space Revenue: $111 million, up from $105 million in Q3 2023.
- Commercial Aerospace Revenue: $85 million, up 3% year-over-year.
- Cash Flow from Operating Activities: $15.8 million year-to-date, compared to $4.6 million year-to-date in Q3 2023.
- Interest Expense: $3.8 million, down from $5.4 million in Q3 2023.
- Available Liquidity: $218.3 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ducommun Inc (NYSE:DCO) achieved record revenue for the second consecutive quarter, exceeding $200 million for the first time.
- The company reported strong growth in military and space revenues, driven by radar, electronic warfare, and missile programs.
- Gross margins improved significantly to 26.2%, up from 22.7% year-over-year, due to strategic pricing initiatives and productivity improvements.
- Ducommun Inc (NYSE:DCO) successfully closed its Monrovia, California facility and reduced operations in Berryville, Arkansas, leading to cost savings.
- The company's backlog remains strong at $1.044 billion, with a notable increase in defense backlog by $97 million year-over-year.
- Revenue guidance for 2024 has been adjusted to the lower end of the expected range due to the Boeing (NYSE:BA) strike and program movements.
- The commercial aerospace backlog decreased sequentially by $20 million, indicating some temporary weakness in the market.
- Boeing platform revenues were down over 40% year-over-year, impacted by lower build rates and the September strike.
- The company faces risks related to supply chain issues, rising interest rates, and geopolitical developments.
- Ducommun Inc (NYSE:DCO) is experiencing delays in the transfer of certain programs, impacting short-term revenue expectations.
A: Stephen Oswald, CEO, explained that Ducommun is involved in airborne surveillance electronics and power packs for Northrop Grumman's MESA program, which is a significant order. They are the sole source for this program and are looking to expand their partnership with Northrop Grumman.
Q: Regarding the 787, what is the current content value per aircraft, and how will it change with the new share shift?
A: Stephen Oswald mentioned that the increase in content value will be in double digits, but specific details will be shared in the next call. This increase is a result of winning a share shift from a competitor.
Q: Are there any standout or challenging companies among the acquired engineered products and aftermarket businesses?
A: Suman Mookerji, CFO, stated that there isn't a specific company to highlight as all have performed well across the engineered product portfolio.
Q: How much more work can Ducommun take on without needing to increase CapEx?
A: Suman Mookerji noted that the structures business has significant capacity, and they do not foresee significant investments in the near term. The electronic side may require minor expansions, but these are not capital-intensive. CapEx is expected to remain around $20 million annually.
Q: Can you describe the M&A pipeline and current environment?
A: Suman Mookerji indicated that there is continuous activity in M&A, with many opportunities being evaluated. They are selective in their acquisitions to ensure the right fit and expect ongoing M&A activity in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.