Ducommun Incorporated (NYSE:DCO) (“Ducommun” or the “Company”)
today reported results for its second quarter ended June 29,
2019.
Second Quarter 2019
Highlights
- Revenue increased 16.6% year-over-year to $180.5 million
- Net income of $7.8 million, or $0.66 per diluted share
- Gross margin increased 40 basis points year-over-year to
21.1%
- Operating margin increased 390 basis points year-over-year to
7.5%
- Adjusted EBITDA increased 19.7% year-over-year to $22.4
million
“The second quarter of 2019 continued to show
the strength of our product lines, solid demand for the key
programs and customers we serve along with operational
improvements,” said Stephen G. Oswald, chairman, president and
chief executive officer. “Even with the ongoing market challenges
related to the Boeing 737 MAX program, our revenue grew an
impressive 16.6% year-over-year, to $180.5 million. This result was
due to an increase in build rates in both commercial and military
platforms across our wide and varied customer base along with
additional content. At the same time, we posted an increase in
operating income on an adjusted basis, of 23.7%, resulting in an
operating margin of 7.5%.
“We were also delighted with the announcement
last week of our newly signed strategic supplier agreement with
Raytheon Missile Systems ('RMS'). Being the first supplier to be
selected by RMS for this initiative is a great first step forward
for a stronger relationship and higher revenue opportunities for
Ducommun in the future. It will allow us to collaborate and compete
on every platform, either new or existing. We appreciated as well
the recognition of our Monrovia, California performance center
being selected in July as a 2019 Raytheon Supplier Excellence
PREMIER Award winner.
“The Company also announced at the Paris Air
Show that we were on track with our $200 million contract to supply
Middle River Aerostructure Systems with LEAP engine nacelle
components for the Airbus A320 platform utilizing Ducommun’s
VersaCore CompositeTM technology. This was a very important
milestone as we take advantage of our proprietary technologies to
drive growth in 2020 and subsequent years.
“All in all, the Company remains in very good
shape heading into the second half of 2019 with strong momentum in
both revenue and earnings.”
Second Quarter Results
Net revenue for the second quarter of 2019 was
$180.5 million compared to $154.8 million for the second quarter of
2018. The year-over-year increase of 16.6% was due to the
following:
- $20.1 million higher revenue in the Company’s commercial
aerospace end-use markets due to additional content and higher
build rates on large aircraft platforms; and
- $6.9 million higher revenue in the Company’s military and space
end-use markets due to higher build rates on other military and
space platforms; partially offset by
- $1.3 million lower revenue in the Company’s industrial end-use
markets.
Net income for the second quarter of 2019 was
$7.8 million, or $0.66 per diluted share, compared to $1.6 million,
or $0.14 per diluted share, for the second quarter of 2018. This
reflects a $6.0 million increase in gross profit due to higher
revenue and improved operating performance. Restructuring charges
were lower year-over-year by $5.4 million, partially offset by $3.3
million of higher selling, general and administrative expenses, and
higher income taxes of $1.1 million.
Gross profit for the second quarter of 2019 was
$38.1 million, or 21.1% of revenue compared to gross profit of
$32.0 million, or 20.7% of revenue, for the second quarter of 2018.
The increase in gross margin year-over-year was due to favorable
manufacturing volume, favorable product mix, and manufacturing
efficiencies, partially offset by higher other manufacturing
costs.
Operating income for the second quarter of 2019
was $13.6 million, or 7.5% of revenue, compared to $5.6 million, or
3.6% of revenue, in the comparable period last year. The
year-over-year increase of $8.0 million was due to higher revenue,
improved operating performance, and lower restructuring charges in
the current year.
Interest expense for the second quarter of 2019
was $4.4 million compared to $3.8 million in the comparable period
of 2018. The year-over-year increase was due to a higher
outstanding balance on the revolving credit facility reflecting the
acquisition of Certified Thermoplastics Co., LLC in April 2018 and
higher interest rates.
Adjusted EBITDA for the second quarter of 2019
was $22.4 million, or 12.4% of revenue, compared to $18.7 million,
or 12.1% of revenue, for the comparable period in 2018, an increase
of 19.7%.
During the second quarter of 2019, the net cash
provided by operations was $9.8 million compared to $15.9 million
during the second quarter of 2018. The change year-over-year was
due to the increase in contract assets and increase in accounts
receivable as a result of the increase in net revenue, partially
offset by higher net income and increase in accrued and other
liabilities.
Business Segment
Information
Electronic Systems
Electronic Systems segment net revenue for the
quarter ended June 29, 2019 was $89.3 million, compared to
$84.5 million for the second quarter of 2018. The year-over-year
increase was due to the following:
- $5.9 million higher revenue within the Company’s military and
space end-use markets due to higher build rates on other military
and space platforms; and
- $0.2 million higher revenue within the Company’s commercial
aerospace end-use markets; partially offset by
- $1.3 million lower revenue within the Company's industrial
end-use markets.
Electronic Systems segment operating income was
$9.9 million, or 11.1% of revenue, for the second quarter of 2019
compared to $8.7 million, or 10.3% of revenue, for the comparable
quarter in 2018. The year-over-year increase of $1.2 million was
due to favorable product mix and improved manufacturing
efficiencies.
Structural Systems
Structural Systems segment net revenue for the
quarter ended June 29, 2019 was $91.2 million, compared to
$70.3 million for the second quarter of 2018. The year-over-year
increase was due to the following:
- $20.0 million higher revenue within the Company’s commercial
aerospace end-use markets due to additional content and higher
build rates on large aircraft platforms; and
- $1.0 million higher revenue within the Company’s military and
space end-use markets due to higher build rates on military
rotary-wing aircraft platforms.
Structural Systems segment operating income for
the quarter ended June 29, 2019 was $11.8 million, or 12.9% of
revenue, compared to $5.0 million, or 7.1% of revenue, for the
second quarter of 2018. The year-over-year increase of $6.7 million
was due to favorable manufacturing volume, improved manufacturing
efficiencies, and lower restructuring charges in the current
year.
Corporate General and Administrative
(“CG&A”) Expenses
CG&A expenses for the second quarter of 2019
were $8.1 million, or 4.5% of total Company revenue, compared to
$8.1 million, or 5.2% of total Company revenue, for the comparable
quarter in the prior year. The year-over-year decrease of less than
$0.1 million was due to lower restructuring charges in the current
year of $1.1 million and lower professional services fees of $1.0
million, partially offset by one-time severance charges of $1.7
million.
Conference Call
A teleconference hosted by Stephen G. Oswald,
the Company’s chairman, president, and chief executive officer, and
Christopher D. Wampler, the Company’s vice president, interim chief
financial officer and treasurer, and controller and chief
accounting officer will be held today, August 5, 2019 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 8785215. Mr. Oswald
and Mr. Wampler 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 8785215.
About Ducommun Incorporated
Ducommun Incorporated delivers value-added
innovative manufacturing solutions to customers in the aerospace,
defense and industrial markets. As the successor to a business that
was 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, 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, August 5, 2019, 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 [benefit], depreciation, amortization,
stock-based compensation expense, 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. 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.
CONTACTS:
Christopher D. Wampler, Vice
President, Interim Chief Financial Officer and Treasurer, and
Controller and Chief Accounting Officer, 657.335.3665 |
Chris Witty, Investor Relations,
646.438.9385, cwitty@darrowir.com |
[Financial Tables Follow]
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited)(Dollars in thousands)
|
|
June 29, 2019 |
|
December 31, 2018 |
Assets |
|
|
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
3,287 |
|
|
$ |
10,263 |
|
Restricted cash |
|
757 |
|
|
— |
|
Accounts receivable, net |
|
69,355 |
|
|
67,819 |
|
Contract assets |
|
100,527 |
|
|
86,665 |
|
Inventories |
|
109,327 |
|
|
101,125 |
|
Production cost of contracts |
|
11,298 |
|
|
11,679 |
|
Other current assets |
|
5,929 |
|
|
6,531 |
|
Total Current Assets |
|
300,480 |
|
|
284,082 |
|
Property and equipment, Net |
|
111,373 |
|
|
107,045 |
|
Operating lease right-of-use
assets |
|
19,148 |
|
|
— |
|
Goodwill |
|
136,057 |
|
|
136,057 |
|
Intangibles, net |
|
106,710 |
|
|
112,092 |
|
Non-current deferred income
taxes |
|
313 |
|
|
308 |
|
Other assets |
|
5,514 |
|
|
5,155 |
|
Total
Assets |
|
$ |
679,595 |
|
|
$ |
644,739 |
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable |
|
$ |
79,279 |
|
|
$ |
69,274 |
|
Contract liabilities |
|
13,183 |
|
|
17,145 |
|
Accrued and other liabilities |
|
33,349 |
|
|
37,786 |
|
Operating lease liabilities |
|
2,858 |
|
|
— |
|
Current portion of long-term debt |
|
2,281 |
|
|
2,330 |
|
Total Current Liabilities |
|
130,950 |
|
|
126,535 |
|
Long-term debt |
|
225,605 |
|
|
228,868 |
|
Non-current operating lease
liabilities |
|
17,911 |
|
|
— |
|
Non-current deferred income
taxes |
|
18,175 |
|
|
18,070 |
|
Other long-term liabilities |
|
14,724 |
|
|
14,441 |
|
Total Liabilities |
|
407,365 |
|
|
387,914 |
|
Commitments and
contingencies |
|
|
|
|
Shareholders’ Equity |
|
|
|
|
Common stock |
|
115 |
|
|
114 |
|
Additional paid-in capital |
|
83,844 |
|
|
83,712 |
|
Retained earnings |
|
195,379 |
|
|
180,356 |
|
Accumulated other comprehensive loss |
|
(7,108 |
) |
|
(7,357 |
) |
Total Shareholders’ Equity |
|
272,230 |
|
|
256,825 |
|
Total Liabilities and
Shareholders’ Equity |
|
$ |
679,595 |
|
|
$ |
644,739 |
|
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(Dollars in thousands,
except per share amounts)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
Net Revenues |
|
$ |
180,495 |
|
|
$ |
154,827 |
|
|
$ |
353,061 |
|
|
$ |
305,282 |
|
Cost of Sales |
|
142,430 |
|
|
122,799 |
|
|
279,302 |
|
|
246,499 |
|
Gross Profit |
|
38,065 |
|
|
32,028 |
|
|
73,759 |
|
|
58,783 |
|
Selling, General and
Administrative Expenses |
|
24,461 |
|
|
21,194 |
|
|
47,307 |
|
|
40,521 |
|
Restructuring Charges |
|
— |
|
|
5,238 |
|
|
— |
|
|
7,411 |
|
Operating Income |
|
13,604 |
|
|
5,596 |
|
|
26,452 |
|
|
10,851 |
|
Interest Expense |
|
(4,426 |
) |
|
(3,763 |
) |
|
(8,777 |
) |
|
(6,661 |
) |
Income Before Taxes |
|
9,178 |
|
|
1,833 |
|
|
17,675 |
|
|
4,190 |
|
Income Tax Expense (Benefit) |
|
1,363 |
|
|
242 |
|
|
2,388 |
|
|
(1 |
) |
Net Income |
|
$ |
7,815 |
|
|
$ |
1,591 |
|
|
$ |
15,287 |
|
|
$ |
4,191 |
|
Earnings Per Share |
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.68 |
|
|
$ |
0.14 |
|
|
$ |
1.33 |
|
|
$ |
0.37 |
|
Diluted earnings per share |
|
$ |
0.66 |
|
|
$ |
0.14 |
|
|
$ |
1.30 |
|
|
$ |
0.36 |
|
Weighted-Average Number of Common
Shares Outstanding |
|
|
|
|
|
|
|
|
Basic |
|
11,513 |
|
|
11,394 |
|
|
11,475 |
|
|
11,370 |
|
Diluted |
|
11,758 |
|
|
11,624 |
|
|
11,754 |
|
|
11,609 |
|
|
|
|
|
|
|
|
|
|
Gross Profit % |
|
21.1 |
% |
|
20.7 |
% |
|
20.9 |
% |
|
19.3 |
% |
SG&A % |
|
13.6 |
% |
|
13.7 |
% |
|
13.4 |
% |
|
13.3 |
% |
Operating Income % |
|
7.5 |
% |
|
3.6 |
% |
|
7.5 |
% |
|
3.6 |
% |
Net Income % |
|
4.3 |
% |
|
1.0 |
% |
|
4.3 |
% |
|
1.4 |
% |
Effective Tax (Benefit) Rate |
|
14.9 |
% |
|
13.2 |
% |
|
13.5 |
% |
|
— |
% |
DUCOMMUN INCORPORATED AND SUBSIDIARIESBUSINESS
SEGMENT PERFORMANCE(Unaudited)(Dollars in thousands)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
%Change |
|
June 29, 2019 |
|
June 30, 2018 |
|
%of Net Revenues2019 |
|
%of Net Revenues2018 |
|
%Change |
|
June 29, 2019 |
|
June 30, 2018 |
|
%of Net Revenues2019 |
|
%of Net Revenues2018 |
Net
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
5.6 |
% |
|
$ |
89,260 |
|
|
$ |
84,502 |
|
|
49.5 |
% |
|
54.6 |
% |
|
3.9 |
% |
|
$ |
173,457 |
|
|
$ |
166,910 |
|
|
49.1 |
% |
|
54.7 |
% |
Structural Systems |
|
29.7 |
% |
|
91,235 |
|
|
70,325 |
|
|
50.5 |
% |
|
45.4 |
% |
|
29.8 |
% |
|
179,604 |
|
|
138,372 |
|
|
50.9 |
% |
|
45.3 |
% |
Total Net Revenues |
|
16.6 |
% |
|
$ |
180,495 |
|
|
$ |
154,827 |
|
|
100.0 |
% |
|
100.0 |
% |
|
15.7 |
% |
|
$ |
353,061 |
|
|
$ |
305,282 |
|
|
100.0 |
% |
|
100.0 |
% |
Segment Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
$ |
9,912 |
|
|
$ |
8,668 |
|
|
11.1 |
% |
|
10.3 |
% |
|
|
|
$ |
19,093 |
|
|
$ |
14,412 |
|
|
11.0 |
% |
|
8.6 |
% |
Structural Systems |
|
|
|
11,773 |
|
|
5,026 |
|
|
12.9 |
% |
|
7.1 |
% |
|
|
|
22,322 |
|
|
9,417 |
|
|
12.4 |
% |
|
6.8 |
% |
|
|
|
|
21,685 |
|
|
13,694 |
|
|
|
|
|
|
|
|
41,415 |
|
|
23,829 |
|
|
|
|
|
Corporate General and Administrative Expenses (1) |
|
|
|
(8,081 |
) |
|
(8,098 |
) |
|
(4.5 |
)% |
|
(5.2 |
)% |
|
|
|
(14,963 |
) |
|
(12,978 |
) |
|
(4.2 |
)% |
|
(4.3 |
)% |
Total Operating Income |
|
|
|
$ |
13,604 |
|
|
$ |
5,596 |
|
|
7.5 |
% |
|
3.6 |
% |
|
|
|
$ |
26,452 |
|
|
$ |
10,851 |
|
|
7.5 |
% |
|
3.6 |
% |
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
$ |
9,912 |
|
|
$ |
8,668 |
|
|
|
|
|
|
|
|
$ |
19,093 |
|
|
$ |
14,412 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
3,531 |
|
|
3,683 |
|
|
|
|
|
|
|
|
7,033 |
|
|
7,315 |
|
|
|
|
|
Restructuring Charges |
|
|
|
— |
|
|
735 |
|
|
|
|
|
|
|
|
— |
|
|
1,255 |
|
|
|
|
|
|
|
|
|
13,443 |
|
|
13,086 |
|
|
15.1 |
% |
|
15.5 |
% |
|
|
|
26,126 |
|
|
22,982 |
|
|
15.1 |
% |
|
13.8 |
% |
Structural Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
11,773 |
|
|
5,026 |
|
|
|
|
|
|
|
|
22,322 |
|
|
9,417 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
3,400 |
|
|
2,618 |
|
|
|
|
|
|
|
|
6,400 |
|
|
4,934 |
|
|
|
|
|
Restructuring Charges |
|
|
|
— |
|
|
3,610 |
|
|
|
|
|
|
|
|
— |
|
|
5,137 |
|
|
|
|
|
Inventory Purchase Accounting Adjustments |
|
|
|
— |
|
|
329 |
|
|
|
|
|
|
|
|
— |
|
|
329 |
|
|
|
|
|
|
|
|
|
15,173 |
|
|
11,583 |
|
|
16.6 |
% |
|
16.5 |
% |
|
|
|
28,722 |
|
|
19,817 |
|
|
16.0 |
% |
|
14.3 |
% |
Corporate General and Administrative Expenses (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
|
(8,081 |
) |
|
(8,098 |
) |
|
|
|
|
|
|
|
(14,963 |
) |
|
(12,978 |
) |
|
|
|
|
Depreciation and Amortization |
|
|
|
32 |
|
|
33 |
|
|
|
|
|
|
|
|
326 |
|
|
66 |
|
|
|
|
|
Stock-Based Compensation Expense |
|
|
|
1,807 |
|
|
1,025 |
|
|
|
|
|
|
|
|
3,271 |
|
|
2,115 |
|
|
|
|
|
Restructuring Charges |
|
|
|
— |
|
|
1,061 |
|
|
|
|
|
|
|
|
— |
|
|
1,187 |
|
|
|
|
|
|
|
|
|
(6,242 |
) |
|
(5,979 |
) |
|
|
|
|
|
|
|
(11,366 |
) |
|
(9,610 |
) |
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
22,374 |
|
|
$ |
18,690 |
|
|
12.4 |
% |
|
12.1 |
% |
|
|
|
$ |
43,482 |
|
|
$ |
33,189 |
|
|
12.3 |
% |
|
10.9 |
% |
Capital
Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
$ |
2,216 |
|
|
$ |
1,478 |
|
|
|
|
|
|
|
|
$ |
3,052 |
|
|
$ |
4,212 |
|
|
|
|
|
Structural Systems |
|
|
|
3,672 |
|
|
1,101 |
|
|
|
|
|
|
|
|
7,361 |
|
|
2,630 |
|
|
|
|
|
Corporate Administration |
|
|
|
— |
|
|
190 |
|
|
|
|
|
|
|
|
— |
|
|
190 |
|
|
|
|
|
Total Capital Expenditures |
|
|
|
$ |
5,888 |
|
|
$ |
2,769 |
|
|
|
|
|
|
|
|
$ |
10,413 |
|
|
$ |
7,032 |
|
|
|
|
|
- Includes costs not allocated to either the Electronic Systems
or Structural Systems operating segments.
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO
NON-GAAP OPERATING INCOME RECONCILIATION(Unaudited)(Dollars in
thousands)
|
|
Three Months Ended |
|
Six Months Ended |
GAAP To Non-GAAP
Operating Income |
|
June 29, 2019 |
|
June 30, 2018 |
|
%of Net Revenues2019 |
|
%of Net Revenues2018 |
|
June 29, 2019 |
|
June 30, 2018 |
|
%of Net Revenues2019 |
|
%of Net Revenues2018 |
GAAP Operating income |
|
$ |
13,604 |
|
|
$ |
5,596 |
|
|
|
|
|
|
$ |
26,452 |
|
|
$ |
10,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating income -
Electronic Systems |
|
$ |
9,912 |
|
|
$ |
8,668 |
|
|
|
|
|
|
$ |
19,093 |
|
|
$ |
14,412 |
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
— |
|
|
735 |
|
|
|
|
|
|
— |
|
|
1,255 |
|
|
|
|
|
Adjusted operating income - Electronic Systems |
|
9,912 |
|
|
9,403 |
|
|
11.1 |
% |
|
11.1 |
% |
|
19,093 |
|
|
15,667 |
|
|
11.0 |
% |
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating income -
Structural Systems |
|
11,773 |
|
|
5,026 |
|
|
|
|
|
|
22,322 |
|
|
9,417 |
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
— |
|
|
3,610 |
|
|
|
|
|
|
— |
|
|
5,137 |
|
|
|
|
|
Inventory purchase accounting adjustments |
|
— |
|
|
329 |
|
|
|
|
|
|
— |
|
|
329 |
|
|
|
|
|
Adjusted operating income - Structural Systems |
|
11,773 |
|
|
8,965 |
|
|
12.9 |
% |
|
12.7 |
% |
|
22,322 |
|
|
14,883 |
|
|
12.4 |
% |
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating loss -
Corporate |
|
(8,081 |
) |
|
(8,098 |
) |
|
|
|
|
|
(14,963 |
) |
|
(12,978 |
) |
|
|
|
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
— |
|
|
1,061 |
|
|
|
|
|
|
— |
|
|
1,187 |
|
|
|
|
|
Adjusted operating loss - Corporate |
|
(8,081 |
) |
|
(7,037 |
) |
|
|
|
|
|
(14,963 |
) |
|
(11,791 |
) |
|
|
|
|
Total adjustments |
|
— |
|
|
5,406 |
|
|
|
|
|
|
— |
|
|
7,579 |
|
|
|
|
|
Adjusted operating income |
|
$ |
13,604 |
|
|
$ |
11,002 |
|
|
7.5 |
% |
|
7.1 |
% |
|
$ |
26,452 |
|
|
$ |
18,430 |
|
|
7.5 |
% |
|
6.0 |
% |
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO
NON-GAAP EARNINGS AND EARNINGS PER SHARE
RECONCILIATION(Unaudited)(Dollars in thousands, except per share
amounts)
|
|
Three Months Ended |
|
Six Months Ended |
GAAP To Non-GAAP
Earnings |
|
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
GAAP Net income |
|
$ |
7,815 |
|
|
$ |
1,591 |
|
|
$ |
15,287 |
|
|
$ |
4,191 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring charges (1) |
|
— |
|
|
4,487 |
|
|
— |
|
|
6,291 |
|
Inventory purchase accounting adjustments (1) |
|
— |
|
|
273 |
|
|
— |
|
|
273 |
|
Total adjustments |
|
— |
|
|
4,760 |
|
|
— |
|
|
6,564 |
|
Adjusted net income |
|
$ |
7,815 |
|
|
$ |
6,351 |
|
|
$ |
15,287 |
|
|
$ |
10,755 |
|
|
|
Three Months Ended |
|
Six Months Ended |
GAAP Earnings Per
Share To Non-GAAP Earnings Per Share |
|
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
GAAP Diluted earnings per share (“EPS”) |
|
$ |
0.66 |
|
|
$ |
0.14 |
|
|
$ |
1.30 |
|
|
$ |
0.36 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring charges (1) |
|
— |
|
|
0.39 |
|
|
— |
|
|
0.54 |
|
Inventory purchase accounting adjustments (1) |
|
— |
|
|
0.02 |
|
|
— |
|
|
0.02 |
|
Total adjustments |
|
— |
|
|
0.41 |
|
|
— |
|
|
0.56 |
|
Adjusted diluted EPS |
|
$ |
0.66 |
|
|
$ |
0.55 |
|
|
$ |
1.30 |
|
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
Shares used for adjusted diluted
EPS |
|
11,758 |
|
|
11,624 |
|
|
11,754 |
|
|
11,609 |
|
- Includes effective tax rate of 17.0% for 2018 adjustments.
DUCOMMUN INCORPORATED AND SUBSIDIARIESNON-GAAP
BACKLOG* BY REPORTING SEGMENT(Unaudited)(Dollars in thousands)
|
|
(In thousands) |
|
|
June 29, 2019 |
|
December 31, 2018 |
Consolidated
Ducommun |
|
|
|
|
Military and space |
|
$ |
365,778 |
|
|
$ |
339,443 |
|
Commercial aerospace |
|
453,203 |
|
|
487,232 |
|
Industrial |
|
33,722 |
|
|
37,774 |
|
Total |
|
$ |
852,703 |
|
|
$ |
864,449 |
|
Electronic
Systems |
|
|
|
|
Military and space |
|
$ |
270,439 |
|
|
$ |
241,196 |
|
Commercial aerospace |
|
66,881 |
|
|
48,032 |
|
Industrial |
|
33,722 |
|
|
37,774 |
|
Total |
|
$ |
371,042 |
|
|
$ |
327,002 |
|
Structural
Systems |
|
|
|
|
Military and space |
|
$ |
95,339 |
|
|
$ |
98,247 |
|
Commercial aerospace |
|
386,322 |
|
|
439,200 |
|
Total |
|
$ |
481,661 |
|
|
$ |
537,447 |
|
* 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
June 29, 2019 was $852.7 million compared to $864.4 million as
of December 31, 2018. Under ASC 606, the Company defines remaining
performance obligations as customer placed purchase orders with
firm fixed price and firm delivery dates. The remaining performance
obligations disclosed under ASC 606 were $666.5 million.
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