Ducommun Incorporated (NYSE: DCO) (“Ducommun” or the “Company”)
today reported results for its first quarter ended March 30,
2024.
First Quarter 2024
Recap
- Net revenue was
$190.8 million, an increase of 5.3% over Q1 2023
- Net income of $6.8
million, or $0.46 per diluted share, or 3.6% of revenue, up 70 bps
year-over-year
- Non-GAAP adjusted
net income of $10.4 million, or $0.70 per diluted share
- Gross margin of
24.6%, year-over-year growth of 430 bps
- Adjusted EBITDA of
$27.4 million, or 14.4% of revenue, up 170 bps year-over-year
“Q1 was an outstanding quarter and a great start
to the year for Ducommun, as we grew our topline year-over-year,
led by continued strength in Commercial Aerospace at both Boeing
and Airbus while also delivering our strongest quarterly gross
margin ever,” said Stephen G. Oswald, chairman, president and chief
executive officer. “We achieved a new first quarter revenue record
of $190.8 million up 5% over Q1 2023, with solid demand for both
narrow-body and wide-body aircraft. The Company's gross margin was
another real highlight, expanding 430 bps year-over-year from 20.3%
to 24.6% as we saw improved operating performance, continued growth
from our higher margin engineered products businesses along with
some initial benefits from our on-going restructuring program.
“In December 2022, we laid out our Vision 2027
Plan to investors and as we begin year two in 2024, it continues to
take shape in a very positive way. Coming off a very good 2023 with
record revenue, we continued that again for Ducommun's first
quarter with another record performance. As we execute against our
2027 Vision Plan, we are highly encouraged with the results, I also
could not be more pleased with strong margin expansion across the
board with net income, Adjusted EBITDA, gross margin and operating
margin all increasing considerably in the quarter. We continue to
see traction with Vision 2027 and I fully believe it will continue
to deliver significant value to our shareholders now and in the
future. In addition, our operating team has done a very good job
navigating through the recent Commercial Aerospace challenges and
continues to deliver strong results against a difficult backdrop.
As the backdrop continues to improve, we expect our path to Vision
2027 targets to accelerate.
“As we move through our 175th year in business,
we are excited about continuing to execute on our stated 2027
strategy, lots of runway ahead.”
First Quarter
Results
Net revenue for the first quarter of 2024 was
$190.8 million compared to $181.2 million for the first quarter of
2023. The year-over-year increase of 5.3% was primarily due to the
following:
- $8.1 million higher
revenue in the Company’s commercial aerospace end-use markets due
to higher rates on rotary-wing aircraft and both single-aisle and
twin-aisle aircraft platforms, partially offset by lower rates on
other commercial aerospace business; and
- $1.3 million higher
revenue in the Company’s military and space end-use markets due to
higher rates on naval and rotary-wing aircraft platforms, partially
offset by lower rates on legacy fixed-wing aircraft platforms.
Net income for the first quarter of 2024 was
$6.8 million, or 3.6% of revenue, or $0.46 per diluted share,
compared to $5.2 million, or 2.9% revenue, or $0.42 per diluted
share, for the first quarter of 2023. This reflects higher gross
profit of $10.2 million and lower restructuring charges of $2.8
million, partially offset by higher selling, general and
administrative (“SG&A”) expenses of $6.7 million and lower
other income of $3.9 million. The higher SG&A expenses were
primarily due to BLR Aerospace (“BLR”) SG&A expenses of $5.5
million (82% 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.
Gross profit for the first quarter of 2024 was
$46.9 million, or 24.6% of revenue, compared to gross profit of
$36.8 million, or 20.3% of revenue, for the first quarter of 2023.
The increase in gross profit as a percentage of net revenue
year-over-year was primarily due to favorable product mix, pricing
actions, higher manufacturing volume and some initial benefits from
our on-going restructuring program.
Operating income for the first quarter of 2024
was $12.6 million, or 6.6% of revenue, compared to $6.4 million, or
3.5% of revenue, in the comparable period last year. The
year-over-year increase of $6.3 million was primarily due to higher
gross profit and lower restructuring charges, partially offset by
higher SG&A expenses, which was noted above. Non-GAAP adjusted
operating income for the first quarter of 2024 was $17.1 million,
or 9.0% of revenue, compared to $13.6 million, or 7.5% of revenue,
in the comparable period last year. The year-over-year increase was
primarily due to favorable product mix, pricing actions, higher
manufacturing volume and initial benefits from our on-going
restructuring program, partially offset by higher SG&A
expenses, mainly due to the addition of the BLR acquisition.
Adjusted EBITDA for the first quarter of 2024
was $27.4 million, or 14.4% of revenue, compared to $23.1 million,
or 12.7% of revenue, for the comparable period in 2023.
Interest expense for the first quarter of 2024
was $3.9 million compared to $4.2 million in the comparable period
of 2023. The year-over-year decrease was primarily due to the
benefit from the interest rate swaps which became effective on
January 1, 2024, partially offset by a higher debt balance in the
first quarter of 2024.
During the first quarter of 2024, the net cash
used in operations was $1.6 million compared to a net cash used in
operations of $18.9 million during the first quarter of 2023. The
lower net cash used in operations during the first quarter of 2024
was primarily due to a smaller increase in inventories and higher
contract liabilities (resulting from driving more progress payments
from customers), partially offset by higher contract assets.
Business Segment
Information
Electronic Systems
Electronic Systems segment net revenue for the
quarter ended March 30, 2024 was $107.5 million, compared to
$105.6 million for the first quarter of 2023. The year-over-year
increase was primarily due to the following:
- $2.4 million higher
revenue in the Company’s commercial aerospace end-use markets due
to higher rates on large aircraft platforms; partially offset
by
- $0.8 million lower
revenue within the Company’s military and space end-use markets due
to lower rates on fixed-wing aircraft platforms, partially offset
by higher rates on various missile and naval platforms.
Electronic Systems segment operating income for
the quarter ended March 30, 2024 was $19.0 million, or 17.6%
of revenue, compared to $10.0 million, or 9.5% of revenue, for the
comparable quarter in 2023. The year-over-year increase of $9.0
million was primarily due to higher manufacturing volume, favorable
product mix, and lower restructuring charges. Non-GAAP adjusted
operating income for the first quarter of 2024 was $19.8 million,
or 18.4% of revenue, compared to $12.3 million, or 11.6% of
revenue, in the comparable period last year.
Structural Systems
Structural Systems segment net revenue for the
quarter ended March 30, 2024 was $83.3 million, compared to
$75.6 million for the first quarter of 2023. The year-over-year
increase was primarily due to the following:
- $5.7 million higher
revenue within the Company’s commercial aerospace end-use markets
due to higher rates on rotary-wing and large aircraft platforms,
partially offset by lower rates on other commercial platforms;
and
- $2.1 million higher
revenue within the Company’s military and space end-use markets due
to higher rates on fixed-wing and rotary-wing platforms, partially
offset by lower rates on missile platforms.
Structural Systems segment operating income for
the quarter ended March 30, 2024 was $2.9 million, or 3.4% of
revenue, compared to $4.7 million, or 6.3% of revenue, for the
comparable quarter in 2023. The year-over-year decrease of $1.9
million was primarily due to higher costs associated with the wind
down of our Monrovia performance center, partially offset by
favorable product mix and lower restructuring charges. Non-GAAP
adjusted operating income for the first quarter of 2024 was $6.5
million, or 7.8% of revenue, compared to $9.7 million, or 12.9% of
revenue, in the comparable period last year.
Corporate General and Administrative
(“CG&A”) Expenses
CG&A expenses for the first quarter of 2024
were $9.2 million, or 4.8% of total Company revenue, compared to
$8.4 million, or 4.6% of total Company revenue, for the comparable
quarter in the prior year. The year-over-year increase in CG&A
expenses was primarily due to higher stock-based compensation
expense of $1.0 million and higher compensation and benefits costs
of $0.6 million, partially offset by lower professional services
fees of $0.8 million.
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, May 8, 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/BI83a11c685c004ee5a2f244c44951ed4f
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 Q1 2024 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 Company's 2027 Vision Strategy
and delivering shareholder value in the years ahead. The Company
generally uses the words “may,” “will,” “could,” “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:
whether the anticipated pre-tax restructuring charges will be
sufficient to address all anticipated restructuring costs,
including related to employee separation, facilities consolidation,
inventory write-down and other asset impairments; whether the
expected cost savings from the restructuring will ultimately be
obtained in the amount and during the period anticipated; whether
the restructuring in the affected areas will be sufficient to build
a more cost efficient, focused, higher margin enterprise with
higher returns for the Company's shareholders; the strength of the
real estate market, the duration of any lease entered into as part
of any sale-leaseback transaction, the amount of commissions owed
to brokers, and applicable tax rates; the impact of the Company’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; the ultimate geographic
spread, duration and severity of the coronavirus (COVID-19)
outbreak, and the effectiveness of actions taken, or actions that
may be taken, by governmental authorities to contain the outbreak
or treat its impact, and other risks and uncertainties, including
those detailed from time to time in the Company’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, May 8, 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, insurance recoveries related to loss on
operating assets, and inventory purchase accounting adjustments),
including as a percentage of revenue, non-GAAP operating income,
including 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.
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. 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 the Company’s
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 the Company’s net revenues. As a result of
these factors, trends in the Company’s overall level of backlog may
not be indicative of trends in the Company’s future net
revenues.
CONTACT:Suman Mookerji, Senior Vice President,
Chief Financial Officer, 657.335.3665
[Financial Tables Follow]
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEETS(Unaudited)(Dollars in thousands) |
|
|
|
March 30,2024 |
|
December 31,2023 |
Assets |
|
|
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
32,066 |
|
$ |
42,863 |
Accounts receivable, net |
|
|
104,499 |
|
|
104,692 |
Contract assets |
|
|
197,056 |
|
|
177,686 |
Inventories |
|
|
208,959 |
|
|
199,201 |
Production cost of contracts |
|
|
7,977 |
|
|
7,778 |
Other current assets |
|
|
13,388 |
|
|
17,349 |
Total Current Assets |
|
|
563,945 |
|
|
549,569 |
Property and Equipment, Net |
|
|
112,108 |
|
|
111,379 |
Operating Lease Right-of-Use Assets |
|
|
27,489 |
|
|
29,513 |
Goodwill |
|
|
244,600 |
|
|
244,600 |
Intangibles, Net |
|
|
162,080 |
|
|
166,343 |
Deferred income taxes |
|
|
641 |
|
|
641 |
Other Assets |
|
|
21,190 |
|
|
18,874 |
Total Assets |
|
$ |
1,132,053 |
|
$ |
1,120,919 |
Liabilities and Shareholders’ Equity |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable |
|
$ |
84,293 |
|
$ |
72,265 |
Contract liabilities |
|
|
57,790 |
|
|
53,492 |
Accrued and other liabilities |
|
|
29,311 |
|
|
42,260 |
Operating lease liabilities |
|
|
7,745 |
|
|
7,873 |
Current portion of long-term debt |
|
|
9,375 |
|
|
7,813 |
Total Current Liabilities |
|
|
188,514 |
|
|
183,703 |
Long-Term Debt, Less Current Portion |
|
|
253,929 |
|
|
256,961 |
Non-Current Operating Lease Liabilities |
|
|
21,016 |
|
|
22,947 |
Deferred Income Taxes |
|
|
4,439 |
|
|
4,766 |
Other Long-Term Liabilities |
|
|
18,608 |
|
|
16,448 |
Total Liabilities |
|
|
486,506 |
|
|
484,825 |
Commitments and Contingencies |
|
|
|
|
Shareholders’ Equity |
|
|
|
|
Common Stock |
|
|
147 |
|
|
146 |
Additional Paid-In Capital |
|
|
206,557 |
|
|
206,197 |
Retained Earnings |
|
|
428,829 |
|
|
421,980 |
Accumulated Other Comprehensive Income |
|
|
10,014 |
|
|
7,771 |
Total Shareholders’ Equity |
|
|
645,547 |
|
|
636,094 |
Total Liabilities and Shareholders’ Equity |
|
$ |
1,132,053 |
|
$ |
1,120,919 |
DUCOMMUN INCORPORATED AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF INCOME(Unaudited)(Dollars in thousands, except per
share amounts) |
|
|
|
Three Months Ended |
|
|
March 30,2024 |
|
April 1,2023 |
Net Revenues |
|
$ |
190,847 |
|
|
$ |
181,191 |
|
Cost of Sales |
|
|
143,904 |
|
|
|
144,424 |
|
Gross Profit |
|
|
46,943 |
|
|
|
36,767 |
|
Selling, General and Administrative Expenses |
|
|
32,951 |
|
|
|
26,225 |
|
Restructuring Charges |
|
|
1,370 |
|
|
|
4,170 |
|
Operating Income |
|
|
12,622 |
|
|
|
6,372 |
|
Interest Expense |
|
|
(3,883 |
) |
|
|
(4,219 |
) |
Other Income |
|
|
— |
|
|
|
3,886 |
|
Income Before Taxes |
|
|
8,739 |
|
|
|
6,039 |
|
Income Tax Expense |
|
|
1,890 |
|
|
|
808 |
|
Net Income |
|
$ |
6,849 |
|
|
$ |
5,231 |
|
Earnings Per Share |
|
|
|
|
Basic earnings per share |
|
$ |
0.47 |
|
|
$ |
0.43 |
|
Diluted earnings per share |
|
$ |
0.46 |
|
|
$ |
0.42 |
|
Weighted-Average Number of Common Shares Outstanding |
|
|
|
|
Basic |
|
|
14,694 |
|
|
|
12,195 |
|
Diluted |
|
|
14,937 |
|
|
|
12,538 |
|
|
|
|
|
|
Gross Profit % |
|
|
24.6 |
% |
|
|
20.3 |
% |
SG&A % |
|
|
17.3 |
% |
|
|
14.5 |
% |
Operating Income % |
|
|
6.6 |
% |
|
|
3.5 |
% |
Net Income % |
|
|
3.6 |
% |
|
|
2.9 |
% |
Effective Tax Rate |
|
|
21.6 |
% |
|
|
13.4 |
% |
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP NET INCOME
TO ADJUSTED EBITDA RECONCILIATION(Unaudited)(Dollars in
thousands) |
|
|
|
Three Months Ended |
|
|
March 30,2024 |
|
April 1,2023 |
GAAP net income |
|
$ |
6,849 |
|
|
$ |
5,231 |
|
Non-GAAP Adjustments: |
|
|
|
|
Interest expense |
|
|
3,883 |
|
|
|
4,219 |
|
Income tax expense |
|
|
1,890 |
|
|
|
808 |
|
Depreciation |
|
|
4,016 |
|
|
|
3,740 |
|
Amortization |
|
|
4,337 |
|
|
|
4,249 |
|
Stock-based compensation expense(1) |
|
|
4,258 |
|
|
|
3,081 |
|
Restructuring charges |
|
|
1,370 |
|
|
|
4,170 |
|
Guaymas fire related expenses |
|
|
— |
|
|
|
1,468 |
|
Insurance recoveries related to loss on operating assets |
|
|
— |
|
|
|
(3,886 |
) |
Inventory purchase accounting adjustments |
|
|
791 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
27,394 |
|
|
$ |
23,080 |
|
Net income as a % of net revenues |
|
|
3.6 |
% |
|
|
2.9 |
% |
Adjusted EBITDA as a % of net revenues |
|
|
14.4 |
% |
|
|
12.7 |
% |
(1) The three months ended March 30, 2024 and
April 1, 2023 included $1.4 million and $0.4 million,
respectively, of stock-based compensation expense for awards with
both performance and market conditions that will be settled in
cash. The three months ended March 30, 2024 and April 1,
2023 included less than $0.1 million and $0.1 million,
respectively, of stock-based compensation expense recorded as cost
of sales.
DUCOMMUN INCORPORATED AND SUBSIDIARIESBUSINESS SEGMENT
PERFORMANCE(Unaudited)(Dollars in thousands) |
|
|
|
Three Months Ended |
|
|
%Change |
|
March 30,2024 |
|
April 1,2023 |
|
%of Net Revenues2024 |
|
%of Net Revenues2023 |
Net Revenues |
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
1.8 |
% |
|
$ |
107,539 |
|
|
$ |
105,626 |
|
|
56.3 |
% |
|
58.3 |
% |
Structural Systems |
|
10.2 |
% |
|
|
83,308 |
|
|
|
75,565 |
|
|
43.7 |
% |
|
41.7 |
% |
Total Net Revenues |
|
5.3 |
% |
|
$ |
190,847 |
|
|
$ |
181,191 |
|
|
100.0 |
% |
|
100.0 |
% |
Segment Operating Income |
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
$ |
18,969 |
|
|
$ |
10,011 |
|
|
17.6 |
% |
|
9.5 |
% |
Structural Systems |
|
|
|
|
2,868 |
|
|
|
4,745 |
|
|
3.4 |
% |
|
6.3 |
% |
|
|
|
|
|
21,837 |
|
|
|
14,756 |
|
|
|
|
|
Corporate General and Administrative Expenses(1) |
|
|
|
|
(9,215 |
) |
|
|
(8,384 |
) |
|
(4.8) |
% |
|
(4.6) |
% |
Total Operating Income |
|
|
|
$ |
12,622 |
|
|
$ |
6,372 |
|
|
6.6 |
% |
|
3.5 |
% |
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
$ |
18,969 |
|
|
$ |
10,011 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
|
3,632 |
|
|
|
3,498 |
|
|
|
|
|
Stock-Based Compensation Expense(2) |
|
|
|
|
80 |
|
|
|
132 |
|
|
|
|
|
Restructuring Charges |
|
|
|
|
459 |
|
|
|
1,874 |
|
|
|
|
|
|
|
|
|
|
23,140 |
|
|
|
15,515 |
|
|
21.5 |
% |
|
14.7 |
% |
Structural Systems |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
2,868 |
|
|
|
4,745 |
|
|
|
|
|
Depreciation and Amortization |
|
|
|
|
4,662 |
|
|
|
4,432 |
|
|
|
|
|
Stock-Based Compensation Expense(3) |
|
|
|
|
86 |
|
|
|
102 |
|
|
|
|
|
Restructuring Charges |
|
|
|
|
911 |
|
|
|
2,296 |
|
|
|
|
|
Guaymas fire related expenses |
|
|
|
|
— |
|
|
|
1,468 |
|
|
|
|
|
Inventory Purchase Accounting Adjustments |
|
|
|
|
791 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
9,318 |
|
|
|
13,043 |
|
|
11.2 |
% |
|
17.3 |
% |
Corporate General and Administrative Expenses(1) |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
|
|
(9,215 |
) |
|
|
(8,384 |
) |
|
|
|
|
Depreciation and Amortization |
|
|
|
|
59 |
|
|
|
59 |
|
|
|
|
|
Stock-Based Compensation Expense(4) |
|
|
|
|
4,092 |
|
|
|
2,847 |
|
|
|
|
|
|
|
|
|
|
(5,064 |
) |
|
|
(5,478 |
) |
|
|
|
|
Adjusted EBITDA |
|
|
|
$ |
27,394 |
|
|
$ |
23,080 |
|
|
14.4 |
% |
|
12.7 |
% |
Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
Electronic Systems |
|
|
|
$ |
796 |
|
|
$ |
1,851 |
|
|
|
|
|
Structural Systems |
|
|
|
|
1,524 |
|
|
|
3,130 |
|
|
|
|
|
Corporate Administration |
|
|
|
|
2,425 |
|
|
|
— |
|
|
|
|
|
Total Capital Expenditures |
|
|
|
$ |
4,745 |
|
|
$ |
4,981 |
|
|
|
|
|
(1) Includes costs not allocated to either the
Electronic Systems or Structural Systems operating segments.
(2) The three months ended March 30, 2024
and April 1, 2023 both included less than $0.1 million of
stock-based compensation expense recorded as cost of sales.
(3) The three months ended March 30, 2024
and April 1, 2023 both included $0.1 million of stock-based
compensation expense recorded as cost of sales.
(4) The three months ended March 30, 2024
and April 1, 2023 included $1.4 million and $0.4 million,
respectively, of stock-based compensation expense for awards with
both performance and market conditions that will be settled in
cash.
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP OPERATING
INCOME RECONCILIATION(Unaudited)(Dollars in thousands) |
|
|
|
Three Months Ended |
GAAP To Non-GAAP Operating Income |
|
March 30, 2024 |
|
April 1, 2023 |
|
%of Net Revenues2024 |
|
%of Net Revenues2023 |
GAAP operating income |
|
$ |
12,622 |
|
|
$ |
6,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income - Electronic Systems |
|
$ |
18,969 |
|
|
$ |
10,011 |
|
|
|
|
|
Adjustments to GAAP operating income - Electronic Systems: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
459 |
|
|
|
1,874 |
|
|
|
|
|
Amortization of acquisition-related intangible assets |
|
|
373 |
|
|
|
373 |
|
|
|
|
|
Total adjustments to GAAP operating income - Electronic
Systems |
|
|
832 |
|
|
|
2,247 |
|
|
|
|
|
Non-GAAP adjusted operating income - Electronic Systems |
|
|
19,801 |
|
|
|
12,258 |
|
|
18.4 |
% |
|
11.6 |
% |
|
|
|
|
|
|
|
|
|
GAAP operating income - Structural Systems |
|
|
2,868 |
|
|
|
4,745 |
|
|
|
|
|
Adjustments to GAAP operating income - Structural Systems: |
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
911 |
|
|
|
2,296 |
|
|
|
|
|
Guaymas fire related expenses |
|
|
— |
|
|
|
1,468 |
|
|
|
|
|
Inventory purchase accounting adjustments |
|
|
791 |
|
|
|
— |
|
|
|
|
|
Amortization of acquisition-related intangible assets |
|
|
1,934 |
|
|
|
1,237 |
|
|
|
|
|
Total adjustments to GAAP operating income - Structural
Systems |
|
|
3,636 |
|
|
|
5,001 |
|
|
|
|
|
Non-GAAP adjusted operating income - Structural Systems |
|
|
6,504 |
|
|
|
9,746 |
|
|
7.8 |
% |
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
GAAP operating loss - Corporate |
|
|
(9,215 |
) |
|
|
(8,384 |
) |
|
|
|
|
Non-GAAP adjusted operating loss - Corporate |
|
|
(9,215 |
) |
|
|
(8,384 |
) |
|
|
|
|
Total non-GAAP adjustments to GAAP operating income |
|
|
4,468 |
|
|
|
7,248 |
|
|
|
|
|
Non-GAAP adjusted operating income |
|
$ |
17,090 |
|
|
$ |
13,620 |
|
|
9.0 |
% |
|
7.5 |
% |
DUCOMMUN INCORPORATED AND SUBSIDIARIESGAAP TO NON-GAAP NET INCOME
AND EARNINGS PER SHARE RECONCILIATION(Unaudited)(Dollars in
thousands, except per share amounts) |
|
|
|
|
|
Three Months Ended |
GAAP To Non-GAAP Net Income |
|
March 30,2024 |
|
April 1,2023 |
GAAP net income |
|
$ |
6,849 |
|
|
$ |
5,231 |
|
Adjustments to GAAP net income: |
|
|
|
|
Restructuring charges |
|
$ |
1,370 |
|
|
$ |
4,170 |
|
Guaymas fire related expenses |
|
|
— |
|
|
|
1,468 |
|
Insurance recoveries related to loss on operating assets |
|
|
— |
|
|
|
(3,886 |
) |
Inventory purchase accounting adjustments |
|
|
791 |
|
|
|
— |
|
Amortization of acquisition-related intangible assets |
|
|
2,307 |
|
|
|
1,610 |
|
Total adjustments to GAAP net income before provision for income
taxes |
|
|
4,468 |
|
|
|
3,362 |
|
Income tax effect on non-GAAP adjustments(1) |
|
|
(894 |
) |
|
|
(673 |
) |
Non-GAAP adjusted net income |
|
$ |
10,423 |
|
|
$ |
7,920 |
|
|
|
Three Months Ended |
GAAP Earnings Per Share To Non-GAAP Earnings Per
Share |
|
March 30,2024 |
|
April 1,2023 |
GAAP diluted earnings per share (“EPS”) |
|
$ |
0.46 |
|
|
$ |
0.42 |
|
Adjustments to GAAP diluted EPS: |
|
|
|
|
Restructuring charges |
|
|
0.09 |
|
|
|
0.33 |
|
Guaymas fire related expenses |
|
|
— |
|
|
|
0.12 |
|
Insurance recoveries related to loss on operating assets |
|
|
— |
|
|
|
(0.31 |
) |
Inventory purchase accounting adjustments |
|
|
0.05 |
|
|
|
— |
|
Amortization of acquisition-related intangible assets |
|
|
0.16 |
|
|
|
0.13 |
|
Total adjustments to GAAP diluted EPS before provision for income
taxes |
|
|
0.30 |
|
|
|
0.27 |
|
Income tax effect on non-GAAP adjustments(1) |
|
|
(0.06 |
) |
|
|
(0.06 |
) |
Non-GAAP adjusted diluted EPS |
|
$ |
0.70 |
|
|
$ |
0.63 |
|
|
|
|
|
|
Shares used for non-GAAP adjusted diluted EPS |
|
|
14,937 |
|
|
|
12,538 |
|
(1) Effective tax rate of 20.0% used for both 2024
and 2023 adjustments.
DUCOMMUN INCORPORATED AND SUBSIDIARIESNON-GAAP BACKLOG* BY
REPORTING SEGMENT(Unaudited)(Dollars in thousands) |
|
|
|
March 30,2024 |
|
December 31,2023 |
Consolidated Ducommun |
|
|
|
|
Military and space |
|
$ |
569,002 |
|
$ |
527,143 |
Commercial aerospace |
|
|
442,133 |
|
|
429,494 |
Industrial |
|
|
34,453 |
|
|
36,931 |
Total |
|
$ |
1,045,588 |
|
$ |
993,568 |
Electronic Systems |
|
|
|
|
Military and space |
|
$ |
434,106 |
|
$ |
397,681 |
Commercial aerospace |
|
|
97,826 |
|
|
87,994 |
Industrial |
|
|
34,453 |
|
|
36,931 |
Total |
|
$ |
566,385 |
|
$ |
522,606 |
Structural Systems |
|
|
|
|
Military and space |
|
$ |
134,896 |
|
$ |
129,462 |
Commercial aerospace |
|
|
344,307 |
|
|
341,500 |
Total |
|
$ |
479,203 |
|
$ |
470,962 |
* Under ASC 606, the Company defines
performance obligations as customer placed purchase orders with
firm fixed price and firm delivery dates. The remaining performance
obligations disclosed under ASC 606 as of March 30, 2024 were
$824.1 million. 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 March 30, 2024 was
$1,045.6 million compared to $993.6 million as of December 31,
2023.
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