[Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Ducommun's Q2 2025 performance highlights strong revenue growth, record margins, and significant net income increase, aligning with its long-term financial goals [Overall Performance Summary](index=1&type=section&id=Overall%20Performance%20Summary) Ducommun reported strong Q2 2025 results, with revenues over $200 million, record margins, and 63% net income growth, aligning with VISION 2027 goals | Financial Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Net Revenue | $202.3 million | +3% | | Gross Margin | 26.6% | +60 bps | | Net Income | $12.6 million | +63% | | Diluted EPS | $0.82 | +58% | | Adjusted EBITDA | $32.4 million | +8% | | Adjusted EBITDA Margin | 16.0% | +80 bps | - Strong quarterly results were led by the **defense business**, particularly missile programs, radar, and military rotary-wing aircraft platforms, offsetting commercial aerospace headwinds[5](index=5&type=chunk) - The company is progressing towards its **VISION 2027 financial goal of 18% Adjusted EBITDA**, with Q2 margins showing continued expansion[6](index=6&type=chunk) - The tariff environment is not expected to materially impact the financial outlook, as **over 95% of revenue** is from domestic facilities, with active mitigation of raw material tariff exposures[7](index=7&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) Ducommun's Q2 2025 consolidated financials show a 3% revenue increase to $202.3 million, driven by military and space, with net income up 63% to $12.6 million and improved cash flow [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Net revenue grew **3% year-over-year to $202.3 million**, driven by a **$16.5 million increase in military and space**, offsetting declines in commercial aerospace and industrial markets | End-Use Market | Revenue Change (YoY) | Key Drivers | | :--- | :--- | :--- | | Military & Space | +$16.5 million | Higher rates on missile, rotary-wing aircraft, and radar platforms | | Commercial Aerospace | -$9.0 million | Lower revenues from Boeing and lower rates on rotary-wing aircraft | | Industrial | -$2.3 million | Selective pruning of non-core business | [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Q2 2025 profitability improved significantly, with net income surging **63% to $12.6 million**, gross margin expanding **60 basis points to 26.6%**, and operating income rising to **$17.2 million** | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $12.6 million | $7.7 million | +$4.9 million (+63%) | | Gross Profit | $53.7 million | $51.2 million | +$2.5 million | | Gross Margin | 26.6% | 26.0% | +60 bps | | Operating Income | $17.2 million | $13.9 million | +$3.2 million | - Gross margin increase was primarily driven by lower manufacturing costs and reduced restructuring charges from the Monrovia performance center wind-down[11](index=11&type=chunk) [Cash Flow and Interest Expense](index=2&type=section&id=Cash%20Flow%20and%20Interest%20Expense) Cash from operations significantly increased to **$22.4 million** in Q2 2025 from **$3.5 million** in Q2 2024, driven by higher net income and working capital management, while interest expense decreased - Net cash provided by operations increased substantially to **$22.4 million** in Q2 2025 from **$3.5 million** in Q2 2024[14](index=14&type=chunk) - Cash flow improvement was primarily due to higher net income, increased accounts payable, and a smaller increase in contract assets[14](index=14&type=chunk) - Interest expense fell by **$1.0 million** year-over-year due to lower interest rates and a reduced debt balance[13](index=13&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) Electronic Systems drove Q2 2025 growth with an **8.7% revenue increase** and expanded operating margin, while Structural Systems saw a **3.7% revenue decline** due to reduced commercial aerospace demand [Electronic Systems](index=2&type=section&id=Electronic%20Systems) Electronic Systems delivered strong results, with net revenue increasing **8.7% to $110.2 million** and operating income growing **$4.2 million to $21.0 million**, expanding operating margin to **19.0%** | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Revenue | $110.2 million | $101.4 million | | Operating Income | $21.0 million | $16.8 million | | Operating Margin | 19.0% | 16.6% | - Revenue growth was primarily due to higher rates on selected missiles, radar, fixed-wing aircraft platforms, and a classified program[18](index=18&type=chunk) [Structural Systems](index=3&type=section&id=Structural%20Systems) Structural Systems revenue decreased **3.7% to $92.0 million**, primarily from a **$6.2 million reduction in Boeing commercial aerospace**, leading to a **$1.0 million decline in operating income** and margin contraction to **10.4%** | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Revenue | $92.0 million | $95.6 million | | Operating Income | $9.5 million | $10.6 million | | Operating Margin | 10.4% | 11.0% | - Revenue decline was driven by lower revenues from Boeing, partially offset by higher rates on selected military rotary-wing aircraft platforms[25](index=25&type=chunk) [Corporate General and Administrative (CG&A) Expenses](index=3&type=section&id=Corporate%20General%20and%20Administrative%20%28CG%26A%29%20Expenses) Q2 2025 Corporate General and Administrative (CG&A) expenses were **$13.3 million (6.6% of revenue)**, a slight decrease from the prior year, primarily due to lower professional services fees [CG&A Expense Details](index=3&type=section&id=CG%26A%20Expense%20Details) CG&A expenses decreased slightly year-over-year, driven by a **$1.0 million reduction in professional services fees**, partially offset by a **$0.6 million increase in compensation and benefits** | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | CG&A Expenses | $13.3 million | $13.4 million | | CG&A as % of Revenue | 6.6% | 6.8% | [Financial Statements and Reconciliations](index=6&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents unaudited financial statements for Q2 2025, including condensed balance sheets, income statements, GAAP to non-GAAP reconciliations, and backlog breakdown [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 28, 2025, Ducommun's balance sheet shows total assets of **$1.14 billion**, total liabilities of **$433.0 million**, and shareholders' equity increased to **$707.8 million** | Balance Sheet Item | June 28, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $598.2 million | $568.1 million | | Total Assets | $1,140.8 million | $1,126.1 million | | Total Current Liabilities | $184.5 million | $175.5 million | | Total Liabilities | $433.0 million | $443.6 million | | Total Shareholders' Equity | $707.8 million | $682.5 million | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 income statement highlights a year-over-year increase in net revenue to **$202.3 million** and net income to **$12.6 million**, or **$0.82 per diluted share** | Income Statement Item (Q2) | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net Revenues | $202.3 million | $197.0 million | | Gross Profit | $53.7 million | $51.2 million | | Operating Income | $17.2 million | $13.9 million | | Net Income | $12.6 million | $7.7 million | | Diluted EPS | $0.82 | $0.52 | [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) The company provides GAAP to non-GAAP reconciliations, showing Q2 2025 Adjusted EBITDA at **$32.4 million (16.0% of revenue)** and non-GAAP adjusted net income at **$13.4 million** GAAP Net Income to Adjusted EBITDA Reconciliation (Q2) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | GAAP net income | $12,553 | $7,724 | | Adjustments (Interest, Tax, D&A, etc.) | $19,855 | $22,249 | | **Adjusted EBITDA** | **$32,408** | **$29,973** | GAAP to Non-GAAP Net Income Reconciliation (Q2) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | GAAP net income | $12,553 | $7,724 | | Total adjustments | $877 | $4,748 | | **Non-GAAP adjusted net income** | **$13,430** | **$12,472** | [Non-GAAP Backlog by Reporting Segment](index=13&type=section&id=Non-GAAP%20Backlog%20by%20Reporting%20Segment) As of June 28, 2025, total backlog was **$1.018 billion**, a decrease from **$1.061 billion** at year-end 2024, with declines across both Electronic and Structural Systems, mainly in military and space | Backlog (in thousands) | June 28, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Consolidated Total** | **$1,017,872** | **$1,060,819** | | Military and space | $592,580 | $624,785 | | Commercial aerospace | $404,080 | $415,905 | | **Electronic Systems Total** | **$532,871** | **$555,966** | | **Structural Systems Total** | **$485,001** | **$504,853** | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides logistical and legal information, including investor call details, a corporate overview, forward-looking statements disclaimer, and non-GAAP financial measure definitions

Core Insights - Ducommun Incorporated reported a strong second quarter for 2025, achieving net revenue of $202.3 million, a 3% increase from $197.0 million in Q2 2024, driven by growth in the defense sector despite challenges in commercial aerospace [2][5][10] - The company is on track to meet its VISION 2027 financial goals, with gross margins expanding by 60 basis points year-over-year to 26.6% and Adjusted EBITDA margins increasing by 80 basis points to 16.0% [3][9][10] - Ducommun's defense business saw robust demand across various missile programs and military platforms, while revenue from Boeing continued to decline, indicating potential future recovery in commercial aerospace [2][11] Financial Performance - Net income for Q2 2025 was $12.6 million, or 6.2% of revenue, compared to $7.7 million, or 3.9% of revenue, in Q2 2024, reflecting a 63% year-over-year increase [6][10] - Gross profit increased to $53.7 million, representing 26.6% of revenue, up from $51.2 million and 26.0% in the prior year [7][10] - Operating income rose to $17.2 million, or 8.5% of revenue, compared to $13.9 million, or 7.1% of revenue, in Q2 2024 [8][10] Business Segments - The Electronic Systems segment reported net revenue of $110.2 million, a year-over-year increase of 8.7%, while the Structural Systems segment saw a decline in revenue to $92.0 million, down 3.7% [14][16] - Operating income for the Electronic Systems segment was $21.0 million, or 19.0% of revenue, compared to $16.8 million, or 16.6% in the previous year [15] - The Structural Systems segment's operating income decreased to $9.5 million, or 10.4% of revenue, down from $10.6 million, or 11.0% in Q2 2024 [16] Cash Flow and Expenses - Net cash provided by operations was $22.4 million in Q2 2025, significantly higher than $3.5 million in Q2 2024, attributed to increased net income and higher accounts payable [13] - Corporate General and Administrative expenses were $13.3 million, or 6.6% of total revenue, slightly down from $13.4 million, or 6.8% in the prior year [17] Market Outlook - The company remains optimistic about revenue growth in the second half of 2025, anticipating increased market demand [5]

Company Overview - Ducommun (DCO) is a stock within the Aerospace sector, which consists of 58 individual stocks and currently holds a Zacks Sector Rank of 6 [2] - Ducommun has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, with the consensus estimate for full-year earnings having increased by 12% in the past quarter [3] Performance Comparison - Year-to-date, Ducommun has gained approximately 40.7%, outperforming the Aerospace sector's average return of 26.9% [4] - Another notable performer in the Aerospace sector is GE Aerospace (GE), which has returned 61.5% year-to-date [4] Industry Context - Ducommun is part of the Aerospace - Defense Equipment industry, which includes 33 companies and currently ranks 147 in the Zacks Industry Rank, with an average gain of 26.6% this year [5] - GE Aerospace belongs to the Aerospace - Defense industry, which consists of 24 stocks and is ranked 63, with a year-to-date increase of 27% [6]

Group 1: Company Overview - Ducommun (DCO) is a notable stock within the Aerospace sector, which consists of 58 individual stocks and ranks 5 in the Zacks Sector Rank [2] - Ducommun currently holds a Zacks Rank of 1 (Strong Buy), indicating strong analyst sentiment and a positive earnings outlook [3] Group 2: Performance Comparison - Year-to-date, Ducommun has returned 35.9%, outperforming the average Aerospace sector gain of 26.3% [4] - Another outperforming stock in the Aerospace sector is Airbus Group (EADSY), which has returned 33.4% year-to-date [4] - Ducommun is part of the Aerospace - Defense Equipment industry, which includes 33 companies and has an average gain of 26.1% this year, further highlighting Ducommun's strong performance [5] Group 3: Industry Insights - The Aerospace - Defense industry, which includes 24 stocks, is currently ranked 87 and has moved +26.4% since the beginning of the year [6] - Investors should monitor both Ducommun and Airbus Group for potential continued strong performance in the Aerospace sector [6]

Company Overview - Ducommun (DCO) currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook compared to the market [3] Price Performance - DCO shares have increased by 0.94% over the past week, outperforming the Zacks Aerospace - Defense Equipment industry, which rose by 0.15% [5] - Over the last month, DCO's price change is 13.92%, significantly higher than the industry's 7.41% [5] - In the last quarter, DCO shares have surged by 60.02%, and over the past year, they have gained 46.68%, while the S&P 500 has only moved 16.27% and 12.91% respectively [6] Trading Volume - DCO's average 20-day trading volume is 153,468 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, one earnings estimate for DCO has increased, raising the consensus estimate from $3.65 to $3.68 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions during the same period [9] Conclusion - Given the strong price performance, positive earnings outlook, and high momentum score, DCO is positioned as a promising investment opportunity [11]

Group 1 - Ducommun Incorporated (NYSE: DCO) is identified as a Tier 1 supplier to the aerospace, defense, and space sectors [1] - Since a Strong Buy rating was issued in March 2025, DCO shares have increased by 20%, significantly outperforming the S&P 500, which declined by 0.9% [1] Group 2 - The Aerospace Forum aims to uncover investment opportunities within the aerospace, defense, and airline industries, leveraging data-informed analysis [2] - The analyst behind The Aerospace Forum has a background in aerospace engineering, providing context to industry developments and their potential impact on investment strategies [2]

Core Viewpoint - Ducommun Incorporated will participate in the B. Riley Securities Annual Investor Conference on May 22, 2025, with one-on-one investor meetings scheduled throughout the day [1] Company Overview - Ducommun Incorporated, founded in 1849, provides value-added innovative products and manufacturing solutions primarily in the aerospace, defense, and industrial markets [2] - The company specializes in two core areas: Electronic Systems and Structural Systems, producing complex products and components for commercial aircraft, military and space programs, and industrial applications [2]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $194.1 million, a 1.7% increase from $190.8 million in Q1 2024, marking the sixteenth consecutive quarter of year-over-year revenue growth [8][22] - Gross margin increased to 26.6%, up from 24.6% year-over-year, achieving a new quarterly record [12][23] - Adjusted EBITDA reached 15.9% of sales, a record high, reflecting strong operational performance [13][37] - GAAP diluted EPS was $0.69, compared to $0.46 in Q1 2024, while adjusted diluted EPS was $0.83, up from $0.70 [14][28] Business Line Data and Key Metrics Changes - Military and space revenue grew by 15% year-over-year, driven by missile and electronic warfare programs [9][19] - Commercial aerospace revenue declined by 10% to $72 million, marking the first decline in 15 quarters, primarily due to lower demand for the 737 MAX [10][20] - Industrial business revenue decreased to $9 million as the company pruned non-core operations [21] Market Data and Key Metrics Changes - The defense backlog increased by $15 million year-over-year to $620 million, while the commercial aerospace backlog decreased by $31 million to $411 million [14][20] - The company reported that 95% of its revenue is generated in the U.S., with minimal exposure to tariffs due to its manufacturing footprint [17][26] Company Strategy and Development Direction - The Vision 2027 strategy aims to increase the revenue percentage from engineered products to over 25%, with current contributions at 23% [8][15] - The company is focused on consolidating its manufacturing footprint and pursuing targeted acquisitions to enhance growth [8][34] - Continued emphasis on value-added pricing and expanding content on key commercial aerospace platforms is part of the strategic plan [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in commercial aerospace in the second half of 2025, despite current headwinds [16][100] - The company anticipates mid-single-digit revenue growth for 2025, supported by strong defense activity and recovery in commercial aerospace [16][101] - Management highlighted the importance of maintaining a balanced portfolio between defense and commercial sectors to mitigate risks [68] Other Important Information - The company is undergoing a restructuring initiative aimed at improving operational efficiency and reducing costs, with expected annual savings of $11 million to $13 million [33][34] - Cash flow from operating activities improved to $800,000 in Q1 2025, compared to a cash outflow of $1.6 million in Q1 2024 [35] Q&A Session Summary Question: How would you characterize any delay in ship set rates to Boeing and Spirit? - Management noted that rates from Boeing are in the low twenties and Spirit is ramping up to the mid to high twenties, with optimism for continued growth despite destocking impacts [40][41] Question: What is the outlook for the M&A pipeline? - Management confirmed ongoing diligence on multiple opportunities and expressed confidence in completing a deal this year, focusing on niche engineered product businesses [52][54] Question: How do you see growth rates between commercial aerospace and defense for the remainder of the year? - Management expects continued strength in defense and a recovery in commercial aerospace, aiming for mid-single-digit growth for the full year [67][101] Question: What are the potential new work scopes in commercial and defense? - Management highlighted opportunities with Spirit AeroSystems and ongoing bidding for new work with major defense customers like RTX [80][83]

Financial Data and Key Metrics Changes - Q1 2025 revenue was $194.1 million, a 1.7% increase from $190.8 million in Q1 2024, marking the sixteenth consecutive quarter of year-over-year revenue growth [9][25] - Gross margin increased to 26.6%, up 200 basis points from 24.6% year-over-year, achieving a new quarterly record [13][26] - Adjusted EBITDA reached 15.9%, a record as a percentage of sales, up from 14.4% in the prior year [14][31] - GAAP diluted EPS was $0.69, compared to $0.46 in Q1 2024, while adjusted diluted EPS was $0.83, up from $0.70 [14][31] Business Line Data and Key Metrics Changes - Military and space revenue grew by 15% year-over-year to $114 million, driven by missile and electronic warfare programs [10][21] - Commercial aerospace revenue declined by 10% to $72 million, marking the first decline in 15 quarters, primarily due to lower demand for the 737 MAX [11][22] - Industrial business revenue decreased to $9 million as the company continues to prune non-core operations [23] Market Data and Key Metrics Changes - The defense backlog increased by over $15 million year-over-year to $620 million, representing 59% of the total backlog [15][21] - The commercial aerospace backlog decreased by $31 million to $411 million due to lower OEM production rates [16][22] - The company expects a recovery in commercial aerospace as production rates ramp up in 2025 [22] Company Strategy and Development Direction - The company is executing its Vision 2027 strategy, aiming to increase the revenue percentage from engineered products, which accounted for 23% in 2024, up from 19% in 2023 [9][17] - The strategy includes targeted acquisitions, consolidation of manufacturing operations, and expansion in high-growth segments of the defense budget [9][10] - The company is focused on maintaining a strong mix of defense and commercial aerospace to mitigate risks associated with market cyclicality [10][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in commercial aerospace and continued strength in defense, reaffirming guidance for mid-single-digit revenue growth for 2025 [18][70] - The company does not anticipate significant impacts from tariffs on its revenues, as 95% of its revenue is generated in the U.S. [19][29] - Management highlighted the importance of maintaining operational efficiency and strong relationships with key customers like Boeing and Spirit [83][84] Other Important Information - The company has ceased operations in two facilities, expecting to realize cost savings as production ramps up in other locations [13][36] - Cash flow from operating activities improved to $800,000 in Q1 2025, compared to a use of $1.6 million in Q1 2024 [38] - The company is actively pursuing M&A opportunities, focusing on niche engineered product businesses that span both defense and commercial aerospace [54][56] Q&A Session Summary Question: How would you characterize any delay in ship set rates to Boeing and Spirit? - Management noted that Boeing is producing in the low twenties and Spirit is ramping up to the mid to high twenties, with expectations for continued growth despite destocking impacts [43][45] Question: Are you tracking towards your M&A placeholder for Vision 2027? - Management confirmed they are tracking multiple opportunities and remain confident in completing a deal this year [54][56] Question: What are your expectations for growth rates between commercial aerospace and defense for the remainder of the year? - Management expects continued strength in defense and a recovery in commercial aerospace, aiming for mid-single-digit growth overall [68][70]

Core Viewpoint - Ducommun (DCO) reported quarterly earnings of $0.83 per share, exceeding the Zacks Consensus Estimate of $0.59 per share, and showing an increase from $0.70 per share a year ago, representing an earnings surprise of 40.68% [1][2] Financial Performance - The company achieved revenues of $194.11 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.74% and increasing from $190.85 million year-over-year [2] - Over the last four quarters, Ducommun has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - Ducommun shares have declined approximately 8% since the beginning of the year, compared to a 3.9% decline in the S&P 500 [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.72 on revenues of $198.67 million, and for the current fiscal year, it is $3.28 on revenues of $820.35 million [7] Industry Context - The Aerospace - Defense Equipment industry, to which Ducommun belongs, is currently ranked in the top 12% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]