Ducommun Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 6, 2025
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Operator

Good day, and thank you for standing by. Welcome to the Q1 twenty twenty five Ducommun earnings conference call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

Operator

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Ducommun's Senior Vice President, Chief Financial Officer, Mr. Suman Mukherjee.

Operator

Please go ahead.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Thank you, and welcome to Ducommun's twenty twenty five first quarter conference call. With me today is Steve Oswald, Chairman, President, and Chief Executive Officer. I'm going to discuss certain limitations to any forward looking statements regarding future events, projections, or performance that we may make during the prepared remarks or the Q and A session that follows. Certain statements today that are not historical facts, including any statements as to future market and regulatory conditions, results of operations and financial projections, including those under our Vision 2027 game plan for investors are forward looking statements under the Private Securities Litigation Reform Act of 1995 and are therefore prospective. These forward looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from the future results expressed or implied by such forward looking statements.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Although we believe that the expectations reflected in our forward looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. In addition, estimates of future operating results are based on the company's current business, which is subject to change. Particular risks facing Ducommun include, amongst others, the cyclicality of our end use markets, the level of U. Government defense spending, our customers may experience delays in the launch and certification of new products, timing of orders from our customers, our ability to obtain additional financing and service existing debt to fund capital expenditures and meet our working capital needs, legal and regulatory risks, including pending litigation matters, the cost of expansion, consolidation and acquisitions competition economic and geopolitical developments, including supply chain issues international trade restrictions the impact of tariffs and rising or high interest rates the ability to attract and retain key personnel and avoid labor disruptions, the ability to adequately protect and enforce intellectual property rights, pandemics, disasters, natural or otherwise, and risk of cybersecurity attacks. Please refer to our annual report on Form 10 ks, quarterly reports on Form 10 Q, and other reports filed from time to time with the SEC, as well as the press release issued today for a detailed discussion of the risks.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Our forward looking statements are subject to those risks. Statements made during this call are only as of the time made, and we do not intend to update any statements made in this presentation, except if and as required by regulatory authorities. This call also includes non GAAP financial measures. Please refer to our filings with the SEC for a reconciliation of the GAAP to non GAAP measures referenced on this call. We filed our Q1 twenty twenty five quarterly report on Form 10 Q with the SEC today.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

I would now like to turn the call over to Steve Oswald for a review of the operating results. Steve?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Okay, thanks, Simana.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Thanks everyone for joining us today for our first quarter call. Today and as usual, I will give an update of the current situation of the company, afterwards Simone will review our financials in detail. Let me start off again on this quarterly call with Ducommun's Vision 2027 game plan for investors as we start our third year in 2025. The strategy and vision were developed coming out of the COVID pandemic over the summer and fall of twenty twenty two, unanimously approved by the Ducommun Board in November 2022, then presented to investors the following month in New York where we got excellent feedback. Since that time, the Commons management has been executing the Vision 2027 strategy.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

This includes increasing the revenue percentage of engineered product and aftermarket content, which finished at 23% for 2024, up from 19% in 2023, consolidating our rooftop footprint and contract manufacturing, continuing the targeted acquisition program, executing our offloading strategy with defense primes and high growth segments of the defense budget, driving value added pricing, and expanded content on key commercial aerospace platforms. All of us here as well as my fellow board members continue to have a high level of conviction in the Vision 2027 strategy and financial goals and believe the many catalysts ahead present unique value creation opportunity for shareholders. The Q1 twenty twenty five results are another example of our strategy and initiatives working. Just look at the margin expansion performance and much more to come this year and in 2026. Despite the challenges discussed on our prior earnings call, I'm happy to report Q1 sales of $194,100,000 which was 1.7% over prior year, making this quarter our sixteenth consecutive quarter with year over year growth in revenue.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Team achieved this despite the headwinds in commercial aerospace bill rates, destocking at BA and SPR and the continued strategic pruning of our non core industrial business. It was also our seventh consecutive quarter above $190,000,000 in revenue. Strong growth in our missile and electronic warfare along with military helicopter programs drove our military and space revenue to 15% growth over prior year. This includes not just order increases, but also major programs I've been speaking about coming online, such as the offload of the next generation Jammer from RTX and Amran. Our defense business looks great with Apache Blades coming back online in Q2, Tomahawk Cables along with Toll Missile case in Q3.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

We can't wait. I also want to point out that three of our top five customers in Q1 were defense primes and that is consistent with all of 2024 as well. Our team continues to build scale at other defense customers outside of RTX, which is and has been a long term goal. Northrop Grumman is a great example of the strategic effort. Strong growth in our defense business more than offset lower revenue in our commercial aerospace business which declined 10% in the quarter and was anticipated.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

This is the first commercial aerospace decline in the past fifteen quarters for DCO. We had tough comparison in Q1 as both Boeing and Spirit drove higher demand during this period last year. We have seen steady improvement in demand with both these customers over the course of Q1 twenty twenty five coming out of the Boeing strike in Q4 of last year and the outlook is promising. I also want to add that everything we are seeing out of Boeing commercial last few months has been very encouraging, both on the seven thirty seven and seven eighty seven, our main platforms. We are optimistic that bill rates will be at 38 soon on the seventhirty seven.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Gross margin also grew $4,700,000 to 26.6 percent in Q1, a new quarterly record, up 200 basis points year over year from 24.6% as we continue to realize year over year benefits from our growing engineered products portfolio with aftermarket, strategic value pricing initiatives, restructuring actions and productivity improvements. We have ceased manufacturing operations in both our Monrovia, California and Berryville, Arkansas facilities and are already seeing cost savings from this action. We expect to see these savings be higher as the receiving plants ramp up production later this year and fully in 2026. Stay tuned. For adjusted operating income margins in Q1, the team delivered 9.9%, which was a 90 basis point improvement compared to prior year of 9%.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

We continue to be pleased with the growth in our Engineered Products portfolio and our Structures business this quarter, which fully recovered from a one time expense in Q4 twenty twenty four. We did tell investors last quarter it was one time and kept our word. Adjusted EBITDA continues to grow compared to last year at 15.9%, a record for us as a percentage of sales, up $3,500,000 and almost $31,000,000 fantastic progress. This is our second quarter with adjusted EBITDA above $30,000,000 and represents an expansion of 150 basis points above prior year and continues the strong momentum we saw in 2024 as we work towards the 18% goal in our Vision 2027 plan. GAAP diluted EPS was $0.69 a share in Q1 twenty twenty five versus $0.46 a share for Q1 twenty twenty four.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

With the adjustments, diluted EPS was a strong $0.83 a share compared to adjusted diluted EPS of $0.70 a share in the prior year quarter. The higher GAAP and adjusted diluted EPS during the quarter was driven by improved operating income as well as lower interest costs due to lower interest rates along with a lower outstanding debt balance. The company's consolidated backlog continues to be strong at $1,050,000,000 increasing $8,000,000 year over year. The defense backlog increased over $15,000,000 compared to the prior year quarter. No surprise there and is now at $620,000,000 The commercial aerospace backlog decreased by $31,000,000 compared to the prior year quarter due to lower OEM production rates, but fully expected to come back.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

In December 2022, we set a target of generating 25% plus of our revenue from engineered products, which was 9% in 2017 and fifteen percent in 2022. In 2024, we reported that our engineered product business drove 23% of our total revenue, up from 19% in 2023, positioning us well ahead of the curve in achieving our Vision 2027 goal and certainly pushing for a lot more. We achieved this both through focused investment driving organic growth in our current businesses as well as the BLR acquisition. In Q1 twenty twenty five, we have maintained this mix at 23% and continue to work on both organic and inorganic opportunities to drive this higher. We made tremendous progress to date and I'm proud of our team and strategic plans.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

As for 2025 revenue, we are positioned to benefit from the expected bone recovery in the second half along with defense, which includes three programs mentioned earlier coming back online in Q2 and Q3. We are reaffirming our guide of mid single digit revenue growth for the year, with Q2 being flattish to last year due to commercial aerospace including destocking but anticipate good strength in the second half of twenty twenty five. In addition, we also believe tariffs will have limited if any impact on our 2025 revenues, a good story for our investors. I want to reiterate as well that Toucamet is a U. S.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Manufacturer with U. S. Employees and 95% of our revenue is produced in The U. S. Our only other facility is based in Guaymas, Mexico and that production is less than 5% of our revenue and thankfully covered under the USMCA exempting us from tariffs.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

The other good news is the common sales into China is almost entirely one program for an Airbus supplier who is owned by the government, constitute less than 3% of our revenues, and we have not seen any impact at this point on tariffs for ourselves. On the supplier side, we do procure some parts from Europe and Asia, but it is manageable and so far the impact has been pretty de minimis. We will continue to monitor as the situation evolves, but at this point, we certainly don't see it as being something material to the company. To sum it up, to comment in a lot of ways is the new trade policy with most of US manufacturing operations and US employees. Now let me provide some additional color on our markets, products and programs.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Beginning with our military and space sector, we saw revenues of $114,000,000 compared to $99,000,000 in Q1 twenty twenty four. Growth was driven by missile programs such as the TOW and AMRAN, electronic warfare and radar programs including the NGJ, Aegis Combat System, GATOR and on the F-sixteen and Black Hawk for fixed and rotary wing platforms. These are partially offset by weakness on the F-thirty five, Patriot and the V-twenty two. We also ended the first quarter with a backlog of $620,000,000 an increase of $51,000,000 year over year, representing 59% of the Commons total backlog. Within our commercial aerospace operations, first quarter revenue took a step backwards, declining 10% year over year in the quarter to $72,000,000 driven mainly by lower rates on the seven thirty seven MAX, commercial helicopters and in flight entertainment, partially offset by growth on the A320 and seven eighty seven.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

As I mentioned earlier, we believe that finally a much better story is ahead for PA and the MAX. Now that production is ramping up again after the strike. We have seen demand pick up at both Boeing and Spirit over the last few months. The backlog within our commercial aerospace business was $411,000,000 at the end of the first quarter, decreasing $31,000,000 compared to prior year driven by Boeing strike late last year and its impact on production rates. We expect this to recover as production rates ramp up in 2025.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Revenue in our industrial business declined to $9,000,000 during Q1 as we continue to strategically prune non core business from the portfolio. This will benefit the company in the long term as we transition that capacity to our core aerospace and defense platforms. With that, I'll have Suman review our financial results in detail. Suman?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Thank you, Steve. As a reminder, please see the company's October and Q1 earnings release for a further description of information mentioned on today's call. As Steve discussed, our first quarter results reflected another period of solid performance with strong growth in our military end markets. We also continued to make good progress on our facility consolidation projects, which are nearing completion and will drive further synergies in late twenty twenty five and into 2026, as we close out the recertification of the various product lines at the receiving facilities over the next few months. As Steve highlighted earlier, we also made great progress in continuing to build up our engineered product portfolio with those revenues now contributing 23% to our mix.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

These actions along with our strategic pricing initiatives drove continued margin expansion in Q1 and is keeping us on pace to achieve our Vision 2027 goals. Now turning to our first quarter results. Revenue for the first quarter of twenty twenty five was $194,100,000 versus $190,800,000 for the first quarter of twenty twenty four. The year over year increase of 1.7 reflects strong growth in military and space of 15%, driven by increases in electronic warfare, missiles and radar systems. This was partially offset by weakness in our commercial aerospace business, mainly driven by lower revenues on the seven thirty seven MAX.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

We posted total gross profit of 51,600,000.0 or 26.6% of revenue for the quarter versus $46,900,000 or 24.6% of revenue in the prior year period. We continue to provide adjusted gross margins as we had certain non GAAP cost of sales items in the prior year period relating to inventory step up amortization on our acquisitions and restructuring charges. On an adjusted basis, our gross margins were 26.6% in Q1 twenty twenty five versus 25% in Q1 twenty twenty four. The improvement in gross margin was driven by our growing engineered products portfolio, strategic pricing initiatives, productivity improvements and restructuring savings across both our structural systems and electronic systems segments. We also continue to make progress on supply chain and labor.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Through our proactive efforts, including strategic buys and our inventory investments, we have been able to avoid any significant impacts thus far on our business. Going forward, we will continue to work to improve the working capital turns in the business and improve our cash flow. I also want to add that we did not see any measurable impact from tariffs in the first quarter. And as Steve mentioned, do not anticipate any significant impact to our P and L. We are a U.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

S. Manufacturing business with U. S. Employees and generate 95% of revenues from our domestic facilities. The other 5% comes from Mexico and all that revenue is tariff free through the USMCA.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Our sales are also largely to domestic customers with U. S. Sales being in excess of 85% in 2024. Sales to China were less than 3%, mostly to one customer for Airbus, and there has been no impact to those volumes or orders at this time due to the tariffs. Our supply chain is also largely domestic with less than 5% of our direct suppliers being foreign.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Some of our domestic suppliers do source materials from outside The United States, but even that is a very manageable spend with China being a low single digit percentage. We expect to mitigate the impact of tariffs on our material spend through military duty free exemptions, alternate sourcing of materials from domestic suppliers, or by passing on the impact to our customers. Yukarman reported operating income for the first quarter of '16 point '6 million dollars or 8.5% of revenue compared to $12,600,000 or 6.6% of revenue in the prior year period. Adjusted operating income was 19,200,000.0 or 9.9% of revenue this quarter, compared to $17,100,000 or 9% of revenue in the comparable period last year. The company reported net income for the first quarter of twenty twenty five of $10,500,000 or $0.69 per diluted share, compared to net income of $6,800,000 or $0.46 per diluted share a year ago.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

On an adjusted basis, the company reported net income of 12,600,000.0 or $0.83 per diluted share compared to adjusted net income of 10,400,000.0 or $0.70 in Q1 twenty twenty four. The higher net income and adjusted net income during the quarter was driven by the higher operating income and adjusted operating income. Now let me turn to our segment results. Our Structural Systems segment posted revenue of $84,400,000 in the first quarter of twenty twenty five versus $83,300,000 last year. The year over year increase reflected 2,300,000.0 of higher sales across our military and space applications, including Black Hawk and Tow.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Commercial aerospace was down just 2% driven primarily by a decline in seven thirty seven MAX and commercial helicopters. Structural systems operating income for the quarter was $10,400,000 or 12.3% of revenue compared to $2,900,000 or 3.4% of revenue for the prior year quarter. Excluding restructuring charges and other adjustments in both years, the segment operating margin was 14.9% in Q1 twenty twenty five versus 7.8% in Q1 twenty twenty four. In Q4 twenty twenty four, we had noted unfavorable program mix and one time costs impacting the profitability of the segment. We had highlighted these as temporary with an expected recovery in Q1 twenty twenty five.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Our performance here in Q1 twenty twenty five validates those comments as we saw a strong recovery in the margins of the Structural Systems segment. Our Electronic Systems segment posted revenue of $109,700,000 in the first quarter of twenty twenty five versus $107,500,000 in the prior year period. Higher revenues from TOW and AMRAAM missiles, as well as from electronic warfare and radar programs were partially offset by lower revenues from F-thirty five in flight entertainment electronics, along with the reduction in our industrial business as we chose to selectively prune non core work. We have been pruning our industrial business now for multiple quarters, maintaining only select customers that are accretive to our business. Electronic Systems operating income for the first quarter was $18,100,000 or 16.5% of revenue versus $19,000,000 or 17.6% of revenue in the prior year period.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Excluding restructuring charges and other adjustments in both years, the segment operating margin was 16.9 in Q1 twenty twenty five versus 18.4% in Q1 twenty twenty four. The year over year decrease was primarily due to lower manufacturing volume and higher manufacturing costs, partially offset by favorable product mix in the quarter. Next, I would like to provide an update on our ongoing restructuring program. As a reminder, and as discussed previously, we commenced a restructuring initiative back in 2022. These actions are being taken to better position the company for stronger performance in the short and long term.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

This includes the shutdown of our facilities in Monrovia, California and Berryville, Arkansas, and the transfer of that work to our low cost operation in Guaymas, Mexico, and to other existing performance centers in The United States. We continue to make progress on these transitions and are working diligently with our customers, Boeing and RTX, to obtain the requisite approvals, which are expected to be completed by the end of Q3. Later this month, we expect to start full production of rotor blades for the Apache helicopter at our Kauksaki, New York facility, which will complete the transition of that program from our Monrovia, California facility. We are also working through the transition of seven thirty seven MAX spoilers, Tomahawk harnesses and the tow missile case, which are all expected to go into production in Guaymas in the second half of this year. During Q1 twenty twenty five, we recorded $400,000 in net restructuring charges.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

We expect to incur an additional 500,000.0 to $1,000,000 in restructuring expenses as we complete the program. As previously communicated, we expect to generate 11,000,000 to $13,000,000 in annual savings from our actions and have already seen some realization of savings in 2024 and the first quarter of this year. We expect the synergies to ramp up in late twenty twenty five and into 2026 as the product recertification is complete and the receiving facilities move up the learning curve and ramp up production. We anticipate selling the land and building at both Monrovia, California and Berryville, Arkansas. During the quarter, we reclassified the Berryville land, buildings and building improvements to assets held for sale and are making progress towards the sale of that property in Q2.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Turning now to liquidity and capital resources. In Q1 twenty twenty five, we generated $800,000 in cash flow from operating activities, which was an improvement compared to use of $1,600,000 in Q1 twenty twenty four. The improvement was due to net income growth of $3,700,000 offset by investments in working capital. As of the end of the first quarter, we had available liquidity of $221,700,000 comprising of the unutilized portion of our revolver and cash on hand. Our existing credit facility was put in place in July 2022 at an opportune time in the credit markets, allowing us to reduce our spread, increase the size of our revolver and allowing us the flexibility to execute on our acquisition strategy.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Interest expense in Q1 twenty twenty five was 3,300,000.0 compared to $3,900,000 in Q1 of twenty twenty four. The year over year improvement in interest cost was primarily due to lower interest rate along with a lower debt balance. In November 2021, we put in place an interest rate hedge that went into effect for a seven year period starting January 2024 and pegs the one month term so far at 170 basis points for $150,000,000 of our debt. The hedge will continue to drive significant interest savings in 2025 and beyond. To conclude the financial review for Q1 twenty twenty five, I would like to say that the first quarter results on a strong start to the year, building on the momentum from 2024 positions us well for the rest of 2025 and beyond.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

I'll now turn it back over to Steve for his closing remarks. Steve?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Okay. Thanks, Suman. In closing, Q1 was an excellent start to the year despite the anticipated headwind from commercial aerospace. As mentioned several times, we achieved another record for gross margin percentage at 26.6% and just keep in mind a few years ago we had a run rate of roughly 20% for an entire year and that was back in 2022, so we've come a long way in two years and could not be happy about that. Adjusted EBITDA percentage was great and a record as well at 15.9 of sales.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

We're also very well positioned to meet and exceed our Vision 2027 target of 25% plus of engineered product revenues with twenty twenty five Q1 coming in at 23% and we are getting this as high as possible as it is our number one strategic focus. Finally, with commercial bill rates heading higher in the second half, getting past destocking along with stronger defense activity, I'm very optimistic about what lies ahead in the next few years for DCO, its shareholders, and other stakeholders. Okay, let's go to questions please. Thank you.

Operator

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. One moment while we compile the Q and A roster.

Operator

Our first question comes from the line of Mike Crawford with B. Riley Securities. Your line is now open.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

Thank thank you. Starting with commercial aerospace. I mean, we we know that Boeing is increasing their monthly build rates, but, how would you characterize any delay in when your ship set rates to Boeing and Spirit would increase if Boeing does get production up to 38 a month?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

We are seeing rates from Boeing in the low twenties. We're seeing rates from Spirit ramp up to the mid to high twenties as we went through Q1 and into April. We know publicly that Boeing is likely producing at around in the low thirties at the moment. So there is some destocking impact that we are seeing, but the rates continue to progress and go up over the last four months this year. And so we are very optimistic that there will continue to be, despite the destocking, continued growth in the demand for us on both those platforms.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

And the expectation is that Boeing is able to get to the rate of 38 by the end of this year.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, Mike, this is Steve. I'm very confident where they are. They had a great April as you can see from the announcements they made. March to April was really impressive. I think their efficiency and everything they're doing with Intujin Sound has gotten a lot better.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

I think 38 is in the cards, probably maybe by September, October. So we're going to see a lift.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

Okay. Thank you. And then just turning to rotary wing, you had some weakness, but you also had some selected rotary wing platforms with higher rates. Take it that's Apache or Apache blades are coming on in q two. So what was performing higher in q one and and and how much of this would you attribute to BLR Aerospace?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

So, did, you rightly pointed on the defense side of our business. The weakness that you pointed out, saw in on the commercial side there, we have some transitions ongoing with production moving from Monrovia to Kokusaki. And so some demand with the Bell helicopter, some issues with materials on Sikorsky platforms, which drove temporary softness in the quarter on commercial helicopter. But we are going to see the Apache production here ramp up, which should be really a positive in Q2 and beyond on the rotorcraft side for us.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, plus Mike, we're on the Apache engine with MaxSeal. So that's also they're going great with the engine business there. So that's a part of that lift, we might have this and that with blades right now, but now we're just starting to get ramped up. We cut the blades, when we looked at them, everything's looking great. We got everybody trained out in New York.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

So we're hoping, obviously these are high energy parts, you gotta be careful, but we're hoping in May we're gonna start really ramping up and we got the orders, just gotta get the production in place.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

Okay, thank you. I'll just end with the DSO increase in Q1. Is that anything structural or contractual that changed or should we look for those DSOs to come back down? Thank you.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Yeah, that's a good point. So we did have just some seasonality in the sales in Q1. We had a slightly bigger March. We had some items that went out towards the end of the quarter that drove it. There isn't any structural change.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

It was just the seasonality, a one time kind of thing during the quarter.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

All right. Thank you.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Yeah, Mike. Thanks.

Operator

Thank you. Our next question comes from the line of Ken Herbert with RBC Capital Markets. Your line is now open.

Ken Herbert
Ken Herbert
Managing Director at RBC Capital Markets

Yes. Hi. Good morning, Steve and Suman. I wanted to ask first on the M and A pipeline. You obviously have placeholder for M and A contribution as we think about Vision '27.

Ken Herbert
Ken Herbert
Managing Director at RBC Capital Markets

It's been quiet recently on the deal front. Are you still tracking towards the placeholder you've got in place for '27 from M and A? And maybe can you give any more detail on how the pipeline looks now and due diligence efforts and maybe expectations for M and A this year?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Ken, thank you for the question and good morning to you as well. We continue to track multiple opportunities in our pipeline and you know, we've got to be disciplined and make sure we execute on the right one. We see enough in the pipeline for us to feel fairly confident in being able to get a deal done this year. And I think that's what I would Yeah, I

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

would say the deal volume is good. Just looked at something fairly hard a lot of, put a lot of hours in on it and turned out it just wasn't for us. So we're involved in diligence as you asked and we're looking forward to getting one sooner than later, Ken.

Ken Herbert
Ken Herbert
Managing Director at RBC Capital Markets

Okay, that's helpful. And are you seeing more in aerospace or defense or combined or anything maybe we should just keep in mind?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

I would say the businesses that we look at tend to be kind of niche engineered product businesses, which often will span across some defense platforms as well as commercial aerospace. So it is a mix of both. It isn't necessarily skewed one way or the other.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, would say that's right, Ken. I'd say we usually have sort of a mix. It's usually never, you know, one hundred percent one way or the other. So that's sort of what we're seeing and what we've seen.

Ken Herbert
Ken Herbert
Managing Director at RBC Capital Markets

Okay. And just finally, you seem to be running ahead of your 27 targets in terms of contribution from the engineered products. And if you do another deal this year, I'm assuming it would be very focused on the engineered products. How should we think about the maybe the margin contribution from these engineered products? You talk obviously a lot about the sales contribution.

Ken Herbert
Ken Herbert
Managing Director at RBC Capital Markets

To maybe help us understand how impactful this could be as you grow that mix to the EBITDA? I mean, can imagine it's been a big component of obviously just the margin improvement on the gross margins and EBITDA. But any help you can give in framing that as we think moving forward on the engineered products would be nice. Thank you.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Great question, Ken. These are significantly accretive to our margins, right? These are engineered proprietary product businesses with access to the aftermarket and in line with some of the other aftermarket peers that you covered, right? Margins are in line with those. So they tend to be accretive, they tend to provide also significant margin runway for us to execute on post acquisition.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

And so we believe that this is going to continue to be, as we do additional acquisitions, a key driver of margin expansion for us into 2027.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Cal, I'll say we have, as far as the value we provide for these products, I mean, we have very good pricing power. So that's the other thing which is important for investors to know.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Thanks, Tim.

Ken Herbert
Ken Herbert
Managing Director at RBC Capital Markets

Great, thanks Steve, thanks Juman.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Sure, thanks.

Operator

Thank you. Our next question comes from the line of Michael Ciarmoli with Truist Securities. Your line is now open.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

Hey, good morning, guys. Thanks for taking the questions. Really nice margins here. Maybe, Steve or Suman, just to kind of level set us and unpack maybe the revenue guidance for the rest of the year, single digit growth. Defense obviously had a really strong quarter here, but the comps do get a bit tougher and you're obviously going to have some of this recovery in commercial aero.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

But maybe how are you thinking about the growth rates between commercial aero and defense for the remainder of the year?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, just let me jump in there first. I think first thing, Mike, just to note, mean, this is a real benefit for shareholders that we have this mix of defense and commercial, right? We've had a lot of peer groups that or peers that have more commercial and they're struggling a bit, but as you can see, our defense business we've been talking about really came to the four as they say in Q1. So first of all, we're really pleased with our balance. As far as what I can see, obviously we're flattish in Q2, but we feel very good about destocking and commercial rates going up, not only on the '37, but on the 87, right?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Cause we have a very good content mix there. So very positive on the back half. And I think maybe defense going forward, maybe not 15, but certainly a very respectable growth number. Simone, you can comment The only

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

thing I'd add, Steve, is that we're going to see the ramp up in the programs that have been transitioning, right? So we have the toll, missile cases, spoilers and the Tomahawk programs across commercial and defense, we're going to get some lift in the back half from those programs coming back online.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Which is gonna be great for everyone.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

Okay, got it. What about the A220? I know Airbus's commentary around both the 02/20 and March have been a little bit squishy just given the Spirit facilities. Do you expect that to be a material contributor to the A220 this year?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Look, yes, so a couple of things. That A220 program has been great for us as we've talked about. We make the fuselage skins. We're a supplier into China. We haven't seen any headwind yet, so we feel very good about that.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

So that's going to continue. We feel as far as where we sit here today, it's going to again be good business this year leading to next year. I understand about the spirit issue and the engine issue, and I'm hoping sooner or later they're to work through that. But we're running rates higher than what they're shipping, that's for sure. And we're happy about that.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

The other thing is on the A350, we're not a player on the A350. So I know they're struggling, it won't impact us.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

Got it. Got it. And last one for me. I think you called out the in flight entertainment side of commercial as being weak. I was just wondering if you could potentially size that business.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

What are the thoughts there just given that that's maybe viewed as more discretionary spending from the airlines? Does that continue to be a headwind for the remainder of the year? Was that just short term here temporary?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

That, you know, it's not a huge portion of our business. It's, you know, low single digit percentage of our total business. I think we'll continue to see some softness there for the rest of this year that we expect will be offset by other things in the portfolio.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Mike, I think the compares get a little bit easier. We had a really good Q1 twenty twenty four with In Flight, you know I mean? That's one customer. So, and obviously we didn't have a great rest of the year where things kind of tamped out a bit. So I think going forward, we'll probably moderate around that a fair basis.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

Okay. Perfect. Thanks, guys. I'll jump back in the queue.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Hey, Mike.

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

See you

Michael Ciarmoli
Michael Ciarmoli
Managing Director - Aerospace & Defense Equity Research at Truist Securities

this week.

Operator

Thank you.

Operator

Our next question comes from the line of Jason Gursky with Citi. Your line is now open.

Jason Gursky
Jason Gursky
Managing Director at Citi

Hey. Good morning,

Jason Gursky
Jason Gursky
Managing Director at Citi

everybody. Steve, I wonder

Jason Gursky
Jason Gursky
Managing Director at Citi

if you could just spend a few minutes, you know, talking about the potential for new work scopes for you all. And maybe start with the commercial side. Obviously, Spirit AeroSystems is going through a thing here and I'm just wondering if there won't be some more opportunities there for you as those assets land in different hands. So is there opportunity here either at Boeing or Airbus as a result of what's going on at Spirit AeroSystems for you guys? That'd

Jason Gursky
Jason Gursky
Managing Director at Citi

And then the second part would be on the defense. I'm just kind of curious if you are beginning to see any signs of increased outsourcing initiatives by any of the big cap defense companies. Thanks.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Okay, thanks. Certainly, it's funny you asked that we have our senior VP out at Spirit actually today meeting with them in Wichita. So we have very close relationship with Spirit, they're obviously a top customer of ours and then we do see more opportunity, especially as things ramp up. Okay, so for instance, we just got going on a seven thirty seven Max skins and that's early on, right? So we do four or five skins and we do 15 a month.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

That's the deal we have, right? So it's not paid by the drink. And we feel very good about increasing business there. We understand there's delivery challenges. We're pretty much 100% on time.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

We're pretty close to both Airbus and Spirit and Boeing. So our operations are very strong. So we think there is growth there. We're continuing to work with them. I think the SKINs is sort of in the lead as well as maybe some other things, as well as Airbus.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

We're getting quoted heavily by Airbus, because some of the other suppliers are not getting the job done. Whether that changes hands, we'll have to see, but we see a lot of growth activity as far as quoting at this point. So I think good story. I think if you look at our just percentage of what we have on the programs in general and our operation performance, it's all very positive. You want to add on the second part?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

On the defense side, I think we are continuing to see numerous opportunities to bid for work. RTX is a big customer for us, our biggest customer, and we are actively bidding both, a lot of new work with them. So I think stay tuned for additional wins for us there on the defense side as well.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, the other thing I'd say as well, Jason, is that look, especially like on card businesses, CCAs, those types of things on very difficult applications, I mean, we're really good, right? So we picked up a lot from RTX that used to make these cards in Massachusetts and now that's coming our way in Tulsa and we have other things we're working on with Northrop. So that's not changing and

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

I've been bullish on defense.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

I've been telling investors, look, these things take time and they do because when you're moving something from an internal operation at RTX to Tulsa, they're not going give you everything at first. You've got to get 50%, you've got to get testing machines. So all this is going to come together for us, believe in this year and next year. I was very happy with the 15%, I'll say that in defense of the score.

Jason Gursky
Jason Gursky
Managing Director at Citi

Yeah, good enough. All right, thanks guys.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Thanks Susan.

Operator

Thank you. Our next question comes from the line of Tony Bancroft with Gamco Investors Inc. Your line is now open.

Tony Bancroft
Portfolio Manager at Gabelli Funds

Hey. Good morning, gents. Congratulations. Well done. Based on the $1,000,000,000,000 PBR, you sort of talked about this a little bit, but and then on top of that, a sort of a two pronged attack here than the increase in European defense spending.

Tony Bancroft
Portfolio Manager at Gabelli Funds

Maybe you could talk a little bit more in detail about how you see yourselves seeing position for that growth trajectory and maybe a little further out, there've been questions of being able to continue that growth. How do you see this maybe playing out over the next few years and what programs that you're on that are going have the best exposure to the throat?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, Tony, I'll jump in and then you can. So Tony, I think first, good afternoon. I think just in general, our whole sort of portfolio around electronic warfare, missiles, radar, and obviously things are going to be happening with the Golden Dome and some other things we're still trying to figure out. We really feel very good and strong about being a part of this trillion dollar budget, being able to support all these customers. Mentioned in my remarks that in the past right or wrongly, were your big Raytheon house as they would say and now we're moving in much more to Northrop, we're moving into BAE Systems, we're moving into some of these other companies on purpose, right?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

To kind of build out this customer base and we got a lot of things to provide, cabling, we're great at that, we're great at cards. So we think that we're in the right position. And as I mentioned earlier, not only the budget, but also customers like RTX are offloading, right? They're offloading, they're driving margins. They might be three or four year into a program with seven year fixed pricing and they have nowhere to go.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

So they're going to move stuff out and they're to try to drive margins that way as a company. It's all looking good, Tony.

Tony Bancroft
Portfolio Manager at Gabelli Funds

Nice job positioning yourself. Great job, Steve. Thanks.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Thanks very much. Good to hear from you.

Operator

Thank you. Our next question comes from the line of Noah Poponak with Goldman Sachs. Your line is now open.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Hey, guys.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Hi, Noah.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Yes, sir.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Just kind of thinking through the pace of growth through the rest of the year. I think you had last quarter talked about 1Q being flat, 2Q a little better. The 1Q actual is a little better. Still feel the same about 2Q, or is that looking better? And I guess, the defense growth rate's quite high in the quarter as others have noted.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

The compares get a little tougher there through the rest of the year, but not that much tougher. And Aero is just down a ton in the first quarter. And Boeing Boeing was on strike and had had things turned off and or I guess was coming out of the strike. So I don't know. Maybe I'm splitting hairs on the mid single for the full year, but it's a little tough to get there, I guess, if things break the right way.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Maybe it's just early in the year and there's a it's a dynamic macro and you're being conservative. But how do you see the growth rate playing out through the year? And what's the upside of where things could land?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Noah. Good afternoon. A great question. On the commercial aerospace side, I would say that so if you look at Boeing and Airbus, they're about 50% of our total commercial aerospace business. So, we do expect that to ramp up in the second half of the year, but I wouldn't apply that growth rate on our entire commercial aerospace revenue, right?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

So, 50% and the other 50% includes business jets and rotorcraft and other things. But there will be growth there. There will be continued strength in the defense business, as Steve mentioned earlier, may not be at the 15% mark, but we do expect based on the programs and the visibility we have for the rest of the year, there's going to be continued strength there. And then we have also the ramp up on the programs that have moved from one facility to another and are currently kind of in hibernation, but are expected to ramp up in the second half of the year. They include toll missile case, they include the spoilers in the seven thirty seven MAX, as well as the Tomahawk harnesses, along with the Apache Blade.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

So those are all expected to give us some lift in the second half. So we see good growth in commercial aerospace, good growth in defense to kind of get us to that mid single digit number for the full year.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, no, I'd also say, look, we're okay. Is it a little conservative right now? Yeah, we want to really see how the second quarter goes with BA and Spirit. Obviously, that's a big part of our growth story. So, we'll probably have a firmer number, we will, in the next call, but that's kind of where we see it right now.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Okay, that makes sense. Where do you expect your mix of revenue from engineered systems to be as you're exiting the year?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

It will kind of depend on the acquisition. I think if we do get an acquisition, it's likely to exceed or get very close to kind of the 25%

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

target

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

again, depends on the timing also of the acquisition and how much of revenues are contributed, but we expect it to kind of be in that 23% to 24% likely this year. And then with an acquisition ramping up to beyond 25% in the next twelve months.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, I think that's right. I think we're going to, you know, we're obviously, you know, job one right now is another acquisition, right? So we're, everybody's working hard on that. So once we do that, we think we'll be over that. And then, come next year, we'll have new thoughts about the next five years, right?

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

So what we're holding right now with the Vision 2027 and we're happy where we are.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Okay. Should we expect the first quarter segment operating margin to be the low watermark for the year and you work higher sequentially off of it? Or is there seasonality or expense timing or mix that could drive a lower quarter at some point in the year?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

So I would say there is some goodness in the Q1 margin. So at 15.9% EBITDA margin, we're also and if you linearly space out our Vision 2027 goal, we would kind of have to be at 16% by the end of the year. So we kind of are there already in Q1. But it does have 50 to 75 basis points of, I would say, mixed goodness in it. So, we'll continue to see, I think, good margins for the rest of the year, but I wouldn't say this is a low watermark.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

But with that 15 to 75 basis points range, I think we're, is how I would say it.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah, around 16 should be good, right?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Yeah, to the

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Makes sense. And then just last one, Suman, what are you expecting for full year 2025 free cash conversion, whether from your adjusted net income or EBITDA?

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

So we did know we had 40% free cash flow conversion last year in 2024, we had a little over 30% free cash flow conversion in 2023. We expect 2025 to be continuing that path of improvement. I wouldn't guide to a specific number for the year, we don't typically provide free cash flow guidance. Our end goal here over the next few years is to get back to 100% free cash flow as a percentage of adjusted net income, But that will will happen over the next couple of years as we unwind our working capital investment.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Yeah.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

That will be better this year. But it will be better

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

this year than it was.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Continuing that continuing that that's true.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

That's right. Yeah.

Noah Poponak
Noah Poponak
Research Analyst at Goldman Sachs

Thank you so much.

Suman Mookerji
Suman Mookerji
Senior VP, CFO, Controller & Treasurer at Ducommun

Thanks Noah, thanks for joining us.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Steve Oswald for closing remarks.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Okay, just wrapping up here. Thank you again for joining us for the call. Again, just to reiterate, we feel great about our start this year. We appreciate the thoughtful questions, the support from our shareholders. I feel very optimistic about this year and next year, and I look forward to reconnecting after Q2.

Stephen Oswald
Stephen Oswald
Chairman, President & CEO at Ducommun

Have a very good day and a safe day. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Executives
    • Suman Mookerji
      Suman Mookerji
      Senior VP, CFO, Controller & Treasurer
    • Stephen Oswald
      Stephen Oswald
      Chairman, President & CEO
Analysts
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Key Takeaways

  • Q1 revenue of $194.1 million, up 1.7% year-over-year, marking 16 consecutive quarters of growth despite a 10% decline in commercial aerospace, with a 15% rise in military and space sales.
  • Record margin expansion: quarterly gross margin reached 26.6% (+200 bps), adjusted EBITDA margin hit 15.9% (+150 bps), and adjusted EPS was $0.83, up from $0.70 a year ago.
  • Defense backlog grew by $51 million to $620 million, driven by key offload programs (next-generation jammer, Apache rotor blades, Tomahawk) and three of the top five customers being defense primes.
  • Progress on Vision 2027: engineered products and aftermarket content represent 23% of revenue (up from 19% in 2023), on track for the 25%+ target, supported by organic growth and the BLR acquisition.
  • Facility consolidation and restructuring actions (Monrovia, CA and Berryville, AR closures) will deliver $11–13 million in annual savings, with full benefits ramping in late 2025 and into 2026.
AI Generated. May Contain Errors.
Earnings Conference Call
Ducommun Q1 2025
00:00 / 00:00

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