DPC Q3 Earnings Call Highlights

Key Points

• DPC reported record third-quarter revenue of $308 million, up 39% year over year, and adjusted EBITDA of $58 million, up 56%. Growth was led by aerospace and industrial gas turbines, while adjusted free cash flow reached $111 million.
• The company raised its 2026 outlook and forecast 2027 revenue of $1.23 billion to $1.33 billion and adjusted EBITDA of $240 million to $260 million, implying an approximately 19.5% margin at the midpoint.
• DPC signed a 10-year industrial gas turbine agreement expected to add more than $100 million in annual revenue by 2032, with the customer funding about 80% of planned capacity investment. It also acquired the remaining stake in Montana Precision Products for $73 million, with the deal expected to add to earnings in its first year.

DPC NYSE: DPC raised its 2026 outlook and issued guidance for 2027 after reporting record third-quarter revenue and adjusted EBITDA, driven by growth in its aerospace and industrial gas turbine markets.

The company, which operates as Doncasters, reported revenue of $308 million, up 39% from a year earlier. Adjusted EBITDA rose 56% to $58 million, and the adjusted EBITDA margin increased 200 basis points to 18.9%.

Chief Executive Officer Mike Quinn said the results exceeded consensus expectations. The company also announced a long-term customer agreement, acquired a stake in an aerospace joint venture and refinanced its debt facilities during the quarter.

Growth Across End Markets

Chief Financial Officer David Egan said third-quarter revenue growth reflected higher volumes, value-based pricing and the pass-through of metal cost inflation. Metal cost pass-through accounted for approximately 6 percentage points of the revenue increase and diluted the adjusted EBITDA margin by 90 basis points, without affecting EBITDA dollars, he said.

Aerospace revenue grew 45%, while industrial gas turbine revenue increased 43%. Transportation revenue rose 21%, benefiting from automotive contracts won in prior years that are ramping up in 2026.

Combined Engine Products revenue increased 43%, and adjusted EBITDA grew 70%. The business’s adjusted EBITDA margin rose 380 basis points to 23.8%, which Egan attributed to higher volumes and value-based pricing.

DPC generated $111 million of adjusted free cash flow in the quarter, helped by customer contributions, and ended the period with an adjusted net cash position of $192 million. That balance preceded the October payment for its joint venture acquisition.

Customer Partnership and Acquisition

DPC signed its fifth strategic customer partnership, a minimum 10-year agreement with an industrial gas turbine equipment manufacturer. The contract covers large and complex blade and vane castings and is expected to generate more than $100 million of incremental annual revenue by 2032, Quinn said.

The company expects to invest more than $200 million in additional capacity for the agreement, with the customer planning to fund approximately 80% of the investment. Across all five partnerships, DPC expects more than $300 million of incremental annual revenue by 2031, with original equipment manufacturers supporting approximately two-thirds of the associated investment.

Quinn said the company’s industrial gas turbine partnerships include customer funding and volume commitments with take-or-pay provisions. He also said DPC had not traded pricing for customer-funded capacity and would decide whether to fund future projects itself or accept customer funding based on each agreement.

Separately, DPC acquired SeaCast’s 50% stake in Montana Precision Products, an aerospace casting joint venture with Unison, a GE Aerospace company. Egan said DPC paid $73 million for the stake and an additional $7.5 million toward the property freehold.

The transaction closed on October 30 and is expected to add to earnings within its first year, Quinn said. Although DPC owns half of the venture, Egan said it has a controlling interest and will consolidate 100% of its results. DPC also sold its Ivostud business on October 23.

Outlook Calls for Higher Revenue and Margins

DPC now expects 2026 revenue of $1.115 billion to $1.13 billion and adjusted EBITDA of $204 million to $207 million. The forecast implies an adjusted EBITDA margin of approximately 18%, including dilution from higher metal cost pass-through.

For 2027, the company projected revenue of $1.23 billion to $1.33 billion and adjusted EBITDA of $240 million to $260 million. At the midpoints, the forecast implies an adjusted EBITDA margin of approximately 19.5%, assuming no change in metal cost pass-through.

Egan said the 2027 outlook includes the consolidated contribution from Montana Precision Products, excludes Ivostud and assumes no material change in metal costs. He expects growth to come primarily from volume, with some pricing contribution, while capacity associated with customer partnerships begins coming online toward the end of 2027.

The midpoint of DPC’s 2027 free cash flow guidance is approximately break-even, including customer funding and total capital expenditure. Egan said customer contributions are tied to construction milestones, with funding expected during 2027, 2028 and 2029.

Long-Term Demand and New Markets

Quinn said demand for heavy-frame industrial gas turbines and replacement parts supports DPC’s plan to double its heavy-frame capacity. He said the company’s long-term base case for industrial gas turbine revenue growth of 7% to 9% annually through 2035 excludes artificial intelligence-related data center demand.

The company also won its first supply contract for unmanned aerial vehicles and drones. Quinn described the order as financially small at this stage but said DPC’s Turbo Wheels manufacturing capabilities are suited to the high-volume castings used in that market.

In aerospace, Quinn said DPC’s planned expansion into volume production of airfoils remains on schedule, with initial shipments expected in the third quarter of 2027. He said the move could increase the company’s aftermarket exposure over time, as blades and vanes require replacement more often than the structural castings DPC primarily produces today.

About DPC (NYSE:DPC)

DPC Dash Limited operates Domino's Pizza restaurants in China under a master franchise arrangement. Its business includes preparing and selling pizzas and other menu items through company-operated stores, along with delivery and carryout services. The company serves customers in mainland China, where it has expanded its restaurant network across multiple cities. Its operations focus on adapting Domino's menu and service model to local markets while maintaining the brand's core offerings. DPC Dash was established in 2010 and is headquartered in Shanghai, China.

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