Ducommun Q3 Earnings Call Highlights

Key Points

• Ducommun posted record Q3 revenue of $227 million, up 6% year over year, as commercial aerospace revenue jumped 28% to $97 million and offset a 7% decline in military and space sales. It raised the low end of its 2026 revenue forecast to $885 million.
• Gross margin reached a record 28.9%, supported by a higher mix of engineered products, manufacturing volume and consolidation savings. Adjusted EBITDA margin rose to 17.5%, while adjusted earnings were $1.21 per share, slightly below $1.22 a year earlier.
• Bookings and backlog strengthened: companywide bookings were $354 million, with record remaining performance obligations of $1.3 billion and a 1.6 book-to-bill ratio. New defense orders included $90 million for RTX’s SPY-6 radar, while a new Airbus A320 titanium-components agreement is expected to bring significant double-digit price increases starting in January.

Ducommun NYSE: DCO reported record third-quarter 2026 revenue as commercial aerospace growth offset a decline in military and space sales, and the company raised the low end of its full-year revenue outlook.

Revenue rose 6% to $227 million from $214.4 million a year earlier, marking the company’s 22nd consecutive quarter of year-over-year growth. Commercial aerospace revenue increased 28% to $97 million, while military and space revenue fell 7% to $119 million.

Chairman and CEO Steve Oswald attributed the defense decline to the timing of orders and production, including work pulled forward into the first half of the year. The company recorded $263 million in military and space bookings during the quarter, a record, and ended the period with $868 million in remaining performance obligations for that business.

Ducommun refined its 2026 revenue forecast to $885 million to $890 million, from the $880 million to $890 million range it provided in September.

Margins rise as engineered products grow

Gross profit increased to $65.6 million from $59 million, and gross margin expanded to a record 28.9% from 27.5%. CFO Suman Mookerji said the improvement reflected a higher mix of engineered products, savings from facility consolidations and increased manufacturing volume.

Engineered products accounted for a record 24% of quarterly revenue. Oswald said the company had realized its expected $13 million in annual savings from the consolidation program.

Adjusted earnings before interest, taxes, depreciation and amortization rose to $39.7 million from $37.3 million, with the adjusted EBITDA margin reaching 17.5%. Ducommun’s VISION 2027 plan targets an 18% margin in 2027.

Net income was $13.9 million, or 89 cents per diluted share, compared with a loss of $60.8 million, or $4.06 per share, a year earlier, when results were affected by a litigation settlement. Adjusted earnings were $1.21 per share, compared with $1.22 a year earlier.

Adjusted operating margin declined to 12.3% from 12.7%. Mookerji said higher selling, general and administrative expenses, driven by the timing of stock-based compensation, offset benefits from higher volume and gross profit.

Aerospace demand and Airbus agreement

Commercial aerospace growth was supported by higher production and deliveries on Boeing and Airbus single-aisle platforms, as well as gains in wide-body aircraft and business jets. Oswald said Ducommun was also benefiting from a proprietary switch program for Boeing, with bookings exceeding $30 million for retrofit and new-build applications.

Oswald said customer destocking was in its final stages and expected to end in December. He also announced a new two-year agreement to supply titanium components for the Airbus A320 family, replacing an agreement expiring at the end of 2026. Ducommun received purchase orders under the new arrangement and expects significant double-digit price increases beginning in January, he said.

Asked whether commercial aerospace growth could remain above 20% in 2027, Mookerji said growth should be strong but that a rate above 20% would “probably be a bit sporty.” Oswald said the company would have a clearer view in February.

Defense backlog builds ahead of missile orders

Quarterly defense bookings included a $90 million order from RTX for the SPY-6 Navy radar and $54 million for Northrop Grumman’s MESA airborne surveillance system supporting five Boeing E-7 Wedgetail aircraft. Missile revenue grew 25% year over year, while radar, ground vehicle and rotorcraft sales were softer because of order and production timing, Oswald said.

Companywide bookings totaled $354 million, bringing remaining performance obligations to a record $1.3 billion, up $255 million from a year earlier. The company’s quarterly book-to-bill ratio was 1.6, while the military and space ratio was 2.2.

Oswald said the defense bookings did not include orders under seven-year missile framework agreements involving RTX and Lockheed. Ducommun expects related orders to begin flowing to the supply chain in late first quarter and second quarter of 2027, though timing is uncertain.

Mookerji said Ducommun expects to support higher missile volumes primarily with existing capacity and modest expansion at existing facilities, limiting the need for significant capital spending.

Long-term targets and acquisitions

Under its VISION 2032 plan, Ducommun is targeting $1.6 billion to $1.7 billion in annual revenue, a 23% adjusted EBITDA margin and an engineered-products share of at least 40% of revenue. Oswald said the company plans to grow that product mix organically and through increased acquisition activity.

Mookerji said Ducommun is evaluating both smaller tuck-in acquisitions and opportunities larger than those it has pursued in the past, but is not seeking a “huge transformative acquisition.” The company ended the quarter with $434 million in available liquidity and generated $77.5 million in operating cash flow through the first nine months of 2026.

About Ducommun (NYSE:DCO)

Ducommun Incorporated NYSE: DCO is a manufacturer of engineered components, assemblies and systems for the aerospace, defense and space industries. The company supplies products used in commercial aircraft, military platforms, launch vehicles, satellites and other mission-critical applications.

Its offerings include structural components and assemblies, precision-machined parts, composite structures, electronic and electromechanical systems, circuit-card assemblies, wire harnesses and other specialized products.

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