View printer-friendly versionFirst Quarter 2017 Highlights
- Revenue was
$136.3 million - Net income was
$2.1 million , or$0.18 per diluted share - Adjusted EBITDA was
$11.7 million - Cash flow from operations was
$13.2 million - Net voluntary principal prepayments on credit facilities totaled
$5 million
“Ducommun’s first quarter results reflect the demand dynamics of our various end-use markets at the start of what we expect to be a solid year ahead,” said
“Even as we’ve accomplished a great deal these past twelve months - resulting in a more focused organization and improved cost structure - we see room for higher operating performance going forward. As I begin my new role, we are assessing all areas of the Company for new ways to streamline manufacturing, further increase margins, and enhance return on capital. This is a priority heading into the second half, and we have already hired select staff to focus on initiatives that will bolster Ducommun’s growth trajectory and strengthen bottom line results. For example, we have filled a new role in the Company to lead strategic initiatives that will drive inorganic growth and a higher level of strategic thinking. We are setting the stage to take the Company to the next level -- leveraging our people, technology expertise and the current attractive economic environment.”
First Quarter Results
Net revenue for the first quarter of 2017 was
$6.0 million lower revenue within the Company’s commercial aerospace end-use markets mainly due to the winding down of a regional jet program and the platform transition of a large aircraft program; and$5.8 million lower revenue within the Company’s industrial end-use markets mainly due to the closure of one of the Company’s Tulsa operations inJune 2016 and divestiture of the Company’sPittsburgh operation inJanuary 2016 ; partially offset by$5.9 million higher revenue within the Company’s military and space end-use markets mainly due to the resumption of scheduled deliveries by theU.S. Department of Defense , which favorably impacted the Company’s helicopter and fixed-wing platforms, partially offset by the divestiture of the Company’s Miltec operation inMarch 2016 .
Net income for the first quarter of 2017 was
- The prior year included a preliminary pretax gain on divestitures of the Company’s
Pittsburgh and Miltec operations of$18.8 million ; partially offset by $6.8 million of lower income tax expense.
Gross profit for the first quarter of 2017 was
Operating income for the first quarter of 2017 was
- Decrease in gross margin percentage as a result of unfavorable product mix; partially offset by
- Lower selling, general and administrative expenses as a result of the divestiture of the Company’s
Pittsburgh operation and closure of certain facilities.
Interest expense decreased to
Adjusted EBITDA for the first quarter of 2017 was
During the first quarter of 2017, the Company generated
The Company’s firm backlog as of
Structural Systems
Structural Systems segment net revenue for the current-year first quarter was
Structural Systems segment operating income for the current-year first quarter was
Structural Systems segment Adjusted EBITDA was
$5.2 million higher revenue within the Company’s military and space end-use markets mainly due to the resumption of scheduled deliveries by theU.S. Department of Defense , which favorably impacted the Company’s fixed-wing and helicopter platforms, partially offset by the divestiture of the Company’s Miltec operation inMarch 2016 ; and$1.2 million higher revenue within the Company’s commercial aerospace end-use markets mainly due to additional content with the Company’s existing customers; partially offset by$5.8 million lower revenue in the Company’s industrial end-use markets mainly due to the closure of one of the Company’s Tulsa operations inJune 2016 and the divestiture of the Company’sPittsburgh operation inJanuary 2016 .
Electronic Systems’ segment operating income was
Corporate General and Administrative (“CG&A”) Expenses
CG&A expenses for the first quarter of 2017 were
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About
Forward Looking Statements
This press release and any attachments include “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, earnings guidance and any statements about the Company’s plans, strategies and prospects. The Company generally uses the words “may,” “will,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” and similar expressions in this press release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: competition from other industry participants; the Company’s ability to continue to develop innovative new products and services and enhance its existing products and services, or the failure of its products and services to continue to appeal to the market; the effectiveness of the Company’s marketing and advertising programs; the Company’s ability to successfully make acquisitions or enter into joint ventures, including its ability to successfully integrate, operate or realize the projected benefits of such businesses; uncertainties related to a downturn in general economic conditions or consumer confidence; uncertainties regarding the satisfactory operation of the Company’s information technology or systems; the impact of existing and future laws and regulations; the impact of existing and future accounting standards and tax rules and regulations; the impact of the Company’s debt service obligations and restrictive debt covenants; and other risks and uncertainties, including those detailed from time to time in the Company’s periodic reports filed with the
Note Regarding Non-GAAP Financial Information
This release contains non-GAAP financial measures, including Adjusted EBITDA (which excludes interest expense, income tax expense, depreciation, amortization, stock-based compensation expense, and gain on divestitures).
The Company believes the presentation of these non-GAAP measures provide important supplemental information to management and investors regarding financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company discloses different non-GAAP financial measures in order to provide greater transparency and to help the Company’s investors to more meaningfully evaluate and compare Ducommun’s results to its previously reported results. The non-GAAP financial measures that the Company uses may not be comparable to similarly titled financial measures used by other companies.
[Financial Tables Follow]
| DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | ||||||||
| April 1, 2017 |
December 31, 2016 |
|||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 7,114 | $ | 7,432 | ||||
| Accounts receivable, net | 71,623 | 76,239 | ||||||
| Inventories | 127,201 | 119,896 | ||||||
| Production cost of contracts | 11,052 | 11,340 | ||||||
| Other current assets | 10,589 | 11,034 | ||||||
| Total Current Assets | 227,579 | 225,941 | ||||||
| Property and equipment, Net | 104,868 | 101,590 | ||||||
| Goodwill | 82,554 | 82,554 | ||||||
| Intangibles, net | 99,364 | 101,573 | ||||||
| Non-current deferred income taxes | 286 | 286 | ||||||
| Other assets | 3,320 | 3,485 | ||||||
| Total Assets | $ | 517,971 | $ | 515,429 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Current portion of long-term debt | $ | — | $ | 3 | ||||
| Accounts payable | 63,313 | 57,024 | ||||||
| Accrued liabilities | 28,092 | 29,279 | ||||||
| Total Current Liabilities | 91,405 | 86,306 | ||||||
| Long-term debt, less current portion | 162,156 | 166,896 | ||||||
| Non-current deferred income taxes | 31,949 | 31,417 | ||||||
| Other long-term liabilities | 18,179 | 18,707 | ||||||
| Total Liabilities | 303,689 | 303,326 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Common stock | 113 | 112 | ||||||
| Additional paid-in capital | 76,827 | 76,783 | ||||||
| Retained earnings | 143,402 | 141,287 | ||||||
| Accumulated other comprehensive loss | (6,060 | ) | (6,079 | ) | ||||
| Total Shareholders’ Equity | 214,282 | 212,103 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 517,971 | $ | 515,429 | ||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except per share amounts) | ||||||||
| Three Months Ended | ||||||||
| April 1, 2017 |
April 2, 2016 |
|||||||
| Net Revenues | $ | 136,297 | $ | 142,148 | ||||
| Cost of Sales | 111,370 | 115,179 | ||||||
| Gross Profit | 24,927 | 26,969 | ||||||
| Selling, General and Administrative Expenses | 20,827 | 22,676 | ||||||
| Operating Income | 4,100 | 4,293 | ||||||
| Interest Expense | (1,593 | ) | (2,399 | ) | ||||
| Gain on Divestitures | — | 18,815 | ||||||
| Income Before Taxes | 2,507 | 20,709 | ||||||
| Income Tax Expense | 392 | 7,159 | ||||||
| Net Income | $ | 2,115 | $ | 13,550 | ||||
| Earnings Per Share | ||||||||
| Basic earnings per share | $ | 0.19 | $ | 1.22 | ||||
| Diluted earnings per share | $ | 0.18 | $ | 1.21 | ||||
| Weighted-Average Number of Common Shares Outstanding | ||||||||
| Basic | 11,208 | 11,100 | ||||||
| Diluted | 11,495 | 11,240 | ||||||
| Gross Profit % | 18.3 | % | 19.0 | % | ||||
| SG&A % | 15.3 | % | 16.0 | % | ||||
| Operating Income % | 3.0 | % | 3.0 | % | ||||
| Net Income % | 1.6 | % | 9.5 | % | ||||
| Effective Tax Rate | 15.6 | % | 34.6 | % | ||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES | |||||||||||||||||
| BUSINESS SEGMENT PERFORMANCE | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| % Change |
April 1, 2017 |
April 2, 2016 |
% of Net Revenues 2017 |
% of Net Revenues 2016 |
|||||||||||||
| Net Revenues | |||||||||||||||||
| Structural Systems | (10.1 | )% | $ | 57,575 | $ | 64,017 | 42.2 | % | 45.0 | % | |||||||
| Electronic Systems | 0.8 | % | 78,722 | 78,131 | 57.8 | % | 55.0 | % | |||||||||
| Total Net Revenues | (4.1 | )% | $ | 136,297 | $ | 142,148 | 100.0 | % | 100.0 | % | |||||||
| Segment Operating Income | |||||||||||||||||
| Structural Systems | $ | 2,632 | $ | 2,724 | 4.6 | % | 4.3 | % | |||||||||
| Electronic Systems | 7,104 | 6,387 | 9.0 | % | 8.2 | % | |||||||||||
| 9,736 | 9,111 | ||||||||||||||||
| Corporate General and Administrative Expenses (1) | (5,636 | ) | (4,818 | ) | (4.1 | )% | (3.4 | )% | |||||||||
| Total Operating Income | $ | 4,100 | $ | 4,293 | 3.0 | % | 3.0 | % | |||||||||
| Adjusted EBITDA | |||||||||||||||||
| Structural Systems | |||||||||||||||||
| Operating Income | $ | 2,632 | $ | 2,724 | |||||||||||||
| Depreciation and Amortization | 2,352 | 2,057 | |||||||||||||||
| 4,984 | 4,781 | 8.7 | % | 7.5 | % | ||||||||||||
| Electronic Systems | |||||||||||||||||
| Operating Income | 7,104 | 6,387 | |||||||||||||||
| Depreciation and Amortization | 3,423 | 3,761 | |||||||||||||||
| 10,527 | 10,148 | 13.4 | % | 13.0 | % | ||||||||||||
| Corporate General and Administrative Expenses (1) | |||||||||||||||||
| Operating loss | (5,636 | ) | (4,818 | ) | |||||||||||||
| Depreciation and Amortization | 7 | 37 | |||||||||||||||
| Stock-Based Compensation Expense | 1,822 | 1,000 | |||||||||||||||
| (3,807 | ) | (3,781 | ) | ||||||||||||||
| Adjusted EBITDA | $ | 11,704 | $ | 11,148 | 8.6 | % | 7.8 | % | |||||||||
| Capital Expenditures | |||||||||||||||||
| Structural Systems | $ | 5,188 | $ | 2,054 | |||||||||||||
| Electronic Systems | 1,433 | 347 | |||||||||||||||
| Corporate Administration | — | — | |||||||||||||||
| Total Capital Expenditures | $ | 6,621 | $ | 2,401 | |||||||||||||
(1) Includes costs not allocated to either the Structural Systems or
CONTACTS:Douglas L. Groves , Vice President, Chief Financial Officer and Treasurer, 310.513.7224Chris Witty , Investor Relations, 646.438.9385, cwitty@darrowir.com