Second Quarter 2017 Highlights
- Revenue of
$140.9 million - Net income of
$3.8 million , or$0.33 per diluted share - Adjusted EBITDA of
$13.6 million - Backlog of
$611 million
“The Ducommun team has made a concerted effort to significantly improve performance to our customers and set the stage for future growth, along with long-term margin expansion,” said
Second Quarter Results
Net revenue for the second quarter of 2017 was
$17.6 million higher revenue in the Company’s military and space end-use markets mainly driven by increased demand, which favorably impacted the Company’s helicopter, fixed-wing, and missile platforms; partially offset by$7.7 million lower revenue in the Company’s commercial aerospace end-use markets, reflecting the winding down of a regional jet program and continued softness in demand in the business jet market; and$2.4 million lower revenue in the Company’s industrial end-use markets.
Net income for the second quarter of 2017 was
$0.8 million higher selling, general, and administrative (“SG&A”) expense mainly due to higher compensation and benefit costs; partially offset by$0.7 million of lower income tax expense.
Gross profit for the second quarter of 2017 was
Operating income for the second quarter of 2017 was
Interest expense was essentially flat at
Adjusted EBITDA for the second quarter of 2017 was
During the second quarter of 2017, the Company generated
The Company’s firm backlog as of
Structural Systems
Structural Systems segment net revenue for the current-year second quarter was
$5.0 million lower revenue within the Company’s commercial aerospace end-use markets mainly due to the winding down of a regional jet program and continued softness in demand in the business jet market; partially offset by$3.4 million higher revenue within the Company’s military and space end-use markets due to increased demand, which favorably impacted the Company’s helicopter platforms.
Structural Systems segment operating income for the current-year second quarter was
$14.2 million higher revenue within the Company’s military and space end-use markets mainly due to higher demand, which favorably impacted the Company’s helicopter, fixed-wing, and missile platforms; partially offset by$2.7 million lower revenue within the Company’s commercial aerospace end-use markets mainly due to continued softness in demand in the business jet market; and$2.4 million lower revenue in the Company’s industrial end-use markets.
Electronic Systems’ segment operating income was
Corporate General and Administrative (“CG&A”) Expenses
CG&A expenses for the second 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: the impact of the Company’s debt service obligations and restrictive debt covenants; the Company’s end-use markets are cyclical; the Company depends upon a selected base of industries and customers; a significant portion of the Company’s business depends upon
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) | ||||||||
July 1, 2017 |
December 31, 2016 |
|||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 7,372 | $ | 7,432 | ||||
Accounts receivable, net | 81,965 | 76,239 | ||||||
Inventories | 129,398 | 119,896 | ||||||
Production cost of contracts | 12,673 | 11,340 | ||||||
Other current assets | 10,438 | 11,034 | ||||||
Total Current Assets | 241,846 | 225,941 | ||||||
Property and equipment, Net | 110,788 | 101,590 | ||||||
Goodwill | 82,554 | 82,554 | ||||||
Intangibles, net | 97,155 | 101,573 | ||||||
Non-current deferred income taxes | 286 | 286 | ||||||
Other assets | 3,143 | 3,485 | ||||||
Total Assets | $ | 535,772 | $ | 515,429 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Current portion of long-term debt | $ | — | $ | 3 | ||||
Accounts payable | 71,659 | 57,024 | ||||||
Accrued liabilities | 25,814 | 29,279 | ||||||
Total Current Liabilities | 97,473 | 86,306 | ||||||
Long-term debt, less current portion | 169,627 | 166,896 | ||||||
Non-current deferred income taxes | 31,895 | 31,417 | ||||||
Other long-term liabilities | 17,837 | 18,707 | ||||||
Total Liabilities | 316,832 | 303,326 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock | 113 | 112 | ||||||
Additional paid-in capital | 77,670 | 76,783 | ||||||
Retained earnings | 147,225 | 141,287 | ||||||
Accumulated other comprehensive loss | (6,068 | ) | (6,079 | ) | ||||
Total Shareholders’ Equity | 218,940 | 212,103 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 535,772 | $ | 515,429 | ||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2017 |
July 2, 2016 |
July 1, 2017 |
July 2, 2016 |
|||||||||||||
Net Revenues | $ | 140,938 | $ | 133,437 | $ | 277,235 | $ | 275,585 | ||||||||
Cost of Sales | 114,747 | 107,222 | 226,117 | 222,401 | ||||||||||||
Gross Profit | 26,191 | 26,215 | 51,118 | 53,184 | ||||||||||||
Selling, General and Administrative Expenses | 19,720 | 18,949 | 40,547 | 41,625 | ||||||||||||
Operating Income | 6,471 | 7,266 | 10,571 | 11,559 | ||||||||||||
Interest Expense | (1,907 | ) | (1,935 | ) | (3,500 | ) | (4,334 | ) | ||||||||
Gain on Divestitures | — | — | — | 18,815 | ||||||||||||
Income Before Taxes | 4,564 | 5,331 | 7,071 | 26,040 | ||||||||||||
Income Tax Expense | 741 | 1,470 | 1,133 | 8,629 | ||||||||||||
Net Income | $ | 3,823 | $ | 3,861 | $ | 5,938 | $ | 17,411 | ||||||||
Earnings Per Share | ||||||||||||||||
Basic earnings per share | $ | 0.34 | $ | 0.35 | $ | 0.53 | $ | 1.56 | ||||||||
Diluted earnings per share | $ | 0.33 | $ | 0.34 | $ | 0.51 | $ | 1.55 | ||||||||
Weighted-Average Number of Common Shares Outstanding | ||||||||||||||||
Basic | 11,237 | 11,155 | 11,253 | 11,127 | ||||||||||||
Diluted | 11,491 | 11,264 | 11,556 | 11,245 | ||||||||||||
Gross Profit % | 18.6 | % | 19.6 | % | 18.4 | % | 19.3 | % | ||||||||
SG&A % | 14.0 | % | 14.2 | % | 14.6 | % | 15.1 | % | ||||||||
Operating Income % | 4.6 | % | 5.4 | % | 3.8 | % | 4.2 | % | ||||||||
Net Income % | 2.7 | % | 2.9 | % | 2.1 | % | 6.3 | % | ||||||||
Effective Tax Rate | 16.2 | % | 27.6 | % | 16.0 | % | 33.1 | % | ||||||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT PERFORMANCE | ||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
% Change |
July 1, 2017 |
July 2, 2016 |
% of Net Revenues 2017 |
% of Net Revenues 2016 |
% Change |
July 1, 2017 |
July 2, 2016 |
% of Net Revenues 2017 |
% of Net Revenues 2016 |
|||||||||||||||||||||||||
Net Revenues | ||||||||||||||||||||||||||||||||||
Structural Systems | (2.6 | )% | $ | 59,112 | $ | 60,694 | 41.9 | % | 45.5 | % | (6.4 | )% | $ | 116,687 | $ | 124,711 | 42.1 | % | 45.3 | % | ||||||||||||||
Electronic Systems | 12.5 | % | 81,826 | 72,743 | 58.1 | % | 54.5 | % | 6.4 | % | 160,548 | 150,874 | 57.9 | % | 54.7 | % | ||||||||||||||||||
Total Net Revenues | 5.6 | % | $ | 140,938 | $ | 133,437 | 100.0 | % | 100.0 | % | 0.6 | % | $ | 277,235 | $ | 275,585 | 100.0 | % | 100.0 | % | ||||||||||||||
Segment Operating Income | ||||||||||||||||||||||||||||||||||
Structural Systems | $ | 2,049 | $ | 4,730 | 3.5 | % | 7.8 | % | $ | 4,681 | $ | 7,454 | 4.0 | % | 6.0 | % | ||||||||||||||||||
Electronic Systems | 8,820 | 6,782 | 10.8 | % | 9.3 | % | 15,924 | 13,169 | 9.9 | % | 8.7 | % | ||||||||||||||||||||||
10,869 | 11,512 | 20,605 | 20,623 | |||||||||||||||||||||||||||||||
Corporate General and Administrative Expenses (1) | (4,398 | ) | (4,246 | ) | (3.1 | )% | (3.2 | )% | (10,034 | ) | (9,064 | ) | (3.6 | )% | (3.3 | )% | ||||||||||||||||||
Total Operating Income | $ | 6,471 | $ | 7,266 | 4.6 | % | 5.4 | % | $ | 10,571 | $ | 11,559 | 3.8 | % | 4.2 | % | ||||||||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||||||||||
Structural Systems | ||||||||||||||||||||||||||||||||||
Operating Income | $ | 2,049 | $ | 4,730 | $ | 4,681 | $ | 7,454 | ||||||||||||||||||||||||||
Depreciation and Amortization | 2,307 | 1,775 | 4,659 | 3,832 | ||||||||||||||||||||||||||||||
4,356 | 6,505 | 7.4 | % | 10.7 | % | 9,340 | 11,286 | 8.0 | % | 9.0 | % | |||||||||||||||||||||||
Electronic Systems | ||||||||||||||||||||||||||||||||||
Operating Income | 8,820 | 6,782 | 15,924 | 13,169 | ||||||||||||||||||||||||||||||
Depreciation and Amortization | 3,439 | 3,668 | 6,862 | 7,429 | ||||||||||||||||||||||||||||||
12,259 | 10,450 | 15.0 | % | 14.4 | % | 22,786 | 20,598 | 14.2 | % | 13.7 | % | |||||||||||||||||||||||
Corporate General and Administrative Expenses (1) | ||||||||||||||||||||||||||||||||||
Operating loss | (4,398 | ) | (4,246 | ) | (10,034 | ) | (9,064 | ) | ||||||||||||||||||||||||||
Depreciation and Amortization | 2 | 33 | 9 | 70 | ||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | 1,342 | 985 | 3,164 | 1,985 | ||||||||||||||||||||||||||||||
(3,054 | ) | (3,228 | ) | (6,861 | ) | (7,009 | ) | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 13,561 | $ | 13,727 | 9.6 | % | 10.3 | % | $ | 25,265 | $ | 24,875 | 9.1 | % | 9.0 | % | ||||||||||||||||||
Capital Expenditures | ||||||||||||||||||||||||||||||||||
Structural Systems | $ | 7,580 | $ | 4,540 | $ | 12,768 | $ | 6,594 | ||||||||||||||||||||||||||
Electronic Systems | 1,030 | 407 | 2,463 | 754 | ||||||||||||||||||||||||||||||
Corporate Administration | 648 | — | 648 | — | ||||||||||||||||||||||||||||||
Total Capital Expenditures | $ | 9,258 | $ | 4,947 | $ | 15,879 | $ | 7,348 |
(1) Includes costs not allocated to either the Structural Systems or
CONTACTS:Douglas L. Groves , Vice President, Chief Financial Officer and Treasurer, 657.335.3665Chris Witty , Investor Relations, 646.438.9385, cwitty@darrowir.com