View printer-friendly versionLOS ANGELES, Nov 07, 2011 (BUSINESS WIRE) -- Ducommun Incorporated (NYSE:DCO) today reported results for its third quarter and nine months ended October 1, 2011.
Recent Highlights
- Net sales increased 86% for the third quarter of 2011 versus the third quarter of 2010, reflecting increased sales of $83.8 million from the LaBarge, Inc. ("LaBarge") acquisition
- Diluted earnings per share for the third quarter of 2011 were $0.09 and, excluding merger-related expenses, were $0.34
- Firm backlog at the end of the third quarter 2011 was approximately $611.7 million
"We are pleased to report our first full quarter of financial results that include LaBarge under the Ducommun umbrella," said Anthony J. Reardon, president and chief executive officer. "The integration of our operations remains on track, with the combined Ducommun LaBarge Technologies benefiting from strong demand across a diverse set of end markets. In addition, Ducommun AeroStructures saw revenue grow in the third quarter by 11% year-over-year, reflecting increases in both commercial and military sales. We expect further expansion in the quarters to come along with margin improvement driven by higher operating leverage and the impact of synergies from our acquisition."
Sales for the third quarter of 2011 increased 86% to $185.1 million, compared to $99.4 million for the third quarter of 2010, reflecting revenue of $83.8 million from the LaBarge acquisition and 2% organic growth, primarily from increased sales of products for commercial aircraft. Net income for the third quarter was $1.0 million, or $0.09 per diluted share, compared to net income of $5.8 million, or $0.55 per diluted share, for the comparable period last year. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $3.9 million, or $0.25 per diluted share, net income was $3.7 million, or $0.34 per diluted share, in the third quarter of 2011. During the quarter, the Company generated $3.7 million of cash flow from operations, excluding $9.7 million of acquisition-related costs.
SG&A expenses in the third quarter of 2011 increased by $10.9 million from the comparable period last year. This increase resulted from SG&A expenses of $11.3 million from the newly acquired LaBarge organization, including approximately $2.7 million of acquisition-related expenses and $1.9 million of amortization of intangibles.
Ducommun AeroStructures (DAS)
The DAS segment reported net sales for the third quarter of 2011 of $75.1 million, compared to $67.6 million in 2010, representing an increase of 11%. The higher sales were primarily the result of increased shipments of commercial aerospace and military products. Operating income for the third quarter of 2011 was $6.5 million, or 8.7% of revenue, compared to $6.7 million, or 9.9% of revenue, for the prior-year period. Operating income was negatively impacted in 2011 by a higher proportion of sales of lower margin products.
Ducommun LaBarge Technologies (DLT)
The DLT segment reported net sales for the third quarter of 2011 of $110.0 million, compared to $31.8 million in 2010. The primary reason for the substantial increase was $83.8 million in sales from the LaBarge acquisition. Operating income for the third quarter of 2011 was $7.3 million, or 6.6% of revenue, compared to $3.1 million, or 9.8% of revenue, for the prior-year period. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $3.6 million, DLT operating income was $10.9 million, or 9.9% of sales.
Corporate General and Administrative Expenses (CG&A)
CG&A expenses represent the portion of SG&A expenses that are not identifiable or allocated to the DAS and DLT segments. CG&A expenses for the third quarter of 2011 were $4.1 million, as compared to $3.6 million in the third quarter of 2010. Excluding acquisition-related expenses of $0.3 million, CG&A expenses were $3.8 million, or 2.1% of sales in the third quarter of 2011, compared to 3.6% of sales in the prior-year period.
Year-to-Date Results
Sales for the first nine months of 2011 increased 28% to $392.7 million, compared to $306.6 million for the first nine months of 2010, reflecting revenue of $84.7 million from the LaBarge acquisition as well as an increase in sales of products for commercial aircraft. Net income for the first nine months of 2011 was $0.9 million, or $0.09 per diluted share, compared to net income of $15.6 million, or $1.48 per diluted share, for the comparable period last year. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $15.3 million, or $1.05 per diluted share, net income was $12.1 million, or $1.13 per diluted share in the first nine months of 2011. During the first nine months of 2011, the Company used $10.8 million of cash flow from operations, excluding $18.1 million of acquisition-related costs.
SG&A expenses in the first nine months of 2011 rose by $22.8 million from the comparable period last year. This increase resulted from SG&A expenses of $11.8 million from the newly acquired LaBarge organization, along with $11.8 million of acquisition-related expenses at Corporate, partially offset by $0.8 million reduction in other expenses.
Ducommun AeroStructures (DAS)
The DAS segment reported net sales for the first nine months of 2011 of $223.9 million, compared to $206.0 million in 2010, an increase of 9%. The higher sales were primarily the result of increased shipments of commercial aerospace and military products. Operating income for the first nine months of 2011 was $22.4 million, or 10.0% of sales, compared to $23.3 million, or 11.3% of sales, in the prior-year period. Operating income was negatively impacted in 2011 by a higher proportion of sales of lower margin products.
Ducommun LaBarge Technologies (DLT)
The DLT segment reported net sales for the first nine months of 2011 of $168.8 million, compared to $100.7 million in 2010. The primary reason for the increase was $84.7 million in sales from the LaBarge acquisition. Operating income for the first nine months of 2011 was $12.1 million, or 7.2% of sales, compared to $8.9 million, or 8.9% of sales, in the prior-year period. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $3.6 million year-to-date, DLT operating income was $15.7 million, or 9.3% of sales.
Corporate General and Administrative Expenses (CG&A)
CG&A expenses for the first nine months of 2011 were $23.2 million compared to $10.1 million in the prior-year period. Excluding acquisition-related expenses of $11.8 million, CG&A expenses in the first nine months of 2011 were $11.4 million, or 2.9% of sales, compared to 3.3% of sales in 2010.
"We couldn't be happier with the LaBarge acquisition and how it has bolstered our technology profile, market position, and growth outlook," Mr. Reardon continued. "Given our solid position on key platforms and programs, and in light of our positive outlook on the commercial aerospace market, Ducommun is on sound footing to post stronger operating performance going forward. We are now able to offer more sophisticated electronic and structural assemblies to our customers - providing access to a pipeline of new, attractive opportunities. With our diversified military business and commercial markets expanding, we remain focused on increasing margins and driving cash flow to pay down debt. Ducommun is clearly aligned with its shareholders in looking to enhance financial results in 2012 and beyond."
Conference Call
A teleconference hosted by Anthony J. Reardon, the Company's president and chief executive officer, and Joseph P. Bellino, the Company's vice president and chief financial officer, will be held on Tuesday, November 8, 2011 at 10:00 AM PT (1:00 PM ET) to review these financial results. To participate in the teleconference, please call 800-706-7745 (international 617-614-3472) approximately ten minutes prior to the conference time stated above. The participant passcode is 15105099. Mr. Reardon and Mr. Bellino will be speaking on behalf of the Company and anticipate the meeting and Q&A period to last approximately 45 minutes.
This call is being webcast by Thomson Reuters and can be accessed directly at the Ducommun website at http://www.ducommun.com. Conference call replay will be available after that time at the same link or by dialing 888-286-8010, passcode 89506569.
About Ducommun Incorporated
Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace, defense, and other industries through a wide spectrum of electronic and structural applications. The company is an established supplier of critical components and assemblies for commercial aircraft and military and space vehicles as well as for the energy market, medical field, and industrial automation. It operates through two primary business units: Ducommun AeroStructures (DAS) and Ducommun LaBarge Technologies (DLT). Additional information can be found at http://www.ducommun.com.
Statements contained in this press release regarding other than recitation of historical facts are forward-looking statements.These statements are identified by words such as "may," "will," " begin," " look forward," "expect," "believe," "intend," "anticipate," "should", "potential," "estimate," "continue," "momentum" and other words referring to events to occur in the future. These statements reflect Company's current view of future events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, including, but not limited to, the state of the world financial, credit, commodities and stock markets, any difficulties, delays or failure in, or unanticipated costs of, realizing the expected synergies of the LaBarge acquisition, and uncertainties regarding the Company, its businesses and the industries in which it operates, which are described in the Company's filings with the Securities and Exchange Commission.The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
| DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| October 1, | December 31, | |||||||
| 2011 | 2010 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 19,376 | $ | 10,268 | ||||
| Accounts receivable | 97,429 | 47,949 | ||||||
| Unbilled receivables | 5,670 | 3,856 | ||||||
| Inventories | 168,161 | 72,597 | ||||||
| Production cost of contracts | 16,672 | 16,889 | ||||||
| Deferred income taxes | 11,119 | 5,085 | ||||||
| Other current assets | 18,588 | 4,748 | ||||||
| Total Current Assets | 337,015 | 161,392 | ||||||
| Property and Equipment, Net | 99,122 | 59,461 | ||||||
| Goodwill | 216,314 | 100,442 | ||||||
| Intangibles | 190,740 | 21,992 | ||||||
| Other Assets | 17,638 | 2,165 | ||||||
| $ | 860,829 | $ | 345,452 | |||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Current portion of long-term debt | $ | 1,961 | $ | 187 | ||||
| Accounts payable | 59,708 | 39,925 | ||||||
| Accrued liabilities | 59,271 | 31,174 | ||||||
| Total Current Liabilities | 120,940 | 71,286 | ||||||
| Long-Term Debt, Less Current Portion | 390,773 | 3,093 | ||||||
| Deferred Income Taxes | 81,437 | 7,691 | ||||||
| Other Long-Term Liabilities | 10,688 | 9,197 | ||||||
| Total Liabilities | 603,838 | 91,267 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity: | ||||||||
| Common stock | 107 | 106 | ||||||
| Treasury stock | (1,924 | ) | (1,924 | ) | ||||
| Additional paid-in capital | 64,368 | 61,684 | ||||||
| Retained earnings | 197,542 | 197,421 | ||||||
| Accumulated other comprehensive loss | (3,102 | ) | (3,102 | ) | ||||
| Total Shareholders' Equity | 256,991 | 254,185 | ||||||
| $ | 860,829 | $ | 345,452 | |||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 1, | October 2, | October 1, | October 2, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Sales and Service Revenues: | ||||||||||||||||
| Product sales | $ | 178,485 | $ | 89,473 | $ | 370,763 | $ | 274,155 | ||||||||
| Service revenues | 6,595 | 9,970 | 21,913 | 32,481 | ||||||||||||
| Net Sales | 185,080 | 99,443 | 392,676 | 306,636 | ||||||||||||
| Operating Costs and Expenses: | ||||||||||||||||
| Cost of product sales | 145,560 | 72,041 | 301,941 | 219,708 | ||||||||||||
| Cost of service revenues | 5,331 | 7,465 | 17,134 | 25,330 | ||||||||||||
| Selling, general and administrative expenses | 24,557 | 13,705 | 62,303 | 39,484 | ||||||||||||
| Total Operating Costs and Expenses | 175,448 | 93,211 | 381,378 | 284,522 | ||||||||||||
| Operating (Loss)/Income | 9,632 | 6,232 | 11,298 | 22,114 | ||||||||||||
| Interest Expense, Net | (8,256 | ) | (544 | ) | (10,047 | ) | (1,692 | ) | ||||||||
| (Loss)/Income Before Taxes | 1,376 | 5,688 | 1,251 | 20,422 | ||||||||||||
| Income Tax Expense, Net | (415 | ) | 85 | (340 | ) | (4,773 | ) | |||||||||
| Net (Loss)/Income | $ | 961 | $ | 5,773 | $ | 911 | $ | 15,649 | ||||||||
| (Loss)/Earnings Per Share: | ||||||||||||||||
| Basic (loss)/earnings per share | $ | 0.09 | $ | 0.55 | $ | 0.09 | $ | 1.49 | ||||||||
| Diluted (loss)/earnings per share | $ | 0.09 | $ | 0.55 | $ | 0.09 | $ | 1.48 | ||||||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
| Basic | 10,539 | 10,499 | 10,534 | 10,483 | ||||||||||||
| Diluted | 10,631 | 10,583 | 10,658 | 10,564 | ||||||||||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||||||||||||||||||||||
| BUSINESS SEGMENT PERFORMANCE | ||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
| Three Months | Nine Months | |||||||||||||||||||||||||||
| October 1, | October 2, | % | October 1, | October 2, | % | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||||||
| Net Sales: | ||||||||||||||||||||||||||||
| Ducommun AeroStructures | $ | 75,076 | $ | 67,634 | 11.0 | % | $ | 223,890 | $ | 205,982 | 8.7 | % | ||||||||||||||||
| Ducommun LaBarge Technologies | 110,004 | 31,809 | 245.8 | % | 168,786 | 100,654 | 67.7 | % | ||||||||||||||||||||
| Total Net Sales | $ | 185,080 | $ | 99,443 | 86.1 | % | $ | 392,676 | $ | 306,636 | 28.1 | % | ||||||||||||||||
| Segment Operating (Loss)/Income (1) | ||||||||||||||||||||||||||||
| Ducommun AeroStructures | $ | 6,503 | $ | 6,725 | $ | 22,414 | $ | 23,343 | ||||||||||||||||||||
| Ducommun LaBarge Technologies | 7,287 | 3,120 | 12,129 | 8,912 | ||||||||||||||||||||||||
| 13,790 | 9,845 | 34,543 | 32,255 | |||||||||||||||||||||||||
| Corporate General and Administrative Expenses (2) | (4,158 | ) | (3,613 | ) | (23,245 | ) | (10,141 | ) | ||||||||||||||||||||
| Total Operating (Loss)/Income | $ | 9,632 | $ | 6,232 | $ | 11,298 | $ | 22,114 | ||||||||||||||||||||
| EBITDA (1) | ||||||||||||||||||||||||||||
| Ducommun AeroStructures | ||||||||||||||||||||||||||||
| Operating (Loss)/Income | $ | 6,503 | $ | 6,725 | $ | 22,414 | $ | 23,343 | ||||||||||||||||||||
| Depreciation and Amortization | 2,681 | 2,243 | 7,710 | 7,110 | ||||||||||||||||||||||||
| 9,184 | 8,968 | 30,124 | 30,453 | |||||||||||||||||||||||||
| Ducommun LaBarge Technologies | ||||||||||||||||||||||||||||
| Operating (Loss)/Income | 7,285 | 3,120 | 12,129 | 8,912 | ||||||||||||||||||||||||
| Depreciation and Amortization | 4,745 | 983 | 6,725 | 2,902 | ||||||||||||||||||||||||
| 12,030 | 4,103 | 18,854 | 11,814 | |||||||||||||||||||||||||
| Corporate General and Administrative Expenses (2)(3) | ||||||||||||||||||||||||||||
| Operating (Loss)/Income | (4,156 | ) | (3,613 | ) | (23,245 | ) | (10,141 | ) | ||||||||||||||||||||
| Depreciation and Amortization | 29 | 4 | 37 | 58 | ||||||||||||||||||||||||
| Non-Cash Stock-Based Compensation | 888 | 652 | 2,352 | 1,621 | ||||||||||||||||||||||||
| (3,239 | ) | (2,957 | ) | (20,856 | ) | (8,462 | ) | |||||||||||||||||||||
| EBITDA | $ | 17,975 | $ | 10,114 | $ | 28,122 | $ | 33,805 | ||||||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||||||||
| Inventory step-up writeoff (3) | 1,178 | - | 1,178 | - | ||||||||||||||||||||||||
| Merger-related transaction expenses (4) | 308 | - | 11,785 | - | ||||||||||||||||||||||||
| Merger-related change-in-control compensation expenses (5) | 2,374 | - | 2,374 | - | ||||||||||||||||||||||||
| 3,860 | - | 15,337 | - | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 21,835 | $ | 10,114 | $ | 43,459 | $ | 33,805 | ||||||||||||||||||||
| Capital Expenditures: | ||||||||||||||||||||||||||||
| Ducommun AeroStructures | $ | 2,838 | $ | 734 | $ | 6,972 | $ | 3,363 | ||||||||||||||||||||
| Ducommun LaBarge Technologies | 2,494 | 532 | 3,970 | 1,622 | ||||||||||||||||||||||||
| Corporate Administration | 50 | 9 | 244 | 69 | ||||||||||||||||||||||||
| Total Capital Expenditures | $ | 5,382 | $ | 1,275 | $ | 11,186 | $ | 5,054 | ||||||||||||||||||||
|
(1) |
Before certain allocated corporate overhead. | ||
|
(2) |
Includes approximately $0.3 million and $11.8 million of merger-related transaction expenses in the three months 2011 and nine months 2011, respectively, related to the LaBarge acquisition. | ||
|
(3) |
Certain expenses, previously incurred by the operating units, are now included in the corporate general and administrative expenses as a result of the Company's organizational changes. | ||
|
(4) |
Includes investment banking, accounting, legal, tax and valuation expenses as a direct result of the LaBarge acquisition. | ||
|
(5) |
Merger-related transaction costs resulting from a change-in-control provision for certain LaBarge key executives and employees arising in connection with the LaBarge acquisition. | ||
SOURCE: Ducommun Incorporated
Ducommun Incorporated
Joseph P. Bellino, 310-513-7211
Vice President and Chief Financial Officer
or
Investor Relations
Chris Witty, 646-438-9385
cwitty@darrowir.com