Third Quarter 2016 Summary
- Third quarter revenue was
$132.6 million - Net income was
$5.0 million , or$0.44 per diluted share - Adjusted EBITDA for the quarter was
$14.9 million - Backlog increased to
$566 million - Made net voluntary principal prepayments of
$10 million on credit facilities during the quarter
“The third quarter illustrated continued progress towards reaching our long-term performance goals and growth objectives,” said
Third Quarter Results
Net revenue for the third quarter of 2016 was
$18.0 million lower revenue within the Company’s industrial end-use markets mainly due to the divestiture of thePittsburgh operation inJanuary 2016 and closure of theHouston operation inDecember 2015 ; and$15.6 million lower revenue within the Company’s military and space end-use markets mainly due to the divestiture of the Miltec operation inMarch 2016 as well as program cancellations and budget changes, which impacted the Company’s fixed-wing and helicopter platforms and pushed out scheduled deliveries;- These negative impact of the aforementioned items was partially offset by
$4.5 million higher revenue in the Company’s commercial aerospace end-use markets, mainly due to added content with existing customers.
Net income for the third quarter of 2016 was
- The 2015 third quarter included a loss on extinguishment of debt of
$11.9 million related to the redemption of the$200.0 million senior unsecured notes; - The 2015 third quarter included a forward loss reserve charge related to a regional jet program of
$10.0 million ; - Lower interest expense of
$1.4 million ; and - Improved operating performance.
Gross profit for the third quarter of 2016 was
Operating income for the third quarter of 2016 was
Interest expense decreased to
Adjusted EBITDA for the third quarter of 2016 was
During the third quarter of 2016, the Company generated
The Company’s firm backlog as of
Structural Systems
Structural Systems segment net revenue for the current-year third quarter was
Structural Systems segment operating income for the current-year third quarter was
Structural Systems segment Adjusted EBITDA was
- An
$18.0 million decrease in industrial revenue mainly due to the divestiture of the Company’sPittsburgh operation inJanuary 2016 and closure of theHouston operation inDecember 2015 ; and - A
$12.2 million decrease in military and space revenue mainly due to the divestiture of the Company’s Miltec operation inMarch 2016 as well as program cancellations and budget changes, which impacted scheduled deliveries on fixed-wing platforms; - Partially offset by a
$4.3 million increase in commercial aerospace revenue mainly due to added content with the Company’s existing customers.
Electronic Systems’ segment operating income for the current-year third quarter was
Corporate General and Administrative Expenses (“CG&A”)
CG&A expenses for the third quarter of 2016 were
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About
Forward Looking Statements
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 the 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, and uncertainties regarding the Company, its businesses and the industries in which it operates, which are described in the Company’s filings 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 (benefit), depreciation, amortization, stock-based compensation expense, gain on divestitures, loss on extinguishment of debt, and restructuring charges).
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.
[Financial Tables Follow]
DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited) |
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(In thousands) | ||||||||
October 1, 2016 |
December 31, 2015 |
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Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 9,466 | $ | 5,454 | ||||
Accounts receivable, net | 73,820 | 77,089 | ||||||
Inventories | 129,769 | 115,404 | ||||||
Production cost of contracts | 11,095 | 10,290 | ||||||
Other current assets | 8,658 | 13,389 | ||||||
Assets held for sale | — | 41,636 | ||||||
Total Current Assets | 232,808 | 263,262 | ||||||
Property and equipment, Net | 98,586 | 96,551 | ||||||
Goodwill | 82,554 | 82,554 | ||||||
Intangibles, net | 103,835 | 110,621 | ||||||
Non-current deferred income taxes | 212 | 324 | ||||||
Other assets | 2,987 | 3,769 | ||||||
Total Assets | $ | 520,982 | $ | 557,081 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Current portion of long-term debt | $ | 5 | $ | 26 | ||||
Accounts payable | 60,173 | 40,343 | ||||||
Accrued liabilities | 30,510 | 36,458 | ||||||
Liabilities held for sale | — | 6,780 | ||||||
Total Current Liabilities | 90,688 | 83,607 | ||||||
Long-term debt, less current portion | 176,618 | 240,661 | ||||||
Non-current deferred income taxes | 25,871 | 26,528 | ||||||
Other long-term liabilities | 16,763 | 18,954 | ||||||
Total Liabilities | 309,940 | 369,750 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock | 112 | 111 | ||||||
Additional paid-in capital | 76,681 | 75,200 | ||||||
Retained earnings | 140,048 | 117,623 | ||||||
Accumulated other comprehensive loss | (5,799 | ) | (5,603 | ) | ||||
Total Shareholders’ Equity | 211,042 | 187,331 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 520,982 | $ | 557,081 |
DUCOMMUN INCORPORATED AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Unaudited) |
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(In thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 1, 2016 |
October 3, 2015 |
October 1, 2016 |
October 3, 2015 |
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Net Revenues | $ | 132,571 | $ | 161,670 | $ | 408,156 | $ | 509,435 | ||||||||
Cost of Sales | 107,348 | 141,642 | 329,749 | 431,439 | ||||||||||||
Gross Profit | 25,223 | 20,028 | 78,407 | 77,996 | ||||||||||||
Selling, General and Administrative Expenses | 17,171 | 21,205 | 58,796 | 64,707 | ||||||||||||
Operating Income (Loss) | 8,052 | (1,177 | ) | 19,611 | 13,289 | |||||||||||
Interest Expense | (1,945 | ) | (3,392 | ) | (6,279 | ) | (16,499 | ) | ||||||||
Loss on Extinguishment of Debt | — | (11,878 | ) | — | (14,720 | ) | ||||||||||
Other Income | 141 | — | 141 | 1,510 | ||||||||||||
Gain on Divestitures | — | — | 18,815 | — | ||||||||||||
Income (Loss) Before Taxes | 6,248 | (16,447 | ) | 32,288 | (16,420 | ) | ||||||||||
Income Tax Expense (Benefit) | 1,234 | (6,932 | ) | 9,863 | (6,714 | ) | ||||||||||
Net Income (Loss) | $ | 5,014 | $ | (9,515 | ) | $ | 22,425 | $ | (9,706 | ) | ||||||
Earnings (Loss) Per Share | ||||||||||||||||
Basic earnings (loss) per share | $ | 0.45 | $ | (0.86 | ) | $ | 2.01 | $ | (0.88 | ) | ||||||
Diluted earnings (loss) per share | $ | 0.44 | $ | (0.86 | ) | $ | 1.99 | $ | (0.88 | ) | ||||||
Weighted-Average Number of Common Shares Outstanding | ||||||||||||||||
Basic | 11,169 | 11,083 | 11,141 | 11,035 | ||||||||||||
Diluted | 11,310 | 11,083 | 11,261 | 11,035 | ||||||||||||
Gross Profit % | 19.0 | % | 12.4 | % | 19.2 | % | 15.3 | % | ||||||||
SG&A % | 13.0 | % | 13.1 | % | 14.4 | % | 12.7 | % | ||||||||
Operating Income (Loss) % | 6.1 | % | (0.7 | )% | 4.8 | % | 2.6 | % | ||||||||
Net Income (Loss) % | 3.8 | % | (5.9 | )% | 5.5 | % | (1.9 | )% | ||||||||
Effective Tax (Benefit) Rate | 19.8 | % | (42.1 | )% | 30.5 | % | (40.9 | )% |
DUCOMMUN INCORPORATED AND SUBSIDIARIES |
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BUSINESS SEGMENT PERFORMANCE |
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(Unaudited) |
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(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
% Change |
October 1, 2016 |
October 3, 2015 |
% of Net Revenues 2016 |
% of Net Revenues 2015 |
% Change |
October 1, 2016 |
October 3, 2015 |
% of Net Revenues 2016 |
% of Net Revenues 2015 |
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Net Revenues | ||||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | (5.0 | ) | % | $ | 60,931 | $ | 64,170 | 46.0 | % | 39.7 | % | (12.6 | ) | % | $ | 185,642 | $ | 212,306 | 45.5 | % | 41.7 | % | ||||||||||||||||||||||||
Electronic Systems | (26.5 | ) | % | 71,640 | 97,500 | 54.0 | % | 60.3 | % | (25.1 | ) | % | 222,514 | 297,129 | 54.5 | % | 58.3 | % | ||||||||||||||||||||||||||||
Total Net Revenues | (18.0 | ) | % | $ | 132,571 | $ | 161,670 | 100.0 | % | 100.0 | % | (19.9 | ) | % | $ | 408,156 | $ | 509,435 | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||
Segment Operating Income | ||||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | $ | 5,893 | $ | (6,028 | ) | 9.7 | % | (9.4 | ) | % | $ | 13,347 | $ | 2,980 | 7.2 | % | 1.4 | % | ||||||||||||||||||||||||||||
Electronic Systems | 6,600 | 8,598 | 9.2 | % | 8.8 | ) | % | 19,769 | 22,575 | 8.9 | % | 7.6 | % | |||||||||||||||||||||||||||||||||
12,493 | 2,570 | 33,116 | 25,555 | |||||||||||||||||||||||||||||||||||||||||||
Corporate General and Administrative Expenses (1) | (4,441 | ) | (3,747 | ) | (3.3 | ) | % | (2.3 | ) | % | (13,505 | ) | (12,266 | ) | (3.3 | ) | % | (2.4 | ) | % | ||||||||||||||||||||||||||
Total Operating Income (Loss) | $ | 8,052 | $ | (1,177 | ) | 6.1 | % | (0.7 | ) | % | $ | 19,611 | $ | 13,289 | 4.8 | % | 2.6 | % | ||||||||||||||||||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | ||||||||||||||||||||||||||||||||||||||||||||||
Operating Income (Loss) | $ | 5,893 | $ | (6,028 | ) | $ | 13,347 | $ | 2,980 | |||||||||||||||||||||||||||||||||||||
Other Income (2) | 141 | — | 141 | 1,510 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 2,851 | 2,386 | 6,683 | 7,009 | ||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | — | 314 | — | 314 | ||||||||||||||||||||||||||||||||||||||||||
8,885 | (3,328 | ) | 14.6 | % | (5.2 | ) | % | 20,171 | 11,813 | 10.9 | % | 5.6 | % | |||||||||||||||||||||||||||||||||
Electronic Systems | ||||||||||||||||||||||||||||||||||||||||||||||
Operating Income | 6,600 | 8,598 | 19,769 | 22,575 | ||||||||||||||||||||||||||||||||||||||||||
Gain on Divestitures (3) | — | — | 18,815 | — | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 3,232 | 4,207 | 10,661 | 12,928 | ||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | — | 468 | — | 468 | ||||||||||||||||||||||||||||||||||||||||||
9,832 | 13,273 | 13.7 | % | 13.6 | % | 49,245 | 35,971 | 22.1 | % | 12.1 | % | |||||||||||||||||||||||||||||||||||
Corporate General and Administrative Expenses (1) | ||||||||||||||||||||||||||||||||||||||||||||||
Operating loss | (4,441 | ) | (3,747 | ) | (13,505 | ) | (12,266 | ) | ||||||||||||||||||||||||||||||||||||||
Gain on Divestitures (3) | — | — | (18,815 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 6 | 42 | 76 | 127 | ||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | 594 | 331 | 2,579 | 2,792 | ||||||||||||||||||||||||||||||||||||||||||
(3,841 | ) | (3,374 | ) | (29,665 | ) | (9,347 | ) | |||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 14,876 | $ | 6,571 | 11.2 | % | 4.1 | % | $ | 39,751 | $ | 38,437 | 9.7 | % | 7.5 | % | ||||||||||||||||||||||||||||||
Capital Expenditures | ||||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | $ | 3,555 | $ | 2,329 | $ | 10,149 | $ | 8,080 | ||||||||||||||||||||||||||||||||||||||
Electronic Systems | 947 | 758 | 1,701 | 3,196 | ||||||||||||||||||||||||||||||||||||||||||
Corporate Administration | — | 4 | — | 10 | ||||||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures | $ | 4,502 | $ | 3,091 | $ | 11,850 | $ | 11,286 |
(1) Includes costs not allocated to either the
(2) Insurance recoveries related to property and equipment included as other income for the nine months ended
(3) Includes gain on divestitures of the
CONTACTS:Douglas L. Groves , Vice President, Chief Financial Officer and Treasurer, 310.513.7224Chris Witty , Investor Relations, 646.438.9385, cwitty@darrowir.com