View printer-friendly versionSANTA ANA, Calif.,
First Quarter 2020 Highlights
- Revenue was
$173.5 million - Net income of
$7.9 million , or$0.67 per diluted share - Gross margin increased 50 basis points year-over-year to 21.2%
- Operating margin increased 30 basis points year-over-year to 7.8%
- Adjusted EBITDA increased 10.3% year-over-year to
$23.2 million
“Though a very difficult time for our nation, the Ducommun team overcame some significant challenges in the quarter with the safety and health of our employees being the number one priority. Strict safety protocols have been deployed throughout all of our operations and we continue to follow health orders from the state and local authorities. Despite the challenges, the team posted excellent numbers for the quarter, reporting revenues of
Oswald continued, “The Company ended the quarter with a backlog* of
“The new
First Quarter Results
Net revenue for the first quarter of 2020 was
$24.2 million higher revenue in the Company’s military and space end-use markets due to higher build rates on military fixed-wing aircraft platforms, various missile platforms, and other military and space platforms; partially offset by$23.0 million lower revenue in the Company’s commercial aerospace end-use markets due to lower build rates on large aircraft platforms.
Net income for the first quarter of 2020 was
Gross profit for the first quarter of 2020 was
Operating income for the first quarter of 2020 was
Interest expense for the first quarter of 2020 was
Adjusted EBITDA for the first quarter of 2020 was
During the first quarter of 2020, the net cash used by operations was
* The Company defines backlog as potential revenue and is based on customer placed purchase orders and long-term agreements (“LTAs”) with firm fixed price and firm delivery dates of 24 months or less. Backlog as of
Business Segment Information
Electronic Systems
Electronic Systems segment net revenue for the quarter ended
$12.9 million higher revenue within the Company’s military and space end-use markets due to higher build rates on military fixed-wing aircraft platforms and various missile platforms, partially offset by lower build rates on other military and space platforms; and$1.4 million higher revenue within the Company’s commercial aerospace end-use markets due to higher build rates on other commercial aerospace platforms.
Electronic Systems segment operating income for the quarter ended
Structural Systems
Structural Systems segment net revenue for the quarter ended
$24.3 million lower revenue within the Company’s commercial aerospace end-use markets due to lower build rates on large aircraft platforms; partially offset by$11.3 million higher revenue within the Company’s military and space end-use markets due to higher build rates on other military and space platforms and military fixed-wing aircraft platforms.
Structural Systems segment operating income for the quarter ended
Corporate General and Administrative (“CG&A”) Expenses
CG&A expenses for the first quarter of 2020 were
Conference Call
A teleconference hosted by
This call is being webcast and can be accessed directly at the Ducommun website at Ducommun.com. Conference call replay will be available after that time at the same link or by dialing 855-859-2056, passcode 8876975.
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,” “continue” 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: whether the anticipated pre-tax restructuring charges will be sufficient to address all anticipated restructuring costs, including related to employee separation, facilities consolidation, inventory write-down and other asset impairments; whether the expected cost savings from the restructuring will ultimately be obtained in the amount and during the period anticipated; whether the restructuring in the affected areas will be sufficient to build a more cost efficient, focused, higher margin enterprise with higher returns for the Company's shareholders; 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, and stock-based compensation expense).
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. We define backlog as potential revenue and is based on customer placed purchase orders and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. The majority of the LTAs do not meet the definition of a contract under ASC 606 and thus, the backlog amount disclosed herein is greater than the remaining performance obligations disclosed under ASC 606. Backlog is subject to delivery delays or program cancellations, which are beyond our control. Backlog is affected by timing differences in the placement of customer orders and tends to be concentrated in several programs to a greater extent than our net revenues. Backlog in industrial markets tends to be of a shorter duration and is generally fulfilled within a three month period. As a result of these factors, trends in our overall level of backlog may not be indicative of trends in our future net revenues.
CONTACTS:
[Financial Tables Follow]
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
2020 |
2019 |
|||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 65,599 | $ | 39,584 | ||||
| Accounts receivable, net | 81,627 | 67,133 | ||||||
| Contract assets | 117,213 | 106,670 | ||||||
| Inventories | 119,751 | 112,482 | ||||||
| Production cost of contracts | 7,859 | 9,402 | ||||||
| Other current assets | 4,733 | 5,497 | ||||||
| Total Current Assets | 396,782 | 340,768 | ||||||
| Property and equipment, Net | 114,732 | 115,216 | ||||||
| Operating lease right-of-use assets | 18,519 | 19,105 | ||||||
| 170,890 | 170,917 | |||||||
| Intangibles, net | 134,532 | 138,362 | ||||||
| Non-current deferred income taxes | 60 | 55 | ||||||
| Other assets | 6,322 | 6,006 | ||||||
| Total Assets | $ | 841,837 | $ | 790,429 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 76,970 | $ | 82,597 | ||||
| Contract liabilities | 27,878 | 14,517 | ||||||
| Accrued and other liabilities | 28,048 | 37,620 | ||||||
| Operating lease liabilities | 3,049 | 2,956 | ||||||
| Current portion of long-term debt | 7,000 | 7,000 | ||||||
| Total Current Liabilities | 142,945 | 144,690 | ||||||
| Long-term debt, less current portion | 343,625 | 300,887 | ||||||
| Non-current operating lease liabilities | 16,937 | 17,565 | ||||||
| Non-current deferred income taxes | 18,147 | 16,766 | ||||||
| Other long-term liabilities | 17,756 | 17,721 | ||||||
| Total Liabilities | 539,410 | 497,629 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Common stock | 116 | 116 | ||||||
| Additional paid-in capital | 89,820 | 88,399 | ||||||
| Retained earnings | 220,483 | 212,553 | ||||||
| Accumulated other comprehensive loss | (7,992 | ) | (8,268 | ) | ||||
| Total Shareholders’ Equity | 302,427 | 292,800 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 841,837 | $ | 790,429 | ||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
| Three Months Ended | ||||||||
2020 |
2019 |
|||||||
| Net Revenues | $ | 173,475 | $ | 172,566 | ||||
| Cost of Sales | 136,671 | 136,872 | ||||||
| Gross Profit | 36,804 | 35,694 | ||||||
| Selling, General and Administrative Expenses | 23,178 | 22,846 | ||||||
| Operating Income | 13,626 | 12,848 | ||||||
| Interest Expense | (4,246 | ) | (4,351 | ) | ||||
| Income Before Taxes | 9,380 | 8,497 | ||||||
| Income Tax Expense | 1,450 | 1,025 | ||||||
| Net Income | $ | 7,930 | $ | 7,472 | ||||
| Earnings Per Share | ||||||||
| Basic earnings per share | $ | 0.68 | $ | 0.65 | ||||
| Diluted earnings per share | $ | 0.67 | $ | 0.64 | ||||
| Weighted-Average Number of Common Shares Outstanding | ||||||||
| Basic | 11,610 | 11,434 | ||||||
| Diluted | 11,855 | 11,755 | ||||||
| Gross Profit % | 21.2 | % | 20.7 | % | ||||
| SG&A % | 13.4 | % | 13.2 | % | ||||
| Operating Income % | 7.8 | % | 7.5 | % | ||||
| Net Income % | 4.6 | % | 4.3 | % | ||||
| Effective Tax Rate | 15.5 | % | 12.1 | % | ||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES
BUSINESS SEGMENT PERFORMANCE
(Unaudited)
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||||||||
| % Change |
2020 |
2019 |
% of Net Revenues 2020 |
% of Net Revenues 2019 |
||||||||||||||||||
| Net Revenues | ||||||||||||||||||||||
| Electronic Systems | 16.5 | % | $ | 98,120 | $ | 84,197 | 56.6 | % | 48.8 | % | ||||||||||||
| Structural Systems | (14.7 | ) | % | 75,355 | 88,369 | 43.4 | % | 51.2 | % | |||||||||||||
| Total Net Revenues | 0.5 | % | $ | 173,475 | $ | 172,566 | 100.0 | % | 100.0 | % | ||||||||||||
| Segment Operating Income | ||||||||||||||||||||||
| Electronic Systems | $ | 15,122 | $ | 9,181 | 15.4 | % | 10.9 | % | ||||||||||||||
| Structural Systems | 5,390 | 10,549 | 7.2 | % | 11.9 | % | ||||||||||||||||
| 20,512 | 19,730 | |||||||||||||||||||||
| Corporate General and Administrative Expenses(1) | (6,886 | ) | (6,882 | ) | (4.0 | ) | % | (4.0 | ) | % | ||||||||||||
| Total Operating Income | $ | 13,626 | $ | 12,848 | 7.8 | % | 7.5 | % | ||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||
| Electronic Systems | ||||||||||||||||||||||
| Operating Income | $ | 15,122 | $ | 9,181 | ||||||||||||||||||
| Depreciation and Amortization | 3,575 | 3,502 | ||||||||||||||||||||
| 18,697 | 12,683 | 19.1 | % | 15.1 | % | |||||||||||||||||
| Structural Systems | ||||||||||||||||||||||
| Operating Income | 5,390 | 10,549 | ||||||||||||||||||||
| Depreciation and Amortization | 3,689 | 3,000 | ||||||||||||||||||||
| 9,079 | 13,549 | 12.0 | % | 15.3 | % | |||||||||||||||||
| Corporate General and Administrative Expenses(1) | ||||||||||||||||||||||
| Operating loss | (6,886 | ) | (6,882 | ) | ||||||||||||||||||
| Depreciation and Amortization | 72 | 253 | ||||||||||||||||||||
| Stock-Based Compensation Expense | 2,279 | 1,464 | ||||||||||||||||||||
| (4,535 | ) | (5,165 | ) | |||||||||||||||||||
| Adjusted EBITDA | $ | 23,241 | $ | 21,067 | 13.4 | % | 12.2 | % | ||||||||||||||
| Capital Expenditures | ||||||||||||||||||||||
| Electronic Systems | $ | 815 | $ | 836 | ||||||||||||||||||
| Structural Systems | 2,137 | 3,689 | ||||||||||||||||||||
| — | — | |||||||||||||||||||||
| Total Capital Expenditures | $ | 2,952 | $ | 4,525 | ||||||||||||||||||
(1) Includes costs not allocated to either the Electronic Systems or Structural Systems operating segments.
DUCOMMUN INCORPORATED AND SUBSIDIARIES
NON-GAAP BACKLOG* BY REPORTING SEGMENT
(Unaudited)
(Dollars in thousands)
| (In thousands) | ||||||||
2020 |
2019 |
|||||||
| Consolidated Ducommun | ||||||||
| Military and space | $ | 474,451 | $ | 451,293 | ||||
| Commercial aerospace | 376,307 | 430,642 | ||||||
| Industrial | 25,668 | 28,286 | ||||||
| Total | $ | 876,426 | $ | 910,221 | ||||
| Electronic Systems | ||||||||
| Military and space | $ | 326,999 | $ | 311,027 | ||||
| Commercial aerospace | 76,932 | 75,719 | ||||||
| Industrial | 25,668 | 28,286 | ||||||
| Total | $ | 429,599 | $ | 415,032 | ||||
| Structural Systems | ||||||||
| Military and space | $ | 147,452 | $ | 140,266 | ||||
| Commercial aerospace | 299,375 | 354,923 | ||||||
| Total | $ | 446,827 | $ | 495,189 | ||||
* The Company defines backlog as potential revenue and is based on customer placed purchase orders and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. Backlog as of as of
Source: Ducommun Incorporated