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Ducommun Incorporated Reports Results for the Third Quarter Ended September 29, 2007

LOS ANGELES, California (October 29, 2007) -- Ducommun Incorporated (NYSE: DCO) today reported results for its third quarter ended September 29, 2007.

Sales for the third quarter of 2007 were $94.7 million, compared to $81.6 million for the third quarter of 2006. Net income for the third quarter of 2007 was $5.8 million, or $0.55 per diluted share, compared to net income of $4.1 million, or $0.40 per diluted share, for the comparable period last year.

Sales for the third quarter of 2007 increased 16% from the same period last year primarily due to an increase in commercial sales. The Company’s mix of business in the third quarter of 2007 was approximately 60% military, 38% commercial and 2% space, compared to 66% military, 31% commercial and 3% space in the third quarter of 2006.

Gross profit, as a percentage of sales, increased to 21.7% in the third quarter of 2007 from 20.8% in the third quarter of 2006. Selling, general and administrative (SG&A) expenses increased to $11.8 million, compared to $10.4 million in the third quarter of 2006. The increase in SG&A expenses was primarily the result of higher bonus accruals in 2007 and higher expenses related to the growth in sales.

Net income for the third quarter of 2007 increased 42% from the third quarter of 2006 primarily due to the reasons stated above. The Company’s effective tax rate for the third quarter of 2007 was 27.7% compared to 30.1% in the third quarter of 2006.

Sales for the first nine months of 2007 were $273.8 million, compared to $231.2 million for the first nine months of 2006. Net income for the first nine months of 2007 was $14.2 million, or $1.36 per diluted share, compared to net income of $10.0 million, or $0.97 per diluted share, for the comparable period last year.

Sales for the first nine months of 2007 increased 18% from the same period last year primarily due to an increase in commercial sales. The Company’s mix of business in the first nine months of 2007 was approximately 61% military, 37% commercial and 2% space, compared to 67% military, 31% commercial and 2% space in the first nine months of 2006.

Gross profit, as a percentage of sales, increased to 21.5% in the first nine months of 2007 from 20.2% in the first nine months of 2006. Selling, general and administrative (SG&A) expenses, as a percentage of sales, increased to 13.2% in the first nine months of 2007 from 12.8% in the first nine months of 2006. The increase in SG&A expenses as a percentage of sales was primarily the result of higher bonus accruals in 2007 and expenses of the WiseWave and CMP businesses which were acquired in the second and third quarters of 2006, respectively.

Net income for the first nine months of 2007 increased 42% from the first nine months of 2006 primarily due to the reasons stated above and a lower effective tax rate, partially offset by higher interest expense in the first nine months of 2007. The Company’s effective tax rate for the first nine months of 2007 was 30.9% compared to 34.1% in the first nine months of 2006.

Joseph C. Berenato, chairman, president and chief executive officer of Ducommun, stated, “Our continued strong operating performance reflects our ongoing efforts to drive Ducommun forward by focusing on our key themes of One Company, Operational Excellence and Profitable Growth. Both our military and commercial markets remain strong. Internally, we are benefiting from the success of our Lean Six Sigma activities. We intend to augment these efforts with acquisitions that will add operational and technological capabilities to our existing businesses. Through these efforts, we are becoming more important to our key customers.”

Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace and defense industry.

A teleconference with Joseph C. Berenato, the Company’s chairman, president and chief executive officer, and Gregory A. Hann, the Company’s vice president, chief financial officer and treasurer, will be held today at 7:30 AM PT (10:30 AM ET). To participate in the teleconference, please call 866-383-8009 (international 617-597-5342) approximately ten minutes prior to the conference time stated above. The participant passcode is 20289123. Mr. Berenato and Mr. Hann will be speaking on behalf of the company and anticipate the meeting and Q&A period to last approximately 40 minutes.

This call is being webcast by Thomson/CCBN and can be accessed at Thomson/CCBN. Conference call replay will be available after that time at the same link.

The statements made in this press release include forward-looking statements that involve risks and uncertainties. The Company’s future financial results could differ materially from those anticipated due to the Company’s dependence on conditions in the airline industry, the level of new commercial aircraft orders, production rates for Boeing commercial aircraft, the C-17 and Apache helicopter rotor blade programs, the level of defense spending, competitive pricing pressures, manufacturing inefficiencies, start-up costs and possible overruns on new contracts, technology and product development risks and uncertainties, product performance, risks associated with acquisitions and dispositions of businesses by the Company, increasing consolidation of customers and suppliers in the aerospace industry, possible goodwill impairment, availability of raw materials and components from suppliers, and other factors beyond the Company’s control. See the Company’s Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended September 29, 2007 for a more detailed discussion of these and other risk factors and contingencies.

 

DUCOMMUN INCORPORATED AND SUBSIDIARIES

COMPARATIVE DATA

CONSOLIDATED INCOME STATEMENT

 

 

Three Months Ended

Nine Months Ended

 

 

Sept. 29, 2007

Sept. 30, 2006

Sept. 29, 2007

Sept. 30, 2006

 

 

 

 

 

 

 

Net Sales

$  94,665,000

$ 81,557,000

$ 273,821,000

$ 231,195,000

 

 

 

 

 

 

 

Operating Costs and Expenses:

 

 

 

 

 

    Cost of Goods Sold

74,135,000

64,612,000

215,020,000

184,508,000

 

    Selling, General &

    Administrative Expenses

11,831,000

10,374,000

36,191,000

29,609,000

 

Total

85,966,000

74,986,000

251,211,000

214,117,000

 

 

 

 

 

 

 

Operating Income

8,699,000

6,571,000

22,610,000

17,078,000

 

Interest Expense

(628,000)

(704,000)

(2,045,000)

(1,868,000)

Income Tax Expense

(2,239,000)

(1,768,000)

(6,362,000)

(5,181,000)

Net Income

$   5,832,000

$   4,099,000

$  14,203,000

$  10,029,000

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

    Basic Earnings Per Share

$           0.56

$           0.40

$           1.37

$          0.98

 

    Diluted Earnings Per Share

0.55

0.40

1.36

0.97

 

 

 

 

 

 

 

Weighted Averaged Number of

 

 

 

 

 

Common Shares Outstanding:

 

 

 

 

 

    Basic

10,409,000

10,231,000

10,357,000

10,195,000

 

    Diluted

10,560,000

10,292,000

10,440,000

10,287,000

 









 

 

DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

(Unaudited)

September 29, 2007

 

December 31, 2006

Assets

 

 

Current Assets:

 

 

     Cash and cash equivalents

387

378

     Accounts receivable, less allowance for doubtful accounts

46,273

42,658

     Unbilled receivables

4,170

3,482

     Inventories

75,277

64,587

     Deferred income taxes

5,967

6,116

     Other current assets

    6,269

    5,521

          Total Current Assets

138,343

122,742

Property and Equipment, Net

55,475

52,987

Goodwill, Net

106,632

106,628

Other Assets

    12,797

    14,676

 

$313,247

$297,033

Liabilities and Shareholders’ Equity

 

 

Current Liabilities:

 

 

     Current portion of long-term debt

$    1,855

$    1,196

     Accounts payable

20,885

32,948

     Accrued liabilities

   35,482

   33,243

          Total Current Liabilities

58,222

67,387

Long-Term Debt, Less Current Portion

32,480

29,240

Deferred Income Taxes

5,705

6,670

Other Long-Term Liabilities

    9,892

    6,711

          Total Liabilities

106,299

110,008

Commitments and Contingencies

 

 

Shareholders’ Equity:

 

 

     Common Stock

105

103

     Additional paid-in-capital

51,711

46,320

     Retained earnings

156,773

142,760

     Accumulated other comprehensive loss

   (1,641)

   (2,158)

          Total Shareholders’ Equity

  206,948

  187,025

 

$313,247

$297,033






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