Ducommun Incorporated Reports Results for the Third Quarter Ended October 3, 2009

LOS ANGELES--(BUSINESS WIRE)--Nov. 2, 2009-- Ducommun Incorporated (NYSE:DCO) today reported results for its third quarter and first nine months ended October 3, 2009.

Sales for the third quarter of 2009 increased 9% to $109.9 million from $100.9 million for the third quarter of 2008. Net income for the third quarter of 2009 was $6.2 million, or $0.59 per diluted share, compared to net income of $6.3 million, or $0.59 per diluted share, for the comparable period last year.

The increase in sales for the third quarter of 2009 from the same period last year was due to the December 2008 acquisition of DynaBil Industries, Inc. (DAS-NY). Net sales from DAS-NY were $11.1 million in the third quarter of 2009. The Company’s mix of business in the third quarter of 2009 was approximately 65% military, 33% commercial and 2% space, compared to 56% military, 41% commercial and 3% space in the third quarter of 2008.

Gross profit, as a percentage of sales, was 20.5% in the third quarter of 2009, compared to 20.6% in the third quarter of 2008.

Selling, general and administration (SG&A) expenses increased to $12.6 million, or 11.5% of sales, in the third quarter of 2009, compared to $11.5 million, or 11.4% of sales, in the third quarter of 2008. The increase in SG&A expenses in the third quarter of 2009 was primarily due to the acquisition of DAS-NY and included a year-over-year increase in amortization of intangible assets of $0.8 million, partially offset by corporate wide cost controls and reductions.

Net income for the third quarter of 2009 decreased 1% from the third quarter of 2008 due to higher interest expense on higher debt levels and a higher effective tax rate in the third quarter of 2009. The Company’s effective tax rate for the third quarter of 2009 was 33.0%, compared to 30.3% in the third quarter of 2008.

Sales for the first nine months of 2009 increased 8% to $325.1 million from $302.4 million for the first nine months of 2008. Net income for the first nine months of 2009 was $13.4 million, or $1.27 per diluted share, compared to net income of $17.3 million, or $1.63 per diluted share, for the comparable period last year.

The increase in sales for the first nine months of 2009 from the same period last year was due to the December 2008 acquisition of DAS-NY. Net sales from DAS-NY were $32.3 million in the first nine months of 2009. The Company’s mix of business in the first nine months of 2009 was approximately 62% military, 36% commercial and 2% space, compared to 58% military, 40% commercial and 2% space in the first nine months of 2008.

Gross profit, as a percentage of sales, was 18.3% in the first nine months of 2009, compared to 21.0% in the first nine months of 2008. Gross profit in the first nine months of 2009 was negatively impacted by a previously reported inventory valuation adjustment of $5.1 million, including an inventory reserve of $4.4 million related to the Eclipse Aviation Corporation Chapter 7 bankruptcy filing in March 2009.

SG&A expenses increased to $37.6 million, or 11.6% of sales, for the first nine months of 2009, compared to $35.9 million, or 11.9% of sales, in the first nine months of 2008. The increase in SG&A expenses resulted from the acquisition of DAS-NY and included a year-over-year increase in amortization of intangible assets of $0.7 million.

Net income for the first nine months of 2009 decreased 23% from the first nine months of 2008 primarily due to the reasons stated above and higher interest expense on higher debt levels, partially offset by the benefit of a lower effective tax rate in the first nine months of 2009. The Company’s effective tax rate for the first nine months of 2009 was 33.0%, compared to 34.6% in the first nine months of 2008. The Company’s effective tax rate in 2009 included the benefit of research and development credits which were not available to the same extent in the first nine months of 2008. The Company expects its full year effective tax rate for 2009 to be approximately 30% to 32%.

Joseph C. Berenato, chairman and chief executive officer, stated, “Ducommun’s third quarter results reflect the strength of our diversified portfolio of programs and products. Sales increased by $9 million on the strength of the December 2008 acquisition of DAS-NY. Excluding the acquisition, year-over-year sales were largely flat, notwithstanding a precipitous decline in commercial aircraft sales particularly for regional and business jets. The third quarter of 2009 benefited from a substantial increase in military sales for such programs as the Northrop Grumman X-47B UCAS, the Boeing C-17 aircraft and radar system upgrades for military fighter aircraft. A substantial increase in sales for the Sikorsky Blackhawk helicopter more than offset the decline in sales for the Boeing Apache helicopter.”

Mr. Berenato continued, “Despite a difficult commercial aerospace market, tight control of operating expenses allowed us to maintain our profit margins in the quarter. As a result, we were able to continue to make substantial investments in new programs without sacrificing current profitability. These new programs offer Ducommun the opportunity for meaningful growth in future years.”

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 and chief executive officer, Anthony J. Reardon, the Company’s president and chief operating officer, and Joseph P. Bellino, the Company’s vice president, chief financial officer, will be held today at 7:30 AM PT (10:30 AM ET). To participate in the teleconference, please call 866.202.0886 (international 617.213.8841) approximately ten minutes prior to the conference stated above. The participant passcode is 81094345. Mr. Berenato, Mr. Reardon and Mr. Bellino 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 directly at the Ducommun Incorporated website at www.ducommun.com. Conference call reply will be available after that time at the same link or at the Company’s website at www.ducommun.com.

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, 2008 and Form 10-Q for the quarter ended October 3, 2009 for a more detailed discussion of these and other risk factors and contingencies.


DUCOMMUN INCORPORATED AND SUBSIDIARIES
COMPARATIVE DATA
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	Oct. 3,			Sept. 27,			Oct. 3,			Sept. 27,
	2009			2008			2009			2008
Sales and Service Revenues
Product sales	$	95,227		$	86,299		$	277,993		$	259,200
Service revenues		14,676			14,557			47,090			43,179
Total		109,903			100,856			325,083			302,379
Operating Costs and Expenses:
Cost of product sales		76,015			68,462			228,217			204,435
Cost of service revenues		11,350			11,571			37,294			34,537
Selling, general and administrative expenses		12,647			11,484			37,591			35,942
Total		100,012			91,517			303,102			274,914

Operating Income		9,891			9,339			21,981			27,465
Interest Expense, Net		(652	)		(355	)		(2,005	)		(948	)
Income Before Taxes		9,239			8,984			19,976			26,517
Income Tax Expense		(3,049	)		(2,720	)		(6,592	)		(9,170	)
Net Income	$	6,190		$	6,264		$	13,384		$	17,347
Earnings Per Share:
Basic earnings per share	$	0.59		$	0.59		$	1.28		$	1.64
Diluted earnings per share	$	0.59		$	0.59		$	1.27		$	1.63

Weighted Average Number of Common Shares Outstanding:
Basic		10,449			10,578			10,465			10,567
Diluted		10,491			10,693			10,502			10,671


DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

	October 3,			December 31,
	2009			2008
Assets
Current Assets:
Cash and cash equivalents	$	823		$	3,508
Accounts receivable, less allowance for doubtful accounts		60,249			50,090
Unbilled receivables		4,250			7,074
Inventories		89,966			83,157
Deferred income taxes		9,381			9,172
Other current assets		6,083			6,172
Total Current Assets		170,752			159,173
Property and Equipment, Net		61,273			61,954
Goodwill, Net		113,378			114,002
Other Assets		29,423			31,057
	$	374,826		$	366,186

Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt	$	4,972		$	2,420
Accounts payable		32,116			35,358
Accrued liabilities		34,279			51,723
Total Current Liabilities		71,367			89,501
Long-Term Debt, Less Current Portion		42,400			28,299
Deferred Income Taxes		11,014			9,902
Other Long-Term Liabilities		13,587			14,038
Total Liabilities		138,368			141,740
Commitments and Contingencies
Shareholders' Equity:
Common stock		106			106
Treasury stock		(1,924	)		(986	)
Additional paid-in capital		57,705			56,040
Retained earnings		184,744			173,718
Accumulated other comprehensive loss		(4,173	)		(4,432	)
Total Shareholders' Equity		236,458			224,446
	$	374,826		$	366,186

Source: Ducommun Incorporated

Ducommun Incorporated
Joseph P. Bellino
Vice President and Chief Financial Officer
310-513-7211

News Release