LOS ANGELES--(BUSINESS WIRE)--Feb. 13, 2014--
Ducommun Incorporated (NYSE: DCO) (“Ducommun” or the “Company”) today
announced that it expects to record pre-tax program-related charges of
approximately $14.1 million in the 2013 fourth quarter, partially offset
by reduced accrued compensation expenses of approximately $5.3 million.
The program-related charges and compensation expense reductions are
expected to decrease net income by approximately $5.5 million, or
approximately $0.51 per diluted share, in the fourth quarter; the number
of shares used in computing diluted earnings per share is approximately
10.9 million.
The program-related charges are for contracts in the Ducommun
AeroStructures segment on the Embraer Legacy 450/500 aircraft and the
Boeing 777 wing tip. The charge for the Embraer aircraft contracts
consists of a $5.7 million asset impairment charge (principally tooling
and development costs), a $1.9 million inventory write-off, and a $3.9
million contract loss reserve. The charge for the Boeing contract
consists of a $1.3 million asset impairment charge (principally tooling)
and a $1.3 million contract loss reserve. These charges result from
estimated cost overruns for the development and production phases of the
Embraer aircraft contracts, as well as difficulties in achieving
previously-anticipated cost reductions for both the Embraer and Boeing
contracts.
Anthony J. Reardon, the Company's chairman and chief executive officer,
stated, “We are clearly disappointed in the execution of these programs.
To expand our content on such platforms, we bid somewhat aggressively
and, unfortunately, did not meet our planned productivity improvements
at the required pace. Moreover, the programs' profitability problems
were exacerbated by customer-generated product changes. While
discussions with Boeing and Embraer continue, we’ve been unable to
resolve these issues with equitable price adjustments to date. That
said, we have implemented more rigorous program management protocols to
improve our product development process, as well as our change control
and pricing procedures, to mitigate such risks going forward.”
Recognition of additional losses in future periods continues to be a
risk and will depend upon numerous factors including the Company’s sales
forecast, the ability to achieve expected cost reductions, and the
ability to resolve claims and assertions with the aforementioned
customers.
Conference Call to Discuss Fourth Quarter Charges
Ducommun will host a special conference call to discuss this
announcement today, February 13, at 2:00 p.m. PT (5:00 p.m. ET). Anthony
J. Reardon, the Company's chairman and chief executive officer, and
Joseph P. Bellino, the Company's vice president, treasurer and chief
financial officer, will host the call. To participate in the
teleconference, please call 866-318-8613 (international 617-399-5132)
approximately ten minutes prior to the conference time. The participant
passcode is 92697441.
Fourth Quarter Earnings Conference Call
Separately, Ducommun today announced that it plans to release the
Company's 2013 fourth quarter and year end financial results after the
market closes on Thursday, February 27, 2014 and then hold a conference
call at 2:00 p.m. PT (5:00 p.m. ET) to review the financial results. To
participate in the teleconference, call 877-280-4959 (international
857-244-7316) prior to the conference time. The participant passcode is
24331269. 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.
Both calls will be webcast by Thomson Reuters and can be accessed
directly at the Ducommun website at www.ducommun.com.
Conference call replay will be available after that time at the same
link or by dialing 888-286-8010, passcode 98437516 and passcode
29953781, for the special call and the earnings call, respectively.
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 www.ducommun.com.
Source: Ducommun Incorporated
Ducommun Incorporated
Joseph P. Bellino
Vice President and
Chief Financial Officer
(310) 513-7211
or
Chris Witty
Investor
Relations
(646) 438-9385 / cwitty@darrowir.com