Ducommun Reports Results For The Third Quarter Ended October 1, 2016

LOS ANGELES, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Ducommun Incorporated (NYSE:DCO) ("Ducommun" or the "Company") today reported results for its third quarter ended October 1, 2016.

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 Anthony J. Reardon, chairman, president and chief executive officer. "While revenue and gross margins were essentially flat sequentially compared to the second quarter, our backlog rose to $566 million - the highest ever, net of divestitures - and we're well positioned for sales acceleration in the fourth quarter and beyond. At the same time we paid down an additional $10 million of debt, leaving us with the strongest balance sheet since our acquisition of LaBarge in 2011. We are pleased with these results but remain focused on further operating improvement. We are pursuing strategic growth opportunities to leverage our expertise in commercial aerospace electronics, titanium, and composite systems, providing innovative solutions that distinguish Ducommun from our competitors."

Third Quarter Results

Net revenue for the third quarter of 2016 was $132.6 million compared to $161.7 million for the third quarter of 2015. The net revenue decrease year-over-year was primarily due to the following:
  • $18.0 million lower revenue within the Company's industrial end-use markets mainly due to the divestiture of the Pittsburgh operation in January 2016 and closure of the Houston operation in December 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 in March 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 $5.0 million, or $0.44 per diluted share, compared to a net loss of $(9.5) million, or $(0.86) per share, for the third quarter of 2015. The increase in net income for the third quarter of 2016 compared to the third quarter of 2015 was primarily due to the following:
  • 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 $25.2 million, or 19.0% of revenue, compared to gross profit of $20.0 million, or 12.4% of revenue, for the third quarter of 2015. The higher gross margin percentage year-over-year was primarily due to the 2015 third quarter included a forward loss reserve charge related to a regional jet program of $10.0 million. In addition, total material costs as a percentage of revenue decreased 2.1% year-over-year as a result of the Company's ongoing supply chain initiatives and improved operating performance.

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