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How to protect your finances during divorce

However you do it divorce will leave you poorer, and you will need to watch your finances carefully

Ducommun Inc (DCO) Q1 2024 Earnings Call Transcript Highlights: Strong Growth and Record ...

GuruFocus Research
·4-min read

  • Revenue: $190.8 million, up 5.3% year-over-year.

  • Gross Margin: 24.6%, increased from 20.3% year-over-year.

  • Net Income: $6.8 million, with EPS of $0.46 per diluted share.

  • Adjusted Net Income: $10.4 million, with adjusted EPS of $0.70 per diluted share.

  • Commercial Aerospace Revenue: $80 million, up 11% year-over-year.

  • Defense Revenue: Nearly $100 million, 1% growth year-over-year.

  • Backlog: Total company backlog at $1.46 billion; Defense backlog at $569 million.

  • Adjusted EBITDA: 14.4% of revenue, improved from 12.7% year-over-year.

  • Operating Income: $12.6 million or 6.6% of revenue.

  • Adjusted Operating Income: $17.1 million or 9% of revenue.

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Ducommun Inc (NYSE:DCO) reported strong Q1 2024 results with revenues exceeding $190 million for the third consecutive quarter, marking a 5.3% growth over the prior year.

  • The company's defense business grew 1% year over year, driven by strong demand for the Black Hawk, Apache, and F-35 platforms, as well as selected naval programs.

  • Ducommun Inc (NYSE:DCO) achieved a record company backlog of $1.46 billion, with the defense backlog increasing $125 million compared to the prior year quarter to a record $569 million.

  • Gross margin for Q1 was 24.6%, up 430 basis points year-over-year, benefiting from strategic value pricing initiatives, productivity improvements, and restructuring savings.

  • Adjusted EBITDA improved significantly, reaching 14.4% of revenue compared to 12.7% in Q1 2023, indicating a strong start to 2024 as the company progresses towards its Vision 2027 goals.

Negative Points

  • Commercial aerospace faced challenges with the MAX quality issues, leading to a slight year-over-year decrease in the commercial aerospace backlog.

  • The company noted potential headwinds in Q2 and Q3 of 2024, particularly with the MAX program, which could impact commercial aerospace revenues.

  • Legacy programs like the F-18 are in decline, which could affect future revenue streams from these sources.

  • Operational transitions, such as the closure of the Monrovia and Varial Arkansas facilities, are expected to incur additional restructuring expenses through the end of 2024.

  • Despite overall growth, certain segments like the Structural Systems faced margin pressures due to higher costs at the Monrovia plant as it winds down production.

Q & A Highlights

Q: What are some of the main pressure points you're trying to avoid with the strategic inventory buys? A: (Stephen Oswald - Chairman of the Board, President, CEO) We are particularly focused on titanium due to its importance in wide-body aircraft and the geopolitical situation with Russia. We've also strategically purchased items for our card business to ensure we're well-prepared for future demands.

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Q: Can you discuss the decline of the F-18 platform and other key platforms that are growing or phasing out? A: (Stephen Oswald - Chairman of the Board, President, CEO) The F-18 is in decline, but we expect to continue seeing business from depot maintenance. Conversely, the Black Hawk and Apache programs are growing robustly. We're also seeing strong performance in our rotary business and have good prospects with the F-35 and other programs.

Q: How are you managing the strong margins in the Electronic Systems segment, and what can we expect going forward? A: (Suman Mookerji - CFO, Senior VP, Treasurer) The margins were driven by strategic pricing and growth in our Engineered Products portfolio. We've also seen benefits from our footprint consolidation strategy. These factors should help sustain the current margin levels going forward.

Q: What is the status of integrating BLR Aerospace's structures into military aircraft? A: (Stephen Oswald - Chairman of the Board, President, CEO) We are actively working on integrating BLR Aerospace's structures, particularly focusing on the Black Hawk for the National Guard. These efforts are expected to take some time but are progressing.

Q: Can you provide insights into the M&A component of Vision 2027, especially regarding the competitive environment for acquisitions? A: (Stephen Oswald - Chairman of the Board, President, CEO) We have a modest placeholder of $75 million for acquisitions under Vision 2027. Our focus will be on acquisitions that enhance our engineered product portfolio. The competitive environment is robust, but we are confident in our ability to pursue valuable acquisitions effectively.

Q: What are the expectations for the MAX program's production rates and potential share gains in the Airbus narrow-body portfolio? A: (Stephen Oswald - Chairman of the Board, President, CEO) We anticipate a temporary reduction in MAX production rates but are working on gaining more share in both the MAX and Airbus A320 programs. We expect these efforts to potentially yield results within the next 12 months.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.