DUCOMMUN INC DE

Previous wording

In its 2023 Annual Report on Form 10-K, The Boeing Company (“Boeing”) indicated that in 2023, global air traffic largely recovered to 2019 levels with domestic travel continuing to be the most robust and international travel has mostly recovered. For 2024, while both major large aircraft manufacturers, Boeing and Airbus SE, have announced either similar or increases in build rates compared to 2023, the ramp up to date has been slower than initially expected and below pre-pandemic levels. In addition, Boeing, one of our largest customers, was notified by the Federal Aviation Administration (“FAA”) in early January 2024 that the FAA had initiated an investigation into Boeing’s quality control system. This notification was followed by the FAA announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures. In July 2024, Boeing also pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control process. Since Boeing is one of our largest customers, if Boeing is unable to meet the full compliance of the FAA’s required quality control procedures, it could have a material adverse impact on our business, results of operations and financial condition.

Current wording

In its 2023 Annual Report on Form 10-K, The Boeing Company (“Boeing”) indicated that in 2023, global air traffic largely recovered to 2019 levels with domestic travel continuing to be the most robust and international travel has mostly recovered. For 2024, while both major large aircraft manufacturers, Boeing and Airbus SE, have announced either similar or increases in build rates compared to 2023, the ramp up to date has been slower than initially expected and below pre-pandemic levels. In addition, Boeing, one of our largest customers, was notified by the Federal Aviation Administration (“FAA”) in early January 2024 that the FAA had initiated an investigation into Boeing’s quality control system. This notification was followed by the FAA announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures. In July 2024, Boeing also pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control process. Further, in September 2024, the International Association of Machinists and Aerospace Workers District 751 voted to initiate a labor strike affecting more than 30,000 Boeing manufacturing employees primarily located in Washington state, and the manufacturing employees, after rejecting the contract offer in October, voted to approve the revised contract offer in November 2024. Since Boeing is one of our largest customers, if Boeing is unable to meet the full compliance of the FAA’s required quality control procedures, and/or recover from the impact of the labor strike in the near term, it could have a material adverse impact on our business, results of operations and financial condition.

Previous wording

•Net income of $7.7 million, or 3.9% of net revenues, or $0.52 per diluted share

Current wording

•Net income of $10.1 million, or 5.0% of net revenues, or $0.67 per diluted share

Previous wording

Net revenues by end-use market and operating segment during the fiscal three and six months ended June 29, 2024 and July 1, 2023, respectively, were as follows:

Current wording

Net revenues by end-use market and operating segment during the fiscal three and nine months ended September 28, 2024 and September 30, 2023, respectively, were as follows:

Previous wording

Net revenues for the three months ended June 29, 2024 were $197.0 million, compared to $187.3 million for the three months ended July 1, 2023. The year-over-year increase in our key end-use markets were primarily due to the following:

Current wording

Net revenues for the three months ended September 28, 2024 were $201.4 million, compared to $196.3 million for the three months ended September 30, 2023. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

Net revenues for the six months ended June 29, 2024 were $387.8 million, compared to $368.5 million for the six months ended July 1, 2023. The year-over-year increase in our key end-use markets were primarily due to the following:

Current wording

Net revenues for the nine months ended September 28, 2024 were $589.3 million, compared to $564.8 million for the nine months ended September 30, 2023. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

•$9.9 million higher revenues in our commercial aerospace end-use markets due to higher production on selected single-aisle and twin-aisle aircraft, buffer stock build for the Monrovia performance center closure, and growth in regional and business aircraft platforms, partially offset by lower revenues from in-flight entertainment; and

Current wording

•$20.8 million higher revenues in our commercial aerospace end-use markets due to growth in Airbus, customer required buffer stock build for the Monrovia performance center closure, higher rates on rotary-wing platforms, and growth in selected business aircraft platforms, partially offset by lower revenues from in-flight entertainment and other commercial aerospace platforms; and

Previous wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), Spirit AeroSystems Holdings, Inc. (“Spirit”), and Viasat, Inc. (“Viasat”) for the three and six months ended June 29, 2024 and July 1, 2023.

Current wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), Spirit AeroSystems Holdings, Inc. (“Spirit”), and Viasat, Inc. (“Viasat”) for the three and nine months ended September 28, 2024 and September 30, 2023.

Previous wording

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended June 29, 2024 of 26.0%, compared to the three months ended July 1, 2023 of 21.4% primarily due to higher manufacturing volume and favorable product mix, partially offset by higher other manufacturing costs.

Current wording

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended September 28, 2024 of 26.2%, compared to the three months ended September 30, 2023 of 22.7% primarily due to favorable product mix and higher manufacturing volume, partially offset by higher other manufacturing costs.

Previous wording

Gross profit as a percentage of net revenues increased year-over-year with the six months ended June 29, 2024 of 25.3%, compared to the six months ended July 1, 2023 of 20.9% primarily due to higher manufacturing volume and favorable product mix, partially offset by higher other manufacturing costs.

Current wording

Gross profit as a percentage of net revenues increased year-over-year with the nine months ended September 28, 2024 of 25.6%, compared to the nine months ended September 30, 2023 of 21.5% primarily due to higher manufacturing volume and favorable product mix, partially offset by higher other manufacturing costs.

Previous wording

SG&A expenses increased $12.4 million year-over-year in the six months ended June 29, 2024 compared to the six months ended July 1, 2023 primarily due to BLR SG&A expenses of $6.8 million which did not exist until the acquisition of BLR was completed at the end of April 2023, higher professional services fees of $2.2 million, of which $1.4 million was related to the unsolicited non-binding offer to acquire all common stock outstanding of Ducommun Incorporated, and higher compensation and benefits expense of $1.8 million.

Current wording

SG&A expenses increased $15.7 million year-over-year in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 primarily due to BLR SG&A expenses of $6.8 million which did not exist until the acquisition of BLR was completed at the end of April 2023, higher compensation and benefits expense of $3.8 million, and higher professional services fees of $3.5 million, of which $2.4 million was related to the unsolicited non-binding offer to acquire all common stock outstanding of Ducommun Incorporated.

Previous wording

Restructuring charges decreased $2.7 million and $5.5 million (including $0.9 million recorded as cost of sales in both periods) year-over-year in the three and six months ended June 29, 2024, compared to the three and six months ended July 1, 2023, respectively, primarily due to the winding down of the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 3 for further information.

Current wording

Restructuring charges decreased $2.1 million and $7.5 million (including $0.9 million recorded as cost of sales in the nine months ended September 28, 2024) year-over-year in the three and nine months ended September 28, 2024, compared to the three and nine months ended September 30, 2023 (including $0.2 million recorded as cost of sales in each period), respectively, primarily due to the winding down of the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 3 for further information.

Previous wording

Interest expense decreased $1.8 million and $2.1 million year-over-year in the three and six months ended June 29, 2024, compared to the three and six months ended July 1, 2023, respectively, primarily due to the interest rate swaps that became effective as of January 1, 2024, along with a lower debt balance.

Current wording

Interest expense decreased $1.5 million and $3.6 million year-over-year in the three and nine months ended September 28, 2024, compared to the three and nine months ended September 30, 2023, respectively, primarily due to the interest rate swaps that became effective as of January 1, 2024, along with a lower debt balance.

Previous wording

We recorded income tax expense of $2.2 million for the three months ended June 29, 2024 compared to $1.0 million for the three months ended July 1, 2023. The increase in income tax expense for the second quarter of 2024 compared to the second quarter of 2023 was primarily due to higher pre-tax income and higher income tax expense related to non-deductible book compensation expenses in the second quarter of 2024 compared to the second quarter of 2023. The increase in income tax expense was partially offset by higher income tax benefits related to the U.S. Federal research and development credit recognized in the second quarter of 2024 compared to the second quarter of 2023.

Current wording

We recorded income tax expense of $1.3 million for the three months ended September 28, 2024 compared to less than $0.1 million for the three months ended September 30, 2023. The increase in income tax expense for the third quarter of 2024 compared to the third quarter of 2023 was primarily due to higher pre-tax income and higher income tax expense related to non-deductible book compensation expenses in the third quarter of 2024 compared to the third quarter of 2023. The increase in income tax expense was partially offset by higher income tax benefits related to the U.S. Federal research and development credit recognized in the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

We recorded income tax expense of $4.1 million for the six months ended June 29, 2024 compared to $1.8 million for the six months ended July 1, 2023. The increase in income tax expense for the six months ended June 29, 2024 compared to the six months ended July 1, 2023 was primarily due to higher pre-tax income and higher income tax expense related to non-deductible book compensation expenses in the six months ended June 29, 2024 compared to the six months ended July 1, 2023. The increase in income tax expense was partially offset by higher income tax benefits related to the U.S. Federal research and development credit recognized in the six months ended June 29, 2024 compared to the six months ended July 1, 2023.

Current wording

We recorded income tax expense of $5.4 million for the nine months ended September 28, 2024 compared to $1.8 million for the nine months ended September 30, 2023. The increase in income tax expense for the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 was primarily due to higher pre-tax income and higher income tax expense related to non-deductible book compensation expenses in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023. The increase in income tax expense was partially offset by higher income tax benefits related to the U.S. Federal research and development credit recognized in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Our total amount of unrecognized tax benefits was $4.8 million and $4.5 million as of June 29, 2024 and December 31, 2023, respectively. If recognized, $3.0 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of June 29, 2024 and December 31, 2023 were not significant. As a result of statute of limitations set to expire in the fourth quarter of 2024, we expect decreases to our unrecognized tax benefits of approximately $1.0 million in the next twelve months.

Current wording

Our total amount of unrecognized tax benefits was $5.1 million and $4.5 million as of September 28, 2024 and December 31, 2023, respectively. If recognized, $3.3 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of September 28, 2024 and December 31, 2023 were not significant. As a result of statute of limitations set to expire in the fourth quarter of 2024, we expect decreases to our unrecognized tax benefits of approximately $1.0 million in the next twelve months.

Previous wording

Net income and earnings per share for the three months ended June 29, 2024 were $7.7 million, or 3.9% of revenues, or $0.52 per diluted share, compared to $2.4 million, or 1.3% of revenues, or $0.17 per diluted share, for the three months ended July 1, 2023. The increase in net income for the three months ended June 29, 2024 compared to the three months ended July 1, 2023 was primarily due to higher gross profit of $11.1 million and lower restructuring charges of $2.7 million ($0.9 million was recorded as cost of sales), partially offset by higher SG&A expenses of $5.7 million and lower other income of $4.1 million. A portion of the higher SG&A expenses were due to BLR SG&A expenses of $1.3 million which did not exist until the end of April 2023.

Current wording

Net income and earnings per share for the three months ended September 28, 2024 were $10.1 million, or 5.0% of revenues, or $0.67 per diluted share, compared to $3.2 million, or 1.6% of revenues, or $0.22 per diluted share, for the three months ended September 30, 2023. The increase in net income for the three months ended September 28, 2024 compared to the three months ended September 30, 2023 was primarily due to higher gross profit of $8.1 million and lower restructuring charges of $2.1 million (including $0.2 million recorded as cost of sales in the prior year period), partially offset by higher SG&A expenses of $3.3 million. A portion of the higher SG&A expenses were due to the unsolicited non-binding offer to acquire all common stock outstanding of Ducommun Incorporated.

Previous wording

Net income and earnings per share for the six months ended June 29, 2024 were $14.6 million, or 3.8% of revenues, or $0.97 per diluted share, compared to $7.6 million, or 2.1% of revenues, or $0.58 per diluted share, for the six months ended July 1, 2023. The increase in net income for the six months ended June 29, 2024 compared to the six months ended July 1, 2023 was primarily due to higher gross profit of $21.3 million and lower restructuring charges of $5.5 million ($0.9 million was recorded as cost of sales), partially offset by higher SG&A expenses of $12.4 million and lower other income of $7.9 million. A portion of the higher SG&A expenses were due to BLR SG&A expenses of $6.8 million which did not exist until the end of April 2023.

Current wording

Net income and earnings per share for the nine months ended September 28, 2024 were $24.7 million, or 4.2% of revenues, or $1.65 per diluted share, compared to $10.8 million, or 1.9% of revenues, or $0.79 per diluted share, for the nine months ended September 30, 2023. The increase in net income for the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 was primarily due to higher gross profit of $29.4 million and lower restructuring charges of $7.5 million (including $0.9 million and $0.2 million recorded as cost of sales in each period, respectively), partially offset by higher SG&A expenses of $15.7 million and lower other income of $7.9 million. A portion of the higher SG&A expenses were due to BLR SG&A expenses of $6.8 million which did not exist until the end of April 2023.

Previous wording

We report our financial performance based upon the two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three and six months ended June 29, 2024 and July 1, 2023:

Current wording

We report our financial performance based upon the two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three and nine months ended September 28, 2024 and September 30, 2023:

Previous wording

(2)The three and six months ended June 29, 2024 each included less than $0.1 million of stock-based compensation expense recorded as cost of sales. The three and six months ended July 1, 2023 included less than $0.1 million and $0.1 million, respectively, of stock-based compensation expense recorded as cost of sales.

Current wording

(2)The three and nine months ended September 28, 2024 each included $0.1 million of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 30, 2023 included less than $0.1 million and $0.1 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous wording

(4)The three and six months ended June 29, 2024 included $0.5 million and $1.9 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended July 1, 2023 included $0.8 million and $1.2 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Current wording

(4)The three and nine months ended September 28, 2024 included $0.9 million and $2.8 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 30, 2023 included $1.4 million and $2.7 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Previous wording

Electronic Systems net revenues in the three months ended June 29, 2024 compared to the three months ended July 1, 2023 decreased $5.7 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the three months ended September 28, 2024 compared to the three months ended September 30, 2023 increased $4.7 million primarily due to the following in our key end-use markets:

Previous wording

•$0.5 million lower revenues in our commercial aerospace end-use markets due to lower in-flight entertainment revenues, partially offset by higher rates on regional and business aircraft and selected single-aisle and twin-aisle aircraft platforms.

Current wording

•$0.9 million lower revenues in our commercial aerospace end-use markets due to lower in-flight entertainment revenues and lower rates on other commercial aerospace platforms, partially offset by higher rates on regional and business aircraft and selected single-aisle and twin-aisle aircraft platforms.

Previous wording

Electronic Systems net revenues in the six months ended June 29, 2024 compared to the six months ended July 1, 2023 decreased $3.8 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 increased $0.9 million primarily due to the following in our key end-use markets:

Previous wording

•$1.9 million higher revenues in our commercial aerospace end-use markets due to higher rates on select single-aisle and twin-aisle aircraft and growth in regional and business aircraft platforms, partially offset by lower revenues from in-flight entertainment.

Current wording

•$1.0 million higher revenues in our commercial aerospace end-use markets due to higher rates on selected single-aisle and twin-aisle aircraft and growth in regional and business aircraft platforms, partially offset by lower revenues from in-flight entertainment.

Previous wording

Electronic Systems segment operating income in the six months ended June 29, 2024 compared to the six months ended July 1, 2023 increased $16.2 million primarily due to favorable product mix, higher manufacturing volume, and lower restructuring charges.

Current wording

Electronic Systems segment operating income in the three months ended September 28, 2024 compared to the three months ended September 30, 2023 increased $6.2 million primarily due to favorable product mix, higher manufacturing volume, and lower restructuring charges, partially offset by higher other manufacturing costs.

Previous wording

•$10.4 million higher revenues in our commercial aerospace end-use markets due to higher production on selected single-aisle and twin-aisle aircraft, buffer stock build for the Monrovia performance center closure, and growth in various business jet platforms; and

Current wording

•$19.8 million higher revenues in our commercial aerospace end-use markets due to higher growth in Airbus, customer required buffer stock build for the Monrovia performance center closure, rotary-wing aircraft, and growth in selected business jet platforms, partially offset by lower rates on other commercial aerospace platforms; and

Previous wording

The Structural Systems segment operating income in the three months ended June 29, 2024 compared to the three months ended July 1, 2023 increased $5.2 million primarily due to higher manufacturing volume, favorable product mix, and lower Guaymas fire related expenses.

Current wording

The Structural Systems segment operating income in the three months ended September 28, 2024 compared to the three months ended September 30, 2023 increased $1.5 million primarily due to favorable product mix and lower inventory purchase accounting adjustments.

Previous wording

The Structural Systems segment operating income in the six months ended June 29, 2024 compared to the six months ended July 1, 2023 increased $3.3 million primarily due to higher manufacturing volume, favorable product mix, lower Guaymas fire related expenses, and lower restructuring charges, partially offset by higher costs associated with the wind down of our Monrovia performance center.

Current wording

The Structural Systems segment operating income in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 increased $4.8 million primarily due to higher manufacturing volume, favorable product mix, lower Guaymas fire related expenses, and lower restructuring charges, partially offset by higher costs associated with the wind down of our Monrovia performance center.

Previous wording

CG&A expenses increased $4.4 million for the six months ended June 29, 2024 compared to the six months ended July 1, 2023 primarily due to higher professional services fees of $2.1 million, of which $1.4 million was related to the unsolicited non-binding offer to acquire all common stock outstanding of Ducommun Incorporated, and higher compensation and benefits expense of $1.5 million.

Current wording

CG&A expenses increased $5.5 million for the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 primarily due to higher professional services fees of $3.3 million, of which $2.4 million was related to the unsolicited non-binding offer to acquire all common stock outstanding of Ducommun Incorporated, and higher compensation and benefits expense of $0.8 million.

Previous wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, professional fees related to unsolicited non-binding acquisition offer, Guaymas fire related expenses, insurance recoveries related to loss on operating assets, and inventory purchase accounting adjustments (“Adjusted EBITDA”) were $30.0 million and $26.1 million for the three months ended June 29, 2024 and July 1, 2023, respectively.

Current wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, professional fees related to unsolicited non-binding acquisition offer, Guaymas fire related expenses, insurance recoveries related to loss on operating assets, and inventory purchase accounting adjustments (“Adjusted EBITDA”) were $31.9 million and $29.3 million for the three months ended September 28, 2024 and September 30, 2023, respectively.

Previous wording

(1) The three and six months ended June 29, 2024 included $0.5 million and $1.9 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended July 1, 2023 included $0.8 million and $1.2 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 29, 2024 each included $0.1 million of stock-based compensation expense recorded as cost of sales. The three and six months ended July 1, 2023 each included $0.2 million of stock-based compensation expense recorded as cost of sales.

Current wording

(1) The three and nine months ended September 28, 2024 included $0.9 million and $2.8 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 30, 2023 included $1.4 million and $2.7 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 28, 2024 included $0.1 million and $0.3 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 30, 2023 included $0.1 million and $0.3 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous wording

(2) The three and six months ended June 29, 2024 each included $0.9 million of restructuring charges that were recorded as cost of sales.

Current wording

(2) The three and nine months ended September 28, 2024 included zero and $0.9 million, respectively, of restructuring charges that were recorded as cost of sales. The three and nine months ended September 30, 2023 each included $0.2 million of restructuring charges that were recorded as cost of sales.

Previous wording

The increase in backlog was primarily in the military and space end-use markets and commercial aerospace end-use markets. $668.0 million of total backlog is expected to be delivered over the next 12 months. The following table summarizes our backlog as of June 29, 2024 and December 31, 2023:

Current wording

The increase in backlog was primarily in the military and space end-use markets, partially offset by a decrease in industrial end-use markets. $690.0 million of total backlog is expected to be delivered over the next 12 months. The following table summarizes our backlog as of September 28, 2024 and December 31, 2023:

Previous wording

For each of the three months ended June 29, 2024 and July 1, 2023, we made the required quarterly amortization payments on the 2022 Term Loan of $1.6 million. For each of the six months ended June 29, 2024 and July 1, 2023, we made the required amortization payments on the 2022 Term Loan of $3.1 million. We made no voluntary prepayments on our term loans during each of the three and six months ended June 29, 2024 and July 1, 2023.

Current wording

For each of the three months ended September 28, 2024 and September 30, 2023, we made the required quarterly amortization payments on the 2022 Term Loan of zero and $1.6 million, respectively. The required quarterly amortization payment due on September 30, 2024 is in the fiscal fourth quarter of 2024. For the nine months ended September 28, 2024 and September 30, 2023, we made the required amortization payments on the 2022 Term Loan of $3.1 million and $4.7 million, respectively. We made no voluntary prepayments on our term loans during each of the three and nine months ended September 28, 2024 and September 30, 2023.

Previous wording

In April 2022, management approved and commenced a restructuring plan that will position us for stronger performance. The restructuring plan will mainly reduce headcount and consolidate facilities. As a result of this restructuring plan, we analyzed the need to write-down inventory and impair long-lived assets, including operating lease right-of-use assets. As of June 29, 2024, we estimate the remaining amount of charges related to this initiative will be $3.0 million to $4.0 million in total pre-tax restructuring charges through early 2025 for employee separation and other facility consolidation related expense. The restructuring accrual for severance and benefits of $4.5 million as of June 29, 2024 are expected to be paid out through 2024. On an annualized basis, we anticipate these restructuring actions will result in total cost savings of $11.0 million to $13.0 million. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

In April 2022, management approved and commenced a restructuring plan that will position us for stronger performance. The restructuring plan will mainly reduce headcount and consolidate facilities. As a result of this restructuring plan, we analyzed the need to write-down inventory and impair long-lived assets, including operating lease right-of-use assets. As of September 28, 2024, we estimate the remaining amount of charges related to this initiative will be $2.0 million to $3.0 million in total pre-tax restructuring charges through early 2025 for facility consolidation related expenses. The restructuring accrual for severance and benefits of $3.4 million as of September 28, 2024 are expected to be paid out through early 2025. On an annualized basis, we anticipate these restructuring actions will result in total cost savings of $11.0 million to $13.0 million. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

We expect to spend a total of $23.0 million to $25.0 million for capital expenditures in 2024 financed by cash generated from operations, principally to support new contract awards in Electronic Systems and Structural Systems. As part of our strategic plan to become a supplier of higher-level assemblies and win new contract awards, additional up-front investment in tooling will be required for newer programs which have higher engineering content and higher levels of complexity in assemblies.

Current wording

We expect to spend a total of $15.0 million to $18.0 million for capital expenditures in 2024 financed by cash generated from operations, principally to support new contract awards in Electronic Systems and Structural Systems. As part of our strategic plan to become a supplier of higher-level assemblies and win new contract awards, additional up-front investment in tooling will be required for newer programs which have higher engineering content and higher levels of complexity in assemblies.

Previous wording

Net cash provided by operating activities for the six months ended June 29, 2024 was $1.8 million, compared to a net cash used of $9.7 million for the six months ended July 1, 2023. The higher net cash provided by operating activities during the first six months of 2024 was mainly due to higher net income and higher accounts payable, partially offset by higher contract assets.

Current wording

Net cash provided by operating activities for the nine months ended September 28, 2024 was $15.8 million, compared to $4.6 million for the nine months ended September 30, 2023. The higher net cash provided by operating activities during the first nine months of 2024 was mainly due to higher net income, lower inventories, and higher accounts payable, partially offset by higher contract assets, lower contract liabilities, and higher accounts receivable.

Previous wording

Net cash used in investing activities was $8.3 million for the six months ended June 29, 2024, compared to $125.3 million in the six months ended July 1, 2023. The lower net cash used in investing activities during the first six months of 2024 compared to the prior year period was mainly due to no acquisitions in the first six months of 2024.

Current wording

Net cash used in investing activities was $10.3 million for the nine months ended September 28, 2024, compared to $130.0 million in the nine months ended September 30, 2023. The lower net cash used in investing activities during the first nine months of 2024 compared to the prior year period was mainly due to no acquisitions in the first nine months of 2024 and lower purchases of property and equipment.

Previous wording

Net cash used in financing activities was $7.0 million for the six months ended June 29, 2024, compared to a net cash provided by financing activities of $111.6 million for the six months ended July 1, 2023. The higher net cash used in financing activities during the first six months of 2024 was mainly due to the issuance of common stock in a public offering in the first six months of 2023 that did not recur in 2024 and lower net borrowings in the first six months of 2024.

Current wording

Net cash used in financing activities was $11.1 million for the nine months ended September 28, 2024, compared to a net cash provided by financing activities of $106.4 million for the nine months ended September 30, 2023. The higher net cash used in financing activities during the first nine months of 2024 was mainly due to the issuance of common stock in a public offering in the first nine months of 2023 that did not recur in 2024 and lower net borrowings in the first nine months of 2024.