DUCOMMUN INC DE
For the period ended Mar 29, 2025. Filed May 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 29, 2025 · Filed May 6, 2025
DCO$135.25+2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-28; filed 2024-11-07.
0001628280-24-045949
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-29; filed 2025-05-06.
0001628280-25-022383
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 137 previous paragraphs and 116 current paragraphs.
62 unchanged; 30 reworded; 22 added; 43 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Economic Environment
Current report
Changes in the macroeconomic environment, including volatility with respect to global trade policy, interest rates, and financial markets, can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as our supply chain. We continue to pursue strategic and operational initiatives to help address these macroeconomic pressures.
Current report
Since February 2025, the U.S. government has issued several executive orders imposing tariffs on imports from most countries with whom the U.S. engages in trade (“Tariff EOs”). In response to the Tariff EOs, China, the European Union and Canada have announced, and in some cases imposed, counter tariffs on goods that are imported from the U.S. Our business imports various goods that may be subject to tariffs from certain countries covered by the Tariff EOs and we also supply goods to customers who may import those goods into a country which may consider counter tariffs and other actions. If the imposition of current tariff levels is sustained, our profitability, cash flows and the estimates inherent in our financial statements could be negatively affected to the extent we are either unable to claim duty exemptions or are unable to pass on such incremental tariffs to our customers. The actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs applied, the timing and duration of tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S. tariffs, and our ability to mitigate the impacts of tariffs by availing ourselves of applicable exemptions. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (“EACs”), and estimates supporting the recoverability of our inventories, contract assets, intangible assets, and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.
Current report
U.S. Government Budget
Current report
On March 15, 2025, the U.S. President signed a continuing resolution (“CR”) under which U.S. government Departments and Agencies will continue to operate through September 30, 2025, the end of the U.S. government’s fiscal year. The CR funds the government at fiscal year 2024 levels with certain exceptions, including the addition of approximately $6 billion to the Department of Defense (“DoD”) budget. Although Congress provided guidelines to the Executive Branch, the CR generally permits individual Departments and Agencies to determine the areas and programs to fund. As a result, while the impact of the CR on Ducommun ultimately will depend on those funding decisions, Ducommun currently does not expect that the CR will materially impact our business or results of operations.
Current report
Executive Order Regarding Modernizing Defense Acquisitions
Current report
On April 9, 2025, the U.S. government issued an executive order requiring, among other things, a DoD review of its Major Defense Acquisition Programs to identify those programs that are 15% behind schedule, 15% over budget, unable to meet key performance parameters, or unaligned with the Secretary of Defense’s mission priorities for potential cancellation. Although Ducommun does not, at this time, believe the Executive Order will have a material impact on our business or results of operations, the longer-term ramifications, if any, to Ducommun will depend on a variety of factors including the formulation and implementation of the review criteria in the order, the review timeline, the Secretary of Defense’s mission priorities, and future budget determinations based on the results of such review.
Current report
First quarter 2025 recap:
Current report
•Net revenues of $194.1 million
Current report
•Adjusted EBITDA of $30.9 million, or 15.9% of net revenues
Current report
First Quarter of 2025 Compared to First Quarter of 2024
Current report
•$14.6 million higher revenues in our military and space end-use markets due to higher rates on selected missile, electronic warfare, radar, and rotary-wing platforms; partially offset by
Current report
In addition, revenues for our industrial end-use markets for the three months ended March 29, 2025 decreased $3.1 million compared to the three months ended March 30, 2024 mainly due to our selective pruning of non-core business.
Current report
SG&A expenses increased $1.6 million year-over-year in the three months ended March 29, 2025 compared to the three months ended March 30, 2024 primarily due to higher compensation and benefits expense of $1.7 million and higher professional services fees of $0.6 million, partially offset by lower other SG&A expenses of $0.7 million.
Current report
•$12.3 million higher revenues in our military and space end-use markets due to higher rates on electronic warfare and selected missiles and radar platforms; partially offset by
Current report
In addition, revenues for our industrial end-use markets for the three months ended March 29, 2025 decreased $3.1 million compared to the three months ended March 30, 2024 mainly due to our selective pruning of non-core business.
Current report
Electronic Systems segment operating income in the three months ended March 29, 2025 compared to the three months ended March 30, 2024 decreased $0.8 million primarily due to lower manufacturing volume and higher other manufacturing costs, partially offset by favorable product mix.
Current report
Structural Systems net revenues in the three months ended March 29, 2025 compared to the three months ended March 30, 2024 increased $1.1 million primarily due to the following:
Current report
•$2.3 million higher revenues in our military and space end-use markets due to higher rates on selected rotary-wing aircraft platforms, partially offset by lower rates on selected fixed-wing aircraft platforms; partially offset by
Current report
•$1.3 million lower revenues in our commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and lower rates on rotary-wing aircraft platforms.
Current report
CG&A expenses increased $2.7 million for the three months ended March 29, 2025 compared to the three months ended March 30, 2024 primarily due to higher compensation and benefits costs of $1.7 million and higher other corporate expenses of $0.9 million.
Current report
Net cash used in financing activities was $2.4 million for the three months ended March 29, 2025, compared to $4.2 million for the three months ended March 30, 2024. The lower net cash used in financing activities during the first three months of 2025 was mainly due to lower repayments on our term loan that was due and paid on March 31, 2025, which occurred in our second fiscal quarter of 2025.
Removed paragraphs (43)
Previous report
Third quarter 2024 recap:
Previous report
•Net revenues of $201.4 million
Previous report
•Adjusted EBITDA of $31.9 million, or 15.8% of net revenues
Previous report
Third Quarter of 2024 Compared to Third Quarter of 2023
Previous report
•$6.6 million higher revenues in our military and space end-use markets due to higher rates on selected radar, electronic warfare, and other military and space platforms, partially offset by lower rates on rotary-wing and fixed-wing aircraft platforms; and
Previous report
In addition, revenues for our industrial end-use markets for the three months ended September 28, 2024 decreased $4.3 million compared to the three months ended September 30, 2023 mainly due to our selectively pruning non-core business.
Previous report
•$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 report
•$11.0 million higher revenues in our military and space end-use markets due to higher rates on selected radar, electronic warfare, naval and submarine, and other military and space platforms, partially offset by lower rates on fixed-wing aircraft platforms.
Previous report
In addition, revenues for our industrial end-use markets for the nine months ended September 28, 2024 decreased $7.3 million compared to the nine months ended September 30, 2023 mainly due to our selectively pruning non-core business.
Previous report
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 report
SG&A expenses increased $3.3 million year-over-year in the three months ended September 28, 2024 compared to the three months ended September 30, 2023 primarily due to higher various other SG&A expenses of $1.5 million, higher professional services fees of $1.3 million, of which $1.0 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 $0.6 million.
Previous report
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 report
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 report
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 report
(3)The three and nine months ended September 28, 2024 included $0.1 million and $0.2 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 $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales.
Previous report
•$9.9 million higher revenues in our military and space end-use markets due to higher rates on select radar, electronic warfare, and other military and space platforms, partially offset by lower rates on fixed-wing aircraft platforms; partially offset by
Previous report
In addition, revenues for our industrial end-use markets for the three months ended September 28, 2024 decreased $4.3 million compared to the three months ended September 30, 2023 mainly due to our selectively pruning non-core business.
Previous report
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 report
•$7.2 million higher revenues in our military and space end-use markets due to higher rates on select radar, electronic warfare, naval and submarine, and other military and space platforms, partially offset by lower rates on fixed-wing aircraft platforms; and
Previous report
•$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 report
In addition, revenues for our industrial end-use markets for the nine months ended September 28, 2024 decreased $7.3 million compared to the nine months ended September 30, 2023 mainly due to our selectively pruning non-core business.
Previous report
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 report
Electronic Systems segment operating income in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 increased $22.4 million primarily due to favorable product mix, higher manufacturing volume, and lower restructuring charges, partially offset by higher other manufacturing costs.
Previous report
Structural Systems net revenues in the three months ended September 28, 2024 compared to the three months ended September 30, 2023 increased $0.5 million primarily due to the following:
Previous report
•$3.7 million higher revenues in our commercial aerospace end-use markets due to growth in Airbus and selected business jet platforms; partially offset by
Previous report
•$3.3 million lower revenues in our military and space end-use markets due to lower rates on rotary-wing aircraft and other military and space platforms, partially offset by higher rates on fixed-wing aircraft platforms.
Previous report
Structural Systems net revenues in the nine months ended September 28, 2024 compared to the nine months ended September 30, 2023 increased $23.6 million primarily due to the following:
Previous report
•$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 report
•$3.8 million higher revenues in our military and space end-use markets due to higher rates on fixed-wing aircraft platforms, partially offset by lower rates on select missile platforms.
Previous report
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 report
In April 2023, we acquired 100.0% of BLR Aerospace L.L.C. (“BLR”). The initial purchase price for BLR was $115.0 million, net of cash acquired, all payable in cash. We paid a gross aggregate of $117.0 million in cash upon the closing of the transaction. BLR’s results of operations have been included in our condensed consolidated statements of income since the date of acquisition and is a part of the Structural Systems segment. See Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.
Previous report
In April 2023, a fire damaged a relatively small portion of one of our performance centers in our Structural Systems reporting segment. Our insurance covers damage, up to a capped amount, to the property and equipment at replacement cost, as well as business interruption and recovery related expenses caused by the fire, less our per claim deductible. There was a loss of production in this damaged portion of the performance center for a short period of time, but the incident did not otherwise result in significant disruption to customer delivery schedules. Production in this damaged portion resumed during the three months ended July 1, 2023. See Note 12 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
Previous report
CG&A expenses increased $1.1 million for the three months ended September 28, 2024 compared to the three months ended September 30, 2023 primarily due to higher professional services fees of $1.2 million, of which $1.0 million was related to the unsolicited non-binding offer to acquire all common stock outstanding of Ducommun Incorporated.
Previous report
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 report
•Professional fees related to unsolicited non-binding acquisition offer may be useful to our investors in evaluating our core operating performance;
Previous report
•Guaymas fire related expenses may be useful to our investors in evaluating our core operating performance;
Previous report
•Other fire related expenses may be useful to our investors in evaluating our core operating performance;
Previous report
•Insurance recoveries related to loss on operating assets (property and equipment, inventories, and other assets) may be useful to our investors in evaluating our core operating performance;
Previous report
•Insurance recoveries related to business interruption may be useful to our investors in evaluating our core operating performance; and
Previous report
(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.
Showing the first 40 of 43 passages. Open the source sections for the rest.
Reworded paragraphs (30)
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. 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.
Current wording
In its 2024 Annual Report on Form 10-K, The Boeing Company (“Boeing”) indicated that in 2024, global air traffic continued to expand beyond 2019 levels with domestic travel continuing to be the most robust and the single-aisle market following closely. International travel also surpassed pre-pandemic levels during 2024 and the wide-body market continued to improve with the international travel recovery. Therefore, the transition in the international commercial market from recovery to normal market conditions continued to progress as China international travel remains below 2019 levels. For 2025, while both major large aircraft manufacturers, Boeing and Airbus SE, have indicated they expect increases in build rates compared to 2024, 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. Moreover, in Boeing’s Q1 2025 Quarterly Report on Form 10-Q, it stated various countries have announced plans for and/or have already implemented new or modified tariffs (discussed further below). Boeing’s first quarter results reflect its best estimate of the impacts of the tariffs enacted as of March 31, 2025, and certain potential mitigations. These tariffs and any retaliatory actions from other countries could have a material impact on Boeing’s financial position, results of operations and/or cash flows. In April 2025, certain customers in China informed Boeing they will not accept deliveries. 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 along with the tariffs (already imposed or will be imposed), it could have a material adverse impact on our business, results of operations and financial condition.
Previous wording
•Net income of $10.1 million, or 5.0% of net revenues, or $0.67 per diluted share
Current wording
•Net income of $10.5 million, or 5.4% of net revenues, or $0.69 per diluted share
Previous 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:
Current wording
Net revenues by end-use market and operating segment during the fiscal three months ended March 29, 2025 and March 30, 2024, respectively, were as follows:
Previous 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:
Current wording
Net revenues for the three months ended March 29, 2025 were $194.1 million, compared to $190.8 million for the three months ended March 30, 2024. The year-over-year increase in our key end-use markets were primarily due to the following:
Previous wording
•$2.8 million higher revenues in our commercial aerospace end-use markets due to growth in Airbus and selected business aircraft platforms, partially offset by lower revenues from the Boeing 737 MAX and in-flight entertainment.
Current wording
•$8.2 million lower revenues in our commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and in-flight entertainment products, and lower rates on rotary-wing aircraft platforms.
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 nine months ended September 28, 2024 and September 30, 2023.
Current wording
(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), and Spirit AeroSystems Holdings, Inc. (“Spirit”) for the three months ended March 29, 2025 and March 30, 2024.
Previous wording
Boeing, Lockheed, Northrop, RTX, Spirit, and Viasat represented the following percentages of total accounts receivable:
Current wording
Boeing, Lockheed, Northrop, RTX, and Spirit represented the following percentages of total accounts receivable:
Previous wording
The net revenues and accounts receivable from Boeing, Lockheed, Northrop, RTX, Spirit, and Viasat are diversified over a number of commercial, military and space programs and were generated by both operating segments.
Current wording
The net revenues and accounts receivable from Boeing, Lockheed, Northrop, RTX, and Spirit were diversified over a number of commercial, military and space programs and were generated by both operating segments.
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 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.
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 March 29, 2025 of 26.6%, compared to the three months ended March 30, 2024 of 24.6% primarily due to favorable product mix and higher manufacturing volume.
Previous 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.
Current wording
Restructuring charges decreased $0.9 million year-over-year in the three months ended March 29, 2025, compared to the three months ended March 30, 2024 primarily due to the winding down of the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 2 for further information.
Previous 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.
Current wording
Interest expense decreased $0.6 million year-over-year in the three months ended March 29, 2025, compared to the three months ended March 30, 2024, primarily due to lower interest rates along with a lower debt balance.
Previous 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.
Current wording
We recorded income tax expense of $2.8 million for the three months ended March 29, 2025 compared to $1.9 million for the three months ended March 30, 2024. The increase in income tax expense for the first quarter of 2025 compared to the first quarter of 2024 was primarily due to higher pre-tax income in the first quarter of 2025 compared to the first quarter of 2024.
Previous 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.
Current wording
Our total amount of unrecognized tax benefits was $4.7 million and $4.5 million as of March 29, 2025 and December 31, 2024, respectively. If recognized, $2.7 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 March 29, 2025 and December 31, 2024 were not significant. As a result of statute of limitations set to expire in the fourth quarter of 2025, we expect decreases to our unrecognized tax benefits of approximately $0.5 million in the next twelve months.
Previous 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.
Current wording
Net income, net income as a percentage of revenues, and earnings per share for the three months ended March 29, 2025 were $10.5 million, or 5.4% of revenues, or $0.69 per diluted share, respectively, compared to $6.8 million, or 3.6% of revenues, or $0.46 per diluted share, respectively, for the three months ended March 30, 2024. The increase in net income for the three months ended March 29, 2025 compared to the three months ended March 30, 2024 was primarily due to higher gross profit of $4.7 million and lower restructuring charges of $0.9 million, partially offset by higher SG&A expenses of $1.6 million.
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 nine months ended September 28, 2024 and September 30, 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 months ended March 29, 2025 and March 30, 2024:
Previous 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.
Current wording
(4)The three months ended March 29, 2025 and March 30, 2024 included $0.8 million and $1.4 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 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:
Current wording
Electronic Systems net revenues in the three months ended March 29, 2025 compared to the three months ended March 30, 2024 increased $2.2 million primarily due to the following in our key end-use markets:
Previous 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.
Current wording
•$7.0 million lower revenues in our commercial aerospace end-use markets due to lower in-flight entertainment revenues and lower rates on large aircraft platforms.
Previous 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.
Current wording
The Structural Systems segment operating income in the three months ended March 29, 2025 compared to the three months ended March 30, 2024 increased $7.5 million primarily due to higher manufacturing volume, favorable product mix, and lower other manufacturing costs.
Previous wording
In June 2020, a fire severely damaged our performance center in Guaymas, Mexico. We have insurance coverage and up to a capped amount, expect these items will be covered, less our deductible. The full financial impact cannot be estimated at this time as we are currently working with our insurance carriers to determine the cause of the fire. The loss of production from the Guaymas performance center was absorbed by our other existing performance centers; however, we have reestablished and are in the process of certification with various customers and ramping up our manufacturing capabilities in a different leased facility in Guaymas. A neighboring, non-related manufacturing facility also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center. In addition, subsequent to the quarter end, we received a subrogation demand from our landlord’s insurer, which we are currently evaluating. As responsibility for the fire is still undetermined, there is no amount of loss that is probable and reasonably estimable at this time. If we are ultimately deemed to be responsible or partly responsible, it is possible we could incur a loss in excess of our insurance coverage limits, which could be material to our cash flow, liquidity, or financial results. See Note 12 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
Current wording
In June 2020, a fire severely damaged our performance center in Guaymas, Mexico, which is part of our Structural Systems segment. We have insurance coverage up to a capped amount, less our deductible. The full financial impact cannot be estimated at this time. We have been working with our insurance carriers to determine ultimate responsibility for the fire. The loss of production from the Guaymas performance center was absorbed by our other existing performance centers, however, we have reestablished and are in the process of ramping up our manufacturing capabilities in a different leased facility in Guaymas. A neighboring, non-related manufacturing facility, also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center and filed a lawsuit against us seeking recovery for its losses. Subsequently, in July 2024, we received a subrogation demand from our landlord’s insurer, who also serves as one of our excess carriers, and with whom we have since entered into an informed consent and conflict of waiver agreement. In the interim, discovery in the litigation is ongoing, and we intend to defend these matters vigorously. Ultimate responsibility for the fire is still undetermined and damages to our former neighbor’s facility have yet to be quantified, and as such, there is no amount of loss that is probable and reasonably estimable at this time. If we are ultimately deemed to be responsible or partly responsible, it is possible we could incur a loss in excess of our insurance coverage limits, which could be material to our cash flow, liquidity, or financial results. See Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
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 $31.9 million and $29.3 million for the three months ended September 28, 2024 and September 30, 2023, respectively.
Current wording
Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, and inventory purchase accounting adjustments (“Adjusted EBITDA”) were $30.9 million and $27.4 million for the three months ended March 29, 2025 and March 30, 2024, respectively.
Previous wording
•Restructuring charges may be useful to our investors in evaluating our core operating performance;
Current wording
•Restructuring charges may be useful to our investors in evaluating our core operating performance; and
Previous 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.
Current wording
(1) The three months ended March 29, 2025 and March 30, 2024 included $0.8 million and $1.4 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three months ended March 29, 2025 and March 30, 2024 each included less than $0.1 million of stock-based compensation expense recorded as cost of sales.
Previous wording
We define backlog as customer placed purchase orders (“POs”) and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. The majority of the LTAs do not meet the definition of a contract under ASC 606, and thus, the backlog amount disclosed below is greater than the remaining performance obligations amount disclosed in Note 1 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Backlog is subject to delivery delays or program cancellations, which are beyond our control. Backlog is affected by timing differences in the placement of customer orders and tends to be concentrated in several programs to a greater extent than our net revenues. Backlog in industrial markets tends to be of a shorter duration and is generally fulfilled within a three month period. As a result of these factors, trends in our overall level of backlog may not be indicative of trends in our future net revenues.
Current wording
We define backlog as customer placed purchase orders (“POs”) and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. The majority of the LTAs do not meet the definition of a contract under ASC 606, and thus, the backlog amount disclosed below may or may not be greater than the remaining performance obligations amount disclosed in Note 1 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Backlog is subject to delivery delays or program cancellations, which are beyond our control. Backlog is affected by timing differences in the placement of customer orders and tends to be concentrated in several programs to a greater extent than our net revenues.
Previous 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:
Current wording
The decrease in backlog was primarily in the military and space and commercial aerospace end-use markets, partially offset by an increase in industrial end-use markets. $756.0 million of total backlog is expected to be delivered over the next 12 months. The following table summarizes our backlog as of March 29, 2025 and December 31, 2024:
Previous 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.
Current wording
For each of the three months ended March 29, 2025 and March 30, 2024, 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 March 31, 2025 is in our second fiscal quarter of 2025. We made no voluntary prepayments on our term loans during each of the three months ended March 29, 2025 and March 30, 2024.
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 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.
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 March 29, 2025, we estimate the remaining amount of charges related to this initiative will be $0.5 million to $1.0 million of total pre-tax restructuring charges during 2025 for facility consolidation related expenses. The restructuring accrual for severance and benefits and other of $1.3 million as of March 29, 2025 are expected to be paid out during 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 2 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 $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.
Current wording
We expect to spend a total of $23.0 million to $25.0 million for capital expenditures in 2025 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 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.
Current wording
Net cash provided by operating activities for the three months ended March 29, 2025 was $0.8 million, compared to net cash used in operating activities of $1.6 million for the three months ended March 30, 2024. The higher net cash provided by operating activities during the first three months of 2025 was mainly due to a smaller increase in contract assets, smaller increase in inventories, and higher net income, partially offset by higher accounts receivable and a smaller increase in accounts payable.
Previous 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.
Current wording
Net cash used in investing activities was $4.8 million for the three months ended March 29, 2025, compared to $5.0 million in the three months ended March 30, 2024. The lower net cash used in investing activities during the first three months of 2025 was mainly due to lower purchases of property and equipment.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(2)The three months ended March 29, 2025 and March 30, 2024 each included less than $0.1 million of stock-based compensation expense recorded as cost of sales.
Current report — wording carried from elsewhere
(3)The three months ended March 29, 2025 and March 30, 2024 included less than $0.1 million and $0.1 million, respectively, of stock-based compensation expense recorded as cost of sales.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
(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.