Ducommun’s first quarter results were well received by the market, with management crediting robust defense sector performance and ongoing improvements in engineered products for the positive outcome. The company highlighted its 16th consecutive quarter of year-over-year revenue growth, despite anticipated declines in commercial aerospace caused by lower production rates at Boeing and Spirit AeroSystems. CEO Steve Oswald pointed to strong contributions from missile and electronic warfare programs, as well as a strategic focus on expanding higher-margin engineered product offerings, as key drivers behind the margin expansion and overall profitability. The team also noted ongoing facility consolidation efforts and restructuring actions that have begun to yield cost savings.
Is now the time to buy DCO? Find out in our full research report (it’s free).
Ducommun (DCO) Q1 CY2025 Highlights:
- Revenue: $194.1 million vs analyst estimates of $192.8 million (1.7% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.83 vs analyst estimates of $0.70 (18.1% beat)
- Adjusted EBITDA: $30.93 million vs analyst estimates of $27.94 million (15.9% margin, 10.7% beat)
- Operating Margin: 8.5%, up from 6.6% in the same quarter last year
- Backlog: $1.05 billion at quarter end, in line with the same quarter last year
- Market Capitalization: $1.22 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Ducommun’s Q1 Earnings Call
- Mike Crawford (B. Riley Securities) asked about the timing of increases in ship set rates to Boeing and Spirit AeroSystems. CFO Suman Mookerji explained that rates are ramping and expects further growth as Boeing moves toward 38 units per month by late 2025.
- Ken Herbert (RBC Capital Markets) questioned the status of Ducommun’s M&A pipeline and the margin impact of engineered products acquisitions. CEO Steve Oswald and Mookerji emphasized active due diligence and highlighted that engineered product deals are expected to be accretive to margins.
- Michael Ciarmoli (Truist Securities) inquired about the growth outlook for commercial aerospace and defense segments. Oswald responded that defense strength will balance commercial softness, with commercial recovery anticipated in the second half, especially for 737 and 787 programs.
- Jason Gursky (Citi) asked if the Spirit AeroSystems situation could bring new business to Ducommun and about defense outsourcing trends. Oswald confirmed close collaboration with Spirit and opportunities for increased work scope, while Mookerji noted active bidding for new defense contracts.
- Noah Poponak (Goldman Sachs) sought clarity on full-year growth pacing, margin trends, and free cash flow expectations. Mookerji projected steady margin improvement, with free cash flow conversion targeted to rise over time as working capital investments are unwound.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of commercial aerospace recovery as Boeing and Spirit AeroSystems ramp production, (2) the execution and margin contribution from new defense programs like Apache blades and Tomahawk harnesses, and (3) the impact of facility consolidation on operational efficiency and cash flow. Progress on engineered product acquisitions and integration will also be key markers for sustained margin expansion.
Ducommun currently trades at $84.77, up from $58.55 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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