View printer-friendly versionFirst Quarter 2022 Recap
- Net Revenue was
$163.5 million - Net income of
$8.1 million , or$0.66 per diluted share - Adjusted net income of
$8.3 million , or$0.67 per diluted share - Adjusted EBITDA of
$20.1 million , or 12.3% of revenue - Record backlog of
$943 million
“It was a good quarter for the Company with commercial aerospace demand continuing its recovery, along with solid performance from Ducommun's defense business resulting in top line growth year-over-year,” said
“As we move forward into 2022, our team has also identified additional ways to accelerate the achievement of our strategic goals and today are announcing a restructuring plan to better position the Company for stronger performance. The Company currently anticipates this initiative will result in approximately
“Finally, we are thrilled with the record backlog for the Company and with the continuing recovery in commercial aerospace along with solid performance from Ducommun's defense business, we are looking forward to the rest of the year.”
First Quarter Results
Net revenue for the first quarter of 2022 was
$18.7 million higher revenue in the Company’s commercial aerospace end-use markets due to higher build rates on large aircraft platforms, other commercial aerospace platforms, and regional and business aircraft platforms; partially offset by$14.8 million lower revenue in the Company’s military and space end-use markets due to lower build rates on other military and space platforms, various missile platforms, and military rotary-wing aircraft platforms.
Net income for the first quarter of 2022 was
Gross profit for the first quarter of 2022 was
Operating income for the first quarter of 2022 was
Interest expense for the first quarter of 2022 was
Adjusted EBITDA for the first quarter of 2022 was
During the first quarter of 2022, the net cash used in operations was
* The Company defines backlog as potential revenue and is based on customer placed purchase orders and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. Backlog as of
Business Segment Information
Electronic Systems
Electronic Systems segment net revenue for the quarter ended
$9.9 million lower revenue within the Company’s military and space end-use markets due to lower build rates on other military and space platforms and various missile platforms; partially offset by$5.9 million higher revenue in the Company’s commercial aerospace end-use markets due to higher build rates on other commercial aerospace platforms.
Electronic Systems segment operating income for the quarter ended
Structural Systems
Structural Systems segment net revenue for the quarter ended
$12.8 million higher revenue within the Company’s commercial aerospace end-use markets due to higher build rates on large aircraft platforms and regional and business aircraft platforms; partially offset by$4.9 million lower revenue within the Company’s military and space end-use markets due to lower build rates on military rotary-wing aircraft platforms.
Structural Systems segment operating income for the quarter ended
Corporate General and Administrative (“CG&A”) Expenses
CG&A expenses for the first quarter of 2022 were
Conference Call
A teleconference hosted by
Additional information regarding Ducommun's results can be found in the Q1 2022 Earnings Presentation available at Ducommun.com.
About
Forward Looking Statements
This press release and any attachments include “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, any statements about the Company’s achievement of its strategic goals or objectives, future performance, and results of its restructuring plan, including the latter's effect on the Company's growth or rate of growth, value creation and outlook. The Company generally uses the words “may,” “will,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend,” “continue” and similar expressions in this press release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: whether the anticipated pre-tax restructuring charges will be sufficient to address all anticipated restructuring costs, including related to employee separation, facilities consolidation, inventory write-down and other asset impairments; whether the expected cost savings from the restructuring will ultimately be obtained in the amount and during the period anticipated; whether the restructuring in the affected areas will be sufficient to build a more cost efficient, focused, higher margin enterprise with higher returns for the Company's shareholders; the strength of the real estate market, the duration of any lease entered into as part of any sale-leaseback transaction, the amount of commissions owed to brokers, and applicable tax rates; the impact of the Company’s debt service obligations and restrictive debt covenants; the Company’s end-use markets are cyclical; the Company depends upon a selected base of industries and customers; a significant portion of the Company’s business depends upon
Note Regarding Non-GAAP Financial Information
This release contains non-GAAP financial measures, including Adjusted EBITDA (which excludes interest expense, income tax expense, depreciation, amortization, stock-based compensation expense, and Guaymas fire related expenses, insurance recoveries related to business interruption, and inventory purchase accounting adjustments), non-GAAP operating income and as a percentage of net revenues, non-GAAP earnings, and non-GAAP earnings per share. In addition, certain other prior period amounts have been reclassified to conform to current year’s presentation.
During the three months ended
The Company believes the presentation of these non-GAAP measures provide important supplemental information to management and investors regarding financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company discloses different non-GAAP financial measures in order to provide greater transparency and to help the Company’s investors to more meaningfully evaluate and compare Ducommun’s results to its previously reported results. The non-GAAP financial measures that the Company uses may not be comparable to similarly titled financial measures used by other companies. We define backlog as potential revenue and is based on customer placed purchase orders 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 herein is greater than the remaining performance obligations disclosed under ASC 606. 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.
CONTACT:
[Financial Tables Follow]
| DUCOMMUN INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) |
||||||||
2022 |
2021 |
|||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 19,260 | $ | 76,316 | ||||
| Accounts receivable, net | 82,804 | 72,261 | ||||||
| Contract assets | 187,171 | 176,405 | ||||||
| Inventories | 159,795 | 150,938 | ||||||
| Production cost of contracts | 7,862 | 8,024 | ||||||
| Other current assets | 8,783 | 8,625 | ||||||
| Total Current Assets | 465,675 | 492,569 | ||||||
| Property and equipment, Net | 103,900 | 102,419 | ||||||
| Operating lease right-of-use assets | 38,860 | 33,265 | ||||||
| 203,694 | 203,694 | |||||||
| Intangibles, net | 138,116 | 141,764 | ||||||
| Other assets | 9,086 | 5,024 | ||||||
| Total Assets | $ | 959,331 | $ | 978,735 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 74,842 | $ | 66,059 | ||||
| Contract liabilities | 37,841 | 42,077 | ||||||
| Accrued and other liabilities | 31,917 | 41,291 | ||||||
| Operating lease liabilities | 7,028 | 6,133 | ||||||
| Current portion of long-term debt | 7,000 | 7,000 | ||||||
| Total Current Liabilities | 158,628 | 162,560 | ||||||
| Long-term debt, less current portion | 247,729 | 279,384 | ||||||
| Non-current operating lease liabilities | 32,917 | 28,074 | ||||||
| Deferred income taxes | 18,820 | 18,727 | ||||||
| Other long-term liabilities | 13,531 | 15,388 | ||||||
| Total Liabilities | 471,625 | 504,133 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Common stock | 120 | 119 | ||||||
| Additional paid-in capital | 104,244 | 104,253 | ||||||
| Retained earnings | 385,362 | 377,263 | ||||||
| Accumulated other comprehensive loss | (2,020 | ) | (7,033 | ) | ||||
| Total Shareholders’ Equity | 487,706 | 474,602 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 959,331 | $ | 978,735 | ||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) |
||||||||
| Three Months Ended | ||||||||
2022 |
2021 |
|||||||
| Net Revenues | $ | 163,481 | $ | 157,151 | ||||
| Cost of Sales | 131,006 | 124,051 | ||||||
| Gross Profit | 32,475 | 33,100 | ||||||
| Selling, General and Administrative Expenses | 23,352 | 22,490 | ||||||
| Operating Income | 9,123 | 10,610 | ||||||
| Interest Expense | (2,402 | ) | (2,806 | ) | ||||
| Other Income | 3,000 | — | ||||||
| Income Before Taxes | 9,721 | 7,804 | ||||||
| Income Tax Expense | 1,622 | 1,109 | ||||||
| Net Income | $ | 8,099 | $ | 6,695 | ||||
| Earnings Per Share | ||||||||
| Basic earnings per share | $ | 0.68 | $ | 0.57 | ||||
| Diluted earnings per share | $ | 0.66 | $ | 0.55 | ||||
| Weighted-Average Number of Common Shares Outstanding | ||||||||
| Basic | 11,989 | 11,791 | ||||||
| Diluted | 12,328 | 12,250 | ||||||
| Gross Profit % | 19.9 | % | 21.1 | % | ||||
| SG&A % | 14.3 | % | 14.3 | % | ||||
| Operating Income % | 5.6 | % | 6.8 | % | ||||
| Net Income % | 5.0 | % | 4.3 | % | ||||
| Effective Tax Rate | 16.7 | % | 14.2 | % | ||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES BUSINESS SEGMENT PERFORMANCE (Unaudited) (Dollars in thousands) |
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| Three Months Ended | |||||||||||||||||
| % Change |
2022 |
2021 |
% of Net Revenues 2022 |
% of Net Revenues 2021 |
|||||||||||||
| Net Revenues | |||||||||||||||||
| Electronic Systems | (1.7 | )% | $ | 97,466 | $ | 99,104 | 59.6 | % | 63.1 | % | |||||||
| Structural Systems | 13.7 | % | 66,015 | 58,047 | 40.4 | % | 36.9 | % | |||||||||
| Total Net Revenues | 4.0 | % | $ | 163,481 | $ | 157,151 | 100.0 | % | 100.0 | % | |||||||
| Segment Operating Income | |||||||||||||||||
| Electronic Systems | $ | 9,411 | $ | 12,491 | 9.7 | % | 12.6 | % | |||||||||
| Structural Systems | 4,887 | 5,128 | 7.4 | % | 8.8 | % | |||||||||||
| 14,298 | 17,619 | ||||||||||||||||
| Corporate General and Administrative Expenses(1) | (5,175 | ) | (7,009 | ) | (3.2 | )% | (4.5 | )% | |||||||||
| Total Operating Income | $ | 9,123 | $ | 10,610 | 5.6 | % | 6.8 | % | |||||||||
| Adjusted EBITDA | |||||||||||||||||
| Electronic Systems | |||||||||||||||||
| Operating Income | $ | 9,411 | $ | 12,491 | |||||||||||||
| Depreciation and Amortization | 3,506 | 3,423 | |||||||||||||||
| 12,917 | 15,914 | 13.3 | % | 16.1 | % | ||||||||||||
| Structural Systems | |||||||||||||||||
| Operating Income | 4,887 | 5,128 | |||||||||||||||
| Depreciation and Amortization | 4,203 | 3,440 | |||||||||||||||
| Guaymas fire related expenses | 957 | 475 | |||||||||||||||
| Inventory Purchase Accounting Adjustments | 637 | — | |||||||||||||||
| 10,684 | 9,043 | 16.2 | % | 15.6 | % | ||||||||||||
| Corporate General and Administrative Expenses(1) | |||||||||||||||||
| Operating loss | (5,175 | ) | (7,009 | ) | |||||||||||||
| Depreciation and Amortization | 59 | 59 | |||||||||||||||
| Stock-Based Compensation Expense | 1,590 | 3,133 | |||||||||||||||
| (3,526 | ) | (3,817 | ) | ||||||||||||||
| Adjusted EBITDA | $ | 20,075 | $ | 21,140 | 12.3 | % | 13.5 | % | |||||||||
| Capital Expenditures | |||||||||||||||||
| Electronic Systems | $ | 1,696 | $ | 624 | |||||||||||||
| Structural Systems | 3,372 | 1,989 | |||||||||||||||
| — | — | ||||||||||||||||
| Total Capital Expenditures | $ | 5,068 | $ | 2,613 | |||||||||||||
| (1) Includes costs not allocated to either the Electronic Systems or Structural Systems operating segments. | |||||||||||||||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES GAAP TO NON-GAAP OPERATING INCOME RECONCILIATION (Unaudited) (Dollars in thousands) |
||||||||||||||
| Three Months Ended | ||||||||||||||
| GAAP To Non-GAAP Operating Income | % of Net Revenues 2022 |
% of Net Revenues 2021 |
||||||||||||
| GAAP Operating income | $ | 9,123 | $ | 10,610 | ||||||||||
| GAAP Operating income - Electronic Systems | $ | 9,411 | $ | 12,491 | ||||||||||
| Adjustment: | ||||||||||||||
| Amortization of acquisition-related intangible assets | 373 | 373 | ||||||||||||
| Adjusted operating income - Electronic Systems | 9,784 | 12,864 | 10.0 | % | 13.0 | % | ||||||||
| GAAP Operating income - Structural Systems | 4,887 | 5,128 | ||||||||||||
| Adjustment: | ||||||||||||||
| Guaymas fire related expenses | 957 | 475 | ||||||||||||
| Inventory purchase accounting adjustments | 637 | — | ||||||||||||
| Amortization of acquisition-related intangible assets | 1,246 | 833 | ||||||||||||
| Adjusted operating income - Structural Systems | 7,727 | 6,436 | 11.7 | % | 11.1 | % | ||||||||
| GAAP Operating loss - Corporate | (5,175 | ) | (7,009 | ) | ||||||||||
| Adjusted operating loss - Corporate | (5,175 | ) | (7,009 | ) | ||||||||||
| Total adjustments | 3,213 | 1,681 | ||||||||||||
| Adjusted operating income | $ | 12,336 | $ | 12,291 | 7.5 | % | 7.8 | % | ||||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES GAAP TO NON-GAAP EARNINGS AND EARNINGS PER SHARE RECONCILIATION (Unaudited) (Dollars in thousands, except per share amounts) |
|||||||
| Three Months Ended | |||||||
| GAAP To Non-GAAP Earnings | 2022 |
2021 |
|||||
| GAAP Net income | $ | 8,099 | $ | 6,695 | |||
| Adjustments: | |||||||
| Guaymas fire related expenses (1) | 766 | 380 | |||||
| Insurance recoveries related to business interruption (1) | (2,400 | ) | — | ||||
| Inventory purchase accounting adjustments (1) | 510 | — | |||||
| Amortization of acquisition-related intangible assets (1) | 1,295 | 965 | |||||
| Total adjustments | 171 | 1,345 | |||||
| Adjusted net income | $ | 8,270 | $ | 8,040 | |||
| Three Months Ended | |||||||
| GAAP Earnings Per Share To Non-GAAP Earnings Per Share | 2022 |
2021 |
|||||
| GAAP Diluted earnings per share (“EPS”) | $ | 0.66 | $ | 0.55 | |||
| Adjustments: | |||||||
| Guaymas fire related expenses (1) | 0.06 | 0.03 | |||||
| Insurance recoveries related to business interruption (1) | (0.20 | ) | — | ||||
| Inventory purchase accounting adjustments (1) | 0.04 | — | |||||
| Amortization of acquisition-related intangible assets (1) | 0.11 | 0.08 | |||||
| Total adjustments | 0.01 | 0.11 | |||||
| Adjusted diluted EPS | $ | 0.67 | $ | 0.66 | |||
| Shares used for adjusted diluted EPS | 12,328 | 12,250 | |||||
| (1) Includes effective tax rate of 20.0% for both 2022 and 2021 adjustments. | |||||||
| DUCOMMUN INCORPORATED AND SUBSIDIARIES NON-GAAP BACKLOG* BY REPORTING SEGMENT (Unaudited) (Dollars in thousands) |
||||||
2022 |
2021 |
|||||
| Consolidated Ducommun | ||||||
| Military and space | $ | 509,165 | $ | 520,278 | ||
| Commercial aerospace | 376,761 | 333,107 | ||||
| Industrial | 56,822 | 51,802 | ||||
| Total | $ | 942,748 | $ | 905,187 | ||
| Electronic Systems | ||||||
| Military and space | $ | 388,636 | $ | 400,002 | ||
| Commercial aerospace | 78,728 | 56,810 | ||||
| Industrial | 56,822 | 51,802 | ||||
| Total | $ | 524,186 | $ | 508,614 | ||
| Structural Systems | ||||||
| Military and space | $ | 120,529 | $ | 120,276 | ||
| Commercial aerospace | 298,033 | 276,297 | ||||
| Total | $ | 418,562 | $ | 396,573 | ||
* The Company defines backlog as potential revenue and is based on customer placed purchase orders and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. Backlog as of
Source: Ducommun Incorporated
