UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 2, 2009
DUCOMMUN INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware | 001-08174 | 95-0693330 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 23301 Wilmington Avenue, Carson, California | 90745-6209 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (310) 513-7200
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
Ducommun Incorporated issued a press release on November 2, 2009 in the form attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
99.1 Ducommun Incorporated press release issued on November 2, 2009.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DUCOMMUN INCORPORATED | ||||||
| (Registrant) | ||||||
| Date: November 2, 2009 | By: | /s/ James S. Heiser | ||||
| James S. Heiser Vice President and General Counsel | ||||||
EXHIBIT 99.1
| CONTACT: | Joseph P. Bellino Vice President and Chief Financial Officer (310) 513-7211 |
FOR IMMEDIATE RELEASE
DUCOMMUN INCORPORATED REPORTS RESULTS FOR THE
THIRD QUARTER AND YEAR-TO-DATE ENDED OCTOBER 3, 2009
LOS ANGELES, California (November 2, 2009)—Ducommun Incorporated (NYSE:DCO) today reported results for its third quarter and first nine months ended October 3, 2009.
Sales for the third quarter of 2009 increased 9% to $109.9 million from $100.9 million for the third quarter of 2008. Net income for the third quarter of 2009 was $6.2 million, or $0.59 per diluted share, compared to net income of $6.3 million, or $0.59 per diluted share, for the comparable period last year.
The increase in sales for the third quarter of 2009 from the same period last year was due to the December 2008 acquisition of DynaBil Industries, Inc. (DAS-NY). Net sales from DAS-NY were $11.1 million in the third quarter of 2009. The Company’s mix of business in the third quarter of 2009 was approximately 65% military, 33% commercial and 2% space, compared to 56% military, 41% commercial and 3% space in the third quarter of 2008.
Gross profit, as a percentage of sales, was 20.5% in the third quarter of 2009, compared to 20.6% in the third quarter of 2008.
Selling, general and administration (SG&A) expenses increased to $12.6 million, or 11.5% of sales, in the third quarter of 2009, compared to $11.5 million, or 11.4% of sales, in the third quarter of 2008. The increase in SG&A expenses in the third quarter of 2009 was primarily due to the acquisition of DAS-NY and included a year-over-year increase in amortization of intangible assets of $0.8 million, partially offset by corporate wide cost controls and reductions.
Net income for the third quarter of 2009 decreased 1% from the third quarter of 2008 due to higher interest expense on higher debt levels and a higher effective tax rate in the third quarter of 2009. The Company’s effective tax rate for the third quarter of 2009 was 33.0%, compared to 30.3% in the third quarter of 2008.
Sales for the first nine months of 2009 increased 8% to $325.1 million from $302.4 million for the first nine months of 2008. Net income for the first nine months of 2009 was $13.4 million, or $1.27 per diluted share, compared to net income of $17.3 million, or $1.63 per diluted share, for the comparable period last year.
The increase in sales for the first nine months of 2009 from the same period last year was due to the December 2008 acquisition of DAS-NY. Net sales from DAS-NY were $32.3 million in the first nine months of 2009. The Company’s mix of business in the first nine months of 2009 was approximately 62% military, 36% commercial and 2% space, compared to 58% military, 40% commercial and 2% space in the first nine months of 2008.
Gross profit, as a percentage of sales, was 18.3 % in the first nine months of 2009, compared to 21.0% in the first nine months of 2008. Gross profit in the first nine months of 2009 was negatively impacted by a previously reported inventory valuation adjustment of $5.1 million, including an inventory reserve of $4.4 million related to the Eclipse Aviation Corporation Chapter 7 bankruptcy filing in March 2009.
SG&A expenses increased to $37.6 million, or 11.6% of sales, for the first nine months of 2009, compared to $35.9 million, or 11.9% of sales, in the first nine months of 2008. The increase in SG&A expenses resulted from the acquisition of DAS-NY and included a year-over-year increase in amortization of intangible assets of $0.7 million.
Net income for the first nine months of 2009 decreased 23% from the first nine months of 2008 primarily due to the reasons stated above and higher interest expense on higher debt levels, partially offset by the benefit of a lower effective tax rate in the first nine months of 2009. The Company’s effective tax rate for the first nine months of 2009 was 33.0%, compared to 34.6% in the first nine months of 2008. The Company’s effective tax rate in 2009 included the benefit of research and development credits which were not available to the same extent in the first nine months of 2008. The Company expects its full year effective tax rate for 2009 to be approximately 30% to 32%.
Joseph C. Berenato, chairman and chief executive officer, stated “Ducommun’s third quarter results reflect the strength of our diversified portfolio of programs and products. Sales increased by $9 million on the strength of the December 2008 acquisition of DAS-NY. Excluding the acquisition, year-over-year sales were largely flat, notwithstanding a precipitous decline in commercial aircraft sales particularly for regional and business jets. The third quarter of 2009 benefited from a substantial increase in military sales for such programs as the Northrop Grumman X-47B UCAS, the Boeing C-17 aircraft and radar system upgrades for military fighter aircraft. A substantial increase in sales for the Sikorsky Blackhawk helicopter more than offset the decline in sales for the Boeing Apache helicopter.”
Mr. Berenato continued, “Despite a difficult commercial aerospace market, tight control of operating expenses allowed us to maintain our profit margins in the quarter. As a result, we were able to continue to make substantial investments in new programs without sacrificing current profitability. These new programs offer Ducommun the opportunity for meaningful growth in future years.”
Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace and defense industry.
A teleconference with Joseph C. Berenato, the Company’s chairman and chief executive officer, Anthony J. Reardon, the Company’s president and chief operating officer, and Joseph P. Bellino, the Company’s vice president, chief financial officer, will be held today at 7:30 AM PT (10:30 AM ET). To participate in the teleconference, please call 866.202.0886 (international 617.213.8841) approximately ten minutes prior to the conference stated above. The participant passcode is 81094345. Mr. Berenato, Mr. Reardon and Mr. Bellino will be speaking on behalf of the Company and anticipate the meeting and Q&A period to last approximately 40 minutes.
This call is being webcast by Thomson/CCBN and can be accessed directly at the Ducommun Incorporated website at www.ducommun.com. Conference call reply will be available after that time at the same link or at the Company’s website at www.ducommun.com
The statements made in this press release include forward-looking statements that involve risks and uncertainties. The Company’s future financial results could differ materially from those anticipated due to the Company’s dependence on conditions in the airline industry, the level of new commercial aircraft orders, production rates for Boeing commercial aircraft, the C-17 and Apache helicopter rotor blade programs, the level of defense spending, competitive pricing pressures, manufacturing inefficiencies, start-up costs and possible overruns on new contracts, technology and product development risks and uncertainties, product performance, risks associated with acquisitions and dispositions of businesses by the Company, increasing consolidation of customers and suppliers in the aerospace industry, possible goodwill impairment, availability of raw materials and components from suppliers, and other factors beyond the Company’s control. See the Company’s Form 10-K for the year ended December 31, 2008 and Form 10-Q for the quarter ended October 3, 2009 for a more detailed discussion of these and other risk factors and contingencies.
[Financial Table Follows]
DUCOMMUN INCORPORATED AND SUBSIDIARIES
COMPARATIVE DATA
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Oct. 3, 2009 |
Sept. 27, 2008 |
Oct. 3, 2009 |
Sept. 27, 2008 |
|||||||||||||
| Sales and Service Revenues |
||||||||||||||||
| Product sales |
$ | 95,227 | $ | 86,299 | $ | 277,993 | $ | 259,200 | ||||||||
| Service revenues |
14,676 | 14,557 | 47,090 | 43,179 | ||||||||||||
| Total |
109,903 | 100,856 | 325,083 | 302,379 | ||||||||||||
| Operating Costs and Expenses: |
||||||||||||||||
| Cost of product sales |
76,015 | 68,462 | 228,217 | 204,435 | ||||||||||||
| Cost of service revenues |
11,350 | 11,571 | 37,294 | 34,537 | ||||||||||||
| Selling, general and administrative expenses |
12,647 | 11,484 | 37,591 | 35,942 | ||||||||||||
| Total |
100,012 | 91,517 | 303,102 | 274,914 | ||||||||||||
| Operating Income |
9,891 | 9,339 | 21,981 | 27,465 | ||||||||||||
| Interest Expense, Net |
(652 | ) | (355 | ) | (2,005 | ) | (948 | ) | ||||||||
| Income Before Taxes |
9,239 | 8,984 | 19,976 | 26,517 | ||||||||||||
| Income Tax Expense |
(3,049 | ) | (2,720 | ) | (6,592 | ) | (9,170 | ) | ||||||||
| Net Income |
$ | 6,190 | $ | 6,264 | $ | 13,384 | $ | 17,347 | ||||||||
| Earnings Per Share: |
||||||||||||||||
| Basic earnings per share |
$ | 0.59 | $ | 0.59 | $ | 1.28 | $ | 1.64 | ||||||||
| Diluted earnings per share |
$ | 0.59 | $ | 0.59 | $ | 1.27 | $ | 1.63 | ||||||||
| Weighted Average Number of Common Shares Outstanding: |
||||||||||||||||
| Basic |
10,449 | 10,578 | 10,465 | 10,567 | ||||||||||||
| Diluted |
10,491 | 10,693 | 10,502 | 10,671 | ||||||||||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
| October 3, 2009 |
December 31, 2008 |
|||||||
| Assets |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 823 | $ | 3,508 | ||||
| Accounts receivable, less allowance for doubtful accounts |
60,249 | 50,090 | ||||||
| Unbilled receivables |
4,250 | 7,074 | ||||||
| Inventories |
89,966 | 83,157 | ||||||
| Deferred income taxes |
9,381 | 9,172 | ||||||
| Other current assets |
6,083 | 6,172 | ||||||
| Total Current Assets |
170,752 | 159,173 | ||||||
| Property and Equipment, Net |
61,273 | 61,954 | ||||||
| Goodwill, Net |
113,378 | 114,002 | ||||||
| Other Assets |
29,423 | 31,057 | ||||||
| $ | 374,826 | $ | 366,186 | |||||
| Liabilities and Shareholders’ Equity |
||||||||
| Current Liabilities: |
||||||||
| Current portion of long-term debt |
$ | 4,972 | $ | 2,420 | ||||
| Accounts payable |
32,116 | 35,358 | ||||||
| Accrued liabilities |
34,279 | 51,723 | ||||||
| Total Current Liabilities |
71,367 | 89,501 | ||||||
| Long-Term Debt, Less Current Portion |
42,400 | 28,299 | ||||||
| Deferred Income Taxes |
11,014 | 9,902 | ||||||
| Other Long-Term Liabilities |
13,587 | 14,038 | ||||||
| Total Liabilities |
138,368 | 141,740 | ||||||
| Commitments and Contingencies |
||||||||
| Shareholders’ Equity: |
||||||||
| Common stock |
106 | 106 | ||||||
| Treasury stock |
(1,924 | ) | (986 | ) | ||||
| Additional paid-in capital |
57,705 | 56,040 | ||||||
| Retained earnings |
184,744 | 173,718 | ||||||
| Accumulated other comprehensive loss |
(4,173 | ) | (4,432 | ) | ||||
| Total Shareholders’ Equity |
236,458 | 224,446 | ||||||
| $ | 374,826 | $ | 366,186 | |||||