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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ducommun Inc | NYSE:DCO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.83 | 1.51% | 55.90 | 55.88 | 55.0705 | 55.80 | 37,452 | 22:30:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
95-0693330
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
23301 Wilmington Avenue, Carson, California
|
|
90745-6209
|
(Address of principal executive offices)
|
|
(Zip code)
|
Large accelerated filer
|
|
¨
|
Accelerated filer
|
|
x
|
|
|
|
|
||
Non-accelerated filer
|
|
¨
|
Smaller reporting company
|
|
¨
|
|
|
April 2,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
6,439
|
|
|
$
|
5,454
|
|
Accounts receivable, net of allowance for doubtful accounts of $294 and $359 at April 2, 2016 and December 31, 2015, respectively
|
|
77,664
|
|
|
77,089
|
|
||
Inventories
|
|
127,080
|
|
|
115,404
|
|
||
Production cost of contracts
|
|
9,667
|
|
|
10,290
|
|
||
Other current assets
|
|
8,441
|
|
|
13,389
|
|
||
Assets held for sale
|
|
—
|
|
|
41,636
|
|
||
Total Current Assets
|
|
229,291
|
|
|
263,262
|
|
||
Property and equipment, net of accumulated depreciation of $131,863 and $128,533 at April 2, 2016 and December 31, 2015, respectively
|
|
95,602
|
|
|
96,551
|
|
||
Goodwill
|
|
82,554
|
|
|
82,554
|
|
||
Intangibles, net
|
|
108,359
|
|
|
110,621
|
|
||
Deferred income taxes
|
|
353
|
|
|
324
|
|
||
Other assets
|
|
3,215
|
|
|
3,769
|
|
||
Total Assets
|
|
$
|
519,374
|
|
|
$
|
557,081
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
19
|
|
|
$
|
26
|
|
Accounts payable
|
|
47,418
|
|
|
40,343
|
|
||
Accrued liabilities
|
|
42,496
|
|
|
36,458
|
|
||
Liabilities held for sale
|
|
—
|
|
|
6,780
|
|
||
Total Current Liabilities
|
|
89,933
|
|
|
83,607
|
|
||
Long-term debt, less current portion
|
|
186,032
|
|
|
240,661
|
|
||
Deferred income taxes
|
|
25,052
|
|
|
26,528
|
|
||
Other long-term liabilities
|
|
17,692
|
|
|
18,954
|
|
||
Total Liabilities
|
|
318,709
|
|
|
369,750
|
|
||
Commitments and contingencies (Notes 11, 13)
|
|
|
|
|
||||
Shareholders’ Equity
|
|
|
|
|
||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 11,147,366 and 11,084,318 issued at April 2, 2016 and December 31, 2015, respectively
|
|
111
|
|
|
111
|
|
||
Additional paid-in capital
|
|
75,269
|
|
|
75,200
|
|
||
Retained earnings
|
|
131,173
|
|
|
117,623
|
|
||
Accumulated other comprehensive loss
|
|
(5,888
|
)
|
|
(5,603
|
)
|
||
Total Shareholders’ Equity
|
|
200,665
|
|
|
187,331
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
519,374
|
|
|
$
|
557,081
|
|
|
|
Three Months Ended
|
||||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||||
Net Revenues
|
|
$
|
142,148
|
|
|
$
|
172,920
|
|
Cost of Sales
|
|
115,179
|
|
|
146,159
|
|
||
Gross Profit
|
|
26,969
|
|
|
26,761
|
|
||
Selling, General and Administrative Expenses
|
|
22,676
|
|
|
23,134
|
|
||
Operating Income
|
|
4,293
|
|
|
3,627
|
|
||
Interest Expense
|
|
(2,399
|
)
|
|
(6,661
|
)
|
||
Gain on Divestitures
|
|
18,815
|
|
|
—
|
|
||
Income (Loss) Before Taxes
|
|
20,709
|
|
|
(3,034
|
)
|
||
Income Tax Expense (Benefit)
|
|
7,159
|
|
|
(1,061
|
)
|
||
Net Income (Loss)
|
|
$
|
13,550
|
|
|
$
|
(1,973
|
)
|
Earnings (Loss) Per Share
|
|
|
|
|
||||
Basic earnings (loss) per share
|
|
$
|
1.22
|
|
|
$
|
(0.18
|
)
|
Diluted earnings (loss) per share
|
|
$
|
1.21
|
|
|
$
|
(0.18
|
)
|
Weighted-Average Number of Common Shares Outstanding
|
|
|
|
|
||||
Basic
|
|
11,100
|
|
|
10,964
|
|
||
Diluted
|
|
11,240
|
|
|
10,964
|
|
|
|
Three Months Ended
|
||||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||||
Net Income (Loss)
|
|
$
|
13,550
|
|
|
$
|
(1,973
|
)
|
Other Comprehensive (Loss) Income
|
|
|
|
|
||||
Amortization of actuarial losses and prior service costs, net of tax benefit of approximately $68 and $97 for the three months ended April 2, 2016 and April 4, 2015, respectively
|
|
123
|
|
|
125
|
|
||
Change in unrealized gains and losses on cash flow hedges, net of tax benefit (expense) of $239 and zero for the three months ended April 2, 2016 and April 4, 2015, respectively
|
|
(408
|
)
|
|
—
|
|
||
Other Comprehensive (Loss) Income
|
|
(285
|
)
|
|
125
|
|
||
Comprehensive Income (Loss)
|
|
$
|
13,265
|
|
|
$
|
(1,848
|
)
|
|
|
Three Months Ended
|
||||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||||
Cash Flows from Operating Activities
|
|
|
|
|
||||
Net Income (Loss)
|
|
$
|
13,550
|
|
|
$
|
(1,973
|
)
|
Adjustments to Reconcile Net Income (Loss) to
|
|
|
|
|
||||
Net Cash Provided by Operating Activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
5,855
|
|
|
6,914
|
|
||
Gain on divestitures
|
|
(18,815
|
)
|
|
—
|
|
||
Stock-based compensation expense
|
|
1,000
|
|
|
1,624
|
|
||
Deferred income taxes
|
|
(2,562
|
)
|
|
751
|
|
||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
(109
|
)
|
||
Recovery of doubtful accounts
|
|
(65
|
)
|
|
(62
|
)
|
||
Other
|
|
(1,370
|
)
|
|
643
|
|
||
Changes in Assets and Liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
1,972
|
|
|
210
|
|
||
Inventories
|
|
(12,366
|
)
|
|
1,399
|
|
||
Production cost of contracts
|
|
429
|
|
|
95
|
|
||
Other assets
|
|
7,084
|
|
|
4,412
|
|
||
Accounts payable
|
|
7,303
|
|
|
342
|
|
||
Accrued and other liabilities
|
|
3,437
|
|
|
(10,761
|
)
|
||
Net Cash Provided by Operating Activities
|
|
5,452
|
|
|
3,485
|
|
||
Cash Flows from Investing Activities
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(3,801
|
)
|
|
(5,572
|
)
|
||
Proceeds from sale of assets
|
|
—
|
|
|
9
|
|
||
Proceeds from divestitures
|
|
55,272
|
|
|
—
|
|
||
Net Cash Provided by (Used in) Investing Activities
|
|
51,471
|
|
|
(5,563
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
|
||||
Repayments of senior unsecured notes and term loans
|
|
(55,000
|
)
|
|
(10,000
|
)
|
||
Repayments of other debt
|
|
(7
|
)
|
|
(6
|
)
|
||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
109
|
|
||
Net proceeds from issuance of common stock under stock plans
|
|
(931
|
)
|
|
(947
|
)
|
||
Net Cash Used in Financing Activities
|
|
(55,938
|
)
|
|
(10,844
|
)
|
||
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
985
|
|
|
(12,922
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
|
5,454
|
|
|
45,627
|
|
||
Cash and Cash Equivalents at End of Period
|
|
$
|
6,439
|
|
|
$
|
32,705
|
|
|
|
(In thousands)
Three Months Ended
|
||||||
|
|
April 2, 2016
|
|
April 4, 2015
|
||||
Interest paid
|
|
$
|
2,081
|
|
|
$
|
11,397
|
|
Taxes paid
|
|
—
|
|
|
—
|
|
||
Non-cash activities:
|
|
|
|
|
||||
Purchases of property and equipment not paid
|
|
215
|
|
|
714
|
|
|
|
(In thousands, except per share data)
Three Months Ended
|
||||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||||
Net earnings (loss)
|
|
$
|
13,550
|
|
|
$
|
(1,973
|
)
|
Weighted-average number of common shares outstanding
|
|
|
|
|
||||
Basic weighted-average common shares outstanding
|
|
11,100
|
|
|
10,964
|
|
||
Dilutive potential common shares
|
|
140
|
|
|
—
|
|
||
Diluted weighted-average common shares outstanding
|
|
11,240
|
|
|
10,964
|
|
||
Earnings (loss) per share
|
|
|
|
|
||||
Basic
|
|
$
|
1.22
|
|
|
$
|
(0.18
|
)
|
Diluted
|
|
$
|
1.21
|
|
|
$
|
(0.18
|
)
|
|
|
December 31, 2015
|
|
Three Months Ended April 2, 2016
|
|
April 2, 2016
|
||||||||||||||
|
|
Balance
|
|
Charges
|
|
Cash Payments
|
|
Change in Estimates
|
|
Balance
|
||||||||||
Severance and benefits
|
|
$
|
722
|
|
|
$
|
22
|
|
|
$
|
(335
|
)
|
|
$
|
—
|
|
|
$
|
409
|
|
Lease termination
|
|
1,181
|
|
|
—
|
|
|
(130
|
)
|
|
—
|
|
|
1,051
|
|
|||||
Ending balance
|
|
$
|
1,903
|
|
|
$
|
22
|
|
|
$
|
(465
|
)
|
|
$
|
—
|
|
|
$
|
1,460
|
|
|
|
As of April 2, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||||||||||
|
|
Fair Value Measurements Using
|
|
|
|
Fair Value Measurements Using
|
|
|
||||||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Balance
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Balance
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
(1)
|
|
$
|
6,342
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,342
|
|
|
$
|
4,587
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,587
|
|
Interest rate cap hedges
(2)
|
|
—
|
|
|
391
|
|
|
—
|
|
|
391
|
|
|
—
|
|
|
963
|
|
|
—
|
|
|
963
|
|
||||||||
Total Assets
|
|
$
|
6,342
|
|
|
$
|
391
|
|
|
$
|
—
|
|
|
$
|
6,733
|
|
|
$
|
4,587
|
|
|
$
|
963
|
|
|
$
|
—
|
|
|
$
|
5,550
|
|
|
|
(In thousands)
|
||||||
|
|
April 2,
2016 |
|
December 31,
2015 |
||||
Raw materials and supplies
|
|
$
|
63,919
|
|
|
$
|
61,840
|
|
Work in process
|
|
59,088
|
|
|
49,299
|
|
||
Finished goods
|
|
10,180
|
|
|
10,073
|
|
||
|
|
133,187
|
|
|
121,212
|
|
||
Less progress payments
|
|
6,107
|
|
|
5,808
|
|
||
Total
|
|
$
|
127,080
|
|
|
$
|
115,404
|
|
|
|
(In thousands)
|
||||||
|
|
April 2,
2016 |
|
December 31,
2015 |
||||
Accrued compensation
|
|
$
|
17,602
|
|
|
$
|
13,521
|
|
Accrued income tax and sales tax
|
|
5,358
|
|
|
1,513
|
|
||
Customer deposits
|
|
2,275
|
|
|
1,758
|
|
||
Interest payable
|
|
103
|
|
|
58
|
|
||
Provision for forward loss reserves
|
|
10,194
|
|
|
11,925
|
|
||
Other
|
|
6,964
|
|
|
7,683
|
|
||
Total
|
|
$
|
42,496
|
|
|
$
|
36,458
|
|
|
|
(In thousands)
|
||||||
|
|
April 2,
2016 |
|
December 31,
2015 |
||||
New term loan
|
|
$
|
190,000
|
|
|
$
|
245,000
|
|
Other debt (fixed 5.41%)
|
|
19
|
|
|
26
|
|
||
Total debt
|
|
190,019
|
|
|
245,026
|
|
||
Less current portion
|
|
19
|
|
|
26
|
|
||
Total long-term debt
|
|
$
|
190,000
|
|
|
$
|
245,000
|
|
Less debt issuance costs
|
|
$
|
3,968
|
|
|
$
|
4,339
|
|
Total long-term debt, net of debt issuance costs
|
|
$
|
186,032
|
|
|
$
|
240,661
|
|
Weighted-average interest rate
|
|
3.33
|
%
|
|
3.07
|
%
|
|
|
(In thousands)
|
||||||
|
|
Three Months Ended
|
||||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||||
Service cost
|
|
$
|
133
|
|
|
$
|
196
|
|
Interest cost
|
|
342
|
|
|
338
|
|
||
Expected return on plan assets
|
|
(370
|
)
|
|
(374
|
)
|
||
Amortization of actuarial losses
|
|
191
|
|
|
222
|
|
||
Net periodic pension cost
|
|
$
|
296
|
|
|
$
|
382
|
|
(1)
|
The amortization expense is included in the computation of periodic pension cost and is a decrease to net income upon reclassification from accumulated other comprehensive loss.
|
|
|
(In thousands)
Three Months Ended
|
||||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||||
Net Revenues
|
|
|
|
|
||||
Structural Systems
|
|
$
|
64,017
|
|
|
$
|
72,058
|
|
Electronic Systems
|
|
78,131
|
|
|
100,862
|
|
||
Total Net Revenues
|
|
$
|
142,148
|
|
|
$
|
172,920
|
|
Segment Operating Income
|
|
|
|
|
||||
Structural Systems
|
|
$
|
2,724
|
|
|
$
|
2,138
|
|
Electronic Systems
|
|
7,053
|
|
|
6,285
|
|
||
|
|
9,777
|
|
|
8,423
|
|
||
Corporate General and Administrative Expenses
(1)
|
|
(5,484
|
)
|
|
(4,796
|
)
|
||
Operating Income
|
|
$
|
4,293
|
|
|
$
|
3,627
|
|
Depreciation and Amortization Expenses
|
|
|
|
|
||||
Structural Systems
|
|
$
|
2,057
|
|
|
$
|
2,513
|
|
Electronic Systems
|
|
3,761
|
|
|
4,359
|
|
||
Corporate Administration
|
|
37
|
|
|
42
|
|
||
Total Depreciation and Amortization Expenses
|
|
$
|
5,855
|
|
|
$
|
6,914
|
|
Capital Expenditures
|
|
|
|
|
||||
Structural Systems
|
|
$
|
2,054
|
|
|
$
|
3,334
|
|
Electronic Systems
|
|
347
|
|
|
1,490
|
|
||
Corporate Administration
|
|
—
|
|
|
4
|
|
||
Total Capital Expenditures
|
|
$
|
2,401
|
|
|
$
|
4,828
|
|
(1)
|
Includes costs not allocated to either the Structural Systems or Electronic Systems operating segments.
|
•
|
First quarter revenue was approximately
$142.1 million
|
•
|
Net income of approximately
$13.6 million
, or
$1.21
per diluted share
|
•
|
Adjusted EBITDA for the quarter was approximately
$11.1 million
|
•
|
Backlog increased to approximately
$563.5 million
|
•
|
They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
|
•
|
They do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;
|
•
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
|
•
|
They are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
|
•
|
They do not reflect the impact on earnings of charges resulting from matters unrelated to our ongoing operations; and
|
•
|
Other companies in our industry may calculate Adjusted EBITDA differently from us, limiting their usefulness as comparative measures.
|
•
|
Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;
|
•
|
Help investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating performance; and
|
•
|
Are used by our management team for various other purposes in presentations to our Board of Directors as a basis for strategic planning and forecasting.
|
•
|
Interest expense may be useful to investors for determining current cash flow;
|
•
|
Income tax expense may be useful to investors because it represents the taxes which may be payable for the period and the change in deferred taxes during the period, and may reduce cash flow available for use in our business;
|
•
|
Depreciation may be useful to investors because it generally represents the wear and tear on our property and equipment used in our operations;
|
•
|
Amortization expense may be useful to investors because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights;
|
•
|
Stock-based compensation may be useful to our investors for determining current cash flow; and
|
•
|
Gain on divestitures may be useful to our investors in evaluating our core operating performance.
|
|
|
(in thousands, except per share data)
Three Months Ended
|
||||||||||||
|
|
April 2,
2016 |
|
%
of Net Revenues
|
|
April 4,
2015 |
|
%
of Net Revenues
|
||||||
Net Revenues
|
|
$
|
142,148
|
|
|
100.0
|
%
|
|
$
|
172,920
|
|
|
100.0
|
%
|
Cost of Sales
|
|
115,179
|
|
|
81.0
|
%
|
|
146,159
|
|
|
84.5
|
%
|
||
Gross Profit
|
|
26,969
|
|
|
19.0
|
%
|
|
26,761
|
|
|
15.5
|
%
|
||
Selling, General and Administrative Expenses
|
|
22,676
|
|
|
16.0
|
%
|
|
23,134
|
|
|
13.4
|
%
|
||
Operating Income
|
|
4,293
|
|
|
3.0
|
%
|
|
3,627
|
|
|
2.1
|
%
|
||
Interest Expense
|
|
(2,399
|
)
|
|
(1.7
|
)%
|
|
(6,661
|
)
|
|
(3.9
|
)%
|
||
Gain on Divestitures
|
|
18,815
|
|
|
13.2
|
%
|
|
—
|
|
|
—
|
%
|
||
Income (Loss) Before Taxes
|
|
20,709
|
|
|
14.6
|
%
|
|
(3,034
|
)
|
|
(1.8
|
)%
|
||
Income Tax Expense (Benefit)
|
|
7,159
|
|
|
nm
|
|
|
(1,061
|
)
|
|
nm
|
|
||
Net Income (Loss)
|
|
$
|
13,550
|
|
|
9.5
|
%
|
|
$
|
(1,973
|
)
|
|
(1.1
|
)%
|
|
|
|
|
|
|
|
|
|
||||||
Effective Tax (Benefit) Rate
|
|
34.6
|
%
|
|
nm
|
|
|
(35.0
|
)%
|
|
nm
|
|
||
Diluted Earnings (Loss) Per Share
|
|
$
|
1.21
|
|
|
nm
|
|
|
$
|
(0.18
|
)
|
|
nm
|
|
|
|
Three Months Ended
|
||||||||||||||||
|
|
|
|
(In thousands)
|
|
% of Net Revenues
|
||||||||||||
|
|
Change
|
|
April 2
2016 |
|
April 4,
2015 |
|
April 2
2016 |
|
April 4,
2015 |
||||||||
Consolidated Ducommun
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
|
|
|
|
|
|
|
|
|
||||||||
Defense technologies
|
|
$
|
(8,663
|
)
|
|
$
|
42,861
|
|
|
$
|
51,524
|
|
|
30
|
%
|
|
30
|
%
|
Defense structures
|
|
(4,527
|
)
|
|
14,914
|
|
|
19,441
|
|
|
11
|
%
|
|
11
|
%
|
|||
Commercial aerospace
|
|
374
|
|
|
66,759
|
|
|
66,385
|
|
|
47
|
%
|
|
38
|
%
|
|||
Industrial
|
|
(17,956
|
)
|
|
17,614
|
|
|
35,570
|
|
|
12
|
%
|
|
21
|
%
|
|||
Total
|
|
$
|
(30,772
|
)
|
|
$
|
142,148
|
|
|
$
|
172,920
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space (defense structures)
|
|
$
|
(4,527
|
)
|
|
$
|
14,914
|
|
|
$
|
19,441
|
|
|
23
|
%
|
|
27
|
%
|
Commercial aerospace
|
|
(3,514
|
)
|
|
49,103
|
|
|
52,617
|
|
|
77
|
%
|
|
73
|
%
|
|||
Total
|
|
$
|
(8,041
|
)
|
|
$
|
64,017
|
|
|
$
|
72,058
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space (defense technologies)
|
|
$
|
(8,663
|
)
|
|
$
|
42,861
|
|
|
$
|
51,524
|
|
|
55
|
%
|
|
51
|
%
|
Commercial aerospace
|
|
3,888
|
|
|
17,656
|
|
|
13,768
|
|
|
23
|
%
|
|
14
|
%
|
|||
Industrial
|
|
(17,956
|
)
|
|
17,614
|
|
|
35,570
|
|
|
22
|
%
|
|
35
|
%
|
|||
Total
|
|
$
|
(22,731
|
)
|
|
$
|
78,131
|
|
|
$
|
100,862
|
|
|
100
|
%
|
|
100
|
%
|
•
|
Approximately $15.4 million lower revenues in the industrial end-use markets due to the divestiture of the Pittsburgh operation in January 2016 and the closure of the Houston operation in December 2015; and
|
•
|
Approximately $13.2 million lower revenues in the military and space end-use markets mainly due to the decrease in U.S. government defense spending and shifting spending priorities, which impacted our fixed-wing and helicopter platforms and pushed out scheduled deliveries of these products to customers.
|
|
|
Three Months Ended
|
||||
|
|
April 2,
2016 |
|
April 4,
2015 |
||
Boeing Company
|
|
19
|
%
|
|
15
|
%
|
Raytheon Company
|
|
7
|
%
|
|
7
|
%
|
Total top ten customers
(1)
|
|
59
|
%
|
|
53
|
%
|
(1)
|
Includes the Boeing Company and Raytheon Company.
|
|
|
April 2,
2016 |
|
December 31,
2015 |
||
Boeing
|
|
18
|
%
|
|
13
|
%
|
Raytheon
|
|
7
|
%
|
|
12
|
%
|
•
|
Total material costs as a percentage of sales decreased approximately 3% or $4.2 million year-over-year as a result of our ongoing supply chain initiatives and favorable product mix; and
|
•
|
Manufacturing efficiencies as a percentage of sales improved as a result of the ongoing headcount reductions and facility rationalization initiatives which contributed approximately $1.4 million in gross profit.
|
•
|
A decrease of approximately $0.9 million in other personnel costs related to ongoing headcount reductions; and
|
•
|
A decrease of approximately $0.9 million related to the divestiture of the Pittsburgh operation on January 22, 2016;
|
•
|
Partially offset by an increase of approximately $0.9 million related to one-time retirement charges; and
|
•
|
An increase of approximately $0.5 million in research and development costs related to new program awards announced in 2015.
|
|
|
Three Months Ended
|
|||||||||||||||
|
|
%
|
|
(In thousands)
|
|
% of Net Revenues
|
|||||||||||
|
|
Change
|
|
April 2,
2016 |
|
April 4,
2015 |
|
April 2,
2016 |
|
April 4,
2015 |
|||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||||
Structural Systems
|
|
(11.2
|
)%
|
|
$
|
64,017
|
|
|
$
|
72,058
|
|
|
45.0
|
%
|
|
41.7
|
%
|
Electronic Systems
|
|
(22.5
|
)%
|
|
78,131
|
|
|
100,862
|
|
|
55.0
|
%
|
|
58.3
|
%
|
||
Total Net Revenues
|
|
(17.8
|
)%
|
|
$
|
142,148
|
|
|
$
|
172,920
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Segment Operating Income
|
|
|
|
|
|
|
|
|
|
|
|||||||
Structural Systems
|
|
|
|
$
|
2,724
|
|
|
$
|
2,138
|
|
|
4.3
|
%
|
|
3.0
|
%
|
|
Electronic Systems
|
|
|
|
7,053
|
|
|
6,285
|
|
|
9.0
|
%
|
|
6.2
|
%
|
|||
|
|
|
|
9,777
|
|
|
8,423
|
|
|
|
|
|
|||||
Corporate General and Administrative Expenses
(1)
|
|
|
|
(5,484
|
)
|
|
(4,796
|
)
|
|
(3.9
|
)%
|
|
(2.8
|
)%
|
|||
Total Operating Income
|
|
|
|
$
|
4,293
|
|
|
$
|
3,627
|
|
|
3.0
|
%
|
|
2.1
|
%
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|||||||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
$
|
2,724
|
|
|
$
|
2,138
|
|
|
|
|
|
|||
Depreciation and Amortization
|
|
|
|
2,057
|
|
|
2,513
|
|
|
|
|
|
|||||
|
|
|
|
4,781
|
|
|
4,651
|
|
|
7.5
|
%
|
|
6.5
|
%
|
|||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
7,053
|
|
|
6,285
|
|
|
|
|
|
|||||
Gain on Divestitures
(2)
|
|
|
|
18,815
|
|
|
—
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
3,761
|
|
|
4,359
|
|
|
|
|
|
|||||
|
|
|
|
29,629
|
|
|
10,644
|
|
|
37.9
|
%
|
|
10.6
|
%
|
|||
Corporate General and Administrative Expenses
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Loss
|
|
|
|
(5,484
|
)
|
|
(4,796
|
)
|
|
|
|
|
|||||
Gain on Divestitures
(2)
|
|
|
|
(18,815
|
)
|
|
—
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
37
|
|
|
42
|
|
|
|
|
|
|||||
Stock-Based Compensation Expense
|
|
|
|
1,000
|
|
|
1,624
|
|
|
|
|
|
|||||
|
|
|
|
(23,262
|
)
|
|
(3,130
|
)
|
|
|
|
|
|||||
Adjusted EBITDA
|
|
|
|
$
|
11,148
|
|
|
$
|
12,165
|
|
|
7.8
|
%
|
|
7.0
|
%
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|||||||
Structural Systems
|
|
|
|
$
|
2,054
|
|
|
$
|
3,334
|
|
|
|
|
|
|||
Electronic Systems
|
|
|
|
347
|
|
|
1,490
|
|
|
|
|
|
|||||
Corporate Administration
|
|
|
|
—
|
|
|
4
|
|
|
|
|
|
|||||
Total Capital Expenditures
|
|
|
|
$
|
2,401
|
|
|
$
|
4,828
|
|
|
|
|
|
(1)
|
Includes costs not allocated to either the Structural Systems or Electronic Systems operating segments.
|
(2)
|
Includes gain on divestitures of the Pittsburgh and Miltec operations.
|
•
|
Approximately $4.5 million decrease in military and space revenues mainly due to the decrease in U.S. government defense spending and shifting spending priorities which impacted scheduled deliveries on our fixed-wing and helicopter platforms; and
|
•
|
Approximately $3.5 million decrease in commercial aerospace revenue related to the wind down of a regional jet program.
|
•
|
An approximately $15.4 million decrease as a result of the divestiture of the Pittsburgh operation in January 2016 and the closure of the Houston operation in December 2015; and
|
•
|
An approximately $8.7 million decrease in military and space revenue mainly due to the decrease in U.S. government defense spending and shifting spending priorities which impacted scheduled deliveries on our fixed-wing and helicopter platforms;
|
•
|
Partially offset by an approximate $3.9 million increase in our commercial aerospace revenue through added content with existing customers.
|
|
|
(In thousands)
|
||||||||||
|
|
Change
|
|
April 2,
2016 |
|
December 31,
2015 |
||||||
Consolidated Ducommun
|
|
|
|
|
|
|
||||||
Military and space
|
|
|
|
|
|
|
||||||
Defense technologies
|
|
$
|
27,599
|
|
|
$
|
196,160
|
|
|
$
|
168,561
|
|
Defense structures
|
|
5,989
|
|
|
64,810
|
|
|
58,821
|
|
|||
Commercial aerospace
|
|
(1,575
|
)
|
|
267,618
|
|
|
269,193
|
|
|||
Industrial
|
|
(14,302
|
)
|
|
34,933
|
|
|
49,235
|
|
|||
Total
|
|
$
|
17,711
|
|
|
$
|
563,521
|
|
|
$
|
545,810
|
|
Structural Systems
|
|
|
|
|
|
|
||||||
Military and space (defense structures)
|
|
$
|
5,989
|
|
|
$
|
64,810
|
|
|
$
|
58,821
|
|
Commercial aerospace
|
|
(5,388
|
)
|
|
218,648
|
|
|
224,036
|
|
|||
Total
|
|
$
|
601
|
|
|
$
|
283,458
|
|
|
$
|
282,857
|
|
Electronic Systems
|
|
|
|
|
|
|
||||||
Military and space (defense technologies)
|
|
$
|
27,599
|
|
|
$
|
196,160
|
|
|
$
|
168,561
|
|
Commercial aerospace
|
|
3,813
|
|
|
48,970
|
|
|
45,157
|
|
|||
Industrial
|
|
(14,302
|
)
|
|
34,933
|
|
|
49,235
|
|
|||
Total
|
|
$
|
17,110
|
|
|
$
|
280,063
|
|
|
$
|
262,953
|
|
|
|
(In millions)
|
||||||
|
|
April 2,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Total debt, including long-term portion
|
|
$
|
190.0
|
|
|
$
|
245.0
|
|
Weighted-average interest rate on debt
|
|
3.33
|
%
|
|
3.07
|
%
|
||
Term Loan interest rate
|
|
3.33
|
%
|
|
3.07
|
%
|
||
Cash and cash equivalents
|
|
$
|
6.4
|
|
|
$
|
5.5
|
|
Unused Revolving Credit Facility
|
|
$
|
198.5
|
|
|
$
|
198.5
|
|
2.1
|
Agreement and Plan of Merger, dated as of April 3, 2011, among Ducommun Incorporated, DLBMS, Inc. and LaBarge, Inc. Incorporated by reference to Exhibit 2.1 to Form 8-K filed on April 5, 2011.
|
2.2
|
Stock Purchase Agreement dated January 22, 2016, by and among Ducommun Incorporated, Ducommun LaBarge Technologies, Inc., as Seller, LaBarge Electronics, Inc., and Intervala, LLC, as Buyer. Incorporated by reference to Exhibit 2.1 to Form 8-K dated January 25, 2016.
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2.3
|
Stock Purchase Agreement dated February 24, 2016, by and between Ducommun LaBarge Technologies, Inc., as Seller, and General Atomics, as Buyer. Incorporated by reference to Exhibit 2.1 to Form 8-K dated February 24, 2016.
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3.1
|
Restated Certificate of Incorporation filed with the Delaware Secretary of State on May 29, 1990. Incorporated by reference to Exhibit 3.1 to Form 10-K for the year ended December 31, 1990.
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3.2
|
Certificate of Amendment of Certificate of Incorporation filed with the Delaware Secretary of State on May 27, 1998. Incorporated by reference to Exhibit 3.2 to Form 10-K for the year ended December 31, 1998.
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3.3
|
Bylaws as amended and restated on March 19, 2013. Incorporated by reference to Exhibit 99.1 to Form 8-K dated March 22, 2013.
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3.4
|
Amendment No. 2 to Bylaws dated August 1, 2013. Incorporated by reference to Exhibit 99.2 to Form 8-K dated August 5, 2013.
|
10.1
|
Credit Agreement, dated as of June 29, 2015, among Ducommun Incorporated, certain of its subsidiaries, Bank of America, N.A., as administrative agent, swingline lender and issuing bank, and other lenders party thereto. Incorporated by reference to Exhibit 10.1 to Form 8-K dated June 29, 2015.
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*10.2
|
2007 Stock Incentive Plan. Incorporated by reference to Appendix B of Definitive Proxy Statement on Schedule 14a, filed on March 29, 2010.
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*10.3
|
2013 Stock Incentive Plan (Amended and Restated March 18, 2015). Incorporated by reference to Appendix B of Definitive Proxy Statement on Schedule 14a, filed on April 22, 2015.
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*10.4
|
Form of Nonqualified Stock Option Agreement, for grants to employees under the 2013 Stock Incentive Plan, and the 2007 Stock Incentive Plan. Incorporated by reference to Exhibit 10.8 to Form 10-K for the year ended December 31, 2003.
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*10.5
|
Form of Performance Stock Unit Agreement for 2014 and 2015. Incorporated by reference to Exhibit 10.19 to Form 8-K dated April 28, 2014.
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*10.6
|
Form of Performance Stock Unit Agreement for 2016 and after.
|
*10.7
|
Form of Restricted Stock Unit Agreement. Incorporated by reference to Exhibit 99.1 to Form 8-K dated May 8, 2007.
|
*10.8
|
Form of Directors’ Restricted Stock Unit Agreement. Incorporated by reference to Exhibit 99.1 to Form 8-K dated May 10, 2010.
|
*10.9
|
Form of Key Executive Severance Agreement entered with five current executive officers of Ducommun. Incorporated by reference to Exhibit 99.1 to Form 8-K dated January 3, 2008. All of the Key Executive Severance Agreements are identical except for the name of the executive officer, the address for notice, and the date of the Agreement:
|
|
Executive Officer
|
|
Date of Agreement
|
|
|
Kathryn M. Andrus
|
|
February 18, 2014
|
|
|
Douglas L. Groves
|
|
February 18, 2014
|
|
|
James S. Heiser
|
|
December 31, 2007
|
|
|
Anthony J. Reardon
|
|
December 31, 2007
|
|
|
Rosalie F. Rogers
|
|
November 5, 2009
|
|
*10.10
|
Form of Indemnity Agreement entered with all directors and officers of Ducommun. Incorporated by reference to Exhibit 10.8 to Form 10-K for the year ended December 31, 1990. All of the Indemnity Agreements are identical except for the name of the director or officer and the date of the Agreement:
|
|
Director/Officer
|
|
Date of Agreement
|
|
|
Kathryn M. Andrus
|
|
January 30, 2008
|
|
|
Richard A. Baldridge
|
|
March 19, 2013
|
|
|
Joseph C. Berenato
|
|
November 4, 1991
|
|
|
Gregory S. Churchill
|
|
March 19, 2013
|
|
|
Robert C. Ducommun
|
|
December 31, 1985
|
|
|
Dean W. Flatt
|
|
November 5, 2009
|
|
|
Douglas L. Groves
|
|
February 12, 2013
|
|
|
Jay L. Haberland
|
|
February 2, 2009
|
|
|
James S. Heiser
|
|
May 6, 1987
|
|
|
Robert D. Paulson
|
|
March 25, 2003
|
|
|
Anthony J. Reardon
|
|
January 8, 2008
|
|
|
Jerry L. Redondo
|
|
October 1, 2015
|
|
|
Rosalie F. Rogers
|
|
July 24, 2008
|
|
|
Christopher D. Wampler
|
|
January 1, 2016
|
|
*10.11
|
Ducommun Incorporated 2016 Bonus Plan. Incorporated by reference to Exhibit 99.3 to Form 8-K dated March 1, 2016.
|
*10.12
|
Directors’ Deferred Compensation and Retirement Plan, as amended and restated February 2, 2010. Incorporated by reference to Exhibit 10.15 to Form 10-K for the year ended December 31, 2009.
|
31.1
|
Certification of Principal Executive Officer.
|
31.2
|
Certification of Principal Financial Officer.
|
32
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
Date: May 9, 2016
|
By:
|
|
/s/ Anthony J. Reardon
|
|
|
|
Anthony J. Reardon
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date: May 9, 2016
|
By:
|
|
/s/ Douglas L. Groves
|
|
|
|
Douglas L. Groves
|
|
|
|
Vice President, Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
Date: May 9, 2016
|
By:
|
|
/s/ Christopher D. Wampler
|
|
|
|
Christopher D. Wampler
|
|
|
|
Vice President, Controller and Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer)
|
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