Ducommun Incorporated ((DCO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Ducommun Incorporated painted a mixed picture, highlighting significant achievements alongside notable challenges. The company celebrated record revenues and robust defense sector growth, while also addressing the impact of the Guaymas Fire litigation settlement and a decline in commercial aerospace revenues.
Record Revenue Achievement
Ducommun Incorporated reported a new quarterly revenue record of $212.6 million, marking the 18th consecutive quarter of year-over-year growth. This achievement represents a 6% increase over the previous year, showcasing the company’s consistent upward trajectory in revenue generation.
Strong Defense Sector Growth
The defense sector emerged as a significant growth driver for Ducommun, achieving a 13% increase in the quarter. Notably, the missile franchise saw a 21% rise, military fixed-wing aircraft grew by 17%, and rotary-wing aircraft platforms increased by 22%, underscoring the company’s strong foothold in defense.
Robust Bookings and Backlog
Ducommun reported impressive new orders totaling $338 million in Q3, with a book-to-bill ratio of 1.6x. The company’s remaining performance obligations reached a record $1.03 billion, reflecting strong demand and a healthy backlog.
Gross and EBITDA Margin Improvements
The company saw improvements in its gross margins, which increased to 26.6% in Q3, up 40 basis points year-over-year. Adjusted EBITDA also improved, reaching 16.2% of revenue, representing an expansion of 30 basis points from the prior year.
Commercial Aerospace Optimism
Despite a 10% decline in the commercial aerospace business, there is optimism for the future. Boeing received FAA approval to increase build rates, indicating a promising outlook once destocking completes in 2026.
Guaymas Fire Litigation Settlement
Ducommun recorded a settlement cost of $99.7 million due to the Guaymas Fire litigation, resulting in a GAAP EPS loss of $4.30 per share in Q3 2025. This significant settlement impacted the company’s financial results.
Challenges in Commercial Aerospace
Commercial aerospace revenues declined by 10% due to lower rates on regional and business jets, coupled with challenges on Boeing platforms impacted by destocking. This sector remains a challenge for Ducommun.
Forward-Looking Guidance
Looking ahead, Ducommun remains optimistic about its financial performance. The company reaffirmed its guidance for mid-single-digit revenue growth for the full year, with expectations of low double-digit growth in Q4 2025. The defense sector continues to be a key driver, and improvements in Boeing’s production rates are anticipated to bolster commercial aerospace.
In conclusion, Ducommun’s earnings call highlighted a balanced narrative of achievements and challenges. While record revenues and defense sector growth are commendable, the impact of the Guaymas Fire litigation and commercial aerospace decline cannot be overlooked. The company’s forward-looking guidance suggests a positive outlook, with expectations of continued growth and recovery in key areas.