dco-20220402

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-08174

_________________________________________________________

DUCOMMUN INCORPORATED

(Exact name of registrant as specified in its charter)

_________________________________________________________


Delaware						95-0693330
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

200 Sandpointe Avenue, Suite 700, Santa Ana, California						92707-5759
(Address of principal executive offices)						(Zip code)

Registrant’s telephone number, including area code: (657) 335-3665

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value per share

DCO

New York Stock Exchange

_________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of April 26, 2022, the registrant had 12,033,277 shares of common stock outstanding.

Table of Contents

DUCOMMUN INCORPORATED AND SUBSIDIARIES


			Page
PART I. FINANCIAL INFORMATION



	Item 1.	Financial Statements (unaudited)	3

		Condensed Consolidated Balance Sheets as of April 2, 2022 and December 31, 2021	3

		Condensed Consolidated Statements of Income for the Three Months Ended April 2, 202 2 and April 3, 2021	4

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended April 2, 2022 and April 3, 2 021	5

		Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended April 2, 2022 and April 3, 2021	6

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 2, 2022 and April 3, 2021	7

		Notes to Condensed Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

	Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 4.	Mine Safety Disclosures	33

	Item 6.	Exhibits	34

Signatures			37

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Ducommun Incorporated and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands, except share and per share data)


	April 2, 2022		December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	19,260	$	76,316
Accounts receivable, net (allowance for credit losses of $791 and $1,098 at April 2, 2022 and December 31, 2021, respectively	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 of Accumulated Depreciation of $171,713 and $168,132 at April 2, 2022 and December 31, 2021, respectively	103,900		102,419
Operating Lease Right-of-Use Assets	38,860		33,265
Goodwill	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 (Notes 7, 9)
Shareholders’ Equity
Common Stock - $0.01 par value; 35,000,000 shares authorized; 12,032,945 and 11,925,087 shares issued and outstanding at April 2, 2022 and December 31, 2021, respectively	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

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

Ducommun Incorporated and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended
	April 2, 2022		April 3, 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

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

Ducommun Incorporated and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in thousands)


	Three Months Ended
	April 2, 2022		April 3, 2021
Net Income	$	8,099	$	6,695
Other Comprehensive Income, Net of Tax:
Amortization of actuarial loss and prior service costs, net of tax of $36 and $76 for the three months ended April 2, 2022 and April 3, 2021, respectively	110		245

Change in unrealized gains on cash flow hedges, net of tax of $1,509 and zero for the three months ended April 2, 2022 and April 3, 2021, respectively	4,903		—
Other Comprehensive Income, Net of Tax	5,013		245
Comprehensive Income	$	13,112	$	6,940

See accompanying notes to Condensed Consolidated Financial Statements.

Table of Contents

Ducommun Incorporated and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(Dollars in thousands)


	Shares Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings	Accumulated Other Comprehensive Loss	Total Shareholders’ Equity
Balance at December 31, 2020	11,728,212	$	117	$	97,090	$

SEC Form 10-Q filed by Ducommun Incorporated