dco-20250329

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 March 29, 2025


☐			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.)

600 Anton Boulevard, Suite 1100, Costa Mesa, California						92626-7100
(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 29, 2025, the registrant had 14,877,749 shares of common stock outstanding.

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DUCOMMUN INCORPORATED AND SUBSIDIARIES


			Page
PART I. FINANCIAL INFORMATION



		Forward Looking Statements	3

	Item 1.	Financial Statements (unaudited)	5

		Condensed Consolidated Balance Sheets as of March 29, 2025 and December 31, 2024	5

		Condensed Consolidated Statements of Income for the Three Months Ended March 29, 2025 and March 30, 2024	6

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 29, 2025 and March 30, 2024	7

		Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 29, 2025 and March 30, 2024	8

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 29, 2025 and March 30, 2024	9

		Notes to Condensed Consolidated Financial Statements	10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

	Item 4.	Controls and Procedures	37

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	38

	Item 1A.	Risk Factors	38

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

	Item 3.	Defaults Upon Senior Securities	38

	Item 4.	Mine Safety Disclosures	38

	Item 5.	Other Information	38

	Item 6.	Exhibits	39

Signatures			40

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FORWARD-LOOKING STATEMENTS AND RISK FACTORS

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be preceded by, followed by or include words such as “could,” “may,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “expect,” “would,” or similar expressions. These statements are based on the beliefs and assumptions of our management at the time such statements are made. Generally, forward-looking statements include information concerning our possible or assumed future actions, events or results of operations. Forward-looking statements specifically include, without limitation, the information in this Form 10-Q regarding: future sales, earnings, cash flow, revenue recognition, uses of cash and other measures of financial performance, projections or expectations for future operations, including costs to complete contracts, goodwill impairment evaluations, useful life of intangible assets, unrecognized tax benefits and effective tax rate, possible labor disruptions, environmental remediation costs, insurance recoveries, industry trends and expectations, including ramp up times for build rates, our plans with respect to restructuring activities, capital expenditures, completed acquisitions, future acquisitions and dispositions and expected business opportunities that may be available to us.

Although we believe that the expectations reflected in the forward-looking statements are based on reasonable assumptions, these forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. We cannot guarantee future results, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. All written and oral forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the “Risk Factors” contained within Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (“Form 10-K”).

There can be no assurance that other factors will not affect the accuracy of these forward-looking statements or that our actual results will not differ materially from the results anticipated in such forward-looking statements. While it is impossible to identify all such factors, some factors that could cause actual results to differ materially from those estimated by us include, but are not limited to, those factors or conditions described under Risk Factors contained within Part I, Item 1A of our Form 10-K and the following:

•our level of indebtedness due to the considerable amount of cash needed to run our business;

•our ability to service our indebtedness;

•the covenants in our credit facilities impose restrictions that may limit our operating and financial flexibility;

•the typical trading volume of our common stock may affect an investor’s ability to sell significant stock holdings in the future without negatively impacting our stock price;

•our amount of debt may require us to raise additional capital to fund acquisitions;

•our end use markets are cyclical and we depend upon a select base of industries and customers;

•a significant portion of our business depends on the U.S. Government defense spending;

•exports of certain of our products and our production facility in Guaymas, Mexico are subject to various export control regulations and authorizations for proposed sales to certain foreign customers;

•contracts with some of our customers give them a variety of rights that are unfavorable to us and the OEMs to whom we provide products and services, including the ability to terminate a contract at any time for convenience;

•further consolidation in the aerospace industry;

•our ability to execute our growth strategy, which includes evaluating select acquisitions;

•labor disruptions and the ability of our suppliers to meet the quality and delivery expectations of our customers;

•we may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions, and may experience business disruptions associated with restructuring, performance center consolidations, realignment, cost reduction, and other strategic initiatives;

•enhanced design, product development, manufacturing, supply chain project management and other skills will be required as we move up the value chain to become a more value added supplier, and we are dependent upon our ability to attract and retain key personnel;

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•risks associated with existing and new tariffs imposed by the U.S. administration or foreign governments potentially impacting the operation and conduct of our business outside the United States, including our production facility in Mexico, sale of products to customers outside the United States and the import of raw materials and equipment from suppliers outside the United States;

•customer pricing pressures could reduce the demand and/or price for our products and services;

•our products and processes are subject to risk of obsolescence as a result of changes in technology and evolving industrial and regulatory standards;

•we may not have the ability to renew facilities leases on terms favorable to us and relocation of operations presents risks due to business interruptions;

•our operations are subject to numerous extensive, complex, costly and evolving laws, regulations and restrictions, including the Defense Contract Audit Agency and cybersecurity requirements;

•we are subject to a number of procurement laws with which we must comply;

•possible goodwill and other asset impairments;

•the risk of environmental liabilities and our environmental, social and governance, and sustainability responsibilities;

•we may be subject to litigation, other legal proceedings and indemnity claims and face headwinds in pending litigation matters;

•our ability to implement changes in estimates when bidding on fixed-price contracts;

•unanticipated changes in our tax provision or exposure to additional income tax liabilities;

•our ability to accurately report our financial results or prevent fraud if our internal control over financial reporting is not effective;

•cybersecurity attacks;

•assertions by third parties of violations of intellectual property rights; and

•damage or destruction of our facilities caused by natural disasters.

We caution the reader that undue reliance should not be placed on any forward-looking statements, which speak only as of the date of this Form 10-Q. We do not undertake any duty or responsibility to update any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q, except as required by law.

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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)


	March 29, 2025		December 31, 2024
Assets
Current Assets
Cash and cash equivalents	$	30,732	$	37,139
Accounts receivable, net of allowance for credit losses of $2,122 and $2,630 at March 29, 2025 and December 31, 2024, respectively	119,154		109,716
Contract assets	210,897		200,584
Inventories	197,414		196,881
Production cost of contracts	6,699		6,802

Other current assets	13,641		16,959

Total Current Assets	578,537		568,081
Property and Equipment, Net of Accumulated Depreciation of $197,524 and $194,921 at March 29, 2025 and December 31, 2024, respectively	109,075		109,812
Operating Lease Right-of-Use Assets	26,423		28,611
Goodwill	244,600		244,600
Intangibles, Net	145,403		149,591
Deferred Income Taxes	4,245		2,239
Other Assets	20,332		23,167
Total Assets	$	1,128,615	$	1,126,101
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	80,290	$	75,784
Contract liabilities	37,496		34,445
Accrued and other liabilities	34,365		44,214
Operating lease liabilities	8,721		8,531
Current portion of long-term debt	12,500		12,500

Total Current Liabilities	173,372		175,474
Long-Term Debt, Less Current Portion	229,920		229,830
Non-Current Operating Lease Liabilities	19,103		21,284

Other Long-Term Liabilities	13,213		16,983
Total Liabilities	435,608		443,571
Commitments and Contingencies (Notes 8, 10)
Shareholders’ Equity
Common Stock - $0.01 par value; 35,000,000 shares authorized; 14,868,305 and 14,781,218 shares issued and outstanding at March 29, 2025 and December 31, 2024, respectively	149		148

Additional Paid-In Capital	219,842		217,523
Retained Earnings	463,986		453,475
Accumulated Other Comprehensive Income	9,030		11,384
Total Shareholders’ Equity	693,007		682,530
Total Liabilities and Shareholders’ Equity	$	1,128,615	$	1,126,101

See accompanying notes to Condensed Consolidated Financial Statements.

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Ducommun Incorporated and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended
	March 29, 2025		March 30, 2024
Net Revenues	$	194,114	$	190,847
Cost of Sales	142,517		143,904
Gross Profit	51,597		46,943
Selling, General and Administrative Expenses	34,594		32,951
Restructuring Charges	426		1,370
Operating Income	16,577		12,622
Interest Expense	(3,263)		(3,883)



Income Before Taxes	13,314		8,739
Income Tax Expense	2,803		1,890
Net Income	$	10,511	$	6,849
Earnings Per Share
Basic earnings per share	$	0.71	$	0.47
Diluted earnings per share	$	0.69	$	0.46
Weighted-Average Number of Common Shares Outstanding
Basic	14,856		14,694
Diluted	15,177		14,937

See accompanying notes to Condensed Consolidated Financial Statements.

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Ducommun Incorporated and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in thousands)


	Three Months Ended
	March 29, 2025		March 30, 2024
Net Income	$	10,511	$	6,849
Other Comprehensive (Loss) Income, Net of Tax:
Amortization of actuarial losses and prior service costs, net of tax of $6 and $14 for the three months ended March 29, 2025 and March 30, 2024, respectively.	20		42

Change in net unrealized (losses) gains on cash flow hedges, net of tax (benefit) expense of $(715) and $672 for the three months ended March 29, 2025 and March 30, 2024, respectively.	(2,374)		2,201
Other Comprehensive (Loss) Income, Net of Tax	(2,354)		2,243
Comprehensive Income	$	8,157	$	9,092

See accompanying notes to Condensed Consolidated Financial Statements.

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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 Income (Loss)		Total Shareholders’ Equity









Balance at December 31, 2023	14,600,766	146		206,197		421,980		7,771		636,094
Net income	—	—		—		6,849		—		6,849
Other comprehensive income, net of tax	—	—		—		—		2,243		2,243

Employee stock purchase plan	28,773	—		1,190		—		—		1,190
Stock options exercised	1,625	—		47		—		—		47
Stock awards vested	152,569	2		(2)		—		—		—
Stock repurchased related to the exercise of stock options and stock awards vested	(77,107)	(1)		(3,764)		—		—		(3,765)
Stock-based compensation	—	—		2,889		—		—		2,889
Balance at March 30, 2024	14,706,626	$	147	$	206,557	$	428,829	$	10,014	$	645,547










Balance at December 31, 2024	14,781,218	148		217,523		453,475		11,384		682,530
Net income	—	—		—		10,511		—		10,511
Other comprehensive income, net of tax	—	—		—		—		(2,354)		(2,354)

Employee stock purchase plan	24,412	1		1,293		—		—		1,294

Stock awards vested	123,580	1		(1)		—		—		—
Stock repurchased related to the exercise of stock options and stock awards vested	(60,905)	(1)		(3,559)		—		—		(3,560)
Stock-based compensation	—	—		4,586		—		—		4,586
Balance at March 29, 2025	14,868,305	$	149	$	219,842	$	463,986	$	9,030	$	693,007

See accompanying notes to Condensed Consolidated Financial Statements.

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Ducommun Incorporated and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


	Three Months Ended
	March 29, 2025		March 30, 2024
Cash Flows from Operating Activities
Net Income	$	10,511	$	6,849
Adjustments to Reconcile Net Income to
Net Cash Provided by (Used in) Operating Activities:
Depreciation and amortization	8,584		8,353
Non-cash operating lease cost	2,194		2,071



Stock-based compensation expense	5,347		4,258
Deferred income taxes	(1,296)		(1,013)

(Recovery of) provision for credit losses	(54)		65



Other	307		218
Changes in Assets and Liabilities:
Accounts receivable	(9,384)		128
Contract assets	(10,313)		(19,370)
Inventories	(533)		(9,758)
Production cost of contracts	(16)		(273)
Other assets	3,622		4,343
Accounts payable	4,929		12,257
Contract liabilities	3,051		4,298
Operating lease liabilities	(1,918)		(

SEC Form 10-Q filed by Ducommun Incorporated