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8-K - FORM 8-K - DUCOMMUN INC /DE/d8k.htm

EXHIBIT 99.1

LOGO

 

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