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EX-99.1 - BYLAWS OF DUCOMMUN INCORPORATED - DUCOMMUN INC /DE/d251942dex991.htm

Exhibit 99.2

LOGO

FOR IMMEDIATE RELEASE

Ducommun Reports Results for the

Third Quarter Ended October 1, 2011

LaBarge Integration on Track – Record Backlog of $612 Million

LOS ANGELES, California (November 7, 2011)—Ducommun Incorporated (NYSE:DCO) today reported results for its third quarter and nine months ended October 1, 2011.

Recent Highlights

 

   

Net sales increased 86% for the third quarter of 2011 versus the third quarter of 2010, reflecting increased sales of $83.8 million from the LaBarge, Inc. (“LaBarge”) acquisition

 

   

Diluted earnings per share for the third quarter of 2011 were $0.09 and, excluding merger-related expenses, were $0.34

 

   

Firm backlog at the end of the third quarter 2011 was approximately $611.7 million

“We are pleased to report our first full quarter of financial results that include LaBarge under the Ducommun umbrella,” said Anthony J. Reardon, president and chief executive officer. “The integration of our operations remains on track, with the combined Ducommun LaBarge Technologies benefiting from strong demand across a diverse set of end markets. In addition, Ducommun AeroStructures saw revenue grow in the third quarter by 11% year-over-year, reflecting increases in both commercial and military sales. We expect further expansion in the quarters to come along with margin improvement driven by higher operating leverage and the impact of synergies from our acquisition.”

Sales for the third quarter of 2011 increased 86% to $185.1 million, compared to $99.4 million for the third quarter of 2010, reflecting revenue of $83.8 million from the LaBarge acquisition and 2% organic growth, primarily from increased sales of products for commercial aircraft. Net income for the third quarter was $1.0 million, or $0.09 per diluted share, compared to net income


of $5.8 million, or $0.55 per diluted share, for the comparable period last year. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $3.9 million, or $0.25 per diluted share, net income was $3.7 million, or $0.34 per diluted share, in the third quarter of 2011. During the quarter, the Company generated $3.7 million of cash flow from operations, excluding $9.7 million of acquisition-related costs.

SG&A expenses in the third quarter of 2011 increased by $10.9 million from the comparable period last year. This increase resulted from SG&A expenses of $11.3 million from the newly acquired LaBarge organization, including approximately $2.7 million of acquisition-related expenses and $1.9 million of amortization of intangibles.

Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the third quarter of 2011 of $75.1 million, compared to $67.6 million in 2010, representing an increase of 11%. The higher sales were primarily the result of increased shipments of commercial aerospace and military products. Operating income for the third quarter of 2011 was $6.5 million, or 8.7% of revenue, compared to $6.7 million, or 9.9% of revenue, for the prior-year period. Operating income was negatively impacted in 2011 by a higher proportion of sales of lower margin products.

Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the third quarter of 2011 of $110.0 million, compared to $31.8 million in 2010. The primary reason for the substantial increase was $83.8 million in sales from the LaBarge acquisition. Operating income for the third quarter of 2011 was $7.3 million, or 6.6% of revenue, compared to $3.1 million, or 9.8% of revenue, for the prior-year period. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $3.6 million, DLT operating income was $10.9 million, or 9.9% of sales.

Corporate General and Administrative Expenses (CG&A)

CG&A expenses represent the portion of SG&A expenses that are not identifiable or allocated to the DAS and DLT segments. CG&A expenses for the third quarter of 2011 were $4.1 million, as compared to $3.6 million in the third quarter of 2010. Excluding acquisition-related expenses of


$0.3 million, CG&A expenses were $3.8 million, or 2.1% of sales in the third quarter of 2011, compared to 3.6% of sales in the prior-year period.

Year-to-Date Results

Sales for the first nine months of 2011 increased 28% to $392.7 million, compared to $306.6 million for the first nine months of 2010, reflecting revenue of $84.7 million from the LaBarge acquisition as well as an increase in sales of products for commercial aircraft. Net income for the first nine months of 2011 was $0.9 million, or $0.09 per diluted share, compared to net income of $15.6 million, or $1.48 per diluted share, for the comparable period last year. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $15.3 million, or $1.05 per diluted share, net income was $12.1 million, or $1.13 per diluted share in the first nine months of 2011. During the first nine months of 2011, the Company used $10.8 million of cash flow from operations, excluding $18.1 million of acquisition-related costs.

SG&A expenses in the first nine months of 2011 rose by $22.8 million from the comparable period last year. This increase resulted from SG&A expenses of $11.8 million from the newly acquired LaBarge organization, along with $11.8 million of acquisition-related expenses at Corporate, partially offset by $0.8 million reduction in other expenses.

Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the first nine months of 2011 of $223.9 million, compared to $206.0 million in 2010, an increase of 9%. The higher sales were primarily the result of increased shipments of commercial aerospace and military products. Operating income for the first nine months of 2011 was $22.4 million, or 10.0% of sales, compared to $23.3 million, or 11.3% of sales, in the prior-year period. Operating income was negatively impacted in 2011 by a higher proportion of sales of lower margin products.


Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the first nine months of 2011 of $168.8 million, compared to $100.7 million in 2010. The primary reason for the increase was $84.7 million in sales from the LaBarge acquisition. Operating income for the first nine months of 2011 was $12.1 million, or 7.2% of sales, compared to $8.9 million, or 8.9% of sales, in the prior-year period. Excluding pre-tax acquisition-related expenses (including cost of sales relating to the write-up of LaBarge inventory) of $3.6 million year-to-date, DLT operating income was $15.7 million, or 9.3% of sales.

Corporate General and Administrative Expenses (CG&A)

CG&A expenses for the first nine months of 2011 were $23.2 million compared to $10.1 million in the prior-year period. Excluding acquisition-related expenses of $11.8 million, CG&A expenses in the first nine months of 2011 were $11.4 million, or 2.9% of sales, compared to 3.3% of sales in 2010.

“We couldn’t be happier with the LaBarge acquisition and how it has bolstered our technology profile, market position, and growth outlook,” Mr. Reardon continued. “Given our solid position on key platforms and programs, and in light of our positive outlook on the commercial aerospace market, Ducommun is on sound footing to post stronger operating performance going forward. We are now able to offer more sophisticated electronic and structural assemblies to our customers – providing access to a pipeline of new, attractive opportunities. With our diversified military business and commercial markets expanding, we remain focused on increasing margins and driving cash flow to pay down debt. Ducommun is clearly aligned with its shareholders in looking to enhance financial results in 2012 and beyond.”

Conference Call

A teleconference hosted by Anthony J. Reardon, the Company’s president and chief executive officer, and Joseph P. Bellino, the Company’s vice president and chief financial officer, will be held on Tuesday, November 8, 2011 at 10:00 AM PT (1:00 PM ET) to review these financial results. To participate in the teleconference, please call 800-706-7745 (international 617-614-3472) approximately ten minutes prior to the conference time stated above. The participant


passcode is 15105099. Mr. Reardon and Mr. Bellino will be speaking on behalf of the Company and anticipate the meeting and Q&A period to last approximately 45 minutes.

This call is being webcast by Thomson Reuters and can be accessed directly at the Ducommun website at www.ducommun.com. Conference call replay will be available after that time at the same link or by dialing 888-286-8010, passcode 89506569.

About Ducommun Incorporated

Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace, defense, and other industries through a wide spectrum of electronic and structural applications. The company is an established supplier of critical components and assemblies for commercial aircraft and military and space vehicles as well as for the energy market, medical field, and industrial automation. It operates through two primary business units: Ducommun AeroStructures (DAS) and Ducommun LaBarge Technologies (DLT). Additional information can be found at www.ducommun.com.

Statements contained in this press release regarding other than recitation of historical facts are forward-looking statements. These statements are identified by words such as “may,” “will,” “ begin,” “ look forward,” “expect,” “believe,” “intend,” “anticipate,” “should”, “potential,” “estimate,” “continue,” “momentum” and other words referring to events to occur in the future. These statements reflect Company’s current view of future events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, including, but not limited to, the state of the world financial, credit, commodities and stock markets, any difficulties, delays or failure in, or unanticipated costs of, realizing the expected synergies of the LaBarge acquisition, and uncertainties regarding the Company, its businesses and the industries in which it operates, which are described in the Company’s filings with the Securities and Exchange Commission. The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

CONTACT:

 

Joseph P. Bellino

     or      

Chris Witty

Vice President and Chief Financial Officer

     

Investor Relations

(310) 513-7211

     

(646) 438-9385/cwitty@darrowir.com


DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     (Unaudited)        
     October 1,
2011
    December 31,
2010
 

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 19,376      $ 10,268   

Accounts receivable

     97,429        47,949   

Unbilled receivables

     5,670        3,856   

Inventories

     168,161        72,597   

Production cost of contracts

     16,672        16,889   

Deferred income taxes

     11,119        5,085   

Other current assets

     18,588        4,748   
  

 

 

   

 

 

 

Total Current Assets

     337,015        161,392   

Property and Equipment, Net

     99,122        59,461   

Goodwill

     216,314        100,442   

Intangibles

     190,740        21,992   

Other Assets

     17,638        2,165   
  

 

 

   

 

 

 
   $ 860,829      $ 345,452   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Current portion of long-term debt

   $ 1,961      $ 187   

Accounts payable

     59,708        39,925   

Accrued liabilities

     59,271        31,174   
  

 

 

   

 

 

 

Total Current Liabilities

     120,940        71,286   

Long-Term Debt, Less Current Portion

     390,773        3,093   

Deferred Income Taxes

     81,437        7,691   

Other Long-Term Liabilities

     10,688        9,197   
  

 

 

   

 

 

 

Total Liabilities

     603,838        91,267   
  

 

 

   

 

 

 

Commitments and Contingencies

    

Shareholders’ Equity:

    

Common stock

     107        106   

Treasury stock

     (1,924     (1,924

Additional paid-in capital

     64,368        61,684   

Retained earnings

     197,542        197,421   

Accumulated other comprehensive loss

     (3,102     (3,102
  

 

 

   

 

 

 

Total Shareholders’ Equity

     256,991        254,185   
  

 

 

   

 

 

 
   $ 860,829      $ 345,452   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.


DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     October 1,
2011
    October 2,
2010
    October 1,
2011
    October 2,
2010
 

Sales and Service Revenues:

        

Product sales

   $ 178,485      $ 89,473      $ 370,763      $ 274,155   

Service revenues

     6,595        9,970        21,913        32,481   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Sales

     185,080        99,443        392,676        306,636   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Costs and Expenses:

        

Cost of product sales

     145,560        72,041        301,941        219,708   

Cost of service revenues

     5,331        7,465        17,134        25,330   

Selling, general and administrative expenses

     24,557        13,705        62,303        39,484   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Costs and Expenses

     175,448        93,211        381,378        284,522   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (Loss)/Income

     9,632        6,232        11,298        22,114   

Interest Expense, Net

     (8,256     (544     (10,047     (1,692
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss)/Income Before Taxes

     1,376        5,688        1,251        20,422   

Income Tax Expense, Net

     (415     85        (340     (4,773
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (Loss)/Income

   $ 961      $ 5,773      $ 911      $ 15,649   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss)/Earnings Per Share:

        

Basic (loss)/earnings per share

   $ 0.09      $ 0.55      $ 0.09      $ 1.49   

Diluted (loss)/earnings per share

   $ 0.09      $ 0.55      $ 0.09      $ 1.48   

Weighted Average Number of Common Shares Outstanding:

        

Basic

     10,539        10,499        10,534        10,483   

Diluted

     10,631        10,583        10,658        10,564   


DUCOMMUN INCORPORATED AND SUBSIDIARIES

BUSINESS SEGMENT PERFORMANCE

(In thousands, except per share amounts)

(Unaudited)

 

     (In thousands)  
     Three Months     %
Change
    Nine Months     %
Change
 
     October 1,
2011
    October 2,
2010
      October 1,
2011
    October 2,
2010
   

Net Sales:

            

Ducommun AeroStructures

   $ 75,076      $ 67,634        11.0   $ 223,890      $ 205,982        8.7

Ducommun LaBarge Technologies

     110,004        31,809        245.8     168,786        100,654        67.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Sales

   $ 185,080      $ 99,443        86.1   $ 392,676      $ 306,636        28.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income (1)

            

Ducommun AeroStructures

   $ 6,503      $ 6,725        $ 22,414      $ 23,343     

Ducommun LaBarge Technologies

     7,287        3,120          12,129        8,912     
  

 

 

   

 

 

     

 

 

   

 

 

   
     13,790        9,845          34,543        32,255     

Corporate General and Administrative Expenses (2)

     (4,158     (3,613       (23,245     (10,141  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Income

   $ 9,632      $ 6,232        $ 11,298      $ 22,114     
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA (1)

            

Ducommun AeroStructures

            

Operating Income

   $ 6,503      $ 6,725        $ 22,414      $ 23,343     

Depreciation and Amortization

     2,681        2,243          7,710        7,110     
  

 

 

   

 

 

     

 

 

   

 

 

   
     9,184        8,968          30,124        30,453     

Ducommun LaBarge Technologies

            

Operating Income

     7,285        3,120          12,129        8,912     

Depreciation and Amortization

     4,745        983          6,725        2,902     
  

 

 

   

 

 

     

 

 

   

 

 

   
     12,030        4,103          18,854        11,814     

Corporate General and Administrative Expenses (2)(3)

            

Operating Loss

     (4,156     (3,613       (23,245     (10,141  

Depreciation and Amortization

     29        4          37        58     

Non-Cash Stock-Based Compensation

     888        652          2,352        1,621     
  

 

 

   

 

 

     

 

 

   

 

 

   
     (3,239     (2,957       (20,856     (8,462  
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA

   $ 17,975      $ 10,114        $ 28,122      $ 33,805     
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

            

Inventory step-up writeoff (3)

     1,178        —            1,178        —       

Merger-related transaction expenses (4)

     308        —            11,785        —       

Merger-related change-in-control compensation expenses (5)

     2,374        —            2,374        —       
  

 

 

   

 

 

     

 

 

   

 

 

   
     3,860        —            15,337        —       
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 21,835      $ 10,114        $ 43,459      $ 33,805     
  

 

 

   

 

 

     

 

 

   

 

 

   

Capital Expenditures:

            

Ducommun AeroStructures

   $ 2,838      $ 734        $ 6,972      $ 3,363     

Ducommun LaBarge Technologies

     2,494        532          3,970        1,622     

Corporate Administration

     50        9          244        69     
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Capital Expenditures

   $ 5,382      $ 1,275        $ 11,186      $ 5,054     
  

 

 

   

 

 

     

 

 

   

 

 

   

 

(1) Before certain allocated corporate overhead.
(2) Includes approximately $0.3 million and $11.8 million of merger-related transaction expenses in the three months 2011 and nine months 2011, respectively, related to the LaBarge acquisition.
(3) Certain expenses, previously incurred by the operating units, are now included in the corporate general and administrative expenses as a result of the Company’s organizational changes.
(4) Includes investment banking, accounting, legal, tax and valuation expenses as a direct result of the LaBarge acquisition.
(5) Merger-related transaction costs resulting from a change-in-control provision for certain LaBarge key executives and employees arising in connection with the LaBarge acquisition.