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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Ducommun Reports Results for the

Fourth Quarter and Year Ended December 31, 2011

Posts Record Backlog of $636 Million; LaBarge Integration Effectively Complete

LOS ANGELES, California (March 5, 2012) — Ducommun Incorporated (NYSE:DCO) today reported results for its fourth quarter and twelve months ended December 31, 2011.

Highlights

 

   

Net sales increased 85% to $188.2 million for the fourth quarter of 2011 versus the fourth quarter of 2010, reflecting increased sales of $90.6 million from the acquisition of LaBarge, Inc. (“LaBarge”)

 

   

The Company reported a net loss of $(4.60) per diluted share for the fourth quarter of 2011, reflecting a pre-tax non-cash goodwill impairment charge of $54.3 million and acquisition-related expenses. Excluding goodwill impairment charges and acquisition-related expenses, the Company’s net income was $0.27 per diluted share in the quarter. The non-cash charge does not impact the Company’s ongoing business operations nor does it affect liquidity, cash flow from operations or financial covenant compliance for any of the Company’s outstanding debt

 

   

Cash flow from operations was $27.9 million in the fourth quarter 2011 and $22.6 million for the full year 2011, excluding acquisition-related expenses

 

   

Ducommun’s record backlog at December 31, 2011 was approximately $636 million

“Ducommun ended 2011 much stronger and better positioned than when the year began, with our operations bolstered by the addition of LaBarge,” said Anthony J. Reardon, president and chief executive officer. “The integration of our two organizations is now effectively complete. We have reduced corporate overhead, and our staffs are working together seamlessly to improve and grow the new Ducommun. Our backlog stands at a record $636 million, and the legacy LaBarge business is providing many new growth avenues, offsetting some weakness in a few of our legacy military applications. At the same time, Ducommun AeroStructures continues to show top-line expansion — driven by robust commercial aerospace demand. With our focus on margins, all factors are coming together for improved performance in 2012.”

Fourth Quarter Results

Sales for the fourth quarter of 2011 increased 85% to $188.2 million, compared with $101.8 million for the fourth quarter of 2010, reflecting $90.6 million in revenue from the acquisition of LaBarge. The Company reported a net loss of $48.5 million, or $(4.60) per fully diluted share, compared with net income of $4.2 million, or $0.39 per fully diluted share, for the comparable period last year. Excluding pre-tax acquisition-related expenses (including cost of sales related to the write-up of LaBarge inventory) of $3.2 million and a pre-tax non-cash goodwill impairment charge of $54.3 million, net income for the fourth quarter of 2011 was $2.8 million, or $0.27 per fully diluted share. The $54.3 million goodwill impairment charge was related to the Company’s Ducommun LaBarge Technologies subsidiary and was driven by a decline in the Company’s market value as of December 31, 2011, following the LaBarge acquisition and a softening defense market. The non-cash charge does not impact the Company’s ongoing business operations nor does it affect liquidity, cash flow from operations or financial covenant compliance for any of the Company’s outstanding debt.

During the quarter, the Company generated $27.9 million of cash flow from operations, excluding $2.0 million of transaction-related costs.


Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the fourth quarter of $68.9 million compared with $65.6 million in the prior-year period, representing an increase of 5%. The higher revenues were primarily the result of increased shipments of commercial aerospace products. Operating income for the 2011 fourth quarter was $3.4 million, or 4.9% of revenues, compared with $5.4 million, or 8.2% of revenues, for the prior-year period. The lower operating results were primarily due to start-up costs associated with new programs. These costs negatively impacted operating margins by $3.0 million, or 5.1 percentage points, on revenues of $4.9 million in the 2011 fourth quarter, compared with an impact of $1.3 million, or 2.4 percentage points, on revenues of $2.5 million in the comparable period of 2010.

Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the fourth quarter of $119.4 million compared with $36.2 million in the fourth quarter of 2010. The reason for the substantial increase in revenues was $90.6 million of contribution from LaBarge, covering a broad set of industrial and commercial end markets, partially offset by lower revenues tied to the Company’s engineering services business and delayed orders for F-15 and F-18 radar products. Operating loss for the fourth quarter of 2011 was $45.5 million, compared with operating income of $4.2 million in the 2010 fourth quarter. Excluding acquisition-related expenses (including cost of sales related to the write-up of LaBarge inventory) of $2.5 million and goodwill impairment charges of $54.3 million, DLT’s operating income was $11.3 million, or 9.5% of revenues, as compared with $4.2 million, or 11.7% of revenues, in the prior year period.

Corporate General and Administrative Expenses (CG&A)

CG&A expenses for the fourth quarter 2011 were $3.3 million, as compared with $5.3 million in the 2010 fourth quarter. Excluding acquisition-related expenses of $0.6 million, CG&A was $2.7 million, or 1.4% of sales, as compared with $5.3 million, or 5.2% of sales, in the prior year period.

Full Year Results

Sales for the twelve months of 2011 increased 42% to $580.9 million, compared with $408.4 million in 2010, reflecting revenue of $175.4 million from the LaBarge acquisition. The Company posted a net loss in 2011 of $47.6 million, or $(4.52) per fully diluted share, compared with net income of $19.8 million, or $1.87 per fully diluted share, in 2010. Excluding pre-tax acquisition-related expenses (including cost of sales related to the write-up of LaBarge inventory) of $18.5 million and a pre-tax non-cash goodwill impairment charge of $54.3 million, net income was $14.9 million, or $1.40 per fully diluted share. In 2011, the Company generated $22.6 million of cash flow from operations, excluding $25.6 million of acquisition-related costs.


Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the twelve months of 2011 of $292.8 million, compared with $271.6 million in 2010, an increase of 8%. The higher revenues were primarily the result of increased shipments of commercial aerospace products. Operating income in 2011 was $25.8 million, or 8.8% of revenues, compared with $28.7 million, or 10.6% of revenues, in the prior year period. The lower operating results were primarily due to start-up costs for new programs. These costs negatively impacted operating margins by $8.8 million, or 4.0 percentage points, on revenues of $21.6 million in 2011, compared with an impact of $4.6 million, or 2.1 percentage points, on revenues of $9.4 million in 2010.

Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the twelve months of 2011 of $288.2 million compared with $136.8 million in 2010. The primary reason for the increase in revenues was $175.4 million of contribution from LaBarge representing a broad set of industrial and commercial end markets, partially offset by lower revenues for engineering services and certain legacy Ducommun manufactured technology products. Operating loss in 2011 was $33.4 million compared with operating income of $13.2 million in 2010. Excluding acquisition-related expenses (including cost of sales related to the write-up of LaBarge inventory) and pre-tax non-cash goodwill impairment charges, DLT’s operating income was $27.0 million, or 9.4% of revenues, as compared with $13.2 million, or 9.6% of revenues, in 2010.

Corporate General and Administrative Expenses (CG&A)

CG&A expenses in 2011 were $26.5 million, compared with $15.4 million in 2010. Excluding acquisition-related expenses of $12.4 million, CG&A was $14.1 million, or 2.4% of sales, in 2011, as compared with $15.4 million, or 3.8% of sales, in 2010.

“While we still have work to do, particularly with regard to improving margins, we feel very confident about the future given the strengths of a more capable and multifaceted Ducommun,” Mr. Reardon continued. “We now have additional talent to deploy, more technical and manufacturing expertise to provide, and a broader base of customers with which to partner. We knew that the last half of 2011 would present some challenges, but we did an excellent job integrating DLT and had solid operating performance within that segment as a result. Furthermore, we won and began development on 14 new aerostructure programs last year, and, while these startup contracts adversely impacted 2011 performance, we believe that investing in such programs and customers will help drive higher revenue and profit margins over the long term. Our immediate goal is to continue to generate solid cash flow, retire debt and reduce our leverage. Some challenges surely remain as we drive to improve operating results, but the outlook is bright for Ducommun.”

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, March 6, 2012 at 10:00 AM PT (1:00 PM ET) to review these financial results. To participate in the teleconference, please call 866.700.6293 (international 617.213.8835) approximately ten minutes prior to the conference time stated above. The participant passcode is 18224938. 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 98348927.


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

[Financial Tables Follow]


DUCOMMUN INCORPORATED AND SUBSIDIARIES

COMPARATIVE DATA

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

 

     Three Months Ended     Year Ended  
     Dec. 31,
2011
    Dec. 31,
2010
    Dec. 31,
2011
    Dec. 31,
2010
 

Sales and Service Revenues

        

Product sales

   $ 181,645      $ 93,408      $ 552,408      $ 367,563   

Service revenues

     6,593        8,362        28,506        40,843   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     188,238        101,770        580,914        408,406   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Costs and Expenses:

        

Cost of product sales

     151,532        76,396        453,473        296,104   

Cost of service revenues

     4,371        6,826        21,505        32,156   

Selling, general & administrative expenses

     23,487        14,194        85,790        53,678   

Goodwill impairment

     54,273        —          54,273        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     233,663        97,416        615,041        381,938   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (Loss)/Income

     (45,425     4,354        (34,127     26,468   

Interest Expense

     (8,151     (113     (18,198     (1,805
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss)/Income Before Taxes

     (53,576     4,241        (52,325     24,663   

Income Tax Benefit/(Expense)

     5,082        (82     4,742        (4,855
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (Loss)/Income

   $ (48,494   $ 4,159      $ (47,583   $ 19,808   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Share

        

Basic (loss)/earnings per share

   $ (4.60   $ 0.40      $ (4.52   $ 1.89   

Diluted (loss)/earnings per share

   $ (4.60   $ 0.39      $ (4.52   $ 1.87   

Weighted Averaged Number of Common Shares Outstanding:

        

Basic

     10,541        10,504        10,536        10,488   

Diluted

     10,565        10,626        10,621        10,596   


DUCOMMUN INCORPORATED AND SUBSIDARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

 

     Year Ended December 31,  
     2011     2010  

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 41,449      $ 10,268   

Accounts receivable (less allowance for doubtful accounts of $488 and $415)

     96,174        47,949   

Unbilled receivables

     3,286        3,856   

Inventories

     154,503        72,597   

Production cost of contracts

     18,711        16,889   

Deferred income taxes

     12,020        5,085   

Other current assets

     14,648        4,748   
  

 

 

   

 

 

 

Total Current Assets

     340,791        161,392   

Property and Equipment, Net

     98,477        59,461   

Goodwill

     163,845        100,442   

Intangibles

     187,854        21,992   

Other Assets

     17,120        2,165   
  

 

 

   

 

 

 
   $ 808,087      $ 345,452   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Current portion of long-term debt

   $ 1,960      $ 187   

Accounts payable

     60,675        39,925   

Accrued liabilities

     53,823        31,174   
  

 

 

   

 

 

 

Total Current Liabilities

     116,458        71,286   

Long-Term Debt, Less Current Portion

     390,280        3,093   

Deferred Income Taxes

     72,043        7,691   

Other Long-Term Liabilities

     25,022        9,197   
  

 

 

   

 

 

 

Total Liabilities

     603,803        91,267   
  

 

 

   

 

 

 

Commitments and Contingencies

    

Shareholders’ Equity:

    

Common stock — $.01 par value; authorized 35,000,000 shares; issued 10,683,863 shares in 2011 and 10,650,443 shares in 2010

     107        106   

Treasury stock — held in treasury 143,300 shares in 2011 and 2010

     (1,924     (1,924

Additional paid-in capital

     64,378        61,684   

Retained earnings

     149,048        197,421   

Accumulated other comprehensive loss

     (7,325     (3,102
  

 

 

   

 

 

 

Total Shareholders’ Equity

     204,284        254,185   
  

 

 

   

 

 

 
   $ 808,087      $ 345,452   
  

 

 

   

 

 

 

 

-more-


DUCOMMUN INCORPORATED AND SUBSIDARIES

BUSINESS SEGMENT PERFORMANCE

(In thousands, except per share amounts)

(Unaudited)

 

     Fourth Quarter December 31,     Year Ended December 31,  
     2011     2010     Change     2011     2010     Change  

Net Sales:

            

Ducommun AeroStructures

   $ 68,870      $ 65,590        5.0   $ 292,759      $ 271,572        7.8

Ducommun LaBarge Technologies

     119,368        36,180        229.9     288,155        136,834        110.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Sales

   $ 188,238      $ 101,770        85.0   $ 580,914      $ 408,406        42.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating (Loss)/Income (1)

            

Ducommun AeroStructures

   $ 3,385      $ 5,397        $ 25,798      $ 28,738     

Ducommun LaBarge Technologies (2)(6)

     (45,520     4,236          (33,390     13,151     
  

 

 

   

 

 

     

 

 

   

 

 

   
     (42,135     9,633          (7,592     41,889     

Corporate General and Administrative Expenses (3)(5)

     (3,290     (5,279       (26,535     (15,421  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating (Loss)/Income

   $ (45,425   $ 4,354        $ (34,127   $ 26,468     
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA (1)

            

Ducommun AeroStructures

            

Operating Income

   $ 3,385      $ 5,397        $ 25,798      $ 28,738     

Depreciation and Amortization

     2,241        2,556          9,953        9,666     
  

 

 

   

 

 

     

 

 

   

 

 

   
     5,626        7,953          35,751        38,404     

Ducommun LaBarge Technologies

            

Operating (Loss)/Income (2)

     (45,520     4,236          (33,390     13,151     

Depreciation and Amortization

     4,718        978          11,445        3,880     
  

 

 

   

 

 

     

 

 

   

 

 

   
     (40,802     5,214          (21,945     17,031     

Corporate General and Administrative Expenses (3)(4)(5)

            

Operating Loss

     (3,290     (5,279       (26,535     (15,421  

Depreciation and Amortization

     22        (7       60        51     
  

 

 

   

 

 

     

 

 

   

 

 

   
     (3,268     (5,286       (26,475     (15,370  
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA — Excluding Goodwill Impairment

   $ (38,444   $ 7,881        $ (12,669   $ 40,065     
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA —Excluding Goodwill Impairment

            

Merger related transaction expenses (3)(5)

   $ 609      $ —          $ 12,394      $ —       

Merger related change-in-control compensation expenses (6)

     1,369        —            3,743        —       

Goodwill Impairment

     54,273        —            54,273        —       
  

 

 

   

 

 

     

 

 

   

 

 

   
     56,251        —            70,410        —       
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA—Excluding Goodwill Impairment

   $ 17,807      $ 7,881        $ 57,741      $ 40,065     
  

 

 

   

 

 

     

 

 

   

 

 

   

Capital Expenditures:

            

Ducommun AeroStructures

   $ 1,826      $ 1,797        $ 8,798      $ 5,150     

Ducommun LaBarge Technologies

     1,485        200          5,454        1,904     

Corporate Administration

     39        53          284        52     
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Capital Expenditures

   $ 3,350      $ 2,050        $ 14,536      $ 7,106     
  

 

 

   

 

 

     

 

 

   

 

 

   

 

(1) Before certain allocated corporate overhead.
(2) Includes approximately $54.3 million of goodwill impairment expense in the three months and twelve months ended December 31, 2011.
(3) Includes approximately $.6 million and $12.4 million of merger-related transaction expenses related to the Labarge acquisition in the three months and twelve months ended December 31, 2011, respectively, and $0 in 2010.
(4) Certain expenses, previously incurred by the operating units, are now included in the corporate general and administrative expense as a result of the Company's organizational changes.
(5) Includes investment banking, accounting, legal, tax and valuation expenses as a direct result of the LaBarge acquisition.
(6) Includes approximately $1.4 million and $3.7 million of 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 in the three months and twelve months ended December 31, 2011, respectively.