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8-K - FORM 8-K - DUCOMMUN INC /DE/d348040d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Ducommun Reports Results for the

First Quarter Ended March 31, 2012

Strong Aerospace Growth, Cash Flow Improvement and Margin Expansion

LOS ANGELES, California (May 7, 2012)—Ducommun Incorporated (NYSE:DCO) today reported results for its first quarter ended March 31, 2012.

Highlights

 

   

Net sales increased 85% to $184.3 million for the first quarter of 2012 versus the first quarter of 2011, including sales of $84.4 million from the acquisition of LaBarge, Inc. (“LaBarge”)

 

   

The Company reported net income of $2.4 million, or $0.23 per diluted share, for the first quarter of 2012

 

   

Adjusted EBITDA grew to $19.0 million in the first quarter of 2012 from $9.1 million in the first quarter of 2011

 

   

Cash flow from operations improved $20.5 million in the first quarter versus the prior-year period

 

   

Ducommun ended the quarter with a record backlog of approximately $647 million.

“Our first quarter showed strong commercial aerospace growth and improvement in many of our financial metrics,” said Anthony J. Reardon, president and chief executive officer. “Ducommun’s adjusted EBITDA climbed to 10.3% of revenue from 9.1% in the first quarter of 2011, and we reduced our seasonal cash usage by $20.5 million versus first quarter 2011. With our backlog at record levels, the Company continues to benefit from increasing demand across its aerospace platforms, offsetting some near-term weakness in the industrial and natural resources end markets. We feel confident that margins will expand going forward, accompanied by solid cash flow generation, as we achieve operating synergies and pursue new business development initiatives.”


First Quarter Results

Sales for the first quarter of 2012 increased 85% to $184.3 million, compared with $99.6 million for the first quarter of 2011, reflecting $84.4 million in revenue from the acquisition of LaBarge. The Company reported net income of $2.4 million, or $0.23 per fully diluted share, compared with net income of $2.9 million, or $0.27 per fully diluted share, for the comparable period last year.

Adjusted EBITDA for the first quarter of 2012 increased to $19.0 million, or 10.3% of revenues, compared with $9.1 million, or 9.1% of revenues, for the comparable period last year.

Cash flow used in operations during the first quarter of 2012 was $4.8 million, as compared to usage of $25.3 million in the prior year’s first quarter. The $20.5 million improvement reflects better working capital management and higher operating efficiency.

Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the first quarter of $74.3 million, compared with $72.2 million in the prior-year period, representing an increase of 2.9%. The higher revenues were primarily the result of increased shipments of commercial aerospace products. Operating income for the 2012 first quarter was $6.6 million, or 8.9% of revenues, compared with $7.1 million, or 9.8% of revenues, for the prior-year period. Operating income in 2012 was impacted by a higher proportion of sales of lower margin products. Adjusted EBITDA was $8.6 million, or 11.6% of revenues, compared with adjusted EBITDA of $9.6 million, or 13.3% of revenues, for the prior year period.

Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the first quarter of 2012 of $110.1 million, compared with $27.3 million in the first quarter of 2011, reflecting sales of $84.4 million from the acquisition of LaBarge. Operating income for the first quarter of 2012 was $8.3 million, or 7.5% of revenues, compared with operating income of $2.1 million, or 7.8% of revenues, in the 2011 first quarter. Adjusted EBITDA was $13.2 million, or 12.0% of revenues, compared with adjusted EBITDA of $3.0 million, or 10.9% of revenues, in the first quarter of 2011.


Corporate General and Administrative Expenses (CG&A)

CG&A expenses for the first quarter of 2012 were $3.0 million, or 1.6% of revenues, as compared with $4.9 million, or 5.0% of revenues, in the 2011 first quarter. CG&A was lower year-over-year primarily due to the reduction in transaction-related expenses from the LaBarge acquisition and integration cost synergies.

“We are pleased to see attractive build rates across the majority of our commercial aerospace programs, and we remain committed to achieving improved operating results in 2012,” Mr. Reardon added. “We are focused on driving margin expansion going forward, which is paramount to ensuring greater returns for our shareholders. With a strong product portfolio across a variety of end markets and a focus on delivering total customer satisfaction, we expect to continue to strengthen our market position.”

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, May 8, 2012 at 10:00 AM PT (1:00 PM ET) to review these financial results. To participate in the teleconference, please call 800-215-2410 (international 617-597-5410) approximately ten minutes prior to the conference time stated above. The participant passcode is 83260671. 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 50818777.


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

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended  
     March 31,     April 2,  
     2012     2011  

Sales and Service Revenues:

    

Product sales

   $ 177,502      $ 91,333   

Service revenues

     6,841        8,220   
  

 

 

   

 

 

 

Net Sales

     184,343        99,553   
  

 

 

   

 

 

 

Operating Costs and Expenses:

    

Cost of product sales

     144,403        74,839   

Cost of service revenues

     5,469        6,306   

Selling, general and administrative expenses

     22,612        14,149   
  

 

 

   

 

 

 

Total Operating Costs and Expenses

     172,484        95,294   
  

 

 

   

 

 

 

Operating Income

     11,859        4,259   

Interest Expense, Net

     (8,239     (260
  

 

 

   

 

 

 

Income Before Taxes

     3,620        3,999   

Income Tax Expense, Net

     (1,230     (1,076
  

 

 

   

 

 

 

Net Income

   $ 2,390      $ 2,923   
  

 

 

   

 

 

 

Earnings Per Share:

    

Basic earnings per share

   $ 0.23      $ 0.28   

Diluted earnings per share

   $ 0.23      $ 0.27   

Weighted Average Number of Common Shares Outstanding:

    

Basic

     10,546        10,526   

Diluted

     10,574        10,634   


DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     (Unaudited)        
     March 31,     December 31,  
     2012     2011  

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 31,212      $ 41,449   

Accounts receivable

     94,723        96,174   

Unbilled receivables

     3,313        3,286   

Inventories

     157,292        154,503   

Production cost of contracts

     19,988        18,711   

Deferred income taxes

     12,286        12,020   

Other current assets

     10,913        14,648   
  

 

 

   

 

 

 

Total Current Assets

     329,727        340,791   

Property and Equipment, Net

     99,524        98,477   

Goodwill

     163,845        163,845   

Intangibles

     184,979        187,854   

Other Assets

     16,369        17,120   
  

 

 

   

 

 

 
   $ 794,444      $ 808,087   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Current portion of long-term debt

   $ 1,950      $ 1,960   

Accounts payable

     57,155        60,675   

Accrued liabilities

     42,056        53,823   
  

 

 

   

 

 

 

Total Current Liabilities

     101,161        116,458   

Long-Term Debt, Less Current Portion

     389,795        390,280   

Deferred Income Taxes

     71,465        72,043   

Other Long-Term Liabilities

     24,709        25,022   
  

 

 

   

 

 

 

Total Liabilities

     587,130        603,803   
  

 

 

   

 

 

 

Commitments and Contingencies

    

Shareholders’ Equity:

    

Common stock

     107        107   

Treasury stock

     (1,924     (1,924

Additional paid-in capital

     65,018        64,378   

Retained earnings

     151,438        149,048   

Accumulated other comprehensive loss

     (7,325     (7,325
  

 

 

   

 

 

 

Total Shareholders’ Equity

     207,314        204,284   
  

 

 

   

 

 

 
   $ 794,444      $ 808,087   
  

 

 

   

 

 

 


DUCOMMUN INCORPORATED AND SUBSIDIARIES

BUSINESS SEGMENT PERFORMANCE

(In thousands)

(Unaudited)

 

     Three Months        
     March 31,     April 2,        
     2012     2011     Change  

Net Sales:

      

Ducommun AeroStructures

   $ 74,287      $ 72,204        2.9

Ducommun LaBarge Technologies

     110,056        27,349        302.4
  

 

 

   

 

 

   

 

 

 

Total Net Sales

   $ 184,343      $ 99,553        85.2
  

 

 

   

 

 

   

 

 

 

Segment Operating Income (1)

      

Ducommun AeroStructures

   $ 6,591      $ 7,067     

Ducommun LaBarge Technologies (5)

     8,302        2,123     
  

 

 

   

 

 

   
     14,893        9,190     

Corporate General and Administrative Expenses (3)(5)

     (3,034     (4,931  
  

 

 

   

 

 

   

Total Operating Income

   $ 11,859      $ 4,259     
  

 

 

   

 

 

   

EBITDA (1)

      

Ducommun AeroStructures

      

Operating Income

   $ 6,591      $ 7,067     

Depreciation and Amortization

     2,056        2,557     
  

 

 

   

 

 

   
     8,647        9,624     

Ducommun LaBarge Technologies

      

Operating Income

     8,302        2,123     

Depreciation and Amortization

     4,697        850     
  

 

 

   

 

 

   
     12,999        2,973     

Corporate General and Administrative Expenses (2)(3)

      

Operating Loss

     (3,034     (4,931  

Depreciation and Amortization

     51        4     
  

 

 

   

 

 

   
     (2,983     (4,927  
  

 

 

   

 

 

   

EBITDA

   $ 18,663      $ 7,670     
  

 

 

   

 

 

   

Adjusted EBITDA

      

Acquisition-related transaction expenses (3)(4)

   $ 151      $ 1,400     

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

     216        —       
  

 

 

   

 

 

   
     367        1,400     
  

 

 

   

 

 

   

Adjusted EBITDA

   $ 19,030      $ 9,070     
  

 

 

   

 

 

   

Capital Expenditures:

      

Ducommun AeroStructures

   $ 2,457      $ 759     

Ducommun LaBarge Technologies

     2,437        687     

Corporate Administration

     23        63     
  

 

 

   

 

 

   

Total Capital Expenditures

   $ 4,917      $ 1,509     
  

 

 

   

 

 

   

 

(1) Before certain allocated corporate overhead.
(2) Includes approximately $0.15 million and $1.4 million of acquisition-related transaction expenses related to the LaBarge acquisition in the three months ended March 31, 2012 and April 2, 2011, respectively.
(3) 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.
(4) Includes investment banking, accounting, legal, tax and valuation expenses as a direct result of the LaBarge acquisition.
(5) Includes approximately $0.22 million of acquisition-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 ended March 31, 2012.