EX-99.1 2 dex991.htm DUCOMMUN INCORPORATED PRESS RELEASE Ducommun Incorporated press release

 

LOGO    EXHIBIT 99.1

 

CONTACT:   Joseph C. Berenato
 

Chairmanand Chief Executive Officer

 

(310)513-7209

FOR IMMEDIATE RELEASE

DUCOMMUN INCORPORATED REPORTS RESULTS FOR THE FOURTH QUARTER AND

YEAR ENDED DECEMBER 31, 2007

LOS ANGELES, California (February 25, 2008) – Ducommun Incorporated (NYSE: DCO) today reported results for the fourth quarter and year ended December 31, 2007.

Sales for the fourth quarter of 2007 were $93.5 million, compared to $87.8 million for the fourth quarter of 2006. Net income for the fourth quarter of 2007 was $5.4 million, or $0.51 per diluted share, compared to net income of $4.3 million, or $0.41 per diluted share, for the comparable period last year.

Sales for the year 2007 were $367.3 million, compared to $319.0 million for the year 2006. Net income for the year 2007 was $19.6 million, or $1.88 per diluted share, compared to net income of $14.3 million, or $1.39 per diluted share, for the comparable period last year.

Sales for the fourth quarter of 2007 increased 6% from the same period last year primarily due to an increase in commercial product sales. The Company’s mix of business in the fourth quarter of 2007 was approximately 58% military, 38% commercial and 4% space, compared to 63% military, 34% commercial and 3% space in the fourth quarter of 2006.

Gross profit, as a percentage of sales, was 18.2% in the fourth quarter of 2007, compared to 18.1% in the fourth quarter of 2006. Gross profit in the fourth quarter of 2007 benefited from improvements in operating performance at Ducommun AeroStructures and Ducommun Technologies and a favorable change in sales mix. However, these improvements were offset by higher bonus and environmental accruals in 2007 than in 2006.

Selling, general and administrative (SG&A) expenses decreased to $10.0 million in the fourth quarter of 2007, compared to $12.3 million in the fourth quarter of 2006. The decrease in SG&A expenses included a gain of $1.2 million from the settlement of the Company’s contract termination claim related to the Space Shuttle program.


Net income for the fourth quarter of 2007 increased 27% from the fourth quarter of 2006 primarily due to the reasons stated above, partially offset by a higher effective tax rate in the fourth quarter of 2007. The Company’s effective tax rate for the fourth quarter of 2007 was 19.0%, compared to a 48.3% tax benefit in the fourth quarter of 2006.

Sales for the year 2007 increased 15% from the same period in 2006, primarily due to increases in commercial product sales and military service sales. The Company’s mix of business for 2007 was 60% military, 37% commercial and 3% space, compared to 66% military, 32% commercial and 2% space for the year 2006.

Gross profit, as a percentage of sales, increased to 20.6% in the year 2007 from 19.6% in the year 2006. The gross profit margin increase was primarily attributable to improvements in operating performance at Ducommun AeroStructures and Ducommun Technologies, partially offset by higher bonus and environmental accruals in 2007 than in 2006.

Selling, general and administrative (SG&A) expenses, as a percentage of sales, decreased to 12.6% for the year 2007 from 13.1% for the year 2006. The decrease in SG&A expenses, as a percentage of sales, was primarily the result of spreading SG&A expenses over a higher volume of sales, partially offset by higher bonus accruals in 2007 and expenses of the WiseWave and CMP businesses which were acquired in the second and third quarters of 2006, respectively. SG&A expenses in 2007 also included a gain of $1.2 million from the settlement of the Company’s contract termination claim related to the Space Shuttle program.

Net income for the year 2007 increased 37% from the year 2006 primarily due to the reasons stated above, partially offset by a higher effective tax rate in the year 2007. The Company’s effective tax rate for the year 2007 was 28.0%, compared to 21.0% for the year 2006.

Joseph C. Berenato, chairman and chief executive officer, stated, “2007 was a good year for Ducommun, both operationally and financially. Sales for Boeing commercial aircraft, regional and business aircraft, and commercial helicopters grew strongly in 2007, while our military markets, particularly for government services, remained robust. In 2007, we were awarded significant contracts for NASA’s Crew Launch Vehicle, Boeing’s 737 aircraft, Sikorsky’s Black Hawk helicopter, and Embraer’s 170/190 aircraft. We continued our success in moving up the value chain by capturing major assemblies for the Dassault Falcon aircraft and the Carson helicopter. We also booked significant new work on the Boeing 787 aircraft for titanium components, composite panels and wiring harness assemblies which we expect to grow significantly in the future.”


Mr. Berenato continued, “The Company’s Lean and Six Sigma initiatives contributed to improvements in operating efficiency in 2007. Despite start-up costs for new programs and those associated with the opening of our second overseas facility in Mexico, gross profit and operating income margins grew nicely. As we enter 2008, we expect to continue the Company’s growth as we leverage the gains made in 2007.”

Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services for the aerospace and defense industry.

A teleconference with Joseph C. Berenato, the Company’s chairman and chief executive officer, will be held today at 7:30 AM PT (10:30 AM ET). To participate in the teleconference, please call 866-761-0748 (international 617-614-2706) approximately ten minutes prior to the conference time stated above. The participant passcode is 47463615. Mr. Berenato will be speaking on behalf of the company and anticipates the meeting and Q&A period to last approximately 40 minutes.

This call is being webcast by Thompson/CCBN and can be accessed at Ducommun’s web site at www.ducommun.com. Conference call replay will be available from the Company’s web site 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, 2007 for a more detailed discussion of these and other risk factors and contingencies.

[Financial Table Follows]


DUCOMMUN INCORPORATED AND SUBSIDIARIES

COMPARATIVE DATA

CONSOLIDATED INCOME STATEMENT

(in thousands, except per share amounts)

 

     Three Months
Ended
    Year Ended  
     December 31,
2007
    December 31,
2006
    December 31,
2007
    December 31,
2006
 

Sales and Service Revenues:

        

Product Sales

   $ 79,582     $ 72,950     $ 310,961     $ 269,520  

Service Revenues

     13,894       14,876       56,336       49,501  
                                

Total

     93,476       87,826       367,297       319,021  
                                

Operating Costs and Expenses:

        

Cost of Product Sales

     65,011       59,131       246,403       215,453  

Cost of Service Revenues

     11,425       12,826       45,053       41,012  

Selling, General & Administrative Expenses

     10,000       12,258       46,191       41,867  
                                

Total

     86,436       84,215       337,647       298,332  
                                

Operating Income

     7,040       3,611       29,650       20,689  

Interest Expense

     (350 )     (733 )     (2,395 )     (2,601 )

Income Tax Expense

     (1,272 )     1,390       (7,634 )     (3,791 )
                                

Net Income

   $ 5,418     $ 4,268     $ 19,621     $ 14,297  
                                

Earnings Per Share:

        

Basic Earnings Per Share

   $ 0.52     $ 0.42     $ 1.89     $ 1.40  

Diluted Earnings Per Share

     0.51       0.41       1.88       1.39  

Weighted Averaged Number of Common Shares Outstanding:

        

Basic

     10,518       10,258       10,398       10,211  

Diluted

     10,670       10,341       10,457       10,290  


DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except share data)

 

     December 31, 2007     December 31, 2006  

Assets

    

Current Assets:

    

Cash and Cash Equivalents

   $ 31,571     $ 378  

Accounts Receivable, Less Allowance for Doubtful Accounts

     39,226       42,658  

Unbilled Receivables

     5,615       3,482  

Inventories

     67,769       64,587  

Deferred Income Taxes

     7,727       6,116  

Other Current Assets

     5,328       5,521  
                

Total Current Assets

     157,236       122,742  

Property and Equipment, Net

     56,294       52,987  

Goodwill, Net

     106,632       106,628  

Other Assets

     12,314       14,676  
                
   $ 332,476     $ 297,033  
                

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Current Portion of Long-Term Debt

   $ 1,859     $ 1,196  

Accounts Payable

     33,845       32,948  

Accrued Liabilities

     43,829       33,243  
                

Total Current Liabilities

     79,533       67,387  

Long-Term Debt, Less Current Portion

     23,892       29,240  

Deferred Income Taxes

     5,584       6,670  

Other Long-Term Liabilities

     9,416       6,711  
                

Total Liabilities

   $ 118,425     $ 110,008  

Commitments and Contingencies

    

Shareholders Equity:

    

Common Stock

     105       103  

Additional Paid-In-Capital

     53,444       46,320  

Retained Earnings

     162,192       142,760  

Accumulated Other Comprehensive Loss

     (1,690 )     (2,158 )
                

Total Shareholders’ Equity

     214,051       187,025  
                
   $ 332,476     $ 297,033  
                

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