EX-99.1 2 d433305dex991.htm DUCOMMUN INCORPORATED PRESS RELEASE ISSUED ON NOVEMBER 7, 2012 Ducommun Incorporated press release issued on November 7, 2012

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

Ducommun Reports Results for the

Third Quarter Ended September 29, 2012

Continued Strengthening of Margins and Earnings

LOS ANGELES, California (November 7, 2012) – Ducommun Incorporated (NYSE:DCO) today reported results for its third quarter and the nine months ended September 29, 2012.

Highlights

 

   

The Company reported net income of $5.1 million, or $0.48 per diluted share, for the third quarter of 2012, up $2.2 million versus $2.9 million, or $0.27 per diluted share, reported in the third quarter of 2011 excluding pre-tax merger-related expenses of $2.7 million

 

   

Cash generated from operating activities in the third quarter of 2012 was $5.7 million, an improvement of $11.7 million compared to the third quarter of 2011

 

   

The Company made a voluntary $10.0 million principal pre-payment on its term loan

 

   

Firm backlog at the end of the third quarter was approximately $642 million

“Ducommun’s focus on the bottom line again produced tangible results this quarter,” said Anthony J. Reardon, chairman, president and chief executive officer. “While revenue was flat both year-over-year and sequentially, reflecting some softness in segments outside aerospace and defense, we recorded higher operating performance across a number of fronts driven by better asset utilization and improved product mix. Our margins expanded, cash flow rose, and earnings increased appreciably to $0.48 per diluted share.

“At the same time, we pre-paid $10 million of our term loan in September and plan for further pre-payments totaling between $10 million and $15 million in the fourth quarter, as we continue to de-lever the balance sheet. Our backlog is strong, and we remain confident about the future based on the enduring programs we serve, our pipeline of new opportunities, and our unique range of capabilities. As we turn toward 2013, we believe we have more room to grow and strengthen Ducommun and are dedicated to this end for our shareholders, our employees, and our customers.”


Third Quarter Results

Sales for the third quarter of 2012 were $184.1 million, compared with $185.1 million for the third quarter of 2011. The Company reported net income of $5.1 million, or $0.48 per diluted share, compared with $1.0 million, or $0.09 per diluted share, for the comparable period last year. Excluding pre-tax merger-related expenses of $2.7 million ($1.9 million after-tax, or $0.18 per diluted share), net income was $2.9 million, or $0.27 per diluted share, in the third quarter of 2011.

Adjusted EBITDA for the third quarter of 2012 was $21.9 million, or 11.9% of revenue, compared to $19.8 million, or 10.7% of revenue, in the previous year.

The Company had an effective tax rate of 14.9% in the third quarter of 2012, compared to an effective tax rate of 30.2% in the third quarter of 2011.

Cash flow generated from operations during the third quarter of 2012 was $5.7 million, as compared to $3.7 million in the prior year’s third quarter, excluding $9.7 million in merger-related costs last year.

Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the third quarter of 2012 of $76.7 million, compared with $75.1 million in the prior-year period. This segment realized higher sales of large commercial aircraft and military helicopter products, somewhat offset by lower sales of regional aircraft and military fixed wing products. Operating income for the 2012 third quarter was $7.4 million, or 9.7% of revenue, compared with $6.5 million, or 8.7% of revenue, in the prior-year period. Operating income for 2012 increased over 2011 due to improved product mix. EBITDA was $10.3 million, or 13.5% of revenue, compared with EBITDA of $9.2 million, or 12.2% of revenue, in the prior-year period.

Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the third quarter of 2012 of $107.4 million, compared with $110.0 million in the third quarter of 2011, reflecting lower sales in the natural resources and industrial end-use markets, partially offset by higher shipments of military and commercial aerospace electronics. Operating income for the third quarter of 2012 was $10.5 million, or 9.7% of revenue, compared with operating income of $7.3 million, or 6.6% of revenue, in the 2011 third quarter, reflecting a favorable mix of higher margin products and benefits from the Company’s integration efforts. EBITDA for the third quarter of 2012 was $15.2 million, or 14.1% of revenue, compared with EBITDA of $12.0 million, or 10.9% of revenue, in the third quarter of 2011.


Corporate General and Administrative Expenses (CG&A)

CG&A expenses for the third quarter of 2012 were $3.6 million, or 2.0% of revenue, as compared with $4.2 million, or 2.2% of revenue, in the 2011 third quarter, excluding merger-related expenses of $2.7 million.

Year to Date Results

Sales for the first nine months of 2012 increased 41% to $553.1 million, compared with $392.7 million for the first nine months of 2011, reflecting $160.8 million in revenue from the acquisition of LaBarge, Inc. (“LaBarge”). The Company reported net income of $13.0 million, or $1.23 per diluted share, compared with $0.9 million, or $0.09 per diluted share, for the prior-year period, which included pre-tax merger-related expenses of $14.2 million ($9.9 million after-tax), or $0.93 per diluted share.

Adjusted EBITDA for the first nine months of 2012 increased to $62.3 million, or 11.3% of revenue, compared with $39.9 million, or 10.2% of revenue, for the comparable period last year.

The Company had an effective tax rate of 15.6% for the first nine months of 2012, compared to an effective tax rate of 27.2% for the first nine months of 2011. The effective tax rate in 2012 benefitted from the LaBarge acquisition, which allowed the Company to file consolidated state tax returns (“combined report”) in certain states. This reduced the Company’s tax provision by approximately $1.6 million.

Cash flow generated from operations during the first nine months of 2012 was $11.4 million, as compared with cash usage of $28.9 million during the prior year’s first nine months. Excluding $18.1 million in merger-related costs last year, the Company used $10.8 million of cash from operations in the first nine months of 2011.

Ducommun AeroStructures (DAS)

The DAS segment reported net sales for the first nine months of 2012 of $227.8 million, compared with $223.9 million in the prior-year period. The segment saw higher sales of large commercial aircraft and military helicopter products, somewhat offset by lower sales of regional aircraft and military fixed wing products. Operating income for the 2012 nine-month period was $21.6 million, or 9.5% of revenue, compared with $22.4 million, or 10.0% of revenue, for the prior-year period. EBITDA was $28.8 million, or 12.6% of revenue, compared with EBITDA of $30.1 million, or 13.5% of revenue, in the prior-year period.


Ducommun LaBarge Technologies (DLT)

The DLT segment reported net sales for the first nine months of 2012 of $325.3 million, including increased sales of $160.8 million from the acquisition of LaBarge, compared with $168.8 million in the prior-year period. Operating income for the first nine months of 2012 was $29.3 million, or 9.0% of revenue, compared with operating income of $12.1 million, or 7.2% of revenue, in 2011. EBITDA was $43.4 million, or 13.3% of revenue, for the nine months of 2012, compared with EBITDA of $18.9 million, or 11.2% of revenue, in the prior-year period.

Corporate General and Administrative Expenses (CG&A)

CG&A expenses for the first nine months of 2012 were $10.7 million, or 1.9% of revenue, as compared with $23.2 million, or 5.9% of revenue, in 2011. CG&A was lower year-over-year primarily due to the reduction in merger-related expenses of approximately $11.8 million from the LaBarge acquisition and integration cost synergies. Excluding merger-related expenses, CG&A for the nine months of 2011 would have been $11.4 million, or 2.9% of revenue.

Conference Call

A teleconference hosted by Anthony J. Reardon, the Company’s chairman, president and chief executive officer, and Joseph P. Bellino, the Company’s vice president and chief financial officer, will be held today, November 7, 2012 at 2:00 PM PT (5:00 PM ET) to review these financial results. To participate in the teleconference, please call 800-706-7748 (international 617-614-3473) approximately ten minutes prior to the conference time stated above. The participant passcode is 79122846. 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 39682427.

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 BALANCE SHEETS

(In thousands)

 

     (Unaudited)        
     September 29,
2012
    December 31,
2011
 

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 28,871      $ 41,449   

Accounts receivable

     103,049        96,174   

Unbilled receivables

     3,527        3,286   

Inventories

     162,465        154,503   

Production cost of contracts

     19,064        18,711   

Deferred income taxes

     12,493        12,020   

Other current assets

     11,191        14,648   
  

 

 

   

 

 

 

Total Current Assets

     340,660        340,791   

Property and Equipment, Net

     99,058        98,477   

Goodwill

     161,940        163,845   

Intangibles, Net

     179,228        187,854   

Other Assets

     14,365        17,120   
  

 

 

   

 

 

 
   $ 795,251      $ 808,087   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Current portion of long-term debt

   $ 33      $ 1,960   

Accounts payable

     57,599        60,675   

Accrued liabilities

     45,208        53,823   
  

 

 

   

 

 

 

Total Current Liabilities

     102,840        116,458   

Long-Term Debt, Less Current Portion

     380,730        390,280   

Deferred Income Taxes

     68,915        72,043   

Other Long-Term Liabilities

     23,815        25,022   
  

 

 

   

 

 

 

Total Liabilities

     576,300        603,803   
  

 

 

   

 

 

 

Commitments and Contingencies

    

Shareholders’ Equity:

    

Common stock

     107        107   

Treasury stock

     (1,924     (1,924

Additional paid-in capital

     66,043        64,378   

Retained earnings

     162,050        149,048   

Accumulated other comprehensive loss

     (7,325     (7,325
  

 

 

   

 

 

 

Total Shareholders’ Equity

     218,951        204,284   
  

 

 

   

 

 

 
   $ 795,251      $ 808,087   
  

 

 

   

 

 

 


DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

                                                                                   
     Three Months Ended     Nine Months Ended  
     September 29,
2012
    October 1,
2011
    September 29,
2012
    October 1,
2011
 

Sales and Service Revenues:

        

Product sales

   $ 176,054      $   178,485      $ 530,696      $ 370,763   

Service revenues

     8,043        6,595        22,449        21,913   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Sales

     184,097        185,080        553,145        392,676   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Costs and Expenses:

        

Cost of product sales

     142,030        145,560        428,975        301,941   

Cost of service revenues

     6,487        5,331        18,168        17,134   

Selling, general and administrative expenses

     21,340        24,557        65,891        62,303   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Costs and Expenses

     169,857        175,448        513,034        381,378   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     14,240        9,632        40,111        11,298   

Interest Expense

     (8,241     (8,256     (24,714     (10,047
  

 

 

   

 

 

   

 

 

   

 

 

 

Income Before Taxes

     5,999        1,376        15,397        1,251   

Income Tax Expense

     (894     (415     (2,395     (340
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 5,105      $ 961      $ 13,002      $ 911   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Share:

        

Basic earnings per share

   $ 0.48      $ 0.09      $ 1.23      $ 0.09   

Diluted earnings per share

   $ 0.48      $ 0.09      $ 1.23      $ 0.09   

Weighted Average Number of Common Shares Outstanding:

        

Basic

     10,595        10,539        10,575        10,534   

Diluted

     10,633        10,631        10,588        10,658   


DUCOMMUN INCORPORATED AND SUBSIDIARIES

BUSINESS SEGMENT PERFORMANCE

(In thousands)

(Unaudited)

 

     Three Months Ended           Nine Months Ended        
     September 29,
2012
      October 1,  
2011
    Change     September 29,
2012
      October 1,  
2011
    Change  

Net Sales

            

Ducommun AeroStructures

   $ 76,655      $ 75,076        2.1   $ 227,832      $ 223,890        1.8

Ducommun LaBarge Technologies

     107,442        110,004        -2.3     325,313        168,786        92.7
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Net Sales

   $ 184,097      $   185,080        -0.5   $ 553,145      $   392,676        40.9
  

 

 

   

 

 

     

 

 

   

 

 

   

Segment Operating Income (1)

            

Ducommun AeroStructures

   $ 7,410      $ 6,503        $ 21,575      $ 22,414     

Ducommun LaBarge Technologies (5)

     10,472        7,287          29,260        12,129     
  

 

 

   

 

 

     

 

 

   

 

 

   
     17,882        13,790          50,835        34,543     

Corporate General and Administrative Expenses (3)(5)

     (3,642     (4,158       (10,724     (23,245  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Income/(Loss)

   $ 14,240      $ 9,632        $ 40,111      $ 11,298     
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA (1)

            

Ducommun AeroStructures

            

Operating Income

   $ 7,410      $ 6,503        $ 21,575      $ 22,414     

Depreciation and Amortization

     2,903        2,681          7,200        7,710     
  

 

 

   

 

 

     

 

 

   

 

 

   
     10,313        9,184          28,775        30,124     
  

 

 

   

 

 

     

 

 

   

 

 

   

Ducommun LaBarge Technologies

            

Operating Income

     10,472        7,287          29,260        12,129     

Depreciation and Amortization

     4,710        4,745          14,139        6,725     
  

 

 

   

 

 

     

 

 

   

 

 

   
     15,182        12,032          43,399        18,854     
  

 

 

   

 

 

     

 

 

   

 

 

   

Corporate General and Administrative Expenses (2)(3)

            

Operating Income/(Loss)

     (3,642     (4,158       (10,724     (23,245  

Depreciation and Amortization

     42        29          122        37     
  

 

 

   

 

 

     

 

 

   

 

 

   
     (3,600     (4,129       (10,602     (23,208  
  

 

 

   

 

 

     

 

 

   

 

 

   

EBITDA

   $ 21,895      $ 17,087        $ 61,572      $ 25,770     
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

            

Merger-related transaction expenses (2)(4)

     6        308          268        11,785     

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

     1        2,374          434        2,374     
  

 

 

   

 

 

     

 

 

   

 

 

   
     7        2,682          702        14,159     
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 21,902      $ 19,769        $ 62,274      $ 39,929     
  

 

 

   

 

 

     

 

 

   

 

 

   

Capital Expenditures:

            

Ducommun AeroStructures

   $ 2,074      $ 2,838        $ 6,360      $ 6,972     

Ducommun LaBarge Technologies

     1,472        2,494          5,921        3,970     

Corporate Administration

     21        50          49        244     
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Capital Expenditures

   $ 3,567      $ 5,382        $ 12,330      $ 11,186     
  

 

 

   

 

 

     

 

 

   

 

 

   

 


(1) Before certain allocated corporate overhead.
(2) Includes approximately $6 thousand and $0.3 million of merger-related transaction expenses related to the LaBarge acquisition in the three months and nine months ended September 29, 2012 and approximately $0.3 million and $11.8 million in the three months and nine months ended October 1, 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 $1 thousand and $0.4 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 nine months ended September 29, 2012 and approximately $2.4 million in both the three months and nine months ended October 1, 2011.