Improved Operating Performance; Gross Margin Percentage Strengthens
Second Quarter 2016 Highlights
-
Second quarter revenues were
$133.4 million -
Net income was
$3.9 million , or$0.34 per diluted share -
Adjusted EBITDA for the quarter was
$13.7 million
“We are pleased to report that
Second Quarter Results
Net revenues for the second quarter of 2016 were
-
$17.1 million lower revenues within the Company’s industrial end-use markets mainly due to the divestiture of thePittsburgh operation inJanuary 2016 and the closure of theHouston operation inDecember 2015 ; and -
$25.8 million lower revenues within the Company’s military and space end-use markets mainly due to the divestiture of the Miltec operations inMarch 2016 and program cancellations and budget changes in the prior year; which impacted the Company’s fixed-wing and helicopter platforms and pushed out scheduled deliveries.
Net income for the second quarter of 2016 was
Gross profit for the second quarter of 2016 was
Operating income for the second quarter of 2016 was
Interest expense decreased to
Adjusted EBITDA for the second quarter of 2016 was
During the second quarter of 2016, the Company generated
The Company’s firm backlog as of
Structural Systems
The Structural Systems segment net revenues for the current-year second
quarter were
-
$10.8 million decrease in military and space revenues mainly due to program cancellations and budget changes in the prior year which impacted scheduled deliveries on the Company’s fixed-wing and helicopter platforms; and -
$4.6 million decrease in commercial aerospace revenue related to the timing of certain shipments on a large airframe platform and the wind down of a regional jet program.
Structural Systems segment operating income for the current-year second
quarter was
Structural Systems segment Adjusted EBITDA was
The
-
$17.1 million decrease in industrial revenues mainly due to the divestiture of thePittsburgh operations inJanuary 2016 and the closure of theHouston operation inDecember 2015 ; and -
$15.0 million decrease in military and space revenue mainly due to the divestiture of the Miltec operation inMarch 2016 and program cancellations and budget changes in the prior year; which impacted scheduled deliveries on the Company’s fixed-wing and helicopter platforms; -
Partially offset by
$6.1 million increase in commercial aerospace revenue mainly due to added content with the Company’s existing customers.
Electronic Systems’ segment operating income for the current-year second
quarter was
Corporate General and Administrative Expenses (“CG&A”)
CG&A expenses for the second quarter of 2016 were
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About
Forward Looking Statements
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 the
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, and uncertainties
regarding the Company, its businesses and the industries in which it
operates, which are described in the Company’s filings with the
Note Regarding Non-GAAP Financial Information
This release contains non-GAAP financial measures, including Adjusted EBITDA (which excludes interest expense, income tax expense, depreciation, amortization, stock-based compensation expense, gain on divestitures, and loss on extinguishment of debt).
The Company believes the presentation of these non-GAAP measures provide important supplemental information to management and investors regarding financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company’s actual and forecasted operating performance, capital resources and cash flow. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
DUCOMMUN INCORPORATED AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
July 2, 2016 |
December 31, 2015 |
||||||||
Assets | |||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ | 9,176 | $ | 5,454 | |||||
Accounts receivable, net | 76,857 | 77,089 | |||||||
Inventories | 127,589 | 115,404 | |||||||
Production cost of contracts | 9,444 | 10,290 | |||||||
Other current assets | 8,100 | 13,389 | |||||||
Assets held for sale | — | 41,636 | |||||||
Total Current Assets | 231,166 | 263,262 | |||||||
Property and Equipment, Net | 97,243 | 96,551 | |||||||
Goodwill | 82,554 | 82,554 | |||||||
Intangibles, Net | 106,097 | 110,621 | |||||||
Deferred income taxes | 282 | 324 | |||||||
Other Assets | 2,957 | 3,769 | |||||||
Total Assets | $ | 520,299 | $ | 557,081 | |||||
Liabilities and Shareholders’ Equity | |||||||||
Current Liabilities | |||||||||
Current portion of long-term debt | $ | 12 | $ | 26 | |||||
Accounts payable | 51,049 | 40,343 | |||||||
Accrued liabilities | 35,921 | 36,458 | |||||||
Liabilities held for sale | — | 6,780 | |||||||
Total Current Liabilities |
86,982 | 83,607 | |||||||
Long-Term Debt, Less Current Portion | 186,317 | 240,661 | |||||||
Deferred Income Taxes | 24,399 | 26,528 | |||||||
Other Long-Term Liabilities | 17,175 | 18,954 | |||||||
Total Liabilities | 314,873 | 369,750 | |||||||
Commitments and Contingencies | |||||||||
Shareholders’ Equity | |||||||||
Common stock | 112 | 111 | |||||||
Additional paid-in capital | 76,199 | 75,200 | |||||||
Retained earnings | 135,034 | 117,623 | |||||||
Accumulated other comprehensive loss | (5,919 | ) | (5,603 | ) | |||||
Total Shareholders’ Equity | 205,426 | 187,331 | |||||||
Total Liabilities and Shareholders’ Equity | $ | 520,299 | $ | 557,081 | |||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 2, 2016 |
July 4, 2015 |
July 2, 2016 |
July 4, 2015 |
|||||||||||||
Net Revenues | $ | 133,437 | $ | 174,845 | $ | 275,585 | $ | 347,765 | ||||||||
Cost of Sales | 107,222 | 143,638 | 222,401 | 289,797 | ||||||||||||
Gross Profit | 26,215 | 31,207 | 53,184 | 57,968 | ||||||||||||
Selling, General and Administrative Expenses | 18,949 | 20,368 | 41,625 | 43,502 | ||||||||||||
Operating Income | 7,266 | 10,839 | 11,559 | 14,466 | ||||||||||||
Interest Expense | (1,935 | ) | (6,446 | ) | (4,334 | ) | (13,107 | ) | ||||||||
Loss on Extinguishment of Debt | — | (2,842 | ) | — | (2,842 | ) | ||||||||||
Other Income | — | 1,510 | — | 1,510 | ||||||||||||
Gain on Divestitures | — | — | 18,815 | — | ||||||||||||
Income Before Taxes | 5,331 | 3,061 | 26,040 | 27 | ||||||||||||
Income Tax Expense | 1,470 | 1,279 | 8,629 | 218 | ||||||||||||
Net Income (Loss) | $ | 3,861 | $ | 1,782 | $ | 17,411 | $ | (191 | ) | |||||||
Earnings (Loss) Per Share | ||||||||||||||||
Basic earnings (loss) per share | $ | 0.35 | $ | 0.16 | $ | 1.56 | $ | (0.02 | ) | |||||||
Diluted earnings (loss) per share | $ | 0.34 | $ | 0.16 | $ | 1.55 | $ | (0.02 | ) | |||||||
Weighted-Average Number of Common Shares Outstanding | ||||||||||||||||
Basic | 11,155 | 11,062 | 11,127 | 11,012 | ||||||||||||
Diluted | 11,264 | 11,276 | 11,245 | 11,012 | ||||||||||||
Gross Profit % | 19.6 | % | 17.8 | % | 19.3 | % | 16.7 | % | ||||||||
SG&A % | 14.2 | % | 11.6 | % | 15.1 | % | 12.5 | % | ||||||||
Operating Income % | 5.4 | % | 6.2 | % | 4.2 | % | 4.2 | % | ||||||||
Net Income (Loss) % | 2.9 | % | 1.0 | % | 6.3 | % | (0.1 | )% | ||||||||
Effective Tax Rate | 27.6 | % | 41.8 | % | 33.1 | % | 807.4 | % | ||||||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT PERFORMANCE | ||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||
%
Change |
July 2, 2016 |
July 4, 2015 |
%
of Net Revenues 2016 |
%
of Net Revenues 2015 |
%
Change |
July 2, 2016 |
July 4, 2015 |
%
of Net Revenues 2016 |
%
of Net Revenues 2015 |
|||||||||||||||||||||||||||||||||||
Net Revenues | ||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | (20.2 | )% | $ | 60,694 | $ | 76,078 | 45.5 | % | 43.5 | % | (15.8 | )% | $ | 124,711 | $ | 148,136 | 45.3 | % | 42.6 | % | ||||||||||||||||||||||||
Electronic Systems | (26.3 | )% | 72,743 | 98,767 | 54.5 | % | 56.5 | % | (24.4 | )% | 150,874 | 199,629 | 54.7 | % | 57.4 | % | ||||||||||||||||||||||||||||
Total Net Revenues | (23.7 | )% | $ | 133,437 | $ | 174,845 | 100.0 | % | 100.0 | % | (20.8 | )% | $ | 275,585 | $ | 347,765 | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||
Segment Operating Income | ||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | $ | 4,730 | $ | 6,870 | 7.8 | % | 9.0 | % | $ | 7,454 | $ | 9,008 | 6.0 | % | 6.1 | % | ||||||||||||||||||||||||||||
Electronic Systems (1) | 6,782 | 7,692 | 9.3 | % | 7.8 | % | 13,169 | 13,977 | 8.7 | % | 7.0 | % | ||||||||||||||||||||||||||||||||
11,512 | 14,562 | 20,623 | 22,985 | |||||||||||||||||||||||||||||||||||||||||
Corporate General and Administrative Expenses (1)(2) | (4,246 | ) | (3,723 | ) | (3.2 | )% | (2.1 | )% | (9,064 | ) | (8,519 | ) | (3.3 | )% | (2.4 | )% | ||||||||||||||||||||||||||||
Total Operating Income | $ | 7,266 | $ | 10,839 | 5.4 | % | 6.2 | % | $ | 11,559 | $ | 14,466 | 4.2 | % | 4.2 | % | ||||||||||||||||||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | ||||||||||||||||||||||||||||||||||||||||||||
Operating Income | $ | 4,730 | $ | 6,870 | $ | 7,454 | $ | 9,008 | ||||||||||||||||||||||||||||||||||||
Other Income (3) | — | 1,510 | — | 1,510 | ||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 1,775 | 2,111 | 3,832 | 4,624 | ||||||||||||||||||||||||||||||||||||||||
6,505 | 10,491 | 10.7 | % | 13.8 | % | 11,286 | 15,142 | 9.0 | % | 10.2 | % | |||||||||||||||||||||||||||||||||
Electronic Systems | ||||||||||||||||||||||||||||||||||||||||||||
Operating Income | 6,782 | 7,692 | 13,169 | 13,977 | ||||||||||||||||||||||||||||||||||||||||
Gain on Divestitures (4) | — | — | 18,815 | — | ||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 3,668 | 4,361 | 7,429 | 8,720 | ||||||||||||||||||||||||||||||||||||||||
10,450 | 12,053 | 14.4 | % | 12.2 | % | 39,413 | 22,697 | 26.1 | % | 11.4 | % | |||||||||||||||||||||||||||||||||
Corporate General and Administrative Expenses (1)(2) | ||||||||||||||||||||||||||||||||||||||||||||
Operating loss | (4,246 | ) | (3,723 | ) | (9,064 | ) | (8,519 | ) | ||||||||||||||||||||||||||||||||||||
Gain on Divestitures (4) | — | — | (18,815 | ) | — | |||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization | 33 | 42 | 70 | 84 | ||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | 985 | 837 | 1,985 | 2,461 | ||||||||||||||||||||||||||||||||||||||||
(3,228 | ) | (2,844 | ) | (25,824 | ) | (5,974 | ) | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 13,727 | $ | 19,700 | 10.3 | % | 11.3 | % | $ | 24,875 | $ | 31,865 | 9.0 | % | 9.2 | % | ||||||||||||||||||||||||||||
Capital Expenditures | ||||||||||||||||||||||||||||||||||||||||||||
Structural Systems | $ | 4,540 | $ | 2,417 | $ | 6,594 | $ | 5,751 | ||||||||||||||||||||||||||||||||||||
Electronic Systems | 407 | 948 | 754 | 2,438 | ||||||||||||||||||||||||||||||||||||||||
Corporate Administration | — | 2 | — | 6 | ||||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures | $ | 4,947 | $ | 3,367 | $ | 7,348 | $ | 8,195 | ||||||||||||||||||||||||||||||||||||
(1) |
Includes correction of an error for the three months ended April 2, 2016 related to a credit of general and administrative expenses being reflected in the Electronic Systems operating segment instead of Corporate General and Administrative Expenses of $0.7 million in the six months ended July 2, 2016 results. There was no impact to total consolidated operating income. |
|
(2) |
Costs not allocated to either the Electronic Systems or Structural Systems operating segments. |
|
(3) | Insurance recoveries related to property and equipment included as other income. | |
(4) | Includes gain on divestitures of the Pittsburgh and Miltec operations. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160804006213/en/
Source:
Ducommun Incorporated
Douglas L. Groves
Vice President, Chief
Financial Officer and Treasurer
310.513.7224
or
Chris
Witty, Investor Relations
646.438.9385
cwitty@darrowir.com