Delaware | 001-08174 | 95-0693330 | |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |
200 Sandpointe Avenue, Suite 700, Santa Ana, California | 92707-5759 | ||
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Ducommun Incorporated issued a press release on February 28, 2019 in the form attached hereto as Exhibit 99.1. |
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits |
Exhibit No. | Exhibit Title or Description |
99.1 |
DUCOMMUN INCORPORATED (Registrant) | |||
Date: February 28, 2019 | By: | /s/ Douglas L. Groves | |
Douglas L. Groves | |||
Vice President, Chief Financial Officer and Treasurer |
![]() | ![]() | |
• | Revenue of $164.2 million |
• | GAAP net income of $0.7 million, or $0.06 per diluted share |
• | Adjusted net income for the quarter of $5.2 million, or $0.44 per diluted share |
• | Gross margin increased 180 basis points year-over-year to 19.9% |
• | Adjusted EBITDA of $19.4 million |
• | $17.0 million higher revenue in the Company’s commercial aerospace end-use markets due to additional content and increasing build rates on the Company’s large aircraft platforms; and |
• | $8.1 million higher revenue within the Company’s military and space end-use markets due to increased shipments on the Company’s missile platforms; partially offset by |
• | $3.2 million lower revenue within the Company’s industrial end-use markets. |
• | $6.8 million higher revenue within the Company’s commercial aerospace end-use markets due to additional content and higher build rates on the Company’s large aircraft platforms; and |
• | $4.5 million higher revenue within the Company’s military and space end-use markets due to increased demand, which favorably impacted the Company’s missile platforms; partially offset by |
• | $3.2 million lower revenue within the Company’s industrial end-use markets. |
• | $10.2 million higher revenue within the Company’s commercial aerospace end-use markets due to higher build rates on the Company’s large aircraft platforms; and |
• | $3.6 million higher revenue within the Company’s military and space end-use markets due to increased shipments on the Company’s rotary-wing aircraft platforms. |
Douglas L. Groves, Vice President, Chief Financial Officer and Treasurer, 657.335.3665 | ||||||
Chris Witty, Investor Relations, 646.438.9385, cwitty@darrowir.com |
December 31, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 10,263 | $ | 2,150 | ||||
Accounts receivable, net | 67,819 | 74,064 | ||||||
Contract assets | 86,665 | — | ||||||
Inventories | 101,125 | 122,161 | ||||||
Production cost of contracts | 11,679 | 11,204 | ||||||
Other current assets | 9,839 | 11,435 | ||||||
Total Current Assets | 287,390 | 221,014 | ||||||
Property and Equipment, Net | 107,045 | 110,252 | ||||||
Goodwill | 136,057 | 117,435 | ||||||
Intangibles, Net | 112,092 | 114,693 | ||||||
Non-Current Deferred Income Taxes | 308 | 261 | ||||||
Other Assets | 5,251 | 3,098 | ||||||
Total Assets | $ | 648,143 | $ | 566,753 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 69,274 | $ | 51,907 | ||||
Contract liabilities | 17,145 | — | ||||||
Accrued liabilities | 37,786 | 28,329 | ||||||
Current portion of long-term debt | 2,330 | — | ||||||
Total Current Liabilities | 126,535 | 80,236 | ||||||
Long-Term Debt, Less Current Portion | 226,961 | 216,055 | ||||||
Non-Current Deferred Income Taxes | 18,070 | 15,981 | ||||||
Other Long-Term Liabilities | 19,752 | 18,898 | ||||||
Total Liabilities | 391,318 | 331,170 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock | 114 | 113 | ||||||
Additional paid-in capital | 83,712 | 80,223 | ||||||
Retained earnings | 180,356 | 161,364 | ||||||
Accumulated other comprehensive loss | (7,357 | ) | (6,117 | ) | ||||
Total Shareholders’ Equity | 256,825 | 235,583 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 648,143 | $ | 566,753 |
Three Months Ended | Years Ended | |||||||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||||
Net Revenues | $ | 164,183 | $ | 142,258 | $ | 629,307 | $ | 558,183 | ||||||||
Cost of Sales | 131,486 | 116,486 | 506,711 | 455,050 | ||||||||||||
Gross Profit | 32,697 | 25,772 | 122,596 | 103,133 | ||||||||||||
Selling, General and Administrative Expenses | 22,531 | 20,064 | 84,007 | 79,139 | ||||||||||||
Restructuring Charges | 3,887 | 8,296 | 14,671 | 8,360 | ||||||||||||
Operating Income (Loss) | 6,279 | (2,588 | ) | 23,918 | 15,634 | |||||||||||
Interest Expense | (3,838 | ) | (2,826 | ) | (13,024 | ) | (8,870 | ) | ||||||||
Loss on Extinguishment of Debt | (926 | ) | — | (926 | ) | — | ||||||||||
Other Income, Net | 276 | 357 | 303 | 845 | ||||||||||||
Income (Loss) Before Taxes | 1,791 | (5,057 | ) | 10,271 | 7,609 | |||||||||||
Income Tax Expense (Benefit) | 1,118 | (14,541 | ) | 1,236 | (12,468 | ) | ||||||||||
Net Income | $ | 673 | $ | 9,484 | $ | 9,035 | $ | 20,077 | ||||||||
Earnings Per Share | ||||||||||||||||
Basic earnings per share | $ | 0.06 | $ | 0.84 | $ | 0.79 | $ | 1.78 | ||||||||
Diluted earnings per share | $ | 0.06 | $ | 0.82 | $ | 0.77 | $ | 1.74 | ||||||||
Weighted-Average Number of Common Shares Outstanding | ||||||||||||||||
Basic | 11,415 | 11,246 | 11,390 | 11,290 | ||||||||||||
Diluted | 11,713 | 11,504 | 11,659 | 11,558 | ||||||||||||
Gross Profit % | 19.9 | % | 18.1 | % | 19.5 | % | 18.5 | % | ||||||||
SG&A % | 13.7 | % | 14.1 | % | 13.3 | % | 14.2 | % | ||||||||
Operating Income (Loss) % | 3.8 | % | (1.8 | )% | 3.9 | % | 2.8 | % | ||||||||
Net Income % | 0.4 | % | 6.7 | % | 1.4 | % | 3.6 | % | ||||||||
Effective Tax (Benefit) Rate | 62.4 | % | (287.5 | )% | 12.0 | % | (163.8 | )% |
Three Months Ended | Years Ended | |||||||||||||||||||||||||||||||||
% Change | December 31, 2018 | December 31, 2017 | % of Net Revenues 2018 | % of Net Revenues 2017 | % Change | December 31, 2018 | December 31, 2017 | % of Net Revenues 2018 | %of Net Revenues 2017 | |||||||||||||||||||||||||
Net Revenues | ||||||||||||||||||||||||||||||||||
Electronic Systems | 10.5 | % | $ | 85,262 | $ | 77,170 | 51.9 | % | 54.2 | % | 6.7 | % | $ | 337,868 | $ | 316,723 | 53.7 | % | 56.7 | % | ||||||||||||||
Structural Systems | 21.3 | % | 78,921 | 65,088 | 48.1 | % | 45.8 | % | 20.7 | % | 291,439 | 241,460 | 46.3 | % | 43.3 | % | ||||||||||||||||||
Total Net Revenues | 15.4 | % | $ | 164,183 | $ | 142,258 | 100.0 | % | 100.0 | % | 12.7 | % | $ | 629,307 | $ | 558,183 | 100.0 | % | 100.0 | % | ||||||||||||||
Segment Operating Income (Loss) | ||||||||||||||||||||||||||||||||||
Electronic Systems | $ | 7,453 | $ | 6,856 | 8.7 | % | 8.9 | % | $ | 30,916 | $ | 31,236 | 9.2 | % | 9.9 | % | ||||||||||||||||||
Structural Systems | 5,683 | (2,592 | ) | 7.2 | % | (4.0 | )% | 19,063 | 5,790 | 6.5 | % | 2.4 | % | |||||||||||||||||||||
13,136 | 4,264 | 49,979 | 37,026 | |||||||||||||||||||||||||||||||
Corporate General and Administrative Expenses (1) | (6,857 | ) | (6,853 | ) | (4.2 | )% | (4.8 | )% | (26,061 | ) | (21,392 | ) | (4.1 | )% | (3.8 | )% | ||||||||||||||||||
Total Operating Income (Loss) | $ | 6,279 | $ | (2,589 | ) | 3.8 | % | (1.8 | )% | $ | 23,918 | $ | 15,634 | 3.8 | % | 2.8 | % | |||||||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||||||||||
Electronic Systems | ||||||||||||||||||||||||||||||||||
Operating Income (Loss) | $ | 7,453 | $ | 6,856 | $ | 30,916 | $ | 31,236 | ||||||||||||||||||||||||||
Other Income | 92 | 357 | 119 | 645 | ||||||||||||||||||||||||||||||
Depreciation and Amortization | 3,201 | 3,681 | 14,223 | 13,888 | ||||||||||||||||||||||||||||||
Restructuring Charges | 2,370 | 1,190 | 4,776 | 1,190 | ||||||||||||||||||||||||||||||
Inventory Purchase Accounting Adjustments | — | 1,111 | — | 1,235 | ||||||||||||||||||||||||||||||
13,116 | 13,195 | 15.4 | % | 17.1 | % | 50,034 | 48,194 | 14.8 | % | 15.2 | % | |||||||||||||||||||||||
Structural Systems | ||||||||||||||||||||||||||||||||||
Operating Income (Loss) | 5,683 | (2,592 | ) | 19,063 | 5,790 | |||||||||||||||||||||||||||||
Other Income | 184 | — | 184 | 200 | ||||||||||||||||||||||||||||||
Depreciation and Amortization | 3,015 | 1,981 | 10,525 | 8,860 | ||||||||||||||||||||||||||||||
Restructuring Charges | 1,149 | 5,802 | 7,897 | 5,866 | ||||||||||||||||||||||||||||||
Inventory Purchase Accounting Adjustments | — | — | 622 | — | ||||||||||||||||||||||||||||||
10,031 | 5,191 | 12.7 | % | 8.0 | % | 38,291 | 20,716 | 13.1 | % | 8.6 | % | |||||||||||||||||||||||
Corporate General and Administrative Expenses (1) | ||||||||||||||||||||||||||||||||||
Operating loss | (6,857 | ) | (6,853 | ) | (26,061 | ) | (21,392 | ) | ||||||||||||||||||||||||||
Depreciation and Amortization | 445 | 34 | 548 | 97 | ||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | 1,626 | 411 | 5,040 | 4,675 | ||||||||||||||||||||||||||||||
Restructuring Charges | 321 | 1,782 | 2,119 | 1,782 | ||||||||||||||||||||||||||||||
Other Debt Refinancing Costs | 697 | — | 697 | — | ||||||||||||||||||||||||||||||
(3,768 | ) | (4,626 | ) | (17,657 | ) | (14,838 | ) | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 19,379 | $ | 13,760 | 11.8 | % | 9.7 | % | $ | 70,668 | $ | 54,072 | 11.2 | % | 9.7 | % | ||||||||||||||||||
Capital Expenditures | ||||||||||||||||||||||||||||||||||
Electronic Systems | $ | 1,628 | $ | 763 | $ | 6,719 | $ | 5,019 | ||||||||||||||||||||||||||
Structural Systems | 2,539 | 3,462 | 9,104 | 20,679 | ||||||||||||||||||||||||||||||
Corporate Administration | 139 | — | 514 | 775 | ||||||||||||||||||||||||||||||
Total Capital Expenditures | $ | 4,306 | $ | 4,225 | $ | 16,337 | $ | 26,473 |
(1) | Includes costs not allocated to either the Electronic Systems or Structural Systems operating segments. |
Three Months Ended | Years Ended | |||||||||||||||
GAAP To Non-GAAP Net Revenues | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||
Total Ducommun Net Revenues | $ | 164,183 | $ | 142,258 | $ | 629,307 | $ | 558,183 | ||||||||
Effect of Adoption of ASC 606 | 1,584 | — | (15,712 | ) | — | |||||||||||
Adjusted Total Ducommun Net Revenues | $ | 165,767 | $ | 142,258 | $ | 613,595 | $ | 558,183 | ||||||||
Electronic Systems Net Revenues | $ | 85,262 | $ | 77,170 | $ | 337,868 | $ | 316,723 | ||||||||
Effect of Adoption of ASC 606 | 3,128 | — | (7,120 | ) | — | |||||||||||
Adjusted Electronic Systems Net Revenues | $ | 88,390 | $ | 77,170 | $ | 330,748 | $ | 316,723 | ||||||||
Structural Systems Net Revenues | $ | 78,921 | $ | 65,088 | $ | 291,439 | $ | 241,460 | ||||||||
Effect of Adoption of ASC 606 | (1,544 | ) | — | (8,592 | ) | — | ||||||||||
Adjusted Structural Systems Net Revenues | $ | 77,377 | $ | 65,088 | $ | 282,847 | $ | 241,460 |
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
GAAP To Non-GAAP Operating Income | December 31, 2018 | December 31, 2017 | % of Net Revenues 2018 | % of Net Revenues 2017 | December 31, 2018 | December 31, 2017 | % of Net Revenues 2018 | % of Net Revenues 2017 | ||||||||||||||||||||
GAAP Operating income | $ | 6,279 | $ | (2,589 | ) | $ | 23,918 | $ | 15,634 | |||||||||||||||||||
GAAP Operating income - Electronic Systems | $ | 7,453 | $ | 6,856 | $ | 30,916 | $ | 31,236 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Effect of Adoption of ASC 606 | (460 | ) | — | (2,370 | ) | — | ||||||||||||||||||||||
Restructuring charges | 2,370 | 1,190 | 4,776 | 1,190 | ||||||||||||||||||||||||
Inventory purchase accounting adjustments | — | 1,111 | — | 1,235 | ||||||||||||||||||||||||
Adjusted operating income - Electronic Systems | 9,363 | 9,157 | 10.6 | % | 11.9 | % | 33,322 | 33,661 | 10.1 | % | 10.6 | % | ||||||||||||||||
GAAP Operating income - Structural Systems | 5,683 | (2,592 | ) | 19,063 | 5,790 | |||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Effect of Adoption of ASC 606 | 1,435 | — | (1,884 | ) | — | |||||||||||||||||||||||
Restructuring charges | 1,149 | 5,802 | 7,897 | 5,866 | ||||||||||||||||||||||||
Inventory purchase accounting adjustments | — | — | 622 | — | ||||||||||||||||||||||||
Adjusted operating income - Structural Systems | 8,267 | 3,210 | 10.7 | % | 4.9 | % | 25,698 | 11,656 | 9.1 | % | 4.8 | % | ||||||||||||||||
GAAP Operating loss - Corporate | (6,857 | ) | (6,853 | ) | (26,061 | ) | (21,392 | ) | ||||||||||||||||||||
Adjustment: | ||||||||||||||||||||||||||||
Restructuring charges | 321 | 1,782 | 2,119 | 1,782 | ||||||||||||||||||||||||
Other debt refinancing costs | 697 | — | 697 | — | ||||||||||||||||||||||||
Adjusted operating loss - Corporate | (5,839 | ) | (5,071 | ) | (23,245 | ) | (19,610 | ) | ||||||||||||||||||||
Total adjustments | 5,512 | 9,885 | 11,857 | 10,073 | ||||||||||||||||||||||||
Adjusted operating income | $ | 11,791 | $ | 7,296 | 7.1 | % | 5.1 | % | $ | 35,775 | $ | 25,707 | 5.8 | % | 4.6 | % |
Three Months Ended | Years Ended | |||||||||||||||
GAAP To Non-GAAP Earnings | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||
GAAP Net income | $ | 673 | $ | 9,484 | $ | 9,035 | $ | 20,077 | ||||||||
Adjustments: | ||||||||||||||||
Tax Cuts Jobs Act (1)(3) | — | (12,590 | ) | — | (12,590 | ) | ||||||||||
Restructuring charges (2)(3) | 3,187 | 6,879 | 12,277 | 6,929 | ||||||||||||
Inventory purchase accounting adjustments (2)(3) | — | 871 | 516 | 968 | ||||||||||||
Loss on extinguishment of debt (2) | 769 | — | 769 | — | ||||||||||||
Other debt refinancing costs (2) | 579 | — | 579 | — | ||||||||||||
Total adjustments | 4,535 | (4,840 | ) | 14,141 | (4,693 | ) | ||||||||||
Adjusted net income | $ | 5,208 | $ | 4,644 | $ | 23,176 | $ | 15,384 |
Three Months Ended | Years Ended | |||||||||||||||
GAAP Earnings Per Share To Non-GAAP Earnings Per Share | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||
GAAP Diluted Earnings Per Share (“EPS”) | $ | 0.06 | $ | 0.82 | $ | 0.77 | $ | 1.74 | ||||||||
Adjustments: | ||||||||||||||||
Tax Cuts Jobs Act (1)(3) | — | (1.10 | ) | — | (1.09 | ) | ||||||||||
Restructuring charges (2)(3) | 0.27 | 0.60 | 1.05 | 0.60 | ||||||||||||
Inventory purchase accounting adjustments (2)(3) | — | 0.08 | 0.05 | 0.08 | ||||||||||||
Loss on extinguishment of debt (2) | 0.06 | — | 0.07 | — | ||||||||||||
Other debt refinancing costs (2) | 0.05 | — | 0.05 | — | ||||||||||||
Total adjustments | 0.38 | (0.42 | ) | 1.22 | (0.41 | ) | ||||||||||
Adjusted Diluted EPS | $ | 0.44 | $ | 0.40 | $ | 1.99 | $ | 1.33 | ||||||||
Shares used for adjusted diluted EPS | 11,713 | 11,504 | 11,659 | 11,558 |
(1) | Net impact of Tax Cuts Jobs Act and $0.5 million in 2016 state income tax adjustments. |
(2) | Includes tax rate of 17.0% for 2018 adjustments. |
(3) | Includes tax rate of 21.6% for 2017 adjustments. |
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