Ducommun (DCO) Jefferies Global Industrial Conference 2024 summary

Business overview and performance

• Generates $776 million in revenue with 14.1% EBITDA, with 53% from military/space and 42% from commercial aerospace.

• Key platforms include Joint Strike Fighter, F/A-18, Apache, SPY-6, ESSM, 737 MAX, A320, and A220.

• Operates as a tier one provider to major OEMs and defense primes, including Boeing, Airbus, Raytheon, and Lockheed.

• Electronics segment includes ruggedized interconnects, circuit card assemblies, human-machine interfaces, and lightning protection.

• Structural systems segment features titanium hot forming, aluminum stretch forming, ammunition handling, magnetic seals, thermoplastics, and aerodynamic structures.

Strategic growth and margin expansion

• Vision 2027 targets $950 million–$1 billion revenue and 13–18% margin by 2027.

• Recent quarters show margin improvement, with Q2 above 15%.

• Growth drivers: commercial aerospace build rates, defense sector expansion, and strategic acquisitions.

• Margin expansion pillars: engineered product growth, cost reduction via facility consolidation, and pricing actions.

• Engineered product businesses have grown from 9% of revenue in 2017 to over 20% today, targeting 25%+ by 2027.

Acquisitions and engineered products

• Acquisitions like Nobles (ammunition handling) and MagSeal (magnetic seals) have driven growth and margin expansion.

• Engineered product businesses are leaders in niche segments, with proprietary IP and strong aftermarket presence.

• Aftermarket revenue has grown from 6% in 2017 to 10% in 2022, targeting 15%+ by 2027.

• M&A strategy focuses on disciplined, high-ROIC deals, aiming for 1–2 transactions per year.