Ducommun (DCO) Jefferies Global Industrial Conference 2024 summary

Business overview and performance

• $776 million in revenue and 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.

• Tier one supplier to major OEMs and defense primes, with strong senior relationships.

• Two main segments: electronics (interconnects, circuit cards, HMI, lightning protection, motion control) and structures (titanium/aluminum forming, ammunition handling, magnetic seals, thermoplastics, aerodynamic structures).

• Management since 2017 has tripled market cap and doubled EBITDA, expanding margins by 400 bps despite industry headwinds.

Strategic vision and growth plans

• Vision 2027 targets $950M–$1B revenue and 13–18% margins by 2027.

• Margin expansion driven by engineered product growth, cost reduction, and pricing actions.

• Facility consolidation and shifting production to Mexico expected to yield $11–$13M annual savings by 2025.

• Aftermarket revenue targeted to exceed 15% by 2027, up from 6% in 2017.

• Engineered product businesses to surpass 25% of revenue by 2027, up from 9% in 2017.

Revenue and margin drivers

• Commercial aerospace growth expected from increased build rates and expanded Airbus business.

• Defense growth supported by prime offloading strategy, moving non-core work from primes to lower-cost facilities.

• Strategic M&A focused on niche, high-margin engineered product businesses, with disciplined cadence of 1–2 deals per year.

• Proprietary inventory strategy ensures supply chain resilience and positions for market share gains.

• Pricing power maintained through niche market focus and flexible contract structures.