Ducommun (DCO) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $194.1 million, up 1.7%–2% year-over-year, driven by strong military and space sales offsetting commercial aerospace and industrial declines.

• Net income rose 53% year-over-year to $10.5 million (5.4% of revenue), or $0.69 per diluted share; adjusted net income was $12.6 million ($0.83/share).

• Gross margin hit a record 26.6%, up 200 basis points year-over-year, driven by engineered products, pricing, and restructuring.

• Adjusted EBITDA reached $30.9 million (15.9% of sales), up from $27.4 million (14.4%) year-over-year.

• The Vision 2027 strategy continues to drive growth, focusing on engineered products, targeted acquisitions, and margin expansion.

Financial highlights

• Gross profit was $51.6 million (26.6% margin, +200 bps YoY); adjusted operating income: $19.2 million (9.9% margin, +90 bps YoY); adjusted EBITDA: $30.9 million (15.9% margin, +150 bps YoY).

• Net income: $10.5 million ($0.69/share); adjusted net income: $12.6 million ($0.83/share).

• Backlog at quarter-end was $1.054 billion, with defense backlog up and commercial aerospace backlog down year-over-year; book-to-bill ratio was 0.91.

• Cash flow from operations improved to $0.8 million from a use of $1.6 million in Q1 2024.

• Interest expense declined to $3.3 million from $3.9 million due to lower rates and debt balance.

Outlook and guidance

• Reaffirmed mid-single-digit revenue growth for 2025, with Q2 expected to be flat year-over-year and stronger growth in the second half.

• Management expects continued margin expansion and progress toward Vision 2027, targeting 18% adjusted EBITDA margin and 25%+ revenue from engineered products.

• Tariffs expected to have minimal impact on 2025 revenues due to U.S.-centric operations.

• Free cash flow conversion expected to improve in 2025, with a long-term goal of 100% of adjusted net income.

• 70% of $986 million in remaining performance obligations expected to be recognized as revenue in the next 12 months.