Ducommun (DCO) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $197.0 million, up 5.2% year-over-year, with strong growth in commercial aerospace and military/space segments.

• Net income rose 225% year-over-year to $7.7 million (3.9% of revenue), or $0.52 per diluted share; adjusted net income was $12.5 million, up 71%.

• Gross margin reached a record 26.0%, up 460 bps year-over-year, driven by higher manufacturing volume, favorable mix, and restructuring benefits.

• Adjusted EBITDA was $30.0 million (15.2% of revenue), up from $26.1 million (13.9%) in Q2 2023.

• Facility consolidation and restructuring are progressing, with cost savings expected to ramp up in 2025.

Financial highlights

• Revenue: $197.0 million in Q2 2024 vs. $187.3 million in Q2 2023, a 5.2% increase.

• Gross margin: 26.0% in Q2 2024, up from 21.4% in Q2 2023; adjusted gross margin 26.6% vs. 23.1% prior year.

• Adjusted operating income margin: 10.1% in Q2 2024.

• Adjusted EBITDA: $30.0 million (15.2% of revenue), up from 13.9% in Q2 2023.

• Backlog: Record $1.07 billion as of June 29, 2024, up from $993.6 million at year-end 2023.

Outlook and guidance

• 2024 revenue guidance maintained at mid-single digit growth, with Q3 expected to be flat year-over-year and an uptick in Q4.

• Commercial aerospace demand expected to increase later in 2024 and into 2025, supported by industry trends and customer awards.

• Free cash flow expected to ramp up in Q4 2024, with a long-term goal to align free cash flow with net income as inventory unwinds.

• Vision 2027 Plan on track, targeting $950M–$1,000M revenue and 18% adjusted EBITDA margin.

• $668.0 million of total backlog expected to be delivered over the next 12 months.