Ducommun (DCO) Q4 2023 earnings summary

Executive summary

• Q4 revenue was $192.2M, up 2% YoY, with commercial aerospace revenue up 18%.

• FY 2023 revenue reached a record $757.0M and adjusted EBITDA a record $101.5M.

• Year-end backlog was $993.6M, including $527.1M in military and space; FY book-to-bill was 1.03.

Financial highlights

• Q4 gross margin was 21.7%, up 120 bps YoY; adjusted operating income was $15.9M and adjusted diluted EPS was $0.70.

• Q4 GAAP net income was $5.1M vs. $8.1M; adjusted net income was $10.4M vs. $10.6M.

• FY 2023 GAAP net income was $15.9M vs. $28.8M; adjusted net income was $36.0M vs. $40.1M.

• Q4 operating cash flow was $26.5M, including an $8.9M payment related to the R&D tax credit rule change; prior-year cash flow was $32.1M.

Outlook and guidance

• 2024 revenue growth guidance was mid-single digit.

• Aerospace production growth and record military and space backlog, alongside defense off-loading initiatives, were expected to support 2024 growth.

• Restructuring savings are expected to phase in from H2 2024, reaching annualized run-rate savings of $11M to $13M.