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PRESS RELEASE : JULY 30, 2007
DUCOMMUN INCORPORATED REPORTS RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2007
Sales for the second quarter of 2007 were $91.1 million, compared to $77.5 million for the second quarter of 2006. Net income for the second quarter of 2007 was $4.6 million, or $0.44 per diluted share, compared to net income of $3.2 million, or $0.31 per diluted share, for the same period last year.
Sales for the second quarter of 2007 increased 18% from the same period last year primarily due to a strong increase in commercial sales. The Company’s mix of business in the second quarter of 2007 was approximately 61% military, 37% commercial and 2% space, compared to 67% military, 32% commercial and 1% space in the second quarter of 2006.
Gross profit, as a percentage of sales, increased to 21.7% in the second quarter of 2007 from 19.7% in the second quarter of 2006. Selling, general and administrative (SG&A) expenses, as a percentage of sales, increased to 13.3% in the second quarter of 2007 from 12.4% in the second quarter of 2006. The increase in SG&A expenses, as a percentage of sales, was primarily the result of higher bonus accruals in 2007 and the expenses of the CMP business which was acquired in the third quarter of 2006.
Net income for the second quarter of 2007 increased 44% from the second quarter of 2006 primarily due to the reasons stated above and a lower effective tax rate, partially offset by higher interest expense in the second quarter of 2007. The Company’s effective tax rate for the second quarter of 2007 was 33.7% compared to 36.3% in the second quarter of 2006.
Sales for the first six months of 2007 were $179.2 million, compared to $149.6 million for the first six months of 2006. Net income for the first six months of 2007 was $8.4 million, or $0.80 per diluted share, compared to net income of $5.9 million, or $0.58 per diluted share, for the comparable period last year.
Sales for the first six months of 2007 increased 20% from the same period last year primarily due to a strong increase in commercial sales. The Company’s mix of business in the first six months of 2007 was approximately 61% military, 37% commercial and 2% space, compared to 67% military, 32% commercial and 1% space in the first six months of 2006.
Gross profit, as a percentage of sales, increased to 21.4% in the first six months of 2007 from 19.9% in the first six months of 2006. SG&A expenses, as a percentage of sales, increased to 13.6% in the first six months of 2007 from 12.9% in the first six months of 2006. The increase in SG&A expenses, as a percentage of sales, was primarily the result of higher bonus accruals in 2007 and the expenses of the WiseWave and CMP businesses which were acquired in the second and third quarters of 2006, respectively.
Net income for the first six months of 2007 increased 41% from the first six months of 2006 primarily due to the reasons stated above and a lower effective tax rate, partially offset by higher interest expense in the first six months of 2007. The Company’s effective tax rate for the first six months of 2007 was 33.0% compared to 36.5% in the first six months of 2006.
Joseph C. Berenato, chairman, president and chief executive officer, stated, “We continue to benefit from healthy aerospace markets and the success of our Lean and Six Sigma initiatives. As a result, we are enjoying growth in new business opportunities and a broadening of our customer base. We expect to complement this internal growth with continuing acquisitions which will help us enhance our product offering and increase our design and manufacturing engineering capabilities. We are driving Ducommun forward through our key initiatives of One Company, Operational Excellence and Profitable Growth in order to become a global partner to our key customers. Our recently announced manufacturing facility in Guaymas, Mexico will complement our Thailand facility and is a further indication of our efforts to support our customer base.”
Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace and defense industry.
A teleconference with Joseph C. Berenato, the Company’s chairman, president and chief executive officer, and Gregory A. Hann, the Company’s vice president, chief financial officer and treasurer, will be held today at 7:30 AM PT (10:30 AM ET). To participate in the teleconference, please call 866-202-3048 (international 617-213-8843) approximately ten minutes prior to the conference time stated above. The participant passcode is 68596280. Mr. Berenato and Mr. Hann will be speaking on behalf of the company and anticipate the meeting and Q&A period to last approximately 40 minutes.
This call is being webcast by Thomson/CCBN and can be accessed at
Thomson/CCBN. Conference call replay will be
available after that time at the same link.
The statements made in this press release include forward-looking statements that involve risks and uncertainties. The Company’s future
financial results could differ materially from those anticipated due to the Company’s dependence on conditions in the airline industry, the
level of new commercial aircraft orders, production rates for Boeing commercial aircraft, the C-17 and Apache helicopter rotor blade programs,
the level of defense spending, competitive pricing pressures, manufacturing inefficiencies, start-up costs and possible overruns on new contracts,
technology and product development risks and uncertainties, product performance, risks associated with acquisitions and dispositions of businesses
by the Company, increasing consolidation of customers and suppliers in the aerospace industry, possible goodwill impairment, availability of raw
materials and components from suppliers, and other factors beyond the Company’s control. See the Company’s Form 10-K for the year ended December
31, 2006 and Form 10-Q for the quarter ended June 30, 2007 for a more detailed discussion of these and other risk factors and contingencies.
[Financial Table Follows] DUCOMMUN IN COMPARATIVE DATA CONSOLIDATED INCOME STATEMENT Three Months Ended Six Months Ended June 30, 2007 July 1, 2006 June 30, 2007 July 1, 2006 Net
Sales $ 91,104,000 $77,480,000 $ 179,156,000 $ 149,638,000 Operating
Costs and Expenses: Cost of Goods Sold 71,310,000 62,255,000 140,885,000 119,896,000 Selling, General & Administrative Expenses 12,134,000 9,599,000 24,360,000 19,235,000 Total 83,444,000 71,854,000 165,245,000 139,131,000 Operating
Income 7,660,000 5,626,000 13,911,000 10,507,000 Interest
Expense (765,000) (649,000) (1,417,000) (1,164,000) Income
Tax Expense (2,324,000) (1,809,000) (4,123,000) (3,413,000) Net
Income $ 4,571,000 $ 3,168,000 $ 8,371,000 $ 5,930,000 Earnings
Per Share: Basic Earnings Per Share $ 0.44 $ 0.31 $ 0.81 $ 0.58 Diluted Earnings Per Share 0.44 0.31 0.80 0.58 Weighted
Averaged Number of Common
Shares Outstanding: Basic 10,361,000 10,222,000 10,331,000 10,178,000 Diluted 10,474,000 10,312,000 10,436,000 10,266,000 - more - CONSOLIDATED
BALANCE SHEETS (In thousands,
except share data) (Unaudited) June 30, 2007 December 31, 2006 Assets Current
Assets: Cash and cash equivalents 559 378 Accounts receivable, less allowance for
doubtful accounts 45,504 42,658 Unbilled receivables 3,883 3,482 Inventories 74,877 64,587 Deferred income taxes 6,099 6,116 Other current assets 4,889 5,521 Total Current Assets 135,811 122,742 Property
and Equipment, Net 54,030 52,987 Goodwill,
Net 106,632 106,628 Other
Assets 13,431 14,676 $309,904 $297,033 Liabilities
and Shareholders’ Equity Current
Liabilities: Current portion of long-term debt $1,851 $1,196 Accounts payable 22,040 32,948 Accrued liabilities 32,207 33,243 Total Current Liabilities 56,098 67,387 Long-Term
Debt, Less Current Portion 39,918 29,240 Deferred
Income Taxes 5,477 6,670 Other
Long-Term Liabilities 9,900 6,711 Total Liabilities 111,393 110,008 Commitments
and Contingencies Shareholders’
Equity: Common Stock 104 103 Additional paid-in-capital 49,107 46,320 Retained earnings 150,941 142,760 Accumulated other comprehensive loss (1,641) (2,158) Total Shareholders’ Equity 198,511 187,025 $309,904 $297,033
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