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PRESS RELEASE : OCTOBER 29, 2007
DUCOMMUN INCORPORATED REPORTS RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 29, 2007
Sales for the third quarter of 2007 were $94.7 million, compared to $81.6 million for the third quarter of 2006. Net income for the third quarter of 2007 was $5.8 million, or $0.55 per diluted share, compared to net income of $4.1 million, or $0.40 per diluted share, for the comparable period last year.
Sales for the third quarter of 2007 increased 16% from the same period last year primarily due to an increase in commercial sales. The Company’s mix of business in the third quarter of 2007 was approximately 60% military, 38% commercial and 2% space, compared to 66% military, 31% commercial and 3% space in the third quarter of 2006.
Gross profit, as a percentage of sales, increased to 21.7% in the third quarter of 2007 from 20.8% in the third quarter of 2006. Selling, general and administrative (SG&A) expenses increased to $11.8 million, compared to $10.4 million in the third quarter of 2006. The increase in SG&A expenses was primarily the result of higher bonus accruals in 2007 and higher expenses related to the growth in sales.
Net income for the third quarter of 2007 increased 42% from the third quarter of 2006 primarily due to the reasons stated above. The Company’s effective tax rate for the third quarter of 2007 was 27.7% compared to 30.1% in the third quarter of 2006.
Sales for the first nine months of 2007 were $273.8 million, compared to $231.2 million for the first nine months of 2006. Net income for the first nine months of 2007 was $14.2 million, or $1.36 per diluted share, compared to net income of $10.0 million, or $0.97 per diluted share, for the comparable period last year.
Sales for the first nine months of 2007 increased 18% from the same period last year primarily due to an increase in commercial sales. The Company’s mix of business in the first nine months of 2007 was approximately 61% military, 37% commercial and 2% space, compared to 67% military, 31% commercial and 2% space in the first nine months of 2006.
Gross profit, as a percentage of sales, increased to 21.5% in the first nine months of 2007 from 20.2% in the first nine months of 2006. Selling, general and administrative (SG&A) expenses, as a percentage of sales, increased to 13.2% in the first nine months of 2007 from 12.8% in the first nine 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 expenses of the WiseWave and CMP businesses which were acquired in the second and third quarters of 2006, respectively.
Net income for the first nine months of 2007 increased 42% from the first nine 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 nine months of 2007. The Company’s effective tax rate for the first nine months of 2007 was 30.9% compared to 34.1% in the first nine months of 2006.
Joseph C. Berenato, chairman, president and chief executive officer of Ducommun, stated, “Our continued strong operating performance reflects our ongoing efforts to drive Ducommun forward by focusing on our key themes of One Company, Operational Excellence and Profitable Growth. Both our military and commercial markets remain strong. Internally, we are benefiting from the success of our Lean Six Sigma activities. We intend to augment these efforts with acquisitions that will add operational and technological capabilities to our existing businesses. Through these efforts, we are becoming more important to our key customers.”
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 866-383-8009 (international 617-597-5342) approximately ten minutes prior to the conference time stated above. The participant passcode is 20289123. 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 September 29, 2007 for a more detailed
discussion of these and other risk factors and contingencies.
DUCOMMUN IN COMPARATIVE DATA CONSOLIDATED INCOME STATEMENT Three Months Ended Nine Months Ended Sept. 29, 2007 Sept. 30, 2006 Sept. 29, 2007 Sept. 30, 2006 Net
Sales $ 94,665,000 $ 81,557,000 $ 273,821,000 $ 231,195,000 Operating
Costs and Expenses: Cost of Goods Sold 74,135,000 64,612,000 215,020,000 184,508,000 Selling, General & Administrative Expenses 11,831,000 10,374,000 36,191,000 29,609,000 Total 85,966,000 74,986,000 251,211,000 214,117,000 Operating
Income 8,699,000 6,571,000 22,610,000 17,078,000 Interest
Expense (628,000) (704,000) (2,045,000) (1,868,000) Income
Tax Expense (2,239,000) (1,768,000) (6,362,000) (5,181,000) Net
Income $ 5,832,000 $ 4,099,000 $ 14,203,000 $ 10,029,000 Earnings
Per Share: Basic Earnings Per Share $ 0.56 $ 0.40 $ 1.37 $ 0.98 Diluted Earnings Per Share 0.55 0.40 1.36 0.97 Weighted
Averaged Number of Common
Shares Outstanding: Basic 10,409,000 10,231,000 10,357,000 10,195,000 Diluted 10,560,000 10,292,000 10,440,000 10,287,000 DUCOMMUN
INCORPORATED AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (In
thousands, except share data) (Unaudited) September 29, 2007 December 31, 2006 Assets Current
Assets: Cash and cash equivalents 387 378 Accounts receivable, less allowance for
doubtful accounts 46,273 42,658 Unbilled receivables 4,170 3,482 Inventories 75,277 64,587 Deferred income taxes 5,967 6,116 Other current assets 6,269 5,521 Total Current Assets 138,343 122,742 Property
and Equipment, Net 55,475 52,987 Goodwill,
Net 106,632 106,628 Other
Assets 12,797 14,676 $313,247 $297,033 Liabilities
and Shareholders’ Equity Current
Liabilities: Current portion of long-term debt $ 1,855 $ 1,196 Accounts payable 20,885 32,948 Accrued liabilities 35,482 33,243 Total Current Liabilities 58,222 67,387 Long-Term
Debt, Less Current Portion 32,480 29,240 Deferred
Income Taxes 5,705 6,670 Other
Long-Term Liabilities 9,892 6,711 Total Liabilities 106,299 110,008 Commitments
and Contingencies Shareholders’
Equity: Common Stock 105 103 Additional paid-in-capital 51,711 46,320 Retained earnings 156,773 142,760 Accumulated other comprehensive loss (1,641) (2,158) Total Shareholders’ Equity 206,948 187,025 $313,247 $297,033
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