Ducommun Incorporated has reported its financial results for the fourth quarter and year ended December 31, 2023, achieving new all-time highs for revenue and adjusted EBITDA in 2023 of $757 million and $102 million, respectively.
Stephen G. Oswald, Chairman, President, and Chief Executive Officer of Ducommun, expressed his satisfaction with the company's performance: "I am very happy to report that the company reached an all-time revenue record in 2023 with the previous high-level mark set in 2012. Q4 numbers were also very good as we continue the top-line growth story for Ducommun, led once again by a strong commercial aerospace market recovery."
The company saw a 2.1% increase in net revenue for the fourth quarter of 2023 compared to the same period in 2022, driven by higher build rates on large aircraft platforms and rotary-wing aircraft platforms within the commercial aerospace end-use markets. However, this was partially offset by lower build rates on various missile platforms and military fixed-wing aircraft platforms within the military and space end-use markets.
Oswald also provided insight into the company's outlook, stating, "Looking ahead to 2024, the record order bookings and the anticipated growth in production rates at both Boeing and Airbus should provide continued tailwind to our commercial aerospace business. The significant growth in backlog in our military and space business and our continued success with off-loading initiatives should be a catalyst for growth in our defense business."
The company's electronic systems and structural systems segments reported net revenue of $106.7 million and $85.6 million, respectively, for the fourth quarter of 2023. Electronic systems reported a decrease in revenue compared to the same period in 2022, while structural systems reported an increase in revenue. Both segments saw operating income declines year-over-year, attributed to various factors including unfavorable product mix and manufacturing volume changes.
The full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $629,307 | $721,088 | $628,941 | $645,413 | $712,537 | $753,029 |
| Gross Margins | 19% | 21% | 22% | 22% | 20% | 21% |
| Net Margins | 1% | 5% | 5% | 21% | 4% | 3% |
| Net Income (k) | $9,035 | $32,461 | $29,174 | $135,536 | $28,789 | $18,899 |
| Net Interest Expense (k) | -$13,024 | -$18,290 | -$13,653 | -$11,187 | -$11,571 | -$18,839 |
| Depreciation & Amort. (k) | $25,296 | $28,305 | $28,850 | $28,389 | $31,421 | $32,507 |
| Diluted Shares (k) | 11,659 | 11,792 | 11,932 | 12,251 | 12,366 | 14,814 |
| Earnings Per Share | $0.77 | $2.75 | $2.45 | $11.06 | $2.33 | $1.45 |
| EPS Growth | n/a | 257.14% | -10.91% | 351.43% | -78.93% | -37.77% |
| Avg. Price | $34.29 | $43.8 | $36.81 | $53.18 | $47.59 | $51.0001 |
| P/E Ratio | 43.41 | 15.53 | 14.72 | 4.66 | 20.0 | 34.23 |
| Free Cash Flow (k) | $28,620 | $32,741 | $101 | -$17,428 | $12,991 | $15,265 |
| EV / EBITDA | 16.96 | 12.57 | 13.38 | 14.34 | 14.11 | 13.79 |
| Total Debt (k) | $455,829 | $601,774 | $623,844 | $558,768 | $481,190 | $264,992 |
| Net Debt / EBITDA | 9.05 | 6.65 | 7.63 | 6.24 | 6.11 | 3.82 |
| Current Ratio | 2.25 | 2.36 | 2.87 | 3.03 | 2.64 | 2.93 |
Ducommun Incorporated appears to be undervalued at a price of $51.6 per share due to its competitive advantage, as evidenced by its wider gross margins compared to industry peers. Additionally, the company's earnings per share have demonstrated consistent growth, with an annualized rate of 11.1% over the last 6 years.
From a growth perspective, Ducommun's increasing capital expenditures and historical earnings per share growth are positive indicators. However, the company's stable revenues and lower operating margins compared to industry averages, as well as an overvalued market based on its PEG ratio, are factors to consider.
In terms of value, Ducommun's high net current asset ratio and decent free cash flows are positive signs. However, the company's highly leveraged balance sheet, trading above its fair value, and premium P/E ratio compared to historical averages suggest caution. It is important to note that this analysis is not personalized financial advice.
