Ducommun Inc (DCO) Q3 2025 Earnings Call Highlights: Record Revenue Amidst Aerospace Challenges

This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Ducommun Inc (NYSE:DCO) reported a record quarterly revenue of $212.6 million, marking the 18th consecutive quarter of year-over-year growth. The defense business showed strong performance with a 13% growth, driven by a 21% increase in the missile franchise. Gross margins improved to 26.6%, benefiting from strategic pricing initiatives and productivity improvements. The company achieved a book-to-bill ratio of 1.6 times, increasing remaining performance obligations to a record $1.03 billion. Adjusted EBITDA reached 16.2% of revenue, showing significant progress towards the Vision 2027 goal of 18%.

Negative Points

The commercial aerospace business faced a 10% decline in revenue due to destocking at Boeing and Spirit AeroSystems. Ducommun Inc (NYSE:DCO) reported a GAAP net loss of $64.4 million for Q3 2025, primarily due to litigation settlements related to the Guaymas fire. The company is still experiencing headwinds from commercial aerospace destocking, which is expected to continue into 2026. The litigation settlement resulted in a significant cash outflow of $95 million, impacting liquidity. The restructuring program incurred additional costs, with $500 million expected in restructuring expenses by the end of Q4.

Q & A Highlights

Warning! GuruFocus has detected 7 Warning Signs with DCO. Is DCO fairly valued? Test your thesis with our free DCF calculator.

Q: Can you provide more detail on the strong bookings in the commercial aerospace sector and the current ship rate on the Max? How should we think about potential headwinds in 2026? A: Steve Oswald, CEO: The Max build rate is influenced by both Boeing and Spirit, with more business at Spirit. Currently, the build rate is around 26-28 per month. We aim to maintain a level load in our factories, producing parts for 30-40 aircraft per month. We saw growth in bookings across Boeing and Airbus, with additional orders for Airbus platforms. The activity at Airbus was particularly strong this quarter.

Q: What are the expectations for revenue growth in Q4, and where might we see upside or continued pressure? A: Suman Mukherjee, CFO: We expect continued pressure from destocking in commercial aerospace, but the medium to long-term outlook is positive. The defense sector remains strong and is expected to be a bright spot in Q4, with robust order intake and revenues. The 787 program at Boeing is also a positive factor.

Leer más

Q: Can you explain the difference between the RPO and backlog figures? A: Suman Mukherjee, CFO: RPO (Remaining Performance Obligations) is a GAAP term representing revenue yet to be recognized, while backlog is linked to shipments and constrained to a two-year window. Backlog includes forecasts under long-term agreements, whereas RPO is unconstrained and includes all unfulfilled orders.

Q: How is the engineered products segment performing, and is it growing faster than the rest of the business? A: Steve Oswald, CEO: Engineered products make up 23% of our revenue mix, up from previous years. This growth has been organic, and we expect it to continue. We are also focusing on acquisitions to further boost this segment, aiming to exceed our 25% target.

Q: What are your thoughts on margin expansion opportunities for 2025 and 2026? A: Suman Mukherjee, CFO: We expect stable margins for the rest of 2025, with significant opportunities in 2026 from facility consolidation efforts. Transitioning product lines to lower-cost locations will drive savings. We will continue strategic pricing and cost efficiencies, focusing on engineered products to improve revenue mix and margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Ver comentarios