Bradley Eiser

Bradley Eiser asked about Ducommun's inventory destocking commentary, specifically inquiring about the magnitude of expected headwinds in the first half of 2026 given favorable Q4 working capital, and whether an acceleration of inventory draw was observed. He also questioned Ducommun's medium-term opportunities and potential for market-beating growth on the defense side as primes increase capacity.

Answer

Suman Mookerji, SVP and CFO, stated that destocking expectations align with previous comments, with external destocking more prevalent than internal, primarily at Spirit and Boeing Direct, expected to ebb in the second half of 2026. Stephen Oswald, Chairman, President, and CEO, highlighted Ducommun's strong missile franchise, existing production capabilities, and significant capacity (at least 30%) to support increased defense demand, particularly from 2027, with minimal additional CapEx.

Bradley Eiser inquired about the company's commentary on inventory destocking, specifically how the favorable working capital movements in Q4 2025 align with previously highlighted headwinds for the first half of 2026, and if there's an acceleration of inventory draw. He also asked about medium-term opportunities on the defense side, given primes are increasing capacity, and if Ducommun expects to grow faster than the market.

Answer

Suman Mookerji, SVP and CFO, stated that destocking expectations are in line with previous comments, with external destocking more prevalent in the first half of 2026. Stephen Oswald, Chairman, President, and CEO, added that the missile business is a legacy franchise with existing production and significant capacity (at least 30% room in factories) for increased demand, with minimal incremental CapEx needed. He noted that major growth is expected in 2027 due to a lag in order flow from OEMs.