Executive Summary

Q1 2025 revenue was $194.1M (+2% YoY) with record gross margin of 26.6%; adjusted EBITDA reached $30.9M (15.9% margin), the second quarter above $30M .
EPS: GAAP diluted EPS $0.69; adjusted diluted EPS $0.83; both up sharply YoY (GAAP +50%, adjusted +19%) .
Versus S&P Global consensus, DCO delivered an EPS beat (Adj. EPS $0.83 vs $0.70*) and a modest revenue beat ($194.1M vs $192.0M*); 5 estimates for each metric. Bold beat on EPS and revenue*.
Management reaffirmed mid-single-digit FY 2025 revenue growth, flagged Q2 as flattish versus last year, and emphasized stronger H2 on defense programs and Boeing rate recovery; tariffs expected to have minimal impact .
Stock catalysts: continued margin expansion toward Vision 2027 (18% EBITDA margin target), defense backlog strength (military and space backlog $620M), and commercial aero ramp (737 MAX, 787, A220) .

Note: Asterisked values are from S&P Global consensus; Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Record gross margin of 26.6% (+200 bps YoY) and adjusted EBITDA margin of 15.9% (+150 bps YoY), driven by favorable mix (engineered products), strategic pricing, and restructuring savings .
Defense strength: military and space revenue up 15% YoY; strong demand across missiles (AMRAAM, TOW), electronic warfare (NGJ), radar; defense backlog up $51M YoY to $620M .
Structural Systems margin recovery: segment operating margin rose to 12.3% (14.9% adjusted) vs 3.4% (7.8% adjusted) a year ago, reflecting better volume/mix and lower manufacturing costs .

Selected quotes:

“An excellent start to 2025…record gross margins…strong Adjusted EBITDA margins.” – CEO Stephen Oswald .
“We are reaffirming our guide of mid-single-digit revenue growth for the year…anticipate good strength in the second half of 2025.” – CEO Stephen Oswald .
“These [engineered product] businesses are significantly accretive to our margins…also provide significant margin runway.” – CFO Suman Mookerji .

What Went Wrong

Commercial aerospace down 10% YoY in Q1, with weakness on 737 MAX and in-flight entertainment; backlog for commercial aero decreased $31M YoY .
Electronic Systems margin eased YoY (16.9% adjusted vs 18.4% prior-year) on lower manufacturing volume and higher manufacturing costs .
Working capital and DSO: cash from operations only $0.8M; DSO uptick tied to late-quarter shipments (seasonal), expected to normalize .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$201.4	$197.3	$194.1
Gross Margin %	26.2%	23.5%	26.6%
Operating Income ($USD Millions)	$15.3	$10.4	$16.6
Operating Margin %	7.6%	5.3%	8.5%
Net Income ($USD Millions)	$10.1	$6.8	$10.5
Diluted EPS ($USD, GAAP)	$0.67	$0.45	$0.69
Adjusted EBITDA ($USD Millions)	$31.9	$27.3	$30.9
Adjusted EBITDA Margin %	15.8%	13.8%	15.9%

Versus S&P Global consensus

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue Consensus Mean ($USD Millions)	194.1*	195.6*	192.0*
Revenue Actual ($USD Millions)	201.4	197.3	194.1
Primary EPS Consensus Mean ($USD)	0.739*	0.814*	0.703*
Adjusted Diluted EPS Actual ($USD)	0.99	0.75	0.83

Estimate counts

Metric	Q1 2025
Primary EPS - # of Estimates	5*
Revenue - # of Estimates	5*

Note: Asterisked values are from S&P Global consensus; Values retrieved from S&P Global.

Segment breakdown (Q1 2025 vs Q1 2024)

Segment	Q1 2025 Revenue ($USD Millions)	Q1 2024 Revenue ($USD Millions)	YoY %	Q1 2025 Segment Op Income ($USD Millions)	Q1 2024 Segment Op Income ($USD Millions)	Q1 2025 Segment Op Margin	Q1 2024 Segment Op Margin
Electronic Systems	$109.7	$107.5	2.1%	$18.1	$19.0	16.5%	17.6%
Structural Systems	$84.4	$83.3	1.3%	$10.4	$2.9	12.3%	3.4%

KPIs

KPI	Q1 2025	Q1 2024
Cash from Operations ($USD Millions)	$0.8	$(1.6)
Interest Expense ($USD Millions)	$3.3	$3.9
Capital Expenditures ($USD Millions)	$4.4	$4.7
Effective Tax Rate	21.1%	21.6%
Cash & Equivalents ($USD Millions)	$30.7	$37.1 (Dec-24)
Current Portion of Long-Term Debt ($USD Millions)	$12.5	$12.5 (Dec-24)
Long-Term Debt, less current ($USD Millions)	$229.9	$229.8 (Dec-24)
Backlog – Military & Space ($USD Millions)	$619.7	$624.8 (Dec-24)
Backlog – Commercial Aerospace ($USD Millions)	$411.1	$415.9 (Dec-24)
Total Backlog ($USD Millions)	$1,053.6	$1,060.8 (Dec-24)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth	FY 2025	Mid-single-digit growth (Q4 2024 call)	Mid-single-digit growth reaffirmed	Maintained
Revenue level	Q2 2025	“Slightly better” than Q1; flattish first quarter (Q4 call)	“Q2 being flattish to last year”	Lowered
Adjusted EBITDA margin	FY 2025	Not explicitly guided	“Around 16% should be good” by year-end	Introduced/Implied
Free cash flow conversion	FY 2025	2024 actual ~40%; improving trend	Expect improvement vs 2024; no numeric guide	Maintained trajectory
Tariff impact	2025	Not highlighted in Q4	Minimal impact expected; 95% U.S. manufacturing footprint	Clarified minimal impact
Program ramps (Apache blades)	H1/H2 2025	Transition underway (Q4)	Apache blades ramp in Q2; spoilers/Tomahawk/TOW in H2	Timing specified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Tariffs/macro	Limited comments; focus on mix and pricing	Minimal impact expected; 95% U.S. ops, limited China exposure	Stable/benign
Supply chain & labor	Proactive buys; avoided major impacts	Progress continues; manageable foreign supplier exposure	Improving
Boeing 737 MAX destocking	Strike impact; shipments in teens/20s; H2 recovery expected	Q1 shipments in low-to-mid 20s; confidence in reaching ~38/month later in 2025	Improving in H2
Engineered products mix	23% of revenue in 2024; target 25%+ by 2027	Maintained ~23%; accretive margins; M&A focus to push beyond 25%	Positive
Defense outsourcing/offload	Wins from RTX/Northrop; Bayern-Chemie order	Continued offloads (NGJ, cards); strong missile/EW/radar demand	Strong
Free cash flow conversion	30%+ in 2023, improving; hedge reduced interest	40% in 2024; expect better in 2025 (no guide)	Improving
Interest rate hedge	SOFR pegged at 170 bps for $150M; savings in 2024	Continued interest savings; Q1 interest expense down YoY	Beneficial
Product/platform performance	A220 skins growth; 787 share shift; S-92/BLR strength	Defense programs ramp; commercial rotorcraft mixed; inflight entertainment soft (low single-digit %)	Mixed
Restructuring actions	Facility closures; $11–13M annual savings expected	~$0.4M Q1 charges; $0.5–$1.0M remaining; savings ramp late 2025/2026	On track

Management Commentary

“Defense in Q1 saw strong demand for select missiles, electronic warfare, military radar and military rotary-wing aircraft platforms… Next Generation Jammer and AMRAAM ramping up.” – CEO Stephen Oswald .
“We are largely a U.S. manufacturer… our domestic facilities generate more than 95% of Ducommun’s revenue… limited supply chain exposure to China… plans to mitigate tariffs.” – CEO Stephen Oswald .
“Adjusted EBITDA… almost $31 million… our second quarter above $30 million… reaffirms our strategy and keeps Ducommun on track to meet the VISION 2027 financial goal of 18% Adjusted EBITDA.” – CEO Stephen Oswald .
“We are reaffirming our guide of mid-single-digit revenue growth… Q2 being flattish… anticipate good strength in the second half.” – CEO Stephen Oswald .
“These [engineered product] businesses are significantly accretive to our margins… a key driver of margin expansion into 2027.” – CFO Suman Mookerji .

Q&A Highlights

Boeing and Spirit rates: Q1 shipments in low-to-mid 20s; optimism to reach ~38/month by late 2025; destocking still a near-term headwind .
Apache blades and rotorcraft: Apache blade production ramp at Coxsackie, NY beginning in Q2; MagSeal engine components also supportive .
DSOs: Increase driven by late-quarter shipments; not structural; expected to normalize .
M&A: Active pipeline focused on niche engineered products spanning defense and commercial; disciplined selection; aim to close a deal in 2025 .
Margins/EBITDA: Q1 EBITDA margin has 50–75 bps mix “goodness”; FY 2025 around 16% implied .
In-flight entertainment: Low single-digit % of revenue; softness likely through 2025, offset elsewhere .

Estimates Context

Q1 2025: Adjusted EPS beat ($0.83 vs $0.70*), revenue beat ($194.1M vs $192.0M*); 5 estimates for each. Bold beat on EPS and revenue*.
Q4 2024: Adjusted EPS miss ($0.75 vs $0.81*), revenue beat ($197.3M vs $195.6M*).
Q3 2024: Adjusted EPS beat ($0.99 vs $0.74*), revenue beat ($201.4M vs $194.1M*).

Note: Asterisked values are from S&P Global consensus; Values retrieved from S&P Global. Company’s “Primary EPS” benchmark aligns with adjusted diluted EPS in company materials .

Key Takeaways for Investors

Margin expansion remains the core narrative: record gross margin (26.6%) and 15.9% adjusted EBITDA margin underscore Vision 2027 execution; trajectory toward ~16% FY EBITDA margin implies continued upside .
Defense momentum offsets commercial softness: missiles/EW/radar programs and rising defense backlog position DCO for resilient growth in 2025; watch Apache blades, TOW case, Tomahawk harness ramps .
Commercial aero recovery is a 2H story: MAX/787/A220 content, Spirit outsourcing (737 skins) and 787 share gains should lift volumes; near-term destocking persists .
Engineered products mix is accretive: 23% of revenue maintained; M&A targeted to push >25% over next 12 months; margin accretion supports re-rating .
Tariff risk low: 95% U.S. manufacturing footprint and USMCA coverage mitigate headline risk; minimal expected P&L impact .
Working capital discipline remains a watch item: Q1 operating cash flow modest; management targeting improved turns and higher free cash conversion vs 2024 .
Trading setup: With repeated beats (Q1, Q3) and a path to stronger H2 on commercial aero plus defense ramps, narrative supports pro-margin, backlog-backed thesis; monitor Q2 “flattish” print as a potential reset before H2 acceleration .

Citations: All company figures and commentary are from Ducommun’s Q1 2025 press release and 8-K and the Q1 2025 earnings call transcript , with prior-quarter context from Q4 2024 and Q3 2024 press releases and transcripts .

DUCOMMUN INC /DE/ (DCO)·Q1 2025 Earnings Summary