Executive Summary

Q2 2025 delivered record gross margin (26.6%) and record adjusted EBITDA margin (16.0%), with revenue of $202.3M up 3% YoY and adjusted diluted EPS of $0.88; both revenue and adjusted EPS beat consensus, while SPGI EBITDA came in below consensus as company-reported adjusted EBITDA differs from standardized EBITDA .
Defense strength (missiles +39%, radar +46%) offset commercial aerospace OEM headwinds (Boeing destocking), driving 16% growth in military & space revenue; management remains optimistic on Boeing rate recovery and Apache rotor blade ramp in H2 .
Guidance tone: mid-single-digit organic revenue growth in Q3 and low double-digit in Q4; tariff impact expected immaterial given 95% U.S. manufacturing and USMCA coverage, and EBITDA margin trajectory around ~16% for 2025 .
Cash flow was a bright spot: cash from operations $22.4M vs $3.5M last year, aided by higher net income and working capital improvements; liquidity strong with revolver fully available and interest costs down on hedges and lower debt .
Stock reaction catalyst: continued defense momentum, Apache/Tomahawk ramp timing and clearer Boeing destocking end-point, with visibility to stronger H2 revenue and sustained margin expansion .

What Went Well and What Went Wrong

What Went Well

Record profitability: gross margin reached 26.6% and adjusted EBITDA margin rose to 16.0%, building a “consistent track record” toward Vision 2027 targets (“on pace to meet the VISION 2027 financial goal of 18% Adjusted EBITDA”) .
Defense outperformance: missiles (+39% YoY) and radar (+46%) propelled military & space revenue higher; CEO: “our missile and radar franchises [are] a bedrock for growth now and the next few years ahead” .
Cash generation: cash from operations of $22.4M, supported by higher net income and favorable working capital; CFO highlighted improved conversion and goal to 100% FCF conversion over next few years .

What Went Wrong

Commercial aerospace weakness: revenue fell (~10% YoY in the quarter) driven by Boeing destocking and in-flight entertainment softness; destocking likely persists through year-end (“we’re still going to have some of that… hope Q1/Q2 next year will be clear”) .
Structural Systems margin compression YoY: operating margin declined to 10.4% from 11.0% on unfavorable mix and lower volume (adjusted operating margin fell to 13.0% from 15.4%) .
Backlog lower sequentially: consolidated non-GAAP backlog declined to $1,017.9M from $1,053.6M in Q1 and $1,060.8M in Q4 (timing of awards); commercial aerospace backlog decreased $47M YoY .

Financial Results

Consolidated P&L and Profitability (company-reported, GAAP and non-GAAP)

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$197.0	$197.3	$194.1	$202.3
Diluted EPS (GAAP) ($)	$0.52	$0.45	$0.69	$0.82
Adjusted Diluted EPS ($)	$0.83	$0.75	$0.83	$0.88
Gross Margin %	26.0%	23.5%	26.6%	26.6%
Operating Income Margin %	7.1%	5.3%	8.5%	8.5%
Adjusted EBITDA ($USD Millions)	$30.0	$27.3	$30.9	$32.4
Adjusted EBITDA Margin %	15.2%	13.8%	15.9%	16.0%

Key drivers: Defense revenue +$16.5M YoY; commercial aerospace -$9.0M YoY; industrial -$2.3M YoY; lower interest expense ($3.0M vs $4.0M) supported EPS growth .

Segment Breakdown (Q2 2025 vs Q2 2024)

Segment	Q2 2024 Revenue ($M)	Q2 2025 Revenue ($M)	Q2 2024 Op Income ($M)	Q2 2025 Op Income ($M)
Electronic Systems	$101.4	$110.2	$16.8	$21.0
Structural Systems	$95.6	$92.0	$10.6	$9.5

Segment commentary: Electronics lifted by missiles, radar; Structures impacted by lower Boeing, unfavorable mix; Electronics adjusted operating margin 19.4% vs 16.9% in 2Q24; Structures adjusted margin 13.0% vs 15.4% .

KPIs and Operating Metrics

KPI	Q4 2024	Q1 2025	Q2 2025
Non-GAAP Backlog (Total) ($USD Billions)	$1.061B	$1.054B	$1.018B
Cash from Operations ($USD Millions)	$18.4	$0.8	$22.4
Interest Expense ($USD Millions)	$3.6	$3.3	$3.0
Effective Tax Rate (%)	0.1%	21.1%	21.1%
Capital Expenditure ($USD Millions)	$4.3	$4.4	$3.9

Results vs Wall Street Consensus (S&P Global)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue Consensus Mean ($USD Millions)	194.9*	192.0*	199.6*
Revenue Actual ($USD Millions)	197.0	194.1	202.3
Primary EPS Consensus Mean ($)	0.61*	0.70*	0.82*
Adjusted Diluted EPS Actual ($)	0.83	0.83	0.88
EBITDA Consensus Mean ($USD Millions)	25.2*	27.9*	31.0*
EBITDA Actual (SPGI) ($USD Millions)	24.8*	25.6*	26.1*

Values retrieved from S&P Global.
Interpretation: Q2 2025 revenue and adjusted EPS beat; SPGI EBITDA (standardized) missed consensus, while company-reported adjusted EBITDA was $32.4M, reflecting non-GAAP add-backs .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Revenue Growth	Q3 2025	Strong H2 growth expected; FY mid-single-digit growth; Q2 flattish YoY	Mid-single-digit growth	Maintained specificity (affirmed)
Organic Revenue Growth	Q4 2025	Strong H2 growth expected; FY mid-single-digit growth	Low double-digit growth	Raised specificity (more bullish Q4)
EBITDA Margin Trajectory (Adjusted)	FY 2025	~16% by year-end; 15.9% in Q1 includes 50–75 bps favorable mix	Record 16.0% in Q2; trajectory consistent with ~16% for FY	Maintained
Tariff Impact	FY 2025	Expected limited/no material impact; 95% U.S. manufacturing; USMCA coverage	No material impact expected; EU agreement supports Airbus tariff-free; mitigation plans in place	Maintained; clarity improved
Restructuring Charges	FY 2025	Additional $0.5–$1.0M to complete program	Additional $0.5–$1.0M still expected; savings $11–$13M annually ramping into 2026	Maintained
Program Ramps	H2 2025	Apache blades, 737 MAX spoilers, Tomahawk harnesses expected to ramp in H2	Apache approvals likely August; shipping in September; Apache/TOW/Tomahawk/SM-3 uptick expected	Increased timing specificity

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Defense (Missiles/Radar)	Q4: Military backlog +~$100M to $625M; strong radar/missiles support margins	Missiles +39%, radar +46%; active negotiations for record SM-3 levels	Strengthening
Commercial Aero Destocking	Q1: Boeing/Spirit destocking; Q2 flattish guidance; recovery in H2	Destocking persists through 2025; sequential improvement; low visibility on precise end-point	Persistent headwind, moderating
Engineered Products Mix	Q4: 23% of revenue; driver of margin; target 25%+	Maintained ~23%; acquisition focus to push beyond 25% in 2026	Stable; potential upside via M&A
Tariffs/Macro	Q1: Minimal impact; 95% U.S.; USMCA; <3% China sales	No material impact; EU agreement supports Airbus tariff-free; mitigation via duty exemptions/passthroughs	Stable/benign
Restructuring/Footprint	Q1: Consolidations nearing completion; savings ramp late 2025–2026	Additional $0.5–$1.0M charges; Apache production moving to NY; Berryville sold for $2M; Monrovia sale planned	Executing; savings ramp ahead
Cash/Interest	Q4: interest down via swaps; cash ops $18.4M	Cash ops $22.4M; revolver fully available; SOFR hedge saving 170 bps on $150M	Improving

Management Commentary

CEO on strategic progress: “The continued growth in Adjusted EBITDA margins in Q2 keeps us on pace to meet the VISION 2027 financial goal of 18% Adjusted EBITDA.”
CEO on end-markets: “Strong growth in our defense business more than offset lower revenue in our commercial aerospace business… optimistic that bill rates will be growing from 38 to 42 on the 737 MAX soon.”
CFO on margin mix: “Across the company, we probably had 50 bps of favorability in margin due to favorable product mix… not a new baseline.”
CFO on cash/hedging: “Available liquidity of $236.9M… interest hedge pegged 1M SOFR at 170 bps for $150M of our debt; will continue to drive significant interest cost savings.”

Q&A Highlights

Boeing/Spirit destocking and H2 cadence: Management expects destocking to persist through year-end with clearer resolution by Q1–Q2 2026; double-digit Q4 growth underpinned by defense and Apache ramp .
Engineered products and M&A: Mix steady near 23% for 2025; pipeline active but competitive; focus on niche engineered assets to accelerate margin accretion .
Apache rotor blades: Approvals likely in August; shipments starting September; Q2 still a headwind; expected to lift Q3/Q4 .
Free cash flow conversion: Improved year-to-date; management targeting 100% over next few years as working capital unwinds .
Real estate: Berryville sold for ~$2M; Monrovia to be re-marketed following prior bid deemed inadequate .

Estimates Context

Q2 2025 revenue beat consensus by ~$2.7M (~1.3%) and adjusted EPS beat by ~$0.06 (~~7%); company’s adjusted EBITDA ($32.4M) exceeded internal records, but SPGI standardized EBITDA (~~$26.1M) missed consensus, highlighting non-GAAP adjustments’ impact .
Models should lift H2 revenue assumptions (mid-single-digit Q3; low double-digit Q4) and reflect sustained ~16% adjusted EBITDA margin trajectory, while tempering near-term commercial aero recovery due to lingering destocking .
Values retrieved from S&P Global*.

Key Takeaways for Investors

Defense momentum is the principal earnings driver near term; missile and radar franchises support backlog and margin expansion, partially de-risking commercial destocking .
H2 set-up is favorable: Apache/TOW/Tomahawk program ramps, Boeing rate improvements, and structural savings from consolidations underpin potential revenue acceleration in Q4 .
Expect continued margin resilience around ~16% adjusted EBITDA in 2025 as engineered products mix and pricing initiatives offset mix variability; monitor Electronics margin sustainability as mix tailwind normalizes .
Cash generation improved; balance sheet flexibility (fully available revolver, interest hedge) provides optionality for M&A and organic investments; watch working capital and backlog timing .
Near-term trading: positive skew on defense news flow and program approvals (Apache/SM-3), with commercial recovery catalysts (737 MAX rate moves) potentially unlocking sentiment; risk remains around destocking duration and structural mix in Structures .
Medium-term: Vision 2027 execution (18% adjusted EBITDA target, 25%+ engineered mix) plus selective M&A could sustain margin compounding and reduce cyclicality .

Appendix Citations

Q2 2025 press release, financials, segments, backlog:
Q2 2025 8-K (Item 2.02, exhibits):
Q2 2025 call transcript:
Q1 2025 press release and call:
Q4 2024 press release:

S&P Global Disclaimer: Asterisked values are from S&P Global consensus and actuals (Primary EPS Consensus Mean, Revenue Consensus Mean, EBITDA Consensus Mean, and SPGI EBITDA Actual).

DUCOMMUN INC /DE/ (DCO)·Q2 2025 Earnings Summary