Ducommun Incorporated

What they do

Ducommun builds high-performance products used in high-cost-of-failure applications, chiefly in aerospace and defense, with additional exposure to industrial and medical markets. Electronic Systems makes complex cable assemblies, printed circuit board assemblies, avionics racks, radar enclosures, lightning diversion systems and other electromechanical assemblies. Structural Systems makes complex contoured aerostructure components and composite and metal bonded structures for commercial, military fixed-wing, and rotary-wing aircraft. The company operates through these two reportable segments and describes itself as a full-service, solution-based provider.

Revenue drivers

• Electronic Systems — Designs and manufactures high-reliability electronics and electromechanical products including cable assemblies, printed circuit board assemblies, radar enclosures, avionics racks, and lightning diversion systems for commercial and military aircraft and space programs, plus select industrial, medical and other markets.
• Structural Systems — Supplies complex contoured aerostructure components and composite and metal bonded structures and assemblies, primarily for commercial aircraft, military fixed-wing aircraft, and military and commercial rotary-wing aircraft; the BLR Aerospace acquisition in April 2023 was included in this segment.
• Commercial aerospace end-use market — Drove $12.0 million of the year-over-year revenue increase in Q2 2026, with growth on large aircraft platforms including the Boeing 737 MAX and Airbus A320; Boeing was one of Ducommun's largest customers in 2025.
• Military and space end-use market — Added $7.9 million year-over-year in Q2 2026 on higher rates across missile platforms, notably PAC-3 and SM-6, and fixed-wing platforms such as the F-15, partly offset by lower revenue on a classified program, selected radar, rotary-wing and naval platforms.

Recent performance

Second quarter 2026 net revenue was a record $224.5 million, up 12% from $200.8 million in Q2 2025. Gross margin was a record 28.0%, up 160 basis points year over year, and gross profit rose $9.9 million to $62.9 million. Net income was $20.4 million, or 9.1% of revenue and $1.31 per diluted share, versus $12.8 million and $0.84 per diluted share a year earlier. Adjusted EBITDA was $38.4 million, or 17.1% of revenue, up 130 basis points. Bookings were $309.7 million for a 1.4x book-to-bill, with remaining performance obligations at an all-time high of $1.2 billion.

Strategy

Management is executing toward stated VISION 2027 goals, including an 18% Adjusted EBITDA margin target, and cited revenue, gross margin and Adjusted EBITDA progress plus record RPO as positioning the company well. Acquisitions have been an important growth element, including the April 2023 purchase of BLR Aerospace for $115.0 million net of cash acquired, which added aftermarket-oriented engineered products to Structural Systems. The company is focused on commercial aerospace ramp programs including single-aisle platforms and on its missile franchise, where it expects to benefit from a major ramp-up in missile production. It has also pursued margin improvement through higher manufacturing volume and a facility consolidation program.

Risks

• Customer concentration in Boeing — Boeing was one of Ducommun's largest 2025 customers and the 737 MAX was one of its highest commercial revenue platforms, so production or quality-control problems at Boeing could materially hurt results.
• Restatement and material weakness — Ducommun restated 2025 and 2024 financials and prior quarterly data for stock-based compensation timing and other corrections, and identified a material weakness in internal control over financial reporting.
• Destocking headwinds — Management said it expects continued destocking headwinds in the remaining quarters of 2026, though those pressures have begun to ease gradually.
• Tariffs and trade policy — Since February 2025 the U.S. government imposed tariffs on imports from most trading partners, though some civil-aircraft trade with the UK, Japan and the EU was recognized as tariff-free under WTO rules.

Outlook

Management expects some continued destocking headwinds in the remaining quarters of 2026 but said those pressures are easing gradually. It cited strengthening missile franchise revenue and orders and said the company is positioned to benefit from an expected major ramp-up in missile production. It also pointed to record RPO and first-half performance as supporting progress toward VISION 2027 targets, including an 18% Adjusted EBITDA margin goal.