Ducommun Inc Continues to Grow with Record Revenue in Q4

Ducommun Inc (NYSE:DCO) achieved a record quarterly revenue of $212.6 million in the third quarter of 2025, indicating year-over-year growth for the 18th consecutive quarter.

The defense sector recorded a growth of 13%, with a contribution from a 21% increase in the missile sector. Gross profit margins rose to 26.6%, benefiting from strategic pricing initiatives and efficiency improvements.

The company achieved a 1.6x book-to-bill ratio, and remaining performance obligations reached a record level of $1.03 billion. Adjusted EBITDA reached 16.2% of revenue, marking significant progress toward the 18% target set for 2027.

The commercial aerospace sector experienced a 10% revenue decline due to inventory reductions at Boeing and Spirit AeroSystems. Additionally, Ducommun Inc reported a $64.4 million GAAP net loss in the third quarter of 2025; a significant portion of this loss was attributable to legal settlements related to the Guaymas fire. The company is still affected by inventory reductions in the commercial aerospace sector, and this situation is expected to continue into 2026.

A significant cash outflow of $95 million occurred due to legal settlements, impacting liquidity. The restructuring program has incurred additional costs, with a projected $500 million in restructuring expenses forecasted by the end of this year.

CEO Steve Oswald noted that the Max production rate, affected by Boeing and Spirit, is currently around 26-28 per month, while emphasizing their target to produce parts for 30-40 aircraft per month. He also reported growth in orders from Boeing and Airbus, specifically with additional orders for Airbus platforms.

Chief Financial Officer Suman Mukherjee stated that while pressure from inventory reduction in commercial aerospace is expected to continue in the fourth quarter, the overall mid-to-long-term outlook remains positive. Strong order intake in the defense sector is anticipated to have favorable effects in the fourth quarter.

Management indicated that the engineering products segment accounted for 23% of the revenue mix, and this growth occurred organically, also stating that they will focus on acquisitions to further strengthen this segment. Opportunities for margin expansion in 2025 and 2026 are present, and transitioning product lines to lower-cost locations is expected to yield savings.