DCO · Ducommun Incorporated

Ducommun reported a record first quarter for 2026, with net revenue of $209.0 million, up 9% year-over-year, driven by strong performance in commercial aerospace (up 18%) and defense. The commercial aerospace rebound was led by single-aisle demand for Airbus A220, A320, and Boeing 737 MAX, as well as commercial rotorcraft. Defense growth was supported by the missile franchise, particularly the Patriot platform, and fixed-wing aircraft like the F-35 and F-15. Gross margin expanded 70 basis points to 26.9%, benefiting from favorable product mix, higher manufacturing volume, and lower other manufacturing costs. Operating income surged to $15.7 million (7.5% of revenue) from $5.0 million (2.6%) in the prior year, reflecting higher gross profit and lower SG&A expenses, including a $4.2 million reduction in stock-based compensation. Net income jumped 607% to $9.9 million ($0.64 per diluted share) from $1.4 million ($0.09). On an adjusted basis, EBITDA reached $35.4 million (16.9% of revenue), up 150 bps year-over-year, keeping the company on track toward its VISION 2027 goal of 18% adjusted EBITDA margin. Management noted that while destocking headwinds are expected in the remaining quarters of 2026, the outlook for 2027 and 2028 remains promising, particularly in commercial aerospace and the missile franchise, which is well-positioned to benefit from long-term Department of War framework agreements. The company's Electronic Systems segment posted operating income of $22.9 million (19.5% of revenue), while Structural Systems reported $10.4 million (11.4% of revenue). Corporate G&A expenses declined to $17.6 million (8.4% of revenue) from $22.4 million (11.6%), primarily due to lower stock-based compensation. Operating cash flow improved to $11.2 million from $0.8 million in the prior year, driven by higher net income and contract liabilities.