Ducommun reports results for the first quarter ended march 30, 2013
Los angeles--(business wire)--ducommun incorporated (nyse:dco) (“ducommun” or the “company”) today reported results for its first quarter ended march 30, 2013. first quarter 2013 highlights ducommun posted net income of $3.7 million, or $0.35 per diluted share, including a retroactive income tax benefit of $2.0 million, or $0.19 per diluted share the company reported adjusted ebitda of $17.3 million ducommun made a voluntary principal prepayment of $7.5 million on its term loan on march 28, 2013 the company also completed the repricing of its bank debt, lowering the interest rate on its term loan and revolving credit facility the company’s firm backlog as of march 30 was $638 million “we began the year building on our momentum from 2012, with commercial aerospace and defense technologies shipments remaining solid,” said anthony j. reardon, chairman, president and chief executive officer. “that said, the company’s overall revenue fell year-over-year primarily due to continued weakness in our natural resources and industrial markets. we anticipate that the non-a&d side of our business will improve later in 2013 but, in the interim, are focused on implementing a comprehensive growth strategy in these areas and working diligently to manage working capital and costs. “we’re pleased that ducommun’s overall backlog remains robust, that our aerospace and defense sales increased 4% year-over-year, and segment ebitda margins likewise rose. we also amended our credit agreement during the quarter – saving on interest expense going forward – and paid down an additional $7.5 million of debt. even with the onset of sequestration, we believe the company’s broad capabilities, focus on operating execution, and longstanding customer relationships keep us well positioned for the balance of 2013.” on march 28, 2013, ducommun completed a repricing of its unsecured term loan and revolving credit facility. as a result, interest rates were effectively reduced by 75 basis points through a combination of 50-basis-point lower pricing on the company’s term loan and revolving credit facility and a 25-basis-point lower interest rate floor. in connection with this repricing, ducommun recognized $0.5 million of financing and legal costs included in the company’s selling, general and administrative expenses during the quarter. first quarter results net sales for the first quarter of 2013 were $175.9 million, versus $184.3 million for the first quarter of 2012. the decline in revenue reflected lower sales within the company’s non-aerospace and defense (“non-a&d”) end markets, partially offset by increases elsewhere. net income was $3.7 million, or $0.35 per diluted share, compared to net income of $2.4 million, or $0.23 per diluted share, in the first quarter of 2012. for the quarter ended march 30, 2013, the company recorded an income tax benefit of $1.2 million (a rate of 49.5%), compared to income tax expense of $1.2 million (or 34.0%) for the first quarter of 2012. the effective tax rate benefit for the first quarter of fiscal 2013 included $2.0 million of federal research and development tax credit (“federal r&d tax credit”) benefits as a result of the american taxpayer relief act of 2012, passed in january 2013 as previously reported. the federal r&d tax credit has been extended through 2013, and the company will recognize the benefits throughout the fiscal year. the first quarter 2012 results included no federal research and development tax benefits. operating income for the first quarter of 2013 was $10.3 million, or 5.9% of revenue, compared to $11.9 million, or 6.4% of revenue, in the comparable period last year. operating margins decreased due to the impact of lower net sales and unfavorable product mix, along with expenses of $0.5 million related to the debt repricing. interest expense was lower in the quarter compared to the previous year’s first quarter as the company continued to de-lever its balance sheet. adjusted ebitda for the first quarter of 2013 was $17.3 million, or 9.9% of revenue, compared to $19.0 million, or 10.3% of revenue, for the comparable period last year. during the first quarter of 2013, the company used $6.1 million of cash from operations compared to a use of $4.8 million in the first quarter of 2012. the higher cash usage year-over-year primarily reflects an increase in investments to support new programs and other timing differences. ducommun aerostructures (das) the company’s das segment reported net sales for the first quarter of $72.7 million, compared to $74.3 million in the year-ago quarter. the decrease in revenue was primarily due to lower sales of military and commercial helicopter products, partially offset by higher sales of large commercial aircraft products. das segment operating income was $6.6 million, or 9.1% of revenue, compared to $6.6 million, or 8.9% of revenue, in the same period of 2012. the higher operating margin primarily reflects improved cost performance of new product development. ebitda was $9.0 million for the quarter, or 12.3% of revenue, compared to $8.6 million, or 11.6% of revenue, for the comparable quarter in the prior year. ducommun labarge technologies (dlt) the company’s dlt segment reported net sales of $103.2 million for the first quarter of 2013, down 6% from $110.1 million reported in the same period of 2012. the lower revenue was the result of a 32% decline in sales within the company’s non-a&d end markets, partially offset by a 15% increase in sales of defense technologies products. dlt operating income was $7.9 million, or 7.7% of revenue, compared to operating income of $8.3 million, or 7.5% of revenue, in the first quarter of 2012. ebitda was $12.6 million in the quarter, or 12.2% of revenue, compared to $13.0 million, or 11.8% of revenue, in the comparable quarter of the prior year. corporate general and administrative (“cg&a”) cg&a expenses for the first quarter of 2013 were $4.3 million, or 2.4% of revenue, up from $3.0 million, or 1.6% of revenue, in the prior-year period. cg&a expenses for the first quarter of 2013 included a charge of $0.5 million related to the company’s debt repricing transaction, $0.3 million in non-recurring professional fees, and higher benefits-related costs. backlog ducommun’s backlog was $638 million as of march 30, 2013. conference call a teleconference hosted by anthony j. reardon, the company's chairman, president and chief executive officer, and joseph p. bellino, the company's vice president, treasurer and chief financial officer, will be held today, may 6, 2013 at 2:00 pm pt (5:00 pm et) to review these financial results. to participate in the teleconference, please call 866-318-8613 (international 617-399-5132) approximately ten minutes prior to the conference time stated above. the participant passcode is 63802830. mr. reardon and mr. bellino will be speaking on behalf of the company and anticipate the meeting and q&a period to last approximately 45 minutes. this call is being webcast by thomson reuters and can be accessed directly at the ducommun website at www.ducommun.com. conference call replay will be available after that time at the same link or by dialing 888-286-8010, passcode 86133277. about ducommun incorporated founded in 1849, ducommun incorporated provides engineering and manufacturing services to the aerospace, defense, and other industries through a wide spectrum of electronic and structural applications. the company is an established supplier of critical components and assemblies for commercial aircraft and military and space vehicles as well as for the energy market, medical field, and industrial automation. it operates through two primary business units – ducommun aerostructures (das) and ducommun labarge technologies (dlt). additional information can be found at www.ducommun.com. statements contained in this press release regarding other than recitation of historical facts are forward-looking statements. these statements are identified by words such as “may,” “will,” “ begin,” “ look forward,” “expect,” “believe,” “intend,” “anticipate,” “should”, “potential,” “estimate,” “continue,” “momentum” and other words referring to events to occur in the future. these statements reflect the company’s current view of future events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, including, but not limited to, the state of the world financial, credit, commodities and stock markets, and uncertainties regarding the company, its businesses and the industries in which it operates, which are described in the company’s filings with the securities and exchange commission. the company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. ducommun incorporated and subsidiaries
