Ducommun CEO optimistic about strong 2008
Ducommun Inc. (NYSE:DCO) CEO Joseph Berenato said the company, a maker of aerospace structural components and subassemblies, said the firm is optimistic about the Carson, Calif.-based firm’s future. Berenato made the comments during a Monday morning conference call.
“Even though we’ve seen some tremors to the economy at large, we still see our future as pretty bright and although it’s filled with some risks, we think predominantly it’s filled with opportunity,” Berenato said. “We’ve had a good first quarter and we look forward to a strong year.”
Before Monday’s opening, Ducommun reported that its first-quarter revenue rose 12% to $98.7 million, compared with $88.1 million a year earlier. The results bested Wall Street’s expectation of $96.2 million in revenue.
“We’ve started 2008 with a solid performance and as we look forward, the commercial markets continue to look strong,” Berenato said. “Build rates are high.”
Net income for the three months ended March 29 surged 29% to $5.3 million, or $0.49 per share, versus $3.8 million, or $0.37 per share, a year ago, when the quarter ended on March 31. The earnings numbers also beat Wall Street analysts’ earnings estimate of $0.44 per share.
Operating costs and expenses increased 10% to $90.1 million, from $81.8 million during the prior-year period. Gross profit, as a percentage of sales, rose to 21.2% during the quarter, from 21% during the first quarter of 2007. The firm’s effective tax rate during quarter clocked in at 36.8%, versus 32.1% during the same period of 2007.
“We’re driving growth through capital expenditures, R&D and acquisitions,” Berenato said. “Those growth elements are driven by our policy deployment and [Lean and Six Sigma business optimization methodology] efforts.”
During the first quarter, 59% of Ducommun’s business came from military, which matched the results of 2007’s first quarter. The commercial segment rose slightly to 39% compared with 39% a year earlier. The space segment declined to 2% from 3% during the same period of 2007. The company’s order backlog at the end of the first-quarter was $392 million, compared with $353 million at year’s end.
“According to the comments of the CEO of Boeing and others, we look for this commercial cycle to last through 2011,” Berenato said.
In response to an analyst’s inquiry, Berenato said Ducommun is continuing to interview candidates in its search for a new chief financial officer. Ducommun’s former CFO Gregory A. Hann resigned on Nov. 19. Reasons for Hann’s resignation were not provided.
“We continue to look for the right guy and we’re not trying to make it as fast as possible. We’ve seen several good candidates and we’re taking them into the second and third round of interviews,” Berenato said. “I would hope that we would be successful in the second quarter of announcing a successor.”
During midday Monday trading, DCO shares are up 1.61%, or $0.52, at $32.90. Shares have ranged between $23.19 and $42.70 over the last 52 weeks.
