Ducommun (NYSE:DCO) reported fourth-quarter 2025 results that management said reflected continued progress under its VISION 2027 plan, highlighted by record quarterly revenue, record gross margin, and record adjusted EBITDA margin. Executives also reiterated expectations for a commercial aerospace recovery in the back half of 2026 as Boeing and Spirit AeroSystems-related destocking moderates, while pointing to sustained strength in defense—particularly missiles—as a key driver of bookings and longer-term growth.
Record revenue and margin expansion in Q4
Revenue in the fourth quarter rose 9.4% year over year to a quarterly record of $215.8 million, marking Ducommun’s 19th consecutive quarter of year-over-year revenue growth, according to management. Chairman, President and CEO Stephen Oswald said the company posted its fourth consecutive quarter of double-digit growth in its military and space business, while commercial aerospace returned to growth after being pressured earlier in the year by destocking at Boeing and Spirit.
GAAP earnings per diluted share were $0.48 versus $0.45 in the year-ago quarter. On an adjusted basis, diluted EPS was $1.05 compared with $0.75 in the prior-year period, driven by improved operating income, excluding litigation settlement and related costs.
Bookings, backlog metrics, and a major missile order
Oswald said remaining performance obligations (RPO) increased sequentially by $75 million to a record $1.1 billion, with growth primarily in defense—especially missiles. Ducommun’s overall book-to-bill was 1.3x in the fourth quarter following what management described as a strong third quarter as well.
One of the quarter’s highlights was more than $80 million of orders tied to the “MIR” program supporting Ducommun’s Tulsa and Huntsville, Arkansas operations, which Oswald called one of the largest single-program order wins in company history and said carried “good margins.”
Management also provided more detail on missile-related demand. Oswald said Ducommun booked more than $130 million of missile franchise orders in Q4, with book-to-bill exceeding 4x, including wins tied to MIR, Tomahawk, AMRAAM, Standard Missile programs, and THAAD. He added that Ducommun supplies components on more than a dozen missile platforms, including AMRAAM, MIR, PAC-3, SM-2, SM-3, SM-6, Tomahawk, Naval Strike, and TOW.
Segment performance and consolidation progress
Military and space revenue in Q4 increased to $124 million from $109 million, which management attributed to growth in military fixed-wing and rotorcraft, satellite-related business, and continued increases in missiles and radar.
Commercial aerospace revenue increased 1% year over year to $82 million, with management citing growth on the 787 and Airbus A320 platforms and in-flight entertainment, offset by lower 737 MAX sales amid ongoing destocking.
By segment, Ducommun reported:
- Structural Systems: Revenue rose to $96 million from $90 million. Segment operating margin improved sharply, with adjusted segment operating margin at 17.8% versus 9.2% a year earlier, driven by plant consolidation savings and favorable mix.
- Electronic Systems: Revenue increased to $120 million from $107 million. Adjusted segment operating margin was 18.6% versus 17.7%, reflecting higher manufacturing volume and favorable mix.
CFO Suman Mookerji said facility consolidation projects are complete, all transitioned programs are now in production at receiving sites, and the restructuring initiative begun in 2022 has been closed out as of Q4. The company reiterated a targeted annual savings run rate of $11 million to $13 million by the end of 2026, with management later indicating roughly half of those synergies were already in the P&L run rate and another $6 million to $7 million expected to come through during 2026 as production ramps and learning-curve efficiencies improve.
Guaymas fire litigation settlement and cash flow impacts
Oswald and Mookerji discussed the previously announced resolution related to litigation stemming from the June 2020 Guaymas, Mexico fire. The company entered into a binding settlement term sheet providing for dismissal of the litigation with prejudice and release of claims in exchange for a $150 million payment, with $56 million funded by Ducommun’s insurance carriers. Ducommun also settled two ancillary subrogation claims of $1.35 million and $4 million.
Ducommun recorded $7.6 million of settlement-related costs in Q4, reflected in GAAP earnings. In cash flow, the company reported using $74.7 million in operating cash in Q4 as settlement-related payments were made; excluding $101.2 million of litigation settlement payments, adjusted operating cash flow was $26.5 million versus $18.4 million in the prior-year quarter. For the full year, operating cash flow was negative $33.4 million due to $103.2 million of settlement-related payments; excluding those, adjusted operating cash flow was $69.8 million, more than double 2024’s $34.2 million.
2026 outlook: defense strength, commercial recovery later in the year
Management said it expects mid-to-high single-digit revenue growth in 2026, with first-half growth in the low-to-mid single digits and a ramp in the second half as commercial aerospace destocking eases. Executives described destocking as both customer-driven and internal, noting in Q&A that MAX-related destocking is “more external than internal” and is expected to persist through the first half of 2026 before ebbing later in the year.
On margins, Mookerji suggested investors view the company’s blended full-year margin profile as a better baseline than Q4’s 17.5% adjusted EBITDA margin, given the roughly 100 basis-point mix benefit in the quarter. He characterized a baseline exit closer to about 16.5% EBITDA margin heading into 2026, with improvement opportunities tied to scaling revenue and ramping production on product lines moved during 2025.
The company also addressed tariffs, stating they were not material in Q4 and are not expected to significantly impact results based on Ducommun’s predominantly U.S. manufacturing footprint and largely domestic supply chain. Mookerji said the company expects to mitigate potential impacts through duty-free exemptions for military programs, alternate sourcing, or pass-through to customers where applicable.
In Q&A, management emphasized capacity availability for defense growth, estimating at least 30% room in existing factories to support missile increases and saying incremental capacity investments can be handled within the regular capital expenditure budget. Oswald also noted that Ducommun is supporting hypersonics and counter-hypersonic efforts primarily on the electronics side, including ruggedized interconnects and cabling.
Separately, Ducommun said it amended its credit agreement in Q4, establishing a $200 million term loan and a $450 million revolver. Management said the facility lowers the company’s cost of capital and provides additional capacity to execute on its acquisition strategy; available liquidity at quarter-end was $390 million. Executives said M&A activity has increased, bidding is competitive, and valuations are “not cheap,” while reiterating a disciplined approach.
Looking ahead, Oswald said Ducommun plans to host an investor conference on Sept. 17 in New York, which will include an update on VISION 2027 and a presentation of a new “Vision 2032” plan.
About Ducommun (NYSE:DCO)
Ducommun Incorporated, through its Electronics and Structures segments, provides engineered products and integrated systems for the global aerospace, defense and space markets. The Electronics segment focuses on high-reliability electronic assemblies, cable and wire harnesses, connector systems and harsh environment electronics for flight-critical applications. In the Structures segment, Ducommun manufactures complex metallic and composite components such as flight control surfaces, skin panels, heat exchangers and other aerostructures for commercial and military platforms.
Founded in 1849 in California as a hardware and stagecoach parts supplier, Ducommun expanded into aerospace manufacturing during World War II and has since grown its capabilities through targeted acquisitions and organic investments.
