 Gross Margin Expansion; Military and Space Revenue Growth; Effectively Responding to Rapidly Changing Industry ConditionsSANTA ANA, Calif., July 30, 2020 GLOBE NEWSWIRE -- Ducommun Incorporated NYSE:DCO Ducommun or the Company today reported results for its second quarter ended June 27, 2020. Second Quarter 2020 Recap Revenue was 147.3 million Net income of 5.1 million, or 0.43 per diluted share Adjusted net income of 5.6 million, or 0.48 per diluted share Gross margin increased 110 basis points year-over-year to 22.2 Adjusted EBITDA was 20.3 millionThis past quarter proved to be one of the most challenging in our history, but Ducommuns performance highlights both the strength and diversity of our business as well as the many measures taken to streamline and optimize our operations since I joined the Company in 2017, said Stephen G. Oswald, chairman, president and chief executive officer. Due to the ongoing COVID-19 pandemic, commercial aerospace demand was negatively impacted but our defense related revenue rose roughly 23 year-over-year, leveraging an array of integral military programs and missile systems. In addition, our military and space backlog increased to over 500 million, bolstering the outlook across this key part of the business.At the same time, despite overall lower revenue, gross margins increased year-over-year due to an improved product mix in defense, effective cost controls, value added pricing and the acquisition of Nobles Worldwide last fall, a key addition to our engineered products portfolio. The team remains focused on rigorous safety protocols, serving our customers, effectively managing working capital, working with the supply base, and reducing costs wherever and whenever possible. We are also confident that Ducommuns strong product portfolio, intellectual property, dedicated staff, and efficient operations will provide positive momentum in the second half of the year and position us for a solid rebound in 2021.Second Quarter ResultsNet revenue for the second quarter of 2020 was 147.3 million compared to 180.5 million for the second quarter of 2019. The year-over-year decrease of 18.4 was primarily due to the following: 51.6 million lower revenue in the Companys commercial aerospace end-use markets due to lower build rates on large aircraft platforms; partially offset by 17.4 million higher revenue in the Companys military and space end-use markets due to additional content and higher build rates on other military and space platforms, and higher build rates on military fixed-wing aircraft platforms and various missile platforms.Net income for the second quarter of 2020 was 5.1 million, or 0.43 per diluted share, compared to 7.8 million, or 0.66 per diluted share, for the second quarter of 2019. This reflects a 5.4 million decrease in gross profit due to lower revenue, partially offset by lower selling, general and administrative SGA expenses of 2.5 million.Gross profit for the second quarter of 2020 was 32.7 million, or 22.2 of revenue, compared to gross profit of 38.1 million, or 21.1 of revenue, for the second quarter of 2019. The increase in gross profit margin as a percentage of net revenue year-over-year was due to lower compensation and benefit costs and favorable product mix, partially offset by unfavorable manufacturing volume.Operating income for the second quarter of 2020 was 10.0 million, or 6.8 of revenue, compared to 13.6 million, or 7.5 of revenue, in the comparable period last year. The year-over-year decrease of 3.6 million was due to lower revenue, partially offset by lower SGA expenses.Interest expense for the second quarter of 2020 was 3.7 million compared to 4.4 million in the comparable period of 2019. The year-over-year decrease was due to lower interest rates, partially offset by a higher outstanding balance on the Companys credit facilities driven by the acquisition of Nobles Worldwide, Inc. Nobles in October 2019, and higher net draw downs on the Companys revolving credit facility, including 50.0 million during the first quarter of 2020, which remained as cash on hand at the end of the second quarter of 2020.Adjusted EBITDA for the second quarter of 2020 was 20.3 million, or 13.8 of revenue, compared to 22.4 million, or 12.4 of revenue, for the comparable period in 2019.During the second quarter of 2020, the net cash provided by operations was 8.6 million compared to 9.7 million during the second quarter of 2019. The change year-over-year was due to higher inventories and lower accounts payable, partially offset by lower accounts receivable. The Company defines backlog as potential revenue and is based on customer placed purchase orders and long-term agreements LTAs with firm fixed price and expected delivery dates of 24 months or less. Backlog as of June 27, 2020 was 830.7 million compared to 910.2 million as of December 31, 2019. Under ASC 606, the Company defines remaining performance obligations as customer placed purchase orders with firm fixed price and firm delivery dates. The remaining performance obligations disclosed under ASC 606 as of June 27, 2020 were 732.2 million compared to 745.3 million as of December 31, 2019.Business Segment InformationElectronic SystemsElectronic Systems segment net revenue for the quarter ended June 27, 2020 was 92.0 million, compared to 89.3 million for the second quarter of 2019. The year-over-year increase was primarily due to the following: 7.7 million higher revenue within the Companys military and space end-use markets due to higher build rates on military fixed-wing aircraft platforms, various missile platforms, and other military and space platforms; partially offset by 6.0 million lower revenue within the Companys commercial aerospace end-use markets due to lower build rates on other commercial aerospace platforms.Electronic Systems segment operating income for the quarter ended June 27, 2020 was 10.4 million, or 11.4 of revenue, compared to 9.9 million, or 11.1 of revenue, for the comparable quarter in 2019. The year-over-year increase of 0.5 million was due to lower compensation and benefit costs.Structural SystemsStructural Systems segment net revenue for the quarter ended June 27, 2020 was 55.4 million, compared to 91.2 million for the second quarter of 2019. The year-over-year decrease was due to the following: 45.5 million lower revenue within the Companys commercial aerospace end-use markets due to lower build rates on large aircraft platforms; partially offset by 9.7 million higher revenue within the Companys military and space end-use markets due to additional content and higher build rates on other military and space platforms, and higher build rates on military rotary-wing aircraft platforms and military fixed-wing aircraft platforms.Structural Systems segment operating income for the quarter ended June 27, 2020 was 6.2 million, or 11.2 of revenue, compared to 11.8 million, or 12.9 of revenue, for the comparable quarter in 2019. The year-over-year decrease of 5.6 million was due to unfavorable manufacturing volume, partially offset by favorable product mix.Corporate General and Administrative CGA ExpensesCGA expenses for the second quarter of 2020 were 6.6 million, or 4.5 of total Company revenue, compared to 8.1 million, or 4.5 of total Company revenue, for the comparable quarter in the prior year. The decrease in CGA expenses was due to a one-time severance charges of 1.7 million in the prior year.Conference CallA teleconference hosted by Stephen G. Oswald, the Companys chairman, president, and chief executive officer, and Christopher D. Wampler, the Companys vice president, interim chief financial officer and treasurer, and controller and chief accounting officer will be held today, July 30, 2020 at 2:00 p.m. PT 5:00 p.m. ET to review these financial results. To participate in the teleconference, please call 844-239-5278 international 574-990-1017 approximately 10 minutes prior to the conference time. The participant passcode is 9433049. Mr. Oswald and Mr. Wampler will be speaking on behalf of the Company and anticipate the call including QA to last approximately 45 minutes.This call is being webcast and can be accessed directly at the Ducommun website at Ducommun.com. Conference call replay will be available after that time at the same link or by dialing 855-859-2056, passcode 9433049.About Ducommun IncorporatedDucommun Incorporated delivers value-added innovative manufacturing solutions to customers in the aerospace, defense and industrial markets. Founded in 1849, the Company specializes in two core areas - Electronic Systems and Structural Systems - to produce complex products and components for commercial aircraft platforms, mission-critical military and space programs, and sophisticated industrial applications. For more information, visit Ducommun.com.Forward Looking StatementsThis press release and any attachments include forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, earnings guidance and any statements about the Companys plans, strategies and prospects. The Company generally uses the words may, will, could, expect, anticipate, believe, estimate, plan, intend, continue and similar expressions in this press release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. 