Ducommun's 2025 Q2 Earnings Call: Unpacking Contradictions in Aerospace Production and Revenue Expectations

Aerospace production rates and growth expectations, defense growth expectations, outlook for aerospace revenue growth, and impact of 787 deliveries on revenue are the key contradictions discussed in Ducommun's latest 2025Q2 earnings call.



Revenue Growth and Strategic Focus:
- Ducommun (DCO) reported a record revenue of $202.3 million for Q2 2025, representing a 2.7% increase year-over-year.
- The growth was driven by increased activity in the defense sector, particularly in missile and radar systems, and strategic divestment of non-core industrial businesses.

Defense Sector Performance:
- Ducommun's defense business grew by 16% during Q2, with key contributors being missile and radar systems.
- The growth is attributed to strong performance in the missile franchise, which increased by 39%, and the defense primes segment, indicating increased scale with customers outside of RTX.

Gross Margin and EBITDA Expansion:
- Gross margin improved to 26.6%, and adjusted EBITDA reached 16% of revenue, up 2.4 million year-over-year.
- The improvements were due to strategic pricing initiatives, engineered product portfolio growth, and restructuring actions.

Financial Outlook and Guidance:
- The company expects mid-single-digit growth in Q3 and low double-digit growth in Q4, driven by Boeing recovery and continued defense momentum.
- The guidance reflects optimistic views on commercial aerospace production rate increases and strong defense order activity.