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- **Revenue Record**: Q3 2025 revenue of $212.6 million (+6% YoY), driven by 13% defense growth and 21% missile expansion.
- **Strategic Progress**: 23% of revenue from engineered products, up from 15% in 2022, with 2026 savings of $11-13 million from facility consolidation.
- **Risk Management**: $150 million litigation settlement resolved, with minimal impact on adjusted results.
- **Defense Dominance**: Missile business up 27% YTD, radar franchise expanding with SPY-6 and TPY-2 programs.
- **Commercial Recovery**: 2026 optimism as Boeing increases MAX build rates, offsetting 2025 destocking headwinds.

**【CEO Summary Section】**
- **Record Revenue Growth**: Q3 2025 revenue reached $212.6 million, up 6% YoY, driven by 13% growth in defense business and 21% expansion in missile programs.
- **Defense Momentum**: Military rotorcraft (+17%), rotary-wing (+22%), and missile franchises (+21%) led growth. Apache tail rotor blade production ramped up in Coxsackie, NY.
- **Bookings Strength**: $338 million in new orders (1.6x book-to-bill), raising RPO to $1.03 billion, a new record.
- **Commercial Aerospace Challenges**: 10% Q3 decline due to destocking, but optimism for 2026 as Boeing increases 737 MAX build rates to 42/month.
- **Strategic Initiatives**: 23% of revenue from engineered products, on track for 25%+ by 2027. Facility consolidation savings expected to reach $11-13 million in 2026.

**【CFO Financial Commentary】**
- **Profitability Metrics**: Gross margin 26.6% (up 40bps YoY), adjusted EBITDA $34.4 million (+$2.5 million YoY). Adjusted EPS $0.99, in line with prior year.
- **Litigation Impact**: $150 million settlement for Guaymas fire (net $95 million cash payment), causing GAAP net loss of $4.30/share but no impact on adjusted results.
- **Liquidity**: $250.7 million available liquidity post-settlement, with revolver capacity fully restored. 2026 leverage expected at 2.3x.
- **Tariffs Mitigation**: <5% of spend from China, minimal impact on margins.

**【Q&A Highlights】**
- **Commercial Aerospace Outlook**: Destocking to persist in 2026, but 787 and MAX programs position DCO for recovery.
- **M&A Strategy**: Liquidity remains strong post-settlement; focused on engineered products and aftermarket acquisitions.
- **Cash Flow Conversion**: Free cash flow to adjusted net income improved to 73% YTD, targeting 100%.
- **Defense Pipeline**: Golden Dome program alignment with radar and missile franchises; SPY-6 radar and Tomahawk production ramping up.

Ducommun Incorporated(DCO)-20251106-2025 Q3 Earnings call transcript

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