Ducommun at Jefferies Conference: Strategic Growth in Aerospace

On Wednesday, 03 September 2025, Ducommun Incorporated (NYSE:DCO) participated in the Jefferies Mining and Industrials Conference 2025, where CEO Steve Oswald shared insights into the company’s strategic direction. Oswald highlighted Ducommun’s transition from contract manufacturing to engineered products, emphasizing both growth in the defense sector and challenges in commercial aerospace destocking. The company remains optimistic about achieving its Vision 2027 targets, despite current market fluctuations.

Key Takeaways

• Ducommun aims to achieve an 18% EBITDA margin by 2027, with revenue near $950 million.
• The company is focused on increasing engineered products and aftermarket revenue to 25% of total revenue.
• Defense sector growth is robust, with missile business revenue growing 39% year-over-year in Q2.
• Commercial aerospace faces destocking challenges, but improvement is expected by mid-2026.
• Strategic acquisitions continue to play a critical role in Ducommun’s growth strategy.

Financial Results

Ducommun reported promising financial metrics, projecting revenue in the $900 million range for 2023/2024, with a target of $950 million by 2027. The company’s EBITDA margin has improved from 13% post-COVID to 16.5% currently, aiming for 18% by 2027. Engineered products and aftermarket services currently contribute 23% of total revenue, with a target of 25%.

Operational Updates

In the commercial aerospace sector, Ducommun is experiencing delivery challenges, with Boeing’s MAX production at 38 per month but deliveries at only 27. Improvement is expected by mid-2026. Ducommun is a key supplier for Airbus’s A320 and A220 programs. In defense, the company anticipates significant growth in missile and radar systems, with Raytheon as a major client.

Future Outlook

Ducommun’s Vision 2027 outlines ambitious targets, including a revenue goal of approximately $950 million and an 18% EBITDA margin. The company plans to expand its engineered products to over 25% of revenue. The M&A strategy focuses on acquiring companies with strong market positions and low capital intensity, particularly in aerospace and defense.

Q&A Highlights

During the Q&A session, Oswald addressed the sustainability of defense growth, particularly in missiles, radar, and electronic warfare. He acknowledged the impact of destocking in commercial aerospace but expects improvement by mid-next year. Key drivers for EBITDA margin improvement include growth in engineered products and cost reductions in contract manufacturing.

In conclusion, Ducommun’s strategic focus on engineered products and defense sector growth positions it well for future success. Readers can refer to the full transcript for a detailed account of the conference call.

Full transcript - Jefferies Mining and Industrials Conference 2025:

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: So Good afternoon, everyone. I’m Greg Conrad with the aerospace and defense equity research team at Jefferies, and welcome to the Jefferies Industrial Comp Conference. I’m very excited to have Dukamun with us today and Stephen Oswald, CEO. He’s gonna give a a quick presentation, and then we’re gonna have a little bit of a fireside chat.

And if we have time, we’ll open it up to audience questions. Thank you, Steve.

Steve Oswald, Chairman and CEO, Ducommun: Great. Thanks, Greg. And thanks everybody for joining us. I know it’s already a long day for everyone. I’m just gonna go through these slides for ten minutes and then we’ll do a little q and a and look forward to our our time together.

Again, I’m Steve Oswald, I’m the new common chairman and CEO as well. So let’s get going. You know, disclosures. A lot of people don’t know that we have a rich history. We are the oldest continuous company in California, which is we feel it’s a kind of a big deal.

We’re outfounded in 1849. Ducommun is a family name. It’s a Swiss name. Charles l Ducomann came to New York as an immigrant in 1843 and lived in New York and then eventually made his way to California in 1849 and started as a general store. And Charles walked across the country.

Just a little fun fact. So in 1848, 1849, when you wanted to get to California, you had a walk. So so it took him nine months. He was starved to death. Few other things happened, so it’s a bit bit of a journey.

But, you know, Charles did a great job at starving the so we’ve been we opened our doors every day for a hundred and seventy six years. So we’ve had a lot of different things happening throughout the, obviously, the the many, many decades. And so we’re proud of our heritage, and we just finished our hundred and seventy fifth last year. So, anyway, just a little little thought here. Alright.

So I came in the company January 2017. I came from PE. I was a CEO for private equity, KKR. I ran one of their companies. And before that, was a large cap executive for for many, many, many years at United Technologies, as well as GE and one other company, Herxcellany.

So you can see here the profile, the market cap. I remember my first presentation at Jefferies. I was invited here in 2017. It was very kind of you to have me in, and I told everybody that to buy the stock. I think it was $25, $26.

So we’ve done pretty good. Obviously, with most companies, we had terrible MAX crashes and COVID, so we kinda went up and down. But I think, you know, stock is right around $90 now and had a nice run this year. I feel very good about where we are. You can see our enterprise value, our revenues.

Again, it’s a lot in that revenue number. It’s more interesting. It’s the EBITDA number, which I feel we’ve done a very good job on since 2016, and you can see our percentages. I’ll get into a little more detail, but that’s a little bit of, you know, the last eight years under my leadership. The company, you can see here to your top left, you can see just the LTMs.

We talked about that a little bit. The revenue by market, you can see that we almost 60% on defense. We think that’s a good number for us. We we benefit from that balance. Talk about that later.

Commercial aerospace, we’re sorry. Yeah. Commercial. We’re we’re primarily do a lot of different things, but we’re heavy and narrow body. You can see all the military aircraft, the business jets, missiles.

We’ll talk about a little bit of that later. All the platforms. We’re primarily a tier one, but we also have a tier two position as well in the industry. But over 50% of our revenue is tier one. So we deal directly with RTX and Airbus, Boeing, a lot of the big players in the industry.

Just to break it down a bit further, we go to market with two segments. So as you can see here, we have our left electronic systems, 55%, structural 45. You can see the EBITDA margins and the revenue currently. On the left, we do a lot of things for electronic warfare. So you think about the common air defense business, what does that really entail?

It’s a lot of heavy ruggedized cabling for missiles, lots of cards, lots of things, structural things for for missiles as well on the right side. We also do lightning protection. I’ll get into that a little bit further. Motion control. So we have very good electronic systems business.

Only gonna get better, which I’ll get into key customers. To the right, we have structural systems. We’re involved in lots of things. You can see it there, titanium ammunition handling work. We have a variety of products we go to market with.

We think that’s actually a strength. You can see some of the customers below, so more to come there. This is a very important slide for us. A couple years ago, coming out of COVID, we decided that, you know, okay. We think the world’s stable enough.

We can start thinking about, well, is Boeing ever gonna get better? Is this gonna get better? We kinda got into some assumption making, and we finally came up with this vision 2027. You know? So this was 2022.

We’re gonna be short on the revenue. Just we had dependent on Boeing in 2023, 2024, a little bit better, but they had that terrible incident with the the blood of the part of the fuselage. So that hurt us. So we’re gonna be in the 9 hundreds. Not sure yet.

I mean, still halfway through, but we’ll be in the nines. Maybe, I think, probably around nine fifty or pretty close. And on the right is the EBITDA margins, which I think is a really important story for investors. Coming out of COVID, we’re 13. Right now, we’re about 16 and a half.

Know, year to date is right around 16 plus, and we’re gonna get to 18. So it’s pretty good. I mean, I remember I talked about this. We were at 13 and people said, how are gonna get to 18? Know, they were like they didn’t believe it.

But, you know, we’re more than halfway there or halfway there as we head into 2027. You can see that it’s 16%, so we’re we’re excited about that. And you can see in the middle there, the recipe, obviously, scale. That’s more that’s more on the coming our way, especially with the destocking at Boeing. Defense growth is gonna be good.

I’ll talk about that. We’ve done a good job with acquisitions. Pricing strategy has been good. We’ve been closing factories where it makes sense and driving cost reductions. Investment highlights.

I’ll get to this a little bit in more detail. But if you think about Tucommon, like, took over in 2017, we’re really a contract manufacturing company. We really didn’t have much. We had 9% of our revenue was engineered products and aftermarket, and that’s 23. Right?

So it’s it’s pretty good. So most a quarter of our company is, you know, similar to HEICO, similar to LOR, similar to Transnite. I mean, the same kind of companies, same kind of margins, same kind of aftermarket profiles. So we got a long way to go. Okay?

But we’re happy to be at 23. Our plans in the future are gonna get to thirty and thirty five and forty and fifty, and, you know, what the common is a long play. Right now, our multiple is right around 11 or 12. And we think that, you know, as we build a company, we’re gonna get to fifteen and eighteen and twenty, and we’re gonna get up to some of these other companies that have, you know, much higher multiples than we do right now. So so I think that’s pretty compelling.

So big story there, cost reduction. We’ve done a good job in m and a. When we do buy this company, we bought we bought five companies since I joined the company, all engineered products with aftermarket. And we’ve grown them organically very strong for the most part. So that’s been a real positive thing.

And more to come there. Like I said, with tier one majority and the rest of the business, I’ll get into a little bit more. The other thing is just we’re limited exposure to tariffs, so that’s also a positive thing for everybody. 95% plus of our manufacturing is done in The US. And we have one facility in Mexico, which is under The U USMCA, and our Airbus customer is also covered with the recent EU tariff agreement.

So that’s positive. So like for like there. This is an important slide. This has been my journey since I got to do common. I came in in 2017, and we had a nice contract manufacturing business

And, these are the things that I’ve done along with the team to really build up this portfolio. And, you can see the dates of the acquisitions. I inherited the, HMI, we call human manual machine interface, excuse me, RF switches, and motor and resolvers. The rest we purchased. And you can see down here that checks a lot of boxes for us and hopefully for investors as we move forward in time.

We have a target of 25% of revenue. We’re at 23 now, so we should be in in really good shape there. As well as aftermarket right now, we’re targeting the 15%. So I think that’s gonna happen. So this is really where if you ask me where Ducommun went for $25 to $90, you know, margin expansion, you know, very high.

Even a margin expansion, very high. This is really this is a big part of the story. It’s a big part of the story. So Also, on the contract manufacturing side, we’re we’re driving costs. You can see on the left here, we’ve had some facility consolidations.

We also are doing work in Mexico, and we have a low cost footprint there for for a lot of products. So that’s those plants are closed now and their product is moving. I think that’s gonna be very beneficial for the company and shareholders in the future, so more to come there. M and A is pretty simple. I’m sure you hear it from a lot of CEOs in the space.

You all kinda know the recipe now. It’s, you know, engineered products with aftermarket. And so those are the companies we purchased, and we’re gonna keep going there. We have the, I think, the right people, the right approach. So I think all good things ahead.

I mean, is it competitive? Yeah. It’s competitive, but it’s okay. You know, we think we’re pretty good too. So stay tuned on that.

Commercial aerospace, I know a lot of discussion around that. You know, Boeing, Airbus, destocking. Our Boeing business is only gonna get better. I’m sure you’ve heard from other suppliers. Think I my view is that the the company over the last nine months or at least last six months has really come on.

I deal with the senior management there every month, and I’ve been impressed. Two years ago, I was not impressed, But now I’m very impressed. Okay? People are focused, disciplined, and I think they’re gonna come out of this. You can see our our business there.

We’re primarily a max in July. We’re not really involved in the triple seven, which is fine for us. We’re happy with our position. Airbus, again, when I came in in 2017, we really weren’t even supplying them. So we’re pretty happy that we’ve had a good run with Airbus.

We’re one of their top suppliers, both on the a three twenty family and the a two twenty. So we have a lot of, I think, positive things there. And then business jets have always, you know, better to come a legacy with our titanium. And, you know, we all know the story there. That’s been a a great success for the whole industry.

We’re also doing a lot of things, as I mentioned earlier, in defense. I’m sure you saw in the Wall Street Journal what you might have heard about the the article on missiles and how the replenishment is on the front burner and lots of other things are happening. It’s true. Okay? I mean, we’re seeing it we’re seeing it across the Navy.

The Navy has a standard missile three, standard missile six, and a standard missile two. And if you don’t know what a standard missile is, it’s like a a Mack truck being shot off from a boat going about 500 miles an hour. And all it is is an interceptor, so it’s not it just goes up and knocks whatever’s down. We’re using a lot of them in The Middle East. We use a lot of them to protect Israel.

And so we’re gonna see a big uptick at DCO in ’26 and ’27. We have a lot of missiles. We’re also in radar, and we’re just getting better at that. And you can see over on the right there, we’re in UAVs. We’re gonna be involved in the Golden Dome.

The hypersonics we’re involved in. So I think, you know, our missile business was up. I think we year over year in q two, we’re up, like, 39% year over year. And our revenue in missiles is probably 20% of our defense business. So it’s like so it’s real money for a company our size.

So lots of good things ahead there. One point on our manufacturing on our contract manufacturing side. Contract manufacturing is a is a good business. It’s not a great business. Engineered products are great business.

Contract made for good business. Right? And but the way we go about it is we really do a real niche type of approach. So you can see there, we’re involved in titanium forming, which you have to heat it to 1,800 degrees Fahrenheit and put in a platen and then and then contour it. It’s not many people wanna be involved in that, so it’s a good thing.

Our cards and cables and box bills are hard to do, which we like. We use manufacture ruggedized interconnects. We do a lot of stretch form, and we do do chem mill. And we do it in California, which is something that you can’t really do anymore, but we have the relationships with the regulatory authorities so we can do that. We recycle recycle our chem mill runoff.

And then we also do a composite, which is a homemade IP composite material for nacelles. So when you think about the common, okay, we’re 75% contract manufacturing. That’s a big number. Okay? But what we’re doing there, you know, we’re trying to really be smart and try to only do things that are hard to do, where you have some stickiness with the customer and you have some pricing power.

So that’s a little bit on that. Talked about tariffs. Here’s a good good slide here. You can see our footprint and you can see our sales. And so we maybe just part of it is luck.

This is where we are as far as our footprint, and we feel good about the tariffs. We’ll we’ll see how things develop, but so far, so good for DCO. We’ve seen no no impact really. Okay. Getting back again to the the highlights.

I just went through these earlier, but I gave you a little bit of detail. We’ll go to questions in a minute. But, you know, we’re right now at our vision 2027. We’re gonna come out next year probably with the vision 2030, and then we’re gonna go from there. Alright?

But I think that if you look at our numbers, we’ll get close to nine fifty. Eighteen percent’s in the cards for us, which is a great, great result from where we were. We’re gonna, I believe, be over 25% of engineered products, and that’s really where I think a lot of the value is is on the engineered products and aftermarket side. So that’ll

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: do it.

Steve Oswald, Chairman and CEO, Ducommun: Thank you for listening. Okay, Greg.

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: Thank you. I I think you you did mention the the 39% growth in the the missile segment, and I I think the defense business has been very strong. I mean, how do you think about the the sustainability in defense growth and maybe the the longer term growth rates of defense?

Steve Oswald, Chairman and CEO, Ducommun: Yeah. I think it’s I think it’s I mean, you know, you just look at the headlines today in China. You know? Look at the things that are happening. You know?

I think, overall, the defense industry is gonna continue to to go up. I think Ducommun, we’re, again, we’re we’re really, positioned on, you know, the missile business, the radar business, electronic warfare, you know, we’re we’re double digit growing right now. Our missile business is way up. I see that continuing. Raytheon is our biggest customer.

So Raytheon, you know, basically, you know, with the Patriot and everything else, I mean, they supply 50% of the world with defense products. I mean, it’s like, you know, it’s it’s astounding what Raytheon’s and we’re the we’re one of their top suppliers. So I feel very good about defense. You know, I think that the next two years, especially, we’re gonna see a lot of uptick in volume, a lot of uptick in revenue, and, I think all good things ahead. And then, I mean, I

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: guess it it was somewhat of a a dirty word during q two, but we heard a lot about destocking within commercial aerospace and Yeah. You know, at Boeing and and its suppliers. I mean, how do you think about or or are you seeing any impact to the commercial aerospace, and how do you think about the the trajectory and

Steve Oswald, Chairman and CEO, Ducommun: Yeah. I think I think destocking right now is is is very real. You know, just to give you an example, I mean, you know, Boeing is is they’re making 38 MAXs a month. Right? You know, we we think that’s, you know, that’s accurate and it’s been three or four months now.

But, you know, we’re seeing our deliveries at 27, okay, a month. You know what mean? So we’re seeing, you know, not a disaster, but we’re not seeing, you know, 38 either. So, I went to the Boeing management. I asked them politely.

I said, you know, could I send you the 40 parts that I have? And can you tell me how much inventory you have on? And they said, yeah. Sure. So I said, okay.

So I took them up on their offer. I sent them my letter, right, and got everything. I didn’t really get, like, a great answer, but I got an answer that said, okay. Like, third of your parts, we’ve got probably over a year. A third of your parts, have, like, six or seven months.

In the third of your parts, we have three months. And I think it’s important for everybody to know that that’s what that’s what it’s like at at Boeing right now. They have some parts, they got two years. You know? Some parts, they got a year, and some parts, got, like, you know, three months.

Now this is my own opinion, but, so I think it’s very uneven. I wish it wasn’t, but that’s what we’ve been through the last five years of Boeing. But I think, my view is is that, you know, by mid next year one good thing is all the planes are gone. So I can tell you that what I know is that all the planes from Moses Lake, all the planes from San Antonio, everything that’s been sent or parked, you know, pretty much all that is with customers now, which is a great thing. Right?

So, I’m thinking June, for the most part, things I think would be a lot better. The only sort of wildcard is Spirit AeroSystems because I think, you know, it looks good that hopefully Boeing will buy them. At least for the MAX, they make all the fuselages as you know, and I think they still have quite a bit of fuselages in Kansas. I’m not sure that could be maybe the ’3, but I think for Boeing operations outside of Spirit, I think by the ’2, just with the ramp up, they’re gonna get to 42. I mean, it’s gonna happen.

You know, they’re doing a very good job. I ’47 is a little bit harder for them to do, they tell me, than to get from 38 to 42. So I think that uptick and them, you know, having their act together now, I think, is is all gonna be positive.

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: And then, you know, you gave the the Vision twenty twenty seven targets, 18% EBITDA margins. I think you’re closer to 16% today.

Steve Oswald, Chairman and CEO, Ducommun: We

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: are. Can you maybe talk about the the key drivers going forward to close that gap and, you know, how you think about Yeah.

Steve Oswald, Chairman and CEO, Ducommun: Sure. Thank you. Yeah. So, you know, we started the journey, you know, at, at 13. So in two and a half years, we’ve, you know, we’ve done a good job.

I mean, know, 300 basis points is something we should all be proud of and we are. We got 200 more to go. You ask me how that gets done. You know, a big part of it is, you know, the engineered product businesses or all their EBITDA margins are above 16. Okay?

So, you know, we drive them, we grow them, and, you know, that’s that’s accretive to the numbers. So, so it’s growing our engineered products. It’s taking cost out of contract manufacturing. Right? So we’ve closed those two plants, and that was a big uptick in in in savings.

So so that’s been happening. We’re also a a niche contract manufacturing supplier. So we we really, you know, we get paid for our value. So, you know, we’re gonna if we’re gonna do something, we’re gonna do it where we can provide value, and we’re gonna ask to be paid. Okay?

If if the customer feels like it’s not for them, then they can you know, we’re working them in other areas where they think we can, but we’re not gonna take things. In the past, we used to take things at a loss. We take things like at zero, you know, OI and say, okay. We’re gonna do better on the we have a wish list of all the things we’re gonna that are gonna happen, and none of them ever happen. So, you know, you end up losing money.

So we don’t do that anymore. That was we threw that overboard the first couple years when I was there. I hate losing money, and we’re not gonna do it. So, so I think all those are positive. And last thing is our productivity.

I mean, our revenue per employee has gone way up. If you look at those numbers over the last couple of years, we have a good culture. People care. People care when they show up. You know, we we support the warfighter.

We do things that I think are important to the world, and our people take it, you know, seriously. And then maybe just sticking on margin dynamics, you know, how do

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: you think about the the difference between electronic systems and structural system segments and just the recent trends with mix and and maybe Yeah. How the costs influence the 2025 outlook?

Steve Oswald, Chairman and CEO, Ducommun: Yeah. I think, you know, overall, you know, in general, our gross margins, you know, have done very well. I remember when we came out of COVID in 2022, our gross margins for each quarter in 2022, it was 20%. So it didn’t go up. It didn’t go down.

It was I kept looking every quarter. 20%. 20%. 20%. You know?

And now it’s twenty six point six just recently. So, you know, we’ve got done at least 600 basis points, and I tell my team, you know, there’s no adjustments in gross margin. Okay? It’s just, you know, gross margin is a really good number to tell you how you’re doing in the manufacturing world. And, so the gross margins have gone up.

I think, you know, structural has, you know, been under pressure because of the destocking, been under pressure because, you know, we don’t have the volume we’d like right now. That’s gonna change. Electronics has been better because we do have more defense work. We do have more electronics warfare. We are building our engineered products within both those segments, so that’s helping.

But the structural business is, the better days ahead for their margins as we move into 2026. I I feel good about that. And then,

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: I mean, I I think you talked a little bit about the supply chain. You know, what are you seeing? I mean, I I think back to several years ago, maybe we don’t hear about it as much, but just in terms of managing supply chain risk and any labor constraints across facilities.

Steve Oswald, Chairman and CEO, Ducommun: Yeah. Thank you, Greg. Look. Supply chain, I think, has gotten better for us. I mean, we didn’t you know, versus maybe some other suppliers or other people you hear from, our supply chain for the most part was fairly good through COVID and fairly good coming out of COVID.

I mean, we did buy ahead, so we’re a little strategic with our buying. You know, our inventory took a was a little bit higher, but at least we I feel, we’re strategic in our buying, especially on electronics, because, you know, we had the issues back in, you know, with the automotive businesses and the other things where, we were trying to get circuitry and boards and those type of things. So I think overall, for us, the supply chain deliveries are fine. It’s just about the pricing. You know I mean?

So, you know, you have to be very, very smart in contract manufacturing when you’re buying products and then selling them to Raytheon because, you know, you have to really understand what the dynamics are on the pricing because you’re buying from Amphenol, you’re buying from a lot of companies that make connectors and other things that that Raytheon is sole sourced. So, you know, there’s no I can go down the street and get it from, you know, some other company. We can’t. So they’re gonna raise prices, you know, 10%, 5% a year, and I think we do a very good job on that with our, you know, we’re not signing up for ten year LTAs. We’re not signing up for things that you don’t want us to sign up for because, you know, the pricing is too dynamic.

And, you know, for you to go back and ask for a price increase at Raytheon, it takes six months, And still, they won’t give you an answer. Not to pick on my biggest customer, but, you know, it takes time, to work that through. So we’re we’re we’re as smart as we can. Is it a 100% everything that I want? No.

Because nothing is, especially in in the manufacturing world. But I think more than less, we manage it properly. We’re gonna make sure we’re covered because, you know, at the end of the day, you know, our input costs are are extremely critical for especially our contract manufacturing business. And I think for your question about labor, labor, you know, those that know, I mean, we have a good amount operations in Southern California. Southern California has a a big time legacy aerospace, as you know, pedigree.

So we have no problem finding people in Southern California to do anything. I mean, you know, there’s a lot of talent out there. We were in some small towns in the Midwest where, you know, we see little constraints, but we’re we’re fine. We’re capitalized for this Boeing increase. I mean, Boeing’s telling us 63 a month.

You know, eventually, 63 a month would be fantastic. Maybe that’s 29, maybe that’s 28, but, you know, they’re gonna get to 47, and they’re gonna take it from there. They’re building another assembly line for the MAX that used to be where the 787 was. So, you know, they cleared out the 787. They moved it to the south, and that building’s been empty.

Now they’re gonna put in a new MAX line, and that’s gonna be sort of next year. So I think with another new line and a new day there that we could possibly get there at some point, and that we’ll be okay because we do have the capital. And then you

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: you talked a little bit about the the twenty vision 2027 on the the revenue side. I think you’ve expect optimism of stronger revenue growth in the 2025. I mean, maybe if you could just square those Yeah. That’s good. Key drivers.

Steve Oswald, Chairman and CEO, Ducommun: Yeah. So we’re you know, look. When we I think we did a good job with this the first half because of destocking, because of Boeing, Spirit, that type of thing. You know, we, we guided to, you know, flattish to a little bit up, and that’s where we actually ended up. And that was, you know, going all out, right, which we go all out every quarter.

Right? So for q three, we’re guiding to mid single because we think things are gonna get better now. And then in q four, we’re guiding to low double digits. So we’re gonna be low double digit in q four year over year, and that’s a good job by us. We haven’t been double digit growth in, you know, at least a year, year and a half, so I think that’s coming back.

We don’t guide 2026 until February when we have our our call, but I’m confident we’re gonna have a very good ’26 and ’27. You know, we’ll see, but I think that everything’s heading in the right direction for what we do in a and d.

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: And then, you know, m and a has been a a big part of your strategy. Maybe if you can talk a little bit more about the current pipeline, what capabilities or geographies are you targeting, and how competitive is the landscape

Steve Oswald, Chairman and CEO, Ducommun: Well, look. The the landscape is competitive. Okay. Maybe a little less so in 2017, 2018, 2019 when we were looking at things. You know, we tend to look at companies that are $30.40, $50.75, maybe million in revenue.

So, you know, in the past when we’re looking at things that were smaller, there wasn’t as many people. Right? Because people weren’t as as interested. So we could probably, you know, have a little bit of an easier easier time, but that’s, that’s changed. Our m and a strategy hasn’t changed.

It’s focused on a and d. We’re pretty agnostic as far as what we’re gonna buy. We just want something that has configuration control, that is a leading brand or has a good market position, low capital intensity, okay, where we can manage it properly, and that, has a good aftermarket. And that’s been our that’s been since myself and my CFO, Suman Mukherjee, started we started a couple months apart in 2017. He let he’s led BD.

Now he’s a CFO as well. He that’s what we’ve been working on, and that’s not gonna change. So that’s worked for us. That’s our vision. That’s who we are.

And, you know, we’re, you know, we’re excited. I mean, the book the book of opportunities, I mean, you know, I just looked at something recently. It was right in our wheelhouse, but just wasn’t that good a company. So I said on the I said on the call, you know, in the queue, you know, we’re picky eaters. You know, we have to be.

Right? Because, you know, we have our dry powders, like, 250,000,000 or 225,000,000. So, you know, we don’t have that kinda, you know, strength like Aiko or TransDive or, you know, Alor. So but so we have to be a little bit more discerning, but we we know there are a couple of properties coming up. I’ll also just tell you next week, I’m still gonna be here.

I live in California. I’m going out to Long Island. I’m gonna meet with a a family owned business, which the person is 63, and a couple years they’re gonna sell, but I’m gonna go out there now and meet with this owner and build that relationship. So, hopefully, in a few years, they’ll remember to comment, and we’ll stay in touch. And then so we also have a not only our, you know, banking relationships and everything else, we also have a proprietary product, pipeline that we try to develop the best we can.

So that’s how we do it.

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: And then maybe just one last one. I mean, I I think over the past couple years, I mean, whether it’s the offloading or some of the skins, you you’ve had a a good ability to kinda take share. Where where are you maybe seeing the biggest opportunity?

Steve Oswald, Chairman and CEO, Ducommun: I mean, look. You know, the best the best thing for us, to take share is when it comes out of an OEM’s operation. Right? So, you know, we love that. Right?

Because, know, you the OEM is making circuit cards in Massachusetts, you know, and they’re very intricate cards, and they’re hard to make. They’re not you know, it’s not easy stuff. And they have lots of overhead. You know, they have lots of things going in there. And they decide that, you know, this isn’t really our core.

You know, we make a radar system. We don’t make a card. So they go to us and say, look. You guys already make our cards. We trust you because it has to be a high level of trust.

You know? Because, you know, they’re not gonna put it in there if they don’t think they can get their parts. And so, you know, we developed that over the last four or five years where we had success with Raytheon where they’ve they’ve sent cards to us. They sent their inspection equipment to us. They trained us.

They helped us, and we actually were successful. So so that’s been a nice, you know, thing for sure where, you know, it’s not all about price, you know, because we’re not gonna do that. Right? It’s about value. So they say, okay.

You know, we trust you guys now. We’re doing a little bit with Northrop as well. And then on the commercial arrow so this is all defense. Commercial arrow, Spirit, their sort of structures are us. I don’t know if you’re meant to Spirit in Wichita, but it’s like, you know, nobody can make structures like Spirit.

I mean, they’re they’re just their equipment is just amazing. I mean, it’s just a it’s everywhere, and it’s very unique. Well, couple years ago, we had their ex CEO come to visit us in one of our factories, and we have similar equipment, not to their size, but similar. And basically said, oh, I didn’t know you did this. I didn’t know you did that.

So we basically said, look. You know, we wanna do some of your fuselage skins for the max. Okay? Give us four. Just give us four skins because, like, 30 of them.

It’s like a jigsaw puzzle when you’re making a fuselage skin for a plane. Thirty, thirty five, 40 pieces. So give us four. Let us stretch it. Let us, you know, paint it.

Let us do with this, and that will send it to you. And it’s worked out. So now we’re, you know, on the max fuselage skins. We only have four of them, but, you know, we’re hoping to have 20 of them. Because the thing that I think is gonna happen, when you get up to 63 a month, that ever is gonna happen with these fuselage, there’s no way they’re gonna wanna hire and capitalize the Wichita plant to 63.

They’re not gonna wanna do it. So that’s why we come in. We add some value that way. I know we’re at time, so I will stop there. But thank you, Greg.

And thanks everybody for listening. Appreciate that.

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: Thanks.

Steve Oswald, Chairman and CEO, Ducommun: Okay. Thank you. Thank you.

Greg Conrad, Aerospace and Defense Equity Research Team, Jefferies: Should’ve waited to go out.

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