Ducommun Inc (NYSE:DCO) is experiencing delays in the transfer of certain programs, impacting short-term revenue expectations.
Q: What is Ducommun doing for Northrop Grumman, and where else could they assist? A: Stephen Oswald, CEO, explained that Ducommun is involved in airborne surveillance electronics and power packs for Northrop Grumman's MESA program, which is a significant order. They are the sole source for this program and are looking to expand their partnership with Northrop Grumman.
Q: Regarding the 787, what is the current content value per aircraft, and how will it change with the new share shift? A: Stephen Oswald mentioned that the increase in content value will be in double digits, but specific details will be shared in the next call. This increase is a result of winning a share shift from a competitor.
Q: Are there any standout or challenging companies among the acquired engineered products and aftermarket businesses? A: Suman Mookerji, CFO, stated that there isn't a specific company to highlight as all have performed well across the engineered product portfolio.
Q: How much more work can Ducommun take on without needing to increase CapEx? A: Suman Mookerji noted that the structures business has significant capacity, and they do not foresee significant investments in the near term. The electronic side may require minor expansions, but these are not capital-intensive. CapEx is expected to remain around $20 million annually.
Q: Can you describe the M&A pipeline and current environment? A: Suman Mookerji indicated that there is continuous activity in M&A, with many opportunities being evaluated. They are selective in their acquisitions to ensure the right fit and expect ongoing M&A activity in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.