Ducommun (NYSE:DCO) reported a stronger first quarter for fiscal 2026, with management pointing to growth in both commercial aerospace and defense, improving margins and continued progress toward the company’s Vision 2027 targets.
Chairman, President and CEO Steve Oswald said revenue reached a first-quarter record of $209 million, up 9% from a year earlier. He described the period as Ducommun’s fourth consecutive quarter with revenue above $200 million and its 20th consecutive quarter of year-over-year revenue growth.
“The Q1 2026 results show again that strategy initiatives are working,” Oswald said, citing gross margin and adjusted EBITDA margin trends that he said remain on track with the company’s long-term goals.
Commercial aerospace rebounds, defense remains steady
Oswald said commercial aerospace revenue increased 18% year over year to $84 million, helped by higher production deliveries, higher OEM production rates and lower-than-expected destocking. He highlighted growth on Airbus platforms including the A220 and A320, as well as Boeing’s 737 MAX. Ducommun also saw growth in commercial rotorcraft tied to Bell platforms from its Coxsackie, New York, facility.
The company cautioned that destocking has not fully ended. Oswald said Ducommun still expects some impact during the remaining three quarters of 2026, though he said the pressure should begin to dissipate toward year-end, particularly around legacy Spirit AeroSystems MAX fuselage operations in Wichita, now owned by Boeing.
In the military and space business, revenue rose 5% to $118 million from $112 million a year earlier. Oswald said growth was driven by military fixed-wing and missile programs, partly offset by weakness in radar and electronic warfare, ground vehicles and marine programs due to order timing.
Ducommun’s missile business increased 22% in the first quarter, following 20% growth in 2025. Oswald said the company is well-positioned on programs including Tomahawk, PAC-3, Standard Missile-3 and Standard Missile-6, and expects expanded production under recent long-term Department of Defense framework agreements with major defense primes to support growth beginning in 2027 and beyond.
Margins and earnings improve sharply
Chief Financial Officer Suman Mookerji said gross profit increased to $56.2 million, or 26.9% of revenue, compared with $50.5 million, or 26.2% of revenue, in the prior-year quarter. Operating income rose to $15.7 million, or 7.5% of revenue, from $5 million, or 2.6% of revenue, a year earlier.
Adjusted operating income was $18 million, or 8.6% of revenue, compared with $7.6 million, or 4.0% of revenue, in the prior-year period. Adjusted EBITDA was $35.4 million, or 16.9% of revenue, up $5.7 million from the first quarter of 2025.
Ducommun reported net income of $9.9 million, or $0.64 per diluted share, compared with $1.4 million, or $0.09 per diluted share, a year earlier. Adjusted net income was $11.7 million, or $0.75 per diluted share, compared with $3.5 million, or $0.23 per diluted share, in the prior-year quarter.
Mookerji said the improvement was driven by higher operating income. He also said facility consolidation projects completed at the end of 2025 should continue contributing synergies through 2026 as production ramps on transferred product lines.
Segment results show strength in electronics
Ducommun’s Structural Systems segment posted revenue of $91 million, up from $83 million a year earlier. Mookerji said the increase reflected $8 million in higher commercial aerospace revenue, driven by single-aisle aircraft platforms and commercial helicopters. Segment operating income was $10.4 million, or 11.4% of revenue, compared with $9.9 million, or 11.9% of revenue, a year earlier. Adjusted segment operating margin declined to 13.4% from 14.5%, which Mookerji attributed to unfavorable sales mix, partly offset by plant consolidation savings.
Electronic Systems revenue increased to $118 million from $109 million. The segment benefited from higher military and space revenue tied to fixed-wing aircraft, missiles and rotorcraft, as well as commercial aerospace growth on the 737 and A220 platforms. Industrial revenue declined by $1.4 million due to timing of orders.
Electronic Systems operating income rose to $23 million, or 19.5% of revenue, from $17 million, or 16.0% of revenue, in the prior-year period. Adjusted segment operating margin improved to 19.8% from 16.4%, driven by higher manufacturing volume and favorable sales mix.
Backlog, liquidity and guidance
Oswald said remaining performance obligations were nearly $1.1 billion, up $86 million from the prior-year first quarter. The company booked more than $175 million in orders during the quarter and $925 million over the past 12 months. The trailing 12-month book-to-bill ratio was 1.1, including 1.2 in defense and 1.0 in commercial aerospace.
Ducommun reiterated its full-year 2026 revenue growth guidance of mid- to high-single digits. Oswald said the stronger-than-expected first quarter in commercial aerospace and the timing of destocking effects now lead management to expect revenue growth to be “relatively level loaded” across the year.
Cash flow from operating activities was $11.2 million in the quarter, compared with $0.8 million in the first quarter of 2025. Mookerji said the increase was driven by higher net income and contract liabilities, partly offset by higher accounts receivable and lower accrued liabilities. Ducommun ended the quarter with $384 million of available liquidity, including cash and unused revolver capacity.
Management points to missile orders and M&A opportunities
During the question-and-answer session, Oswald said Ducommun is in “heavy discussion” with defense primes on missile-related orders, but had nothing new to announce. He said order activity could begin to appear in the second half of 2026, with revenue impact later in 2027. Mookerji clarified that the timing discussed referred first to orders, with revenue following later.
On capacity, Oswald said Ducommun does not expect to need additional footprint to support missile production ramps, noting available space and labor-hour capacity at some facilities. He said the main challenge after orders arrive will be hiring and training qualified workers.
Asked about acquisitions, Mookerji said Ducommun remains active but disciplined, adding that the company has come close on several opportunities over the past 18 months. Oswald said the company has the capital and team to pursue deals but remains selective.
Oswald closed the call by saying the company is “very, very happy” with the start to 2026. He also said Ducommun plans to discuss an update to Vision 2027 and introduce a new “Vision 2032” roadmap at an investor day in September.
About Ducommun (NYSE:DCO)
Ducommun Incorporated, through its Electronics and Structures segments, provides engineered products and integrated systems for the global aerospace, defense and space markets. The Electronics segment focuses on high-reliability electronic assemblies, cable and wire harnesses, connector systems and harsh environment electronics for flight-critical applications. In the Structures segment, Ducommun manufactures complex metallic and composite components such as flight control surfaces, skin panels, heat exchangers and other aerostructures for commercial and military platforms.
Founded in 1849 in California as a hardware and stagecoach parts supplier, Ducommun expanded into aerospace manufacturing during World War II and has since grown its capabilities through targeted acquisitions and organic investments.
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