Ducommun’s third-quarter report delivered a mixed bag: revenue matched expectations, defense programs drove growth, and a large legal settlement sank GAAP profitability. The company beat on adjusted EPS, showed a growing backlog and record bookings, but operating margins were hit hard by a one-time charge. Management laid out a path that leans on defense demand, engineered product mix, and facility consolidation to rebuild margins. Investors now face a trade-off between visible defense momentum and short-term profit pressure from litigation costs.
Ducommun reported third-quarter revenue of $212.6 million, up 5.5% year over year and essentially square with consensus. Adjusted earnings of $0.99 per share topped estimates, while adjusted EBITDA landed near guidance with a 16.2% margin. On a GAAP basis the picture was uglier, as operating margin swung sharply negative driven by a major non-recurring charge. Backlog finished the quarter at $1.14 billion and the company reported a market capitalization near $1.34 billion.
The defense business proved to be the growth engine, offsetting softness in commercial aerospace where customers are still destocking inventory. Management flagged double-digit expansion in missiles and radar programs, with the missile franchise up notably during the quarter. “We achieved this despite continued headwinds in our commercial aerospace business, which has been previously forecasted due to destocking at BA and SPR.”
The headline drag on GAAP results was the $99.7 million charge tied to the Guaymas Fire litigation settlement, a hit that turned what would have been a solid operational quarter into a loss by accounting standards. Management says insurance recoveries will reduce the cash burden in the next quarter, though the timing and magnitude of those recoveries remain important variables. That settlement will dominate near-term comparisons and is the primary reason adjusted metrics differ so much from GAAP numbers.
Order intake was a bright spot, with record new orders of $338 million and a book-to-bill ratio of roughly 1.6x, pushing backlog to multi-quarter highs. That kind of order momentum provides revenue visibility into 2026 and underscores the breadth of demand across defense platforms and certain commercial pockets. Strong bookings give the company runway to shift more revenue toward engineered, higher-margin work as production delivers against those orders.
Ducommun is also pushing a strategic shift toward engineered products and cost efficiencies to lift margins over time. The engineered products mix climbed meaningfully, reflecting a deliberate move toward value-added offerings that carry better pricing power. Facility consolidation, including plant closures and production transfers, is expected to generate annual savings in the $11–$13 million range by 2026 and should help margins as those actions come fully online.
Looking ahead, the story is about execution: converting record bookings into profitable revenue, getting cost savings from consolidation, and watching whether commercial aerospace demand stabilizes. Management framed their positioning optimistically: “We are positioned very well strategically to benefit from the replenishment of depleted worldwide inventories along with robust U.S. and FMS order activity.” Investors will watch the pace of defense awards, signs the Boeing destocking cycle eases, and the realization of cost savings that could restore GAAP margins without relying on non-recurring items.
