Ducommun's Strategic Actions Set Stage for Stronger Performance
March 15, 2016 | Business WireEstimated reading time: 11 minutes
In the fourth quarter of 2015, the Company renamed its operating segments as Electronic Systems segment and Structural Systems segment. Electronic Systems was formerly known as Ducommun LaBarge Technologies (“DLT”) and Structural Systems was formerly known as Ducommun AeroStructures (“DAS”). There was no regrouping of revenues or expenses as a result of these name changes.
Net revenue for the fourth quarter of 2015 was $156.6 million, compared to $187.6 million for the fourth quarter of 2014. The year-over-year decline was due to the following:
- Approximately 18.6% lower revenue in the Company’s military and space markets. This was due to a decrease in U.S. government defense spending and shifting spending priorities which impacted scheduled deliveries on the Company’s fixed-wing and helicopter platforms;
- Approximately 20.3% lower revenue in the Company’s non-aerospace and defense (“non-A&D”) end-use markets. This was due to the closure of the Company’s Houston manufacturing operations during the current quarter; and
- Approximately 11.6% lower revenue in the Company’s commercial aerospace end-use markets. This was due to year end schedule slides on certain regional jet programs.
Net loss for the fourth quarter of 2015 was $(63.6) million, or $(5.74) per share, compared to a net income of $5.2 million, or $0.46 per diluted share, for the fourth quarter of 2014. The net loss in the fourth quarter of 2015 was primarily the result of an approximate $57.2 million non-cash goodwill impairment charge in the Structural Systems segment, a $32.9 million non-cash charge related to the impairment of the indefinite-lived trade name in the Electronic Systems segment, and an approximate $5.7 million attributable to lower manufacturing volume. The difference in the results was also impacted by a 2014 nonrecurring reversal of an approximate $3.4 million forward loss reserve related to a customer settlement. These items were partially offset by lower fourth quarter 2015 income tax expense of approximately $25.5 million and lower interest expense of approximately $4.8 million.
The current quarter effective income tax benefit rate was 29.5% compared to an effective income tax benefit rate of 27.8% in the prior year’s quarter.
Operating loss for the fourth quarter of 2015 was $(88.6) million, or (56.6)% of revenue, compared to operating income of $10.1 million, or 5.4% of revenue, for the comparable period in 2014. The change to an operating loss in the fourth quarter of 2015 compared to the prior year period was primarily due to the items that affected operating (loss) income described in net loss above.
Interest expense decreased to $2.2 million in the fourth quarter of 2015, compared to $7.0 million in the previous year’s fourth quarter primarily due to a lower outstanding debt balance and lower interest rate on the debt as a result of the Company completing the refinancing of its debt in July 2015.
Adjusted EBITDA for the fourth quarter of 2015 was $11.0 million, or 7.0% of revenue, compared to $19.4 million, or 10.3% of revenue, for the comparable period in 2014.
During the fourth quarter of 2015, the Company generated $11.6 million of cash from operations compared to $32.6 million during the fourth quarter of 2014.
The Company’s firm backlog as of December 31, 2015 was approximately $545.8 million.
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