Ducommun's Strategic Actions Set Stage for Stronger Performance
March 15, 2016 | Business WireEstimated reading time: 11 minutes
Structural Systems
Structural Systems reported net revenue for the current quarter of $61.0 million, compared to $78.3 million for the fourth quarter of 2014. The lower revenue was primarily due to an approximate 36.5% decrease in military and space revenue mainly due to the decline in demand for military fixed-wing and helicopter platforms and a 14.5% decrease in commercial aerospace revenues, both of which were a result of the reasons described in the net revenue explanation above.
Structural Systems reported an operating loss for the current fourth quarter of $(56.0) million, or (91.8)% of revenue, compared to operating income of $6.9 million, or 8.8% of revenue, in the fourth quarter of 2014. This operating loss was primarily due to a non-cash charge of approximately $57.2 million from the impairment of goodwill. 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. An additional factor contributing to the operating loss was an approximate $2.8 million from lower manufacturing volume.
Adjusted EBITDA was $4.6 million for the current quarter, or 7.6% of revenue, compared to $10.5 million, or 13.5% of revenue, for the comparable quarter in the prior year.
Electronic Systems
Electronic Systems reported net revenue for the current quarter of $95.6 million, compared to $109.3 million for the fourth quarter of 2014. The lower revenue was primarily due to an approximate 20.3% decrease in non-A&D revenue mainly due to the closure of the Company’s Houston manufacturing operations during the current quarter, and an approximate 10.3% decrease in military and space revenue mainly due to the decline in demand for military fixed-wing and helicopter platforms, as a result of the reasons described in net revenue above.
Electronic Systems reported an operating loss for the current quarter of $(27.0) million, or (28.3)% of revenue, compared to an operating income of $8.5 million, or 7.8% of revenue, in the fourth quarter of 2014, primarily due to a non-cash charge of approximately $32.9 million from the impairment of an indefinite-lived trade name intangible asset; and approximately $2.9 million from lower manufacturing volume.
Adjusted EBITDA was $11.3 million for the current quarter, or 11.8% of revenue, compared to $13.0 million, or 11.9% of revenue, in the comparable quarter in the prior year.
Corporate General and Administrative Expenses (“CG&A”)
CG&A expenses for the current fourth quarter were $5.6 million, or 3.6% of total Company revenue, compared to $5.3 million, or 2.8% of total Company revenue in the comparable quarter in the prior year. CG&A expenses increased primarily due to higher professional service fees of approximately $1.0 million related to the portfolio repositioning activity, partially offset by lower compensation and benefit costs of approximately $0.7 million.
Full Year Results
Net revenue for the year ended December 31, 2015 was $666.0 million compared to $742.0 million for the year ended December 31, 2014. The year-over-year decline was due to the following:
- Approximately 21.4% lower revenue in the Company’s military and space end-use markets mainly due to a decrease in U.S. government defense spending and shifting spending priorities, which impacted the Company’s fixed-wing and helicopter platforms and pushed out scheduled deliveries of these products to customers; and
- Approximately 3.7% lower revenue from non-A&D end-use markets; which were
- Partially offset by an approximate 3.0% increase in revenue in commercial aerospace end-use markets.
Net loss for the year ended December 31, 2015 was $(73.3) million, or $(6.63) per share, compared to net income of $19.9 million, or $1.79 per diluted share, for the year ended December 31, 2014. The net loss in 2015 was primarily the result of an approximate $57.2 million non-cash goodwill impairment charge in the Structural Systems segment and an approximate $39.5 million of lower gross profit mainly due to lower revenue. Other factors contributing to the reduction in net income from the prior year include 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 $14.7 million loss on extinguishment of debt. These items were partially offset by lower 2015 income tax expense of approximately $39.7 million and lower interest expense of approximately $9.4 million.
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