Ducommun's Defense Book-to-Bill Reaches 2.2 Times

The Tip Desk · November 7, 2026 · 3 min read

Remaining performance obligations hit a record $1.3 billion as third-quarter revenue reached $227.0 million and gross margin set a 28.9% high.

Ducommun Incorporated (DCO), the aerospace and defense manufacturer, reported remaining performance obligations of $1.3 billion after $354.3 million of bookings in the third quarter ended October 3, 2026, a 1.6x book-to-bill that the company said included defense bookings at 2.2x.

Net revenue reached a record $227.0 million, up 6% from $214.4 million a year earlier, after 12% year-over-year growth in the second quarter. Chairman, president and chief executive officer Stephen G. Oswald said commercial aerospace led the increase, with a 28% year-over-year rise that he said was nearing a $100 million quarterly run rate, partially offset by temporary weakness in defense revenues due to timing of certain programs.

Commercial aerospace end-use revenue rose $21.1 million from a year earlier, versus a $12.0 million increase in the second quarter. Military and space end-use revenue fell $9.2 million year-over-year on lower rates at selected ground vehicle, rotary-wing aircraft, and radar platforms, reversing a $7.9 million year-over-year increase in the second quarter. Oswald said the defense franchise still grew on Tomahawk, MIR, and TOW missiles and on F-15 fixed-wing platforms, offset by temporal weakness on ground vehicles, Blackhawk and Apache rotary-wing aircraft, and select radar programs. Industrial end-use revenue increased $0.8 million, mainly due to timing of orders and production.

Gross margin hit a record 28.9%, up 140 basis points from 27.5% a year earlier, after 160 bps year-over-year expansion to 28.0% in the second quarter. The company said the year-over-year increase was primarily due to higher manufacturing volume along with stronger direct margins from facility consolidation synergy realization and strategic pricing, partially offset by unfavorable product mix. Adjusted EBITDA was $39.7 million, or 17.5% of revenue, up 10 bps from 17.4% a year earlier. Oswald said that brought the company close to its VISION 2027 goal of 18% Adjusted EBITDA by the end of 2027.

GAAP net income was $13.9 million, or $0.89 a share, versus a $60.8 million net loss a year earlier that included $99.7 million of litigation settlement and related costs that did not reoccur. Non-GAAP adjusted net income was $18.8 million, or $1.21 a share. Operating income was $25.8 million, or 11.4% of revenue, compared with an operating loss of $75.3 million, or 35.1% of revenue, in the year-ago quarter. Corporate general and administrative expenses were $14.9 million, or 6.6% of revenue, versus $110.8 million, or 51.7%, a year earlier. Net cash provided by operations was $32.7 million.

Electronic Systems net revenue was $129.6 million, up 3.5% from $125.3 million a year earlier, with operating income of $28.7 million, or 22.2% of revenue, versus $23.3 million, or 18.6%. Structural Systems net revenue was $97.4 million, up 9.3% from $89.2 million a year earlier, while segment operating income fell to $11.9 million, or 12.3% of revenue, from $12.2 million, or 13.7%. The company attributed the Structural Systems operating-income decline primarily to unfavorable product mix, partially offset by higher manufacturing volume and stronger direct margins.

Oswald said the company expects to see momentum continue in its defense business in 2027. At an investor day on September 17, Ducommun launched a VISION 2032 plan with an annual revenue target of $1.6 to $1.7 billion, engineered product mix of 40%, aftermarket mix of 20%, and Adjusted EBITDA margin of 23%.