Ducommun reported record third‑quarter revenue of $212.6 million, a 6 % year‑over‑year increase that marked the company’s 18th consecutive quarter of revenue growth. Gross margin expanded to 26.6 %, matching the level achieved in the first half of the year, while adjusted EBITDA rose to $34.4 million, or 16.2 % of revenue—an increase of 40 basis points from the prior quarter and the third straight quarter above $30 million in adjusted EBITDA. The company posted a net loss of $64.4 million, largely driven by a $99.7 million litigation settlement related to a 2020 fire at its Guaymas, Mexico facility, which is a one‑time charge that does not reflect ongoing operational performance.
Revenue growth was led by the defense segment, which generated $123.1 million in the quarter, up 6.6 % from the same period last year. The structural systems segment contributed $89.5 million, up 4 % YoY. Commercial aerospace revenue remained modest at $99.9 million, reflecting continued destocking by major OEMs; the segment’s decline was partially offset by higher production rates at Boeing and other manufacturers. The mix shift toward higher‑margin defense products helped lift overall revenue despite the aerospace slowdown.
Gross margin expansion was driven by lower other manufacturing costs and the near completion of a restructuring program that reduced overhead. The company also benefited from a favorable product mix, with a higher proportion of high‑margin missile and radar contracts. Adjusted EBITDA margin improvement reflects both the margin lift and disciplined cost management, as operating expenses grew at a slower pace than revenue. The 16.2 % margin is 40 basis points above the prior quarter and 8 % above the $31.9 million adjusted EBITDA reported in Q3 2024.
The $64.4 million net loss was largely attributable to the $99.7 million litigation settlement, of which the company expects to record a net charge of $94 million after insurance recovery. Excluding the one‑time settlement, Ducommun’s GAAP net income would have been positive, underscoring that the underlying business remains profitable. The settlement’s impact is isolated to the quarter and does not affect the company’s long‑term earnings trajectory.
Operating cash flow improved to $18.1 million, up from $13.9 million in Q3 2024, driven by higher gross profit and lower interest expense. The book‑to‑bill ratio reached a record 1.6×, indicating a robust backlog and strong future revenue visibility. Management reiterated full‑year 2025 revenue guidance in the mid‑single digits and forecast accelerated growth in Q4 to low double digits, reflecting confidence in defense demand and a gradual rebound in commercial aerospace.
Stephen G. Oswald, Chairman, President and CEO, said the quarter “was another excellent performance and full‑year 2025 is positioned to be another record year for the Company.” He highlighted that “net revenue grew 6 % to a new quarterly record of $212.6 million, led by strength in our defense business which offset the continued headwinds in commercial aerospace OEM demand.” Oswald added that the company remains optimistic about “greater revenue growth year‑over‑year to close out 2025 and beyond as market demand continues to strengthen in both defense and commercial aerospace.”
Investors reacted positively to the results, with the company’s earnings beat and margin expansion reinforcing confidence in its defense‑centric strategy. The record book‑to‑bill ratio and the company’s guidance for accelerated Q4 growth were cited as key drivers of the favorable market response.
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