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Sunday, May 28, 2023

Ducommun Makes Biggest Buy Under Oswald

Steve Oswald has arranged for the largest acquisition of his more than six years as the head of Santa Ana-based Ducommun Inc., the aerospace, defense and industrial component maker that is also the oldest company in California.

Ducommun (NYSE: DCO) said last month it was buying BLR Aerospace of Everett, Wash., for $115 million.

BLR, founded in 1992, makes aerodynamic systems that enhance the productivity, performance and safety of helicopters and airplanes, serving commercial and military customers.

It says its products are on more than 10,000 aircraft, and among other things, help helicopters to carry a heavier load.

The deal, Ducommun’s largest purchase in over a decade, is expected to close between now and the end of June, subject to regulatory approval.

The company’s shares were trading at $54.45 apiece as of April 3, for a 9% rise since the start of the year. Its valuation was approaching $650 million as of late last week.

Defense Push

CEO Oswald estimates the BLR acquisition, once it’s approved, will probably bring the company’s headcount up to around 2,300 to 2,400.

Ducommun said it intends to finance the acquisition through its existing revolving credit facility.

Oswald says the purchase comes at a good time for both the company and the aerospace industry.

“We’re very bullish on commercial aerospace,” he told the Business Journal on March 27. “Our defense business is our biggest business. We built it out during COVID. We feel really good about it.”

Oswald noted that electronic warfare fits well with Ducommun since the company does a lot of circuit cards and specialty cards for many defense applications, missiles and jamming equipment.

“The trending for electronics is good for Ducommun.”

Ducommun produces complex products and components for commercial aircraft platforms, mission-critical military and space programs, and sophisticated industrial applications.

They include high-reliability interconnect systems, printed circuit board assemblies, and integrated electronic, electromechanical and mechanical assemblies among others.

Ducommun also contributed to the 2022 successful launch of Artemis I, the first flight of NASA’s Space Launch System and the most powerful rocket engine ever flown to space.

Ducommun’s major customers include Raytheon (NYSE: RTX), Boeing (NYSE: BA), and European aerospace company Airbus.

Raytheon work represented 22% of the company’s net revenue last year, while Boeing was 7%.

“We see Boeing now coming back in a big way,” Oswald told the Business Journal.

The CEO told stock analysts in an earnings conference call on Feb. 16: “The Boeing 737 MAX business is up 37% year-over-year and the Airbus A320 also having significant growth, up 72% year-over-year.”

“Our growing book of business with Airbus is a significant driver of long-term shareholder value,” Ducommun said in its 2022 annual report.

All told, “we had a nice bounce-back in 2022 on the revenue side,” said Oswald, rising to $713 million for a year-over-year increase of just over 10%.

“We’re pretty upbeat.”

“Looking ahead to 2023, with both Boeing and Airbus each planning on hiring 10,000 workers or more this year, we anticipate the commercial aerospace market recovery to continue in earnest,” Oswald said in the earnings release in February.

Before Honest Abe’s Presidency,
There was Ducommun

Ducommun Inc. traces its past back to the time before Abraham Lincoln was president, but plenty has happened since it opened in 1849, one year before California became a state.

The company’s founder was Charles Ducommun, an immigrant from Switzerland.

“Evolving from a hardware supply store opened by Charles Ducommun in Los Angeles during the California Gold Rush, the company assisted in the birth of the aerospace industry in Southern California by providing aircraft aluminum to early aerospace pioneers like Lindbergh, Douglas and Lockheed,” the company says on its website.

Lindbergh was Charles Lindbergh, who became the first person to fly nonstop across the Atlantic, in an historic achievement almost a century ago—when Ducommun had already been in business for 78 years.

As the Los Angeles Times said eight years ago: “Ducommun Inc. has a special place in the business history of California. It began by outfitting prospectors with hardware and sundries during the Gold Rush, more than a century and a half ago. Now, it makes electronic assemblies for the U.S. Navy’s Tomahawk cruise missile.”

The company now specializes in two core areas—Electronic Systems and Structural Systems—to produce complex products and components for commercial aircraft platforms, mission-critical military and space programs, and sophisticated industrial applications.

Ducommun (NYSE: DCO) went public in 1946; its valuation was approaching $700 million as of last week.

—Kevin Costelloe

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Sonia Chung
Sonia Chung
Sonia Chung joined the Orange County Business Journal in 2021 as their Marketing Creative Director. In her role she creates all visual content as it relates to the marketing needs for the sales and events teams. Her responsibilities include the creation of marketing materials for six annual corporate events, weekly print advertisements, sales flyers in correspondence to the editorial calendar, social media graphics, PowerPoint presentation decks, e-blasts, and maintains the online presence for Orange County Business Journal’s corporate events.

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