Ducommun Incorporated Investor Day 2026

Good morning, everyone. Welcome to Ducommun's Investor Day, both all of you here in person as well as an even larger number of people who are joining us remotely today. I am Suman Mookerji, Chief Financial Officer of the company, and with us today we have Steve Oswald, Chairman, President, and Chief Executive Officer, Jerry Redondo, Senior Vice President, Electrical and Structural Systems, and Clay Bringhurst, Vice President, Engineered Products. To get us started here with the fun stuff, the forward-looking statements and disclosures. Certain statements we make today that are not historical facts, including any statements as to future market and regulatory conditions, results of operations and financial projections, including those under our Vision 2027 and Vision 2032 game plans for investors, are forward-looking statements under the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the future results expressed or implied by such statements. Please refer to our annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed with the SEC for discussion of the particular risks facing the company. Statements made today in today's presentation are only as of the time made or as otherwise specified. We do not intend to update any statements made in the presentation except if and as required by regulatory authorities. Today's presentation also includes non-GAAP financial measures. Please refer to the appendix at the end of the presentation for a reconciliation of non-GAAP measures to their GAAP counterparts. With that out of the way, I will pass it on to Steve Oswald.

Steve. Okay, thank you Suman.

Again, let me welcome everybody for our Investor Day. Very much appreciated by everybody that came here in person and those online as well. I want to thank you. It's a very important day for us, for our company, for our shareholders. We don't do this very often. Does anybody know how many days it's been since our last Investor Day? You get a prize. Over 1,000 or under 1,000?

Over 1,000. Yeah, good job.

You get some kind of prize. 1,379 days since we last spoke about Ducommun at our Investor Day. I actually had somebody help me with the math, I'm just kidding, but help me with the math on that yesterday because I think it's an important metric or important number, because we don't get together that often, for these type of things. Again, a very important day. I want to welcome everyone. We're going to be very efficient. We've got quite a few slides and stories to get through, so if you hang in with us, we're going to do our best for you and make sure it's interesting and compelling. For the agenda, I'm going to give an update on the Vision 2027. This is something you all know about.

You're probably sick of hearing me talk about it, but you're going to hear it a little bit longer. Then, what you're waiting for, the Vision 2032 plans, so I look forward to presenting that and I hope that you're excited as we are. Then Jerry and Clay are going to go over both the structural electronic systems product lines. I think they'll be interesting. Then Suman will talk about M&A, where M&A is a big part of who we are and will continue to be, so we look forward to those remarks. Financial performance by Suman, and then I will close, and then we're going to have plenty of time for Q&A. So, let's go. First, for those that don't know or are not that familiar with our story, we're the oldest company in California still active today. So that's kind of cool, right?

We were founded in 1849. Ducommun is a family name. Charles L. Ducommun walked across the U.S. Took him nine months to get from the East Coast to the West Coast. Almost starved to death, but made it. Got out to the Pueblo of Los Angeles and was a watchmaker. Looked around and said, "I'm going to starve if I keep going with these watches." So basically turned to picks and axes and then got into the general store business for a long time. I guess one other thing just to start off, so there's a very important 100th anniversary next year in aviation. Does anybody know what that is? With all these smart people here live. I think someone knows, right? No? All right, so next year is the 100th anniversary of the Spirit of St. Louis and the flight by Charles Lindbergh.

The reason I bring that up is that Ducommun actually supplied the tubular steel, and aluminum for that plane. People don't realize that plane was actually built in San Diego by Claude Ryan's, the old Ryan Air. So, we're going to celebrate that next year. Hopefully you can celebrate it with us. We're really proud of those kind of things and we'll keep going from there. So a little bit of background on the company, which we like. Now, just real quick on the Vision 2027. I'm happy to report that pretty much we're on target. For those getting used to our story, these numbers are the numbers we presented back in December 2022. These numbers, these goals have not changed. These goals are the same goals. We put them out there. The team has worked extremely hard.

I am happy to report that as we stand here today and looking to next year, we will meet our revenue on the left, which is a nice job with all the drama we had with Boeing in 2023 and 2024 and some other things. The adjusted EBITDA margins, we signed up for 500 basis point improvement, we are going to deliver. That is, I think, a very nice job. Then engineered products, which we are going to talk a lot about today. We are also committed to having that roughly 25% of our revenue by the end of next year, and that also is on track. Just a little bit of that. We will report on Vision 2027 next year. It is not going to be like, "Okay, we had the investor meeting. We are on to 2032. Let us forget about it." The usual corporate stuff.

We are not usual corporate people, okay? We are committed. We will make sure we report on it next year and meet our commitments at the end of 2027. Thank you for that. Okay, so when you set goals and you work hard, right, and you have success, and all your people are engaged and you have good products and customers love what you are doing, this is what happens. Okay, so this is a little bit. You can see the journey for our Vision 2027 and over the last 2 years, the magnificent increase in our stock performance. This is a tribute to my team and also our loyal shareholders getting behind our story. You can see the TSR since the end of 2022 is 243%. The market cap has gone way up, and also our average daily traded volume has gone up as well.

We have, I think, really set things up nicely the last 4 or 5 years coming out of COVID, coming out of these terrible MAX crashes, and I think now, just an aside, reflecting on today, there couldn't be a better time for Ducommun to have Investor Day, right? Obviously we are proud of what we do, but also it is good to be a little lucky. This is a great time to talk about Ducommun on our markets, and we will tell you why. Revenue growth, I am not going to get into this too much. This is 2027. I know you are here for the next phase here, but we have had great growth in missiles, radar. Commercial aerospace, I am happy to report, is really coming back, as you know. I was just up at Boeing with the folks a couple of weeks ago for the 737 MAX line, and super impressed.

Kelly and everybody is doing a great job up there, so thanks to them. We have had a lot of organic growth in engineered products, which we will talk about. How did we get to earn the adjusted EBITDA margins of 500 basis points? First and foremost, it is the change in our revenue mix, going more to engineered products and aftermarket. That is critical. When I first came in, that was the number 1 goal. Okay? Is to make sure we change our mix, we build our aftermarket, and we build sole-source engineered products. Okay? Numero uno. Okay? That is what we have been driving towards, as well as making sure, to the right there, we are getting all the value we can and the value of the pricing for contract manufacturing. Then also we are doing some smart things, I think, on restructuring.

And we have done some of that as well for footprint consolidation. Here is the engineered products growth, just to look under the hood a bit here. In 2022, we are $110 million. Next year, we are going to be $250 million. I just want to point out that over $100 million of that is organic growth. Let me just say that again. Over $100 million of that is organic growth. That is our engineering teams getting stronger, our engineering teams getting broader, putting out new products that customers need and want. Okay, so it is not just acquisitions. Acquisitions are important. They will be an important part of our story going forward, so stay tuned for that. A lot of this is, on the right there, all the things we have done to build organic growth in engineered products. So we are thrilled with it. You are going to see this chart a lot.