DCO

DUCOMMUN INC /DE/

NYSE · INDUSTRIALS · AIRCRAFT PARTS & AUXILIARY EQUIPMENT, NEC

168.24

+1.79 +1.08%

USD · close Oct 21

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MKT CAP $2.5BP/E —DIV YIELD —FCF YIELD -0.96%REV TTM $865.1M +9.2%NET INCOME −$21.2M −170.3%NET DEBT $231.6M52W 86.41 – 206.98SEC XBRL · TTM TO Invalid Date

How DCO rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

46%

of sentences unchanged

Added

117

new sentences

Dropped

119

sentences removed

Length

+127

words, now 9,353

New in FY2025

These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect us and our securities in the future.
References to past events are provided by way of example only and not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
CAPITAL STRUCTURE RISKS We require a considerable amount of cash to run our business.
The terms of the 2025 Term Loan require us to make installment payments of 0.625% of the initial outstanding principal balance on a quarterly basis during years one and two, 1.250% during years three and four, and 1.875% during year five, on the last business day of each calendar quarter.
In addition, the undrawn portion of the commitment of the 2025 Revolving Credit Facility is subject to a commitment fee ranging from 0.175% to 0.250%, based upon the consolidated total net adjusted leverage ratio.
As of December 31, 2025, the outstanding balance on the 2025 Credit Facilities (as defined below) was $305.0 million with an average interest rate of 6.10%.
See Note 1, Note 3, and Note 9 to our consolidated financial statements included in Part IV, Item 15(a) of this Form 10-K for further discussion.
Our indebtedness could limit our financing options, adversely affect our financial condition, and prevent us from fulfilling our debt obligations.
On November 24, 2025, we completed a refinancing of our existing debt by entering into a new term loan (“2025 Term Loan”) and a new revolving credit facility (“2025 Revolving Credit Facility”).
The 2025 Term Loan is a $200.0 million senior secured loan that matures in November 2030.
The 2025 Revolving Credit Facility is a $450.0 million senior secured revolving credit facility that matures on November 24, 2030.
The 2025 Term Loan replaced the 2022 Term Loan (“2022 Term Loan”) which was a $250.0 million senior secured loan.
The 2025 Revolving Credit Facility replaced the 2022 Revolving Credit Facility (“2022 Revolving Credit Facility”) which was a $200.0 million senior secured revolving credit facility.
The 2025 Term Loan and 2025 Revolving Credit Facility, collectively are the new credit facilities (“2025 Credit Facilities”).
The terms of the 2025 Revolving Credit Facility do not require us to make installment payments.
However, the undrawn portion of the commitment of the 2025 Revolving Credit Facility is subject to a commitment fee ranging from 0.175% to 0.250%, based upon the consolidated total net adjusted leverage ratio.
At December 31, 2025, we had a total of $305.0 million of outstanding long-term debt under the 2025 Credit Facilities.
The total long-term debt was primarily the result of our acquisitions, including Lightning Diversion Systems, LLC (“LDS”) in September 2017, Certified Thermoplastics Co., LLC (“CTP”) in April 2018, and Nobles Worldwide, Inc.
(“Nobles”) in October 2019, and litigation settlement and related costs, net during the fourth quarter of 2025.
Our level of debt could: • limit our ability to obtain additional financing to fund capital expenditures, investments or acquisitions or other general corporate requirements; • require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions or other general corporate purposes; • increase our vulnerability to adverse changes in general economic, industry and competitive conditions; • place us at a disadvantage compared to other, less leveraged competitors; • expose us to the risk of increased borrowing costs and rising or high interest rates as a portion of our current borrowings under our 2025 Credit Facilities bear interest at variable rates (however, we have interest rate swaps that were effective on January 1, 2024, with an aggregate total notional amount of $150.0 million with a seven year tenor), which could further adversely impact our cash flows; • limit our flexibility to plan for and react to changes in our business and the industry in which we compete; • restrict us from making strategic acquisitions; • expose us to risk of unfavorable changes in the global credit markets; and • make it more difficult for us to satisfy our obligations with respect to the 2025 Credit Facilities and our other debt.
We are required to comply with a leverage covenant as defined in the 2025 Credit Facilities.
The leverage covenant is defined as Consolidated Funded Indebtedness less unrestricted cash and cash equivalents, divided by consolidated earnings before interest, taxes and depreciation and amortization (“EBITDA”) and other adjustments.
In addition, we are required to comply with a Consolidated Interest Coverage Ratio covenant.
The Consolidated Interest Coverage Ratio is defined as consolidated EBITDA and other adjustments to consolidated interest charges paid in cash.
At December 31, 2025, we were in compliance with all covenants under the 2025 Credit Facilities.
However, there is no assurance that we will continue to be in compliance with all the covenants in future periods.
The 2025 Credit Facilities’ agreements contain a number of significant restrictions and covenants that limit our ability, among other things, to incur additional indebtedness, to create liens, to make certain payments, to make certain investments, to engage in transactions with affiliates, to sell certain assets or enter into mergers.
A breach of any covenant in the 2025 Credit Facilities could result in a default under the 2025 Credit Facilities.
The level of trading activity of our common stock may vary daily and typically represents only a small percentage of outstanding shares.
Sales to The Boeing Company (“Boeing”), which now includes Spirit AeroSystems Holdings, Inc.
(“Spirit”), based on Boeing’s December 8, 2025 announcement confirming the closing of its acquisition of all of Spirit’s Boeing-related commercial operations, comprise a significant portion of our commercial aerospace end-use market in 2025.
A significant portion of our net sales in our military and space end-use markets are made under subcontracts with original equipment manufacturers (“OEMs”), pursuant to their prime contracts with the U.
We had significant sales in 2025 to Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), and TransDigm Group Inc.
(“TransDigm”), which completed its acquisition of the Simmonds Precision Products, Inc. business of Goodrich Corporation from RTX Corporation based on TransDigm’s announcement on October 6, 2025, in our defense technologies end-use market.
Our revenues from our top ten customers, which represented 61% of our total 2025 net revenues, were diversified over a number of different aerospace and defense products.
Boeing was one of our largest customers in 2025, and the 737 MAX was one of our highest commercial end use market revenue platforms.
In early January 2024, the Federal Aviation Administration (“FAA”) initiated an investigation into Boeing’s quality control system, which was followed by the agency announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it was satisfied that Boeing attained full compliance with required quality control procedures.
Subsequently, in July 2024, Boeing pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control processes.
More recently, Boeing announced the FAA has cleared Boeing’s plan to raise 737 MAX production from 38 airplanes to 42 airplanes per month.
Accordingly, the success of our business depends upon government spending generally or for specific departments or agencies.

and 77 more.

Gone since FY2024

Any of these risks, uncertainties and other factors could cause our future financial results to differ materially from recent financial results or from currently anticipated future financial results.
CAPITAL STRUCTURE RISKS Our indebtedness could limit our financing options, adversely affect our financial condition, and prevent us from fulfilling our debt obligations.
In July 2022, we completed a refinancing of our then existing debt by entering into a new term loan (“2022 Term Loan”) and a new revolving credit facility (“2022 Revolving Credit Facility”).
The 2022 Term Loan is a $250.0 million senior secured loan that matures in July 2027.
The 2022 Revolving Credit Facility is a $200.0 million senior secured revolving credit facility that matures in July 2027.
The 2022 Term Loan and 2022 Revolving Credit Facility, collectively are the new credit facilities (“2022 Credit Facilities”).
The terms of the 2022 Term Loan require us to make installment payments of 0.625% of the initial outstanding principal balance on a quarterly basis during years one and two, 1.250% during years three and four, and 1.875% during year five, on the last business day of each calendar quarter.
In addition, the undrawn portion of the commitment of the 2022 Revolving Credit Facility is subject to a commitment fee ranging from 0.175% to 0.275%, based upon the consolidated total net adjusted leverage ratio.
At December 31, 2024, we had a total of $243.2 million of outstanding long-term debt under the 2022 Credit Facilities.
The total long-term debt was primarily the result of our acquisitions, including Lightning Diversion Systems, LLC (“LDS”) in September 2017, Certified Thermoplastics Co., LLC (“CTP”) in April 2018, Nobles Worldwide, Inc.
(“Nobles”) in October 2019, and BLR Aerospace, L.L.C.
Our level of debt could: • limit our ability to obtain additional financing to fund capital expenditures, investments or acquisitions or other general corporate requirements; • require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions or other general corporate purposes; • increase our vulnerability to adverse changes in general economic, industry and competitive conditions; • place us at a disadvantage compared to other, less leveraged competitors; • expose us to the risk of increased borrowing costs and rising or high interest rates as a portion of our current borrowings under our 2022 Credit Facilities bear interest at variable rates (however, we have interest rate swaps that became effective on January 1, 2024, with an aggregate total notional amount of $150.0 million with a seven year tenor), which could further adversely impact our cash flows; • limit our flexibility to plan for and react to changes in our business and the industry in which we compete; • restrict us from making strategic acquisitions; • expose us to risk of unfavorable changes in the global credit markets; and • make it more difficult for us to satisfy our obligations with respect to the 2022 Credit Facilities and our other debt.
We require a considerable amount of cash to run our business.
In April 2023, we acquired 100% of the outstanding equity interests of BLR for an initial purchase price of $115.0 million, net of cash acquired, all payable in cash.
We paid a gross aggregate of $117.0 million in cash upon the closing of the transaction.
We utilized the 2022 Revolving Credit Facility to complete the acquisition.
See Note 2 to our consolidated financial statements included in Part IV, Item 15(a) of this Form 10-K for further discussion.
In July 2022, as a result of completing a refinancing of our existing debt, we were required to complete an amendment of all the forward interest rate swaps (“Amended Forward Interest Rate Swaps”) we entered into in November 2021 that were based on U.S. dollar-one month London Interbank Offered Rate (“LIBOR”) to be based on one month Term Secured Overnight Financing Rate (“SOFR”) as borrowings can only be based on SOFR.
The Amended Forward Interest Rate Swaps, with an aggregate total notional amount of $150.0 million and all with a seven year tenor, became effective on January 1, 2024.
The weighted average fixed rate of the Amended Forward Interest Rate Swaps was 1.7%.
At December 31, 2024, the outstanding balance on the 2022 Credit Facilities was $243.2 million with an average interest rate of 7.25%.
See Note 1, Note 4, and Note 10 to our consolidated financial statements included in Part IV, Item 15(a) of this Form 10-K for further discussion.
We require a considerable amount of cash to fund our anticipated voluntary principal prepayments on our Credit Facilities.
Our ability to reduce the debt outstanding under our 2022 Credit Facilities through voluntary principal prepayments will be a contributing factor to our ability to keep our interest rate towards the lower end of the interest rate range as defined in the 2022 Credit Facilities.
Our ability to make such prepayments will depend upon our ability to generate significant cash in the future.
We cannot ensure that our business will generate sufficient cash flow from operations to fund any such prepayments.
We are required to comply with a leverage covenant as defined in the 2022 Credit Facilities.
The leverage covenant is defined as Consolidated Funded Indebtedness less unrestricted cash and cash equivalents in excess of $5.0 million, divided by consolidated earnings before interest, taxes and depreciation and amortization (“EBITDA”) and other adjustments.
At December 31, 2024, we were in compliance with the leverage covenant under the 2022 Credit Facilities.
However, there is no assurance that we will continue to be in compliance with the leverage covenant in future periods.
The 2022 Credit Facilities’ agreements contains a number of significant restrictions and covenants that limit our ability, among other things, to incur additional indebtedness, to create liens, to make certain payments, to make certain investments, to engage in transactions with affiliates, to sell certain assets or enter into mergers.
A breach of any covenant in the 2022 Credit Facilities could result in a default under the 2022 Credit Facilities.
The level of trading activity may vary daily and typically represents only a small percentage of outstanding shares.
Sales to The Boeing Company (“Boeing”), Spirit AeroSystems Holdings, Inc.
(“Viasat”) comprise a significant portion of our commercial aerospace end-use market in 2024.
A significant portion of our net sales in our military and space end-use markets are made under subcontracts with original equipment manufacturers (“OEMs”), under their prime contracts with the U.
We had significant sales to Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), and RTX Corporation (f/k/a Raytheon Technologies Corporation) (“RTX”) in 2024 in our defense technologies end-use market.
Our revenues from our top ten customers, which represented 60% of our total 2024 net revenues, were diversified over a number of different aerospace and defense products.
Boeing was one of our largest customers in 2024, and the 737 MAX was one of our highest commercial end use market revenue platforms.
In early January 2024, the FAA initiated an investigation into Boeing’s quality control system.

and 79 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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