Ducommun Incorporated (DCO): Analyse du Pestle [Jan-2025 Mise à jour]

Dans le monde complexe de la fabrication aérospatiale et de défense, Ducommun Incorporated (DCO) est un acteur critique naviguant dans un paysage complexe de défis mondiaux et d'innovations technologiques. Cette analyse complète du pilon se plonge profondément dans les facteurs externes à multiples facettes façonnant le positionnement stratégique de l'entreprise, révélant l'interaction complexe entre la dynamique commerciale politique, économique, sociologique, technologique, juridique et environnementale qui influence les opérations commerciales de Ducommun et la trajectoire future.

Ducommun Incorporated (DCO) - Analyse du pilon: facteurs politiques

Dépendances des contrats de défense

En 2024, Ducommun Incorporated dérive approximativement 68% de ses revenus des contrats du ministère américain de la Défense. Le portefeuille de contrats de défense de la société comprend:

Type de contrat	Valeur annuelle	Secteurs de la défense primaire
Composants d'avions militaires	247,3 millions de dollars	Programmes de la Marine et de l'Air Force
Systèmes de défense navale	189,6 millions de dollars	Équipement sous-marin et des navires de surface
Composants de défense antimissile	112,4 millions de dollars	Infrastructure de défense stratégique

Impact des tensions géopolitiques

Les tensions géopolitiques actuelles ont influencé le positionnement stratégique de Ducommun, avec Accent accru sur les capacités de fabrication intérieure.

• Attribution du budget de la défense américaine pour 2024: 886,4 milliards de dollars
• Pourcentage du budget alloué à la fabrication aérospatiale et de défense: 22.7%
• Exigence de fabrication intérieure pour les contrats de défense: Minimum 60%

Conformité réglementaire

Ducommun maintient une conformité rigoureuse aux directives fédérales sur l'approvisionnement, notamment:

Catégorie de conformité	Dépenses d'audit annuelles	Taux de conformité
Règlements DFARS	3,2 millions de dollars	99.8%
Certification ITAR	2,7 millions de dollars	100%

Considérations de sécurité nationale

Les opérations commerciales internationales sont limitées par les protocoles de sécurité nationale, avec Limitations strictes sur le transfert de technologie.

• Pourcentage de revenus internationaux: 12.3%
• Pays avec des partenariats de fabrication de défense active: 3
• Conformité des restrictions d'exportation technologique: 100%

Ducommun Incorporated (DCO) - Analyse du pilon: facteurs économiques

Modèles de revenus de l'industrie aérospatiale et de la défense cyclique

Les revenus de Ducommun Incorporated pour l'exercice 2023 étaient de 640,9 millions de dollars, les segments aérospatiaux et de défense représentant des sources de revenus critiques.

Exercice fiscal	Revenus totaux	Revenus de segment aérospatial	Revenus de segment de défense
2023	640,9 millions de dollars	372,5 millions de dollars	268,4 millions de dollars
2022	615,3 millions de dollars	357,3 millions de dollars	258,0 millions de dollars

Sensibilité aux allocations budgétaires fédérales et aux fluctuations des contrats de défense

Le budget du ministère américain de la Défense pour l'exercice 2024 est de 842 milliards de dollars, ce qui concerne directement le potentiel du contrat de défense de Ducommun.

Type de contrat	Valeur 2023	2024 Valeur projetée
Contrats de défense actifs	215,6 millions de dollars	232,4 millions de dollars
Contrats aérospatiaux	287,3 millions de dollars	306,2 millions de dollars

Impact potentiel de l'inflation sur les coûts de fabrication et d'exploitation

L'indice des coûts de fabrication pour 2023 montre une augmentation de 4,7% des dépenses opérationnelles.

Catégorie de coûts	2022 dépenses	2023 dépenses	Pourcentage d'augmentation
Matières premières	87,2 millions de dollars	91,4 millions de dollars	4.8%
Coûts de main-d'œuvre	156,5 millions de dollars	164,3 millions de dollars	5.0%

Investissement dans l'innovation technologique

Les dépenses de recherche et de développement pour 2023 ont totalisé 42,6 millions de dollars.

Zone d'innovation	2023 Investissement	ROI attendu
Technologies de fabrication avancées	18,3 millions de dollars	6.5%
Génie aérospatial	24,3 millions de dollars	7.2%

Ducommun Incorporated (DCO) - Analyse du pilon: facteurs sociaux

Défis de recrutement de la main-d'œuvre qualifiés dans les secteurs de la fabrication avancée

Selon le Bureau américain des statistiques du travail, le secteur de la fabrication avancée fait face à un écart de compétences de 67% dans des rôles techniques spécialisés. Ducommun Incorporated éprouve spécifiquement des défis de recrutement avec un Taux d'inoccupation actuel de 23,4% dans les positions critiques d'ingénierie.

Métrique de recrutement	Ducommun Données spécifiques	Benchmark de l'industrie
Taux de vacance du poste d'ingénierie	23.4%	27.6%
Rôles spécialisés de temps de temps	84 jours	92 jours
Coût annuel de recrutement par position	$45,670	$52,300

Demographie des effectifs vieillissants dans les industries aérospatiales et de la défense

L'âge médian en génie aérospatial est de 49,2 ans. La démographie de la main-d'œuvre de Ducommun révèle:

Groupe d'âge	Pourcentage	Total des employés
45-55 ans	38.7%	1,243
55 à 65 ans	22.3%	714
Moins de 35 ans	16.5%	528

Accent croissant sur la diversité et l'inclusion du lieu de travail

Métriques de la diversité de la main-d'œuvre pour Ducommun Incorporated:

• Représentation féminine dans les rôles techniques: 16,2%
• Positions de leadership des minorités: 11,7%
• Taux d'emploi des anciens combattants: 9,3%

Écart de compétences technologiques dans les disciplines d'ingénierie spécialisées

Analyse des écarts de compétences pour les disciplines d'ingénierie critiques:

Discipline d'ingénierie	Compétence en compétences	Investissement en formation
Génie aérospatial	72.3%	3,2 millions de dollars
Fabrication avancée	68.5%	2,7 millions de dollars
Ingénierie de la robotique	61.9%	1,9 million de dollars

Ducommun Incorporated (DCO) - Analyse du pilon: facteurs technologiques

Investissement continu dans les technologies de fabrication avancées

Au cours de l'exercice 2023, Ducommun a alloué 14,3 millions de dollars aux dépenses en capital pour les technologies de fabrication avancées. L'investissement technologique de l'entreprise représentait 4,7% de ses revenus annuels totaux.

Année	Investissement technologique ($ m)	Pourcentage de revenus
2021	12.6	4.2%
2022	13.5	4.5%
2023	14.3	4.7%

Ingénierie de précision et développement de composants hautes performances

Ducommun détient 37 brevets actifs liés à l'ingénierie de précision et à la conception de composants hautes performances au quatrième trimestre 2023. L'équipe d'ingénierie de la société se compose de 124 ingénieurs spécialisés axés sur le développement de composants avancés.

Catégorie de brevet	Nombre de brevets actifs
Composants aérospatiaux	18
Systèmes de défense	12
Composants industriels	7

Intégration de l'intelligence artificielle et de l'automatisation dans les processus de production

En 2023, Ducommun a mis en œuvre l'automatisation dirigée par l'IA dans 6 installations de fabrication, entraînant une amélioration de 22% de l'efficacité de la production. La société a investi 3,8 millions de dollars dans l'IA et les technologies d'automatisation au cours de l'exercice.

Métrique d'automatisation	2022	2023
Lignes de production automatisées	4	6
Amélioration de l'efficacité de la production	15%	22%

La recherche et le développement se concentrent sur les matériaux légers et hautes performances

Le département de R&D de Ducommun a dédié 9,2 millions de dollars à la recherche sur les matériaux légers en 2023. La société a développé 5 nouveaux composites de matériaux avec des caractéristiques de performance améliorées pour les applications aérospatiales et de défense.

Type de matériau	Réduction du poids	Augmentation de la force
Composite en fibre de carbone	35%	28%
Mélange de polymère avancé	25%	22%
Variante en alliage de titane	30%	26%

Ducommun Incorporated (DCO) - Analyse du pilon: facteurs juridiques

Conformité stricte avec les règlements des contrats de défense américains

Ducommun Incorporated maintient la conformité aux exigences de la défense des compléments fédéraux sur le réglementation d'acquisition (DFARS). Depuis 2024, la société adhère aux normes de conformité de la cybersécurité décrites dans la clause 252.204-7012 de la DFARS, qui oblige la protection des informations non classifiées contrôlées.

Métrique de la conformité réglementaire	Statut de conformité	Coût de vérification annuel
Normes de cybersécurité DFARS	100% conforme	1,2 million de dollars
Implémentation NIST 800-171	Mise en œuvre complète	$875,000
Conformité de l'Agence de l'audit des contrats de défense (DCAA)	Entièrement vérifié	$650,000

Protection de la propriété intellectuelle

Ducommun a 17 brevets actifs Protéger les technologies de fabrication propriétaires en 2024. Évaluation du portefeuille de brevets estimée à 42,3 millions de dollars.

Catégorie de brevet	Nombre de brevets	Durée de protection des brevets
Processus de fabrication aérospatiale	8	15-20 ans
Innovations technologiques de défense	6	20 ans
Technologie des matériaux avancés	3	15 ans

Environnement réglementaire dans les secteurs de l'aérospatiale et de la défense

Les coûts de conformité réglementaire pour les secteurs de l'aérospatiale et de la défense ont totalisé 4,7 millions de dollars en 2024. Les cadres réglementaires clés comprennent:

• Règlement sur la Federal Aviation Administration (FAA)
• Règlement sur le trafic international dans les armes (ITAR)
• Lignes directrices sur l'approvisionnement du ministère de la Défense

Contrôle des exportations et gestion des restrictions du commerce international

Ducommun gère la conformité à l'exportation à travers 12 juridictions internationales. Budget de conformité au contrôle des exportations: 2,3 millions de dollars par an.

Juridiction de contrôle des exportations	Statut de conformité	Coût annuel de conformité
États-Unis	Compliance complète	$850,000
Union européenne	Compliance complète	$450,000
Royaume-Uni	Compliance complète	$350,000
Autres juridictions internationales	Conformité partielle	$650,000

Ducommun Incorporated (DCO) - Analyse du pilon: facteurs environnementaux

Accent croissant sur les pratiques de fabrication durables

Ducommun Incorporated a rapporté un 17,3% de réduction de la production totale de déchets Dans son rapport sur la durabilité de 2022. La société a investi 2,4 millions de dollars dans des technologies de fabrication durables au cours de l'exercice 2023.

Métrique de la durabilité	2022 Performance	Cible 2023
Réduction des déchets	17.3%	22.5%
Consommation d'énergie renouvelable	8.6%	12.4%
Conservation de l'eau	14.2%	18.7%

Réduction de l'empreinte carbone dans la production de composants aérospatiaux

Ducommun a réalisé un 12,8% de réduction des émissions de carbone Dans ses installations de fabrication en 2023. La société a mis en œuvre des technologies avancées de suivi du carbone avec un investissement de 1,7 million de dollars.

Réduction des émissions de carbone	2022 BASELINE	Performance de 2023
Émissions totales de carbone (tonnes métriques)	24,560	21,426
Pourcentage de réduction des émissions	-	12.8%

Conformité aux réglementations environnementales dans les processus de fabrication

Ducommun dépensé 3,2 millions de dollars sur la conformité environnementale et l'adhésion réglementaire en 2023. La société a maintenu une conformité à 100% avec l'EPA et les réglementations environnementales au niveau de l'État.

• Budget de conformité environnementale: 3,2 millions de dollars
• Audits réglementaires passés: 7/7
• Incidents de violation de l'environnement: 0

Améliorations de l'efficacité énergétique dans les installations de production

La société a mis en œuvre des mesures d'efficacité énergétique résultant en un 15,6% de réduction de la consommation d'énergie. L'investissement total dans les technologies économes en énergie a atteint 2,9 millions de dollars en 2023.

Métrique de l'efficacité énergétique	2022 Consommation	2023 Consommation	Réduction
Électricité (MWH)	42,560	35,940	15.6%
Gaz naturel (MMBTU)	18,240	15,420	15.5%

Ducommun Incorporated (DCO) - PESTLE Analysis: Social factors

You're looking at Ducommun Incorporated, a company deeply embedded in the high-stakes world of aerospace and defense, so the social factors-specifically the stability, skill, and safety of its workforce-are not merely a matter of corporate responsibility; they are a direct input to product quality and, ultimately, contract performance. The near-term focus is defintely on managing labor relations and retaining specialized talent in a competitive market.

Workforce of 2,180 employees as of late 2024 requires talent retention focus.

As of late 2024, Ducommun Incorporated's global workforce stood at 2,180 employees. This is a specialized team, and the company's success hinges on its ability to attract and retain key engineering, technical, and managerial personnel. Losing a few experts in a highly complex area like electronic systems or structural solutions can slow down a program, so competition for this talent is a very real risk, especially against larger aerospace and defense competitors. The need for a strong talent pipeline is constant.

Here's a quick look at the human capital metrics that matter:

• Total Employees (as of 12/31/2024): 2,180
• Unionized Employees (subject to April 2025 CBA): 268
• Key Focus: Attracting and retaining specialized engineering and technical staff.

Safety focus reduced the Total Recordable Incident Rate by 54% over four years.

A strong safety culture is non-negotiable in precision manufacturing for aerospace and defense. Ducommun has made significant, measurable progress in this area, which is a positive social indicator and a sign of operational discipline. The company successfully decreased its Total Recordable Incident Rate (TRIR) by 54% over the four-year period ending with the 2024 fiscal year. This focus translates directly into fewer operational disruptions and lower associated costs, plus it builds employee trust.

To be fair, safety performance is a continuous effort, but the trend is strong:

Safety Metric	Performance Highlight (as of 2024)	Context
Total Recordable Incident Rate (TRIR) Reduction	54% reduction over four years	Demonstrates a sustained commitment to operational safety and risk mitigation.
Lost Time Incidents	Only three lost time incidents since 2022	Indicates a high level of control over serious workplace injuries.
Total Lost Time Incident Rate (LTIR)	89% reduction in the LTIR since 2019	Shows a dramatic improvement in preventing injuries that lead to missed workdays.

Core values emphasize Trust and Teamwork, crucial for high-reliability defense work.

The company's core values-Honesty, Professionalism, Respect, Trust, and Teamwork-are not just boilerplate; they are essential for a supplier of mission-critical components. When you're building parts for a fighter jet or a space program, collaboration and mutual reliance are paramount. This emphasis on a 'People First' culture and transparent communication helps align the workforce with the strategic direction, which is critical for maintaining the high-quality, zero-defect standard required by major customers like Boeing.

Labor risk exists, with one collective bargaining agreement expiring in April 2025.

A near-term labor risk is present. One of Ducommun's performance centers is party to a collective bargaining agreement (CBA) that covers 268 full-time hourly employees and is set to expire in April 2025. While the company notes that it has not experienced any material labor-related work stoppages and considers relations to be good, the expiration of a CBA always introduces a possibility of disruption. A work stoppage, even a short one, at a single performance center could impact production schedules and customer delivery commitments, so this negotiation will be a key event in Q2 2025.

Ducommun Incorporated (DCO) - PESTLE Analysis: Technological factors

You're looking at Ducommun Incorporated (DCO) and its long-term viability, and honestly, the technology story is a clear-cut case of strategic evolution. The company is actively shifting its focus from being a high-volume contract manufacturer to a specialized, high-margin engineered products provider. This isn't just a buzzword; it's a fundamental business model change aimed at boosting profitability.

This technological pivot is already showing up in the financials for the 2025 fiscal year, even with headwinds in commercial aerospace. You need to focus on this mix shift and the proprietary technologies that underpin it, plus the non-negotiable cost of defense-grade cybersecurity.

Strategic mix shift to engineered products, now 23% of total revenue.

The core of Ducommun's Vision 2027 strategy is to increase the revenue contribution from its Engineered Products portfolio. This category-which includes complex electronic and structural systems-drives higher gross margins (profitability) compared to simple contract manufacturing.

As of the end of the third quarter of 2025, engineered products and aftermarket content accounted for 23% of total revenue. This is a significant jump from the 15% reported in 2022, and it's right on track for the stated goal of surpassing 25% by 2027. Here's the quick math on recent performance:

Metric	Q1 2025 Data	Q3 2025 Data	Strategic Implication
Net Revenue	$194.1 million	$212.6 million	Revenue growth despite commercial aerospace destocking.
Engineered Products % of Revenue	23%	23%	Consistent progress toward the 25%+ Vision 2027 target.
Adjusted Gross Margin	26.6%	26.6%	Record-level margins, defintely helped by the product mix shift.

This shift is a deliberate move to insulate the company from cyclical volume swings in basic manufacturing, and it's working-the gross margin has been at a record 26.6% for both Q1 and Q3 2025.

Continuous innovation in complex electronic and structural systems is paramount.

You can't hit those margin targets without proprietary, high-value technology. Ducommun's competitive edge rests on its ability to innovate within its two core segments: Electronic Systems and Structural Systems. In Electronic Systems, this means advanced radio frequency (RF) products, motors, and resolvers used in missile guidance and electronic warfare. In Structural Systems, it's about making parts lighter, stronger, and with fewer total components.

The focus is on providing an integrated solution, not just a part.

• Develop complex circuit card assemblies for next-generation electronic warfare systems (NGJ).
• Engineer high-performance blades for military platforms like the Apache helicopter.
• Integrate mechanical and electrical components directly into structural assemblies to reduce part count.

Utilizing technologies like VersaCore Composite™ for structural components.

A concrete example of this proprietary technology is the VersaCore Composite™ system. This is a patented, game-changing process for manufacturing complex aerostructures. Instead of assembling many small pieces, which is time-consuming and prone to tolerance stack-ups, this technology creates net-molded, lofted composite parts.

What this means for customers and DCO is a significant reduction in manufacturing complexity and cost.

• Low Part Count: Replaces numerous traditional parts with a single, integrated component.
• Seamless Construction: Eliminates the need for secondary bonds, improving aerodynamic performance.
• Fast Cycle Times: The entire process, including foam molding and Resin Transfer Molding (RTM), can take less than one day.

This technology is already proven on critical defense and commercial platforms, including the C-17 transport aircraft and components for a high-rate single-aisle commercial aircraft engine nacelle contract valued at greater than $200 million through 2029.

Increased investment in cybersecurity for CMMC compliance is a near-term cost.

The technological landscape isn't just about product innovation; it's also about protection, especially when 95% of Ducommun's revenue is U.S.-based and heavily tied to the Department of Defense (DoD). The Cybersecurity Maturity Model Certification (CMMC) is a non-negotiable cost of doing business.

Ducommun is already using the National Institute of Standards and Technology (NIST) Framework, but the CMMC 2.0 Final Rule, which took effect in late 2024, mandates third-party certification for contractors handling Controlled Unclassified Information (CUI).

This compliance is a near-term financial reality. For a company of Ducommun's size and complexity, achieving the mandatory CMMC Level 2 certification-which requires 110 controls based on NIST SP 800-171-will require a substantial investment. The total first-year cost for a typical medium-to-large defense contractor pursuing Level 2 is estimated to range from $175,000 to over $285,000, including preparation, technology upgrades, and the official assessment fee. This is a necessary expense that protects the defense backlog, which stood at $620 million in Q1 2025.

The next step is for the IT and Finance teams to finalize the CMMC Level 2 budget and vendor selection by the end of Q4 2025.

Ducommun Incorporated (DCO) - PESTLE Analysis: Legal factors

The legal landscape for Ducommun Incorporated is currently dominated by two major areas: the financial fallout from a significant litigation settlement and the intensifying regulatory demands of U.S. defense contracting, particularly around cybersecurity compliance.

Q3 2025 net loss of $(64.4) million due to a $99.7 million litigation charge.

You need to look past Ducommun's record revenue of $212.6 million for Q3 2025 to see the real legal impact. The company reported a GAAP net loss of $(64.4) million, or $(4.30) per diluted share, for the quarter. This loss was almost entirely driven by a one-time litigation settlement and related costs totaling $99.7 million.

Here's the quick math: The settlement was for $150 million to resolve the lawsuit with Williams International Co., LLC related to the 2020 fire at the Guaymas, Mexico facility. Ducommun expects $56 million of that to be covered by insurance, leaving a net expense of $94 million, plus approximately $4 million in related legal expenses for Q3 2025. This single event dramatically skewed the GAAP results, even as non-GAAP adjusted net income was a positive $15.2 million, or $0.99 per diluted share.

Q3 2025 Financial Metric	Amount (in millions)	Impact Source
Net Revenue	$212.6	Operational Performance (Up 6% YoY)
GAAP Net Loss	$(64.4)	Litigation Settlement
Litigation Settlement & Related Costs, Net	$99.7	Guaymas Fire Lawsuit
Gross Settlement Amount	$150.0	Williams International Co., LLC Claim
Insurance Recovery (Expected)	$56.0	Insurance Coverage
Non-GAAP Adjusted Net Income	$15.2	Underlying Operational Performance

Must comply with Defense Federal Acquisition Regulation Supplement (DFARS).

As a major supplier to the U.S. Department of Defense (DoD), Ducommun is defintely subject to the strict requirements of the Defense Federal Acquisition Regulation Supplement (DFARS). This isn't just a compliance formality; it's a condition of doing business.

Specifically, DFARS mandates that defense contractors adequately safeguard Controlled Unclassified Information (CUI). Failure to comply with these procurement laws and regulations can lead to severe consequences, including contract termination, fines, and reputational damage. This is a constant, high-stakes legal risk that demands continuous internal investment in compliance infrastructure.

Subject to pending subrogation claims related to a fire at the Guaymas facility.

Even with the primary Williams International lawsuit settled, the legal risk from the 2020 Guaymas fire isn't entirely extinguished. Ducommun remains subject to pending subrogation claims. Subrogation is when an insurer steps into the shoes of the insured party to recover a loss payment from the party who caused the loss.

The company has disclosed a few specific, smaller liabilities:

• A subrogation claim from an intervening insurer in the Williams International litigation, which the company expects to settle for approximately $1.35 million.
• Additional expenses of approximately $3 million in future periods related to a separate subrogation claim asserted by the insurer of the entity that provides labor and facilities for the Guaymas performance center.

These claims, while small compared to the $150 million settlement, show how a single incident creates a long tail of legal and financial exposure.

Compliance with the Cybersecurity Maturity Model Certification (CMMC) is mandated.

The most significant near-term regulatory shift is the Cybersecurity Maturity Model Certification (CMMC) program. The mandate has moved from a future threat to an immediate requirement with the 48 CFR CMMC Acquisition Rule becoming effective on November 10, 2025.

This means new DoD solicitations are now including CMMC requirements, making certification a condition of eligibility for new defense work. For Ducommun, which handles CUI, this will likely require a CMMC Level 2 certification, involving a third-party assessment (C3PAO). Ducommun is actively incorporating CMMC requirements into its overall cybersecurity program, but the full rollout and mandatory compliance for all new DoD contract awards is expected by October 31, 2026, with full implementation by 2028. This is a critical action item to protect their defense revenue stream.

Next Step: Legal and IT teams must finalize the CMMC Level 2 gap analysis and secure a C3PAO engagement by the end of Q4 2025 to ensure eligibility for key 2026 contract bids.

Ducommun Incorporated (DCO) - PESTLE Analysis: Environmental factors

The environmental landscape for Ducommun Incorporated is defined by a strong, measurable commitment to de-carbonization, but it's also shadowed by the perennial, high-cost risks inherent in manufacturing for the aerospace and defense sectors. You need to see the success in emissions reduction as a cost-management win, but stay realistic about the uninsurable liabilities tied to legacy site contamination.

Reduced Scope 1 and 2 GHG emissions by 50% in 2024 versus 2019 baseline.

Ducommun has made serious, verifiable progress on its carbon footprint, which is a major positive for both regulatory and investor sentiment in the 2025 fiscal year. The company achieved an absolute reduction of its combined Scope 1 (direct) and Scope 2 (indirect) Greenhouse Gas (GHG) emissions by a full 50% in 2024, benchmarked against its 2019 baseline. That's a huge step toward de-carbonizing operations.

The reduction wasn't evenly split, which shows where the biggest wins came from. Scope 2 emissions-mostly from purchased electricity-saw a steep 55% cut, likely due to increased renewable energy reliance and efficiency projects. Scope 1 emissions, from sources like on-site natural gas and vehicle fuel, dropped by a respectable 33%. This isn't just good PR; it translates directly into lower energy costs and a buffer against future carbon taxes.

GHG Emissions Reduction (2024 vs. 2019 Baseline)	Reduction (Absolute Basis)	Impact
Combined Scope 1 and 2 Emissions	50%	Strong defense against climate-related regulatory risk.
Scope 2 Emissions (Purchased Electricity)	55%	Indicates successful energy procurement and efficiency projects.
Scope 1 Emissions (Direct Sources)	33%	Shows progress in on-site fuel/natural gas consumption.

Compliance with hazardous material laws is a constant, uninsurable liability.

Working in advanced manufacturing for defense means you deal with hazardous materials every day, and that creates a constant, unquantifiable risk. Ducommun's operations are subject to stringent regulations like the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), among others. The company's 2024 Annual Report confirms that compliance with existing or future environmental laws may require extensive capital expenditures and could adversely affect financial results. To be fair, they manage their waste well.

For example, in 2023, Ducommun reclaimed, recycled, and reused 99% of the hazardous waste it generated, and 82% of the chemicals used in its processes. That's a phenomenal operational metric, but it doesn't eliminate the underlying liability risk. You can't insure against the risk of a new, unforeseen regulation that suddenly makes a common chemical illegal or forces a billion-dollar cleanup. It's a risk you simply have to manage through best practices and robust Environmental, Health, and Safety (EHS) systems.

Risk of future capital expenditures for environmental remediation at certain sites.

A key financial risk you need to track is the potential for unexpected capital expenditures (CapEx) related to historical contamination. Ducommun has disclosed that it has been directed to investigate and take corrective action for groundwater contamination at certain sites. The ultimate liability for these matters is uncertain and dependent on factors like the scope of contamination and regulatory requirements.

This is where the rubber meets the road: environmental remediation costs are often a CapEx black hole. While current financial statements account for known liabilities, the risk is that the scope of these cleanups expands significantly. Any major change in the regulatory environment, or the discovery of a wider plume of contamination, could trigger a substantial, unplanned cash outlay that directly hits the balance sheet. You need to budget for the unknown here.

Focus on energy efficiency projects to manage climate-related regulatory costs.

The company's strategy to manage climate-related regulatory costs is focused on operational efficiency and a shift to cleaner energy. This proactive approach is a smart way to get ahead of potential carbon pricing or energy mandates. A major part of this effort is energy efficiency projects, like the installation of LED lighting, which Ducommun has completed at eleven performance centers.

This focus has already paid off in the form of increased renewable energy use, which reached approximately 34,121 Gigajoules (9.5 million kWh) in 2023 compared to the 2019 baseline. This investment in efficiency is a clear action to mitigate the risk of rising energy costs and climate-related regulatory burdens. It's a classic example of turning an environmental risk into an operational efficiency gain.

• Increase renewable energy use: Reached 34,121 GJ in 2023.
• Implement LED lighting: Completed at eleven performance centers.
• Target total energy reduction: Total energy usage decreased by 16% in 2023 versus the 2019 baseline.

The next step for you is to monitor the 2025 CapEx line items for any material increase in 'Environmental Remediation' spending, as that will be the first signal of an expanding liability at those legacy sites. Finance: flag any environmental CapEx exceeding $5 million in a single quarter for immediate review.