Ducommun Incorporated (DCO): Business Model Canvas [Dec-2025 Updated]

You're looking to quickly map the engine room of Ducommun Incorporated, and frankly, understanding their Business Model Canvas is the fastest way to see where the value is created in the defense-tech space. After years of analyzing these structures, I see a company anchored by high-reliability components, sitting on a hefty $1.03 billion remaining performance obligations as of Q3 2025. This isn't guesswork; their model clearly shows a dual focus, with roughly 55% of revenue coming from mission-critical Military and Space platforms, supported by deep partnerships with prime contractors. Below, we lay out the nine building blocks-from their specialized Key Resources to their revenue-driving Electronic and Structural Systems segments-so you can see precisely how Ducommun plans to execute its VISION 2027 strategy. Let's get straight to the details.

Ducommun Incorporated (DCO) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that keep Ducommun Incorporated running, the ones that secure the high-reliability work in defense and aerospace. These partnerships are critical because Ducommun often handles complex, niche manufacturing steps, meaning their partners rely on their specialized capability.

The relationship with BAE Systems is clearly a highlight. Ducommun Incorporated was recognized as the BAE Systems Supplier of the Year for Vertical Launch Systems at the Seventh Annual 'Partner2Win' Supplier Symposium on December 4, 2025. This wasn't a one-off; Ducommun was also named a Gold Supplier for the 3rd year in a row. This level of recognition speaks directly to operational excellence and on-time delivery for combat vehicles and weapon systems destined for the U.S. military and allies.

Ducommun's customer base forms the bedrock of its Key Partnerships, spanning defense primes and commercial Original Equipment Manufacturers (OEMs). The company sells directly into these platforms, positioning them as a Tier 1 player in many cases.

Here is a look at the primary customer segments that drive Ducommun Incorporated's business, based on the latest available full-year segment data from Q1 2025:

The defense side is showing strong momentum. For instance, in the third quarter of 2025, revenue in the military and space end-use markets grew by 13% year-over-year, driven by missiles, fixed-wing aircraft, and ground vehicles. Conversely, commercial aerospace faced headwinds, with revenue declining by 10% in Q3 2025 due to lower rates on large aircraft platforms like Boeing and Airbus models.

Within the commercial segment, Ducommun Incorporated's structural solutions are deeply embedded. They supply complex contoured metal parts made via niche processes like titanium hot forming and superplastic forming directly to the major airframe builders.

Key commercial aircraft OEM relationships include:

• Boeing platforms, specifically the 737MAX and 787 programs.
• Airbus platforms, including the A320, A330, and A220 families.
• Business jet content, notably with Gulfstream, which has been growing nicely.

For specialized raw materials, the partnership with titanium suppliers is crucial for their Structural Solutions segment. Ducommun uses proprietary hot forming and super-plastic forming processes, which require specific material inputs [cite: 2, 5 in previous search]. For example, a multi-year contract was previously signed with Arconic (now part of Howmet) to supply titanium sheet and plate for these processes [cite: 5 in previous search]. This highlights the reliance on a select few suppliers capable of meeting the stringent quality and material specifications for aerospace-grade titanium.

Finally, the relationship with the banking group is vital for liquidity and strategic flexibility. Effective November 24, 2025, Ducommun Incorporated entered an amended credit facility to take advantage of favorable market conditions. This new facility is a significant upgrade:

• Total Facility Size: $650 million.
• Revolving Line of Credit: Upsized to $450 million from the previous $200 million.
• Term Loan: Set at $200 million.
• Availability: More than $300 million in availability at close.
• Maturity: Extended to November 2030, pushing the maturity profile out by over three years.

The proceeds from this refinancing were used to fully repay the existing facility, which included a $225 million term loan and the drawn portion of the old revolver, which was $95 million. This new capital structure is intended to provide firepower for acquisition opportunities aligned with their VISION 2027 strategy.

Ducommun Incorporated (DCO) - Canvas Business Model: Key Activities

You're looking at how Ducommun Incorporated actually makes its money and executes its strategy as of late 2025. It's not just about making parts; it's a focused effort on high-reliability manufacturing, driven by a clear, multi-year plan. Here's the quick math on what they are actively doing.

Manufacturing complex electronic and structural systems

Ducommun Incorporated's core activity involves the precision manufacturing of complex components for demanding sectors. This is split across two main areas: Electronic Systems and Structural Systems. The focus is heavily weighted toward defense and space, which is proving more resilient than commercial aerospace in the near term.

For the second quarter ended June 28, 2025, net revenue hit $202.3 million, showing a 3% increase year-over-year. The company is managing this production while driving margin improvement, with a Q2 2025 Gross Margin of 26.6%. This operational performance keeps Ducommun Incorporated on track toward its VISION 2027 financial goal of achieving 18% Adjusted EBITDA margins.

The output from these activities is captured in their order book, which speaks directly to the long-term nature of their manufacturing commitments:

• Backlog as of June 28, 2025, for Military and space was $592,580 thousand.
• Backlog as of June 28, 2025, for Commercial aerospace was $404,080 thousand.

Executing VISION 2027 strategic plan for growth

The execution of the VISION 2027 strategy is a primary ongoing activity. This plan, laid out in December 2022, centers on achieving specific financial targets and reshaping the business mix. The goal is to generate net revenues between $950M to $1,000M by 2027, alongside targeting 18% Adjusted EBITDA margins.

Progress is being measured by key performance indicators achieved through Q2 2025:

Engineering and designing proprietary products (Engineered Products)

A key strategic activity is deliberately increasing the proportion of higher-margin Engineered Products and aftermarket sales within the total revenue base. This shift is intended to drive margin expansion and operational efficiency. You can see this focus translating directly into the revenue mix.

The company has successfully grown this higher-value area:

• Engineered Products now account for 23% of Ducommun Incorporated's revenue.
• This is up from 19% in 2023.

This focus on proprietary design and engineering is central to their value proposition in defense and space programs.

Consolidating manufacturing facilities for cost savings

Ducommun Incorporated is actively managing its physical footprint to reduce costs, a necessary activity given competitive pricing pressures. This involves consolidating operations from higher-cost legacy sites to lower-cost domestic and international facilities, such as the one in Guaymas, Mexico.

The financial impact of this restructuring is projected to materialize soon:

• The company is consolidating manufacturing from locations like Monrovia, California, and Berryville, Arkansas.
• This shift is projected to yield annual savings of $11 million to $13 million as production scales in 2026.

The Q2 2025 results showed lower restructuring charges compared to the prior year, indicating progress toward completion of these wind-down activities.

Program management for large, long-term contracts

Managing the execution and delivery across a diverse portfolio of large, long-term contracts, particularly in the defense sector, is a critical, day-to-day activity. This involves navigating complex customer requirements, such as those for missile systems, electronic warfare equipment, and the Next Generation Jammer program.

The company's U.S.-centric manufacturing base, generating 95% of revenue domestically, helps insulate these programs from certain global trade risks. Furthermore, the company benefits from contractual cost pass-throughs for military programs, which helps manage input cost volatility. The backlog figures from mid-2025 serve as the primary metric for the scope of this activity.

Finance: draft 13-week cash view by Friday.

Ducommun Incorporated (DCO) - Canvas Business Model: Key Resources

You're looking at the core assets Ducommun Incorporated uses to deliver its value propositions in the aerospace, defense, and industrial sectors. These aren't just line items on a balance sheet; they are the tangible and intangible engines driving their current performance, especially given the strong defense order intake.

The company's near-term revenue visibility is quite strong, evidenced by its record remaining performance obligations (backlog) of $1.03 billion as of the third quarter of 2025. This figure represents revenue yet to be recognized and signals a robust pipeline of committed work.

A significant structural advantage is the geographic concentration of its operations. Ducommun Incorporated is largely a U.S. manufacturer, with its domestic facilities generating more than 95% of Ducommun's revenue. This U.S.-centric base helps mitigate certain international tariff risks, though it ties performance closely to U.S. government spending cycles.

The financial foundation supporting these operations is substantial. As of the first quarter of 2025 LTM, Ducommun Incorporated reported total assets of $1.13 billion. The most recent reported balance sheet data (Q2 2025) shows this figure slightly higher, which you can see detailed below.

The proprietary nature of certain product lines is a key intangible asset, particularly within the Electronic Systems segment. Ducommun Incorporated's proprietary Human Machine Interface (HMI) products-which include illuminated switches, rotary switches, keyboards, lighted panels, and integrated display systems-are typically sole-sourced and spec-in on demanding platforms. These HMI products are designed for military fighter, transport aircraft, helicopters, shipboard, space, and commercial applications, and a majority carry FAA/PMA certified or MIL-PRF/QPL certified status.

The physical assets are specialized for high-cost-of-failure applications. Ducommun Incorporated's specialized manufacturing facilities and equipment support core competencies across its Electronic Systems and Structural Systems segments. These capabilities include stretch-forming, thermal-forming, chemical milling, precision fabrication, machining, and proprietary processes like VersaCore Composite™ technology. The company continues to make prudent capital expenditures for manufacturing equipment and facilities to support long-term contracts.

Here's a look at the key financial and operational metrics underpinning these resources:

You should note the mix of revenue is shifting toward these proprietary, engineered products. For instance, Engineered Products, which includes the HMI line, accounted for 23% of revenues as of Q3 2025, up from 9% in 2017, showing a deliberate shift to higher-margin, owned-IP assets.

Ducommun Incorporated (DCO) - Canvas Business Model: Value Propositions

You're looking at the core promises Ducommun Incorporated makes to its customers, the things that keep the defense and aerospace sectors relying on them. Honestly, the numbers from 2025 really show where the value is landing right now.

High-reliability components for mission-critical applications

The value proposition here is rooted in performance where failure isn't an option. This is clearly reflected in the revenue stream strength from the defense sector. For instance, in the third quarter of 2025, Ducommun Incorporated saw $14.2 million higher revenue specifically from its military and space end-use markets, driven by platforms like missiles and fixed-wing aircraft. This momentum carried over from the first quarter of 2025, which saw $14.6 million in higher revenue from that same segment. The company is clearly delivering on high-stakes requirements.

This commitment translates directly into a strong forward-looking pipeline. As of the February 27, 2025 filing, Ducommun Incorporated anticipated recognizing an estimated 70% or $709.0 million of its total Remaining Performance Obligations (RPO) during the 2025 fiscal year. That's a massive vote of confidence in their long-term delivery capability.

Expertise in complex electronic and structural solutions

Ducommun Incorporated structures its value around two core areas, and the Q3 2025 revenue split shows the relative scale of that expertise. You can see the output of their complex work in the segment results:

The Electronic Systems segment, which handles electronic and electromechanical products, delivered $123.1 million in revenue for the third quarter of 2025. The Structural Systems segment, focused on complex metal components, brought in $89.5 million for the same period. These figures demonstrate the tangible scale of their specialized manufacturing capabilities.

Value-added manufacturing and engineering services

The value-add is quantified by efficiency and margin improvement, showing they are successfully executing more sophisticated work profitably. Ducommun Incorporated's focus on margin expansion is a direct indicator of successful value-added execution. In Q3 2025, the Gross Margin hit 26.6%, marking a 40 basis point improvement year-over-year. This follows a record Gross Margin of 26.6% in Q1 2025, which was an improvement of 200 basis points over Q1 2024. Furthermore, the Adjusted EBITDA margin reached 16.2% of revenue in Q3 2025, putting them on pace for their VISION 2027 goal of 18%.

Long-term supply assurance for defense programs

Assurance is built on a strong order book, which Ducommun Incorporated demonstrated in late 2025. The company reported a very strong Book to Bill ratio of 1.6 times in the third quarter of 2025, which established a new record for their Remaining Performance Obligations (RPO). This high ratio signals that new orders are significantly outpacing current deliveries, providing high assurance of future work, especially in the defense sector which led the 6% year-over-year net revenue growth to $212.6 million in Q3 2025.

Contractual raw material cost pass-throughs on military products

Ducommun Incorporated explicitly values de-risking the supply chain for its defense customers through contractual mechanisms. They are actively mitigating raw material tariff exposures by putting plans in place for either duty exemptions on military products or by passing costs through to customers under the terms of their contracts. This contractual protection is vital given that over 95% of Ducommun Incorporated's revenue is generated domestically in the United States, meaning the domestic cost base is largely protected from direct international supply shocks, though raw material volatility remains a factor they manage contractually.

Here's a quick look at the domestic focus:

• Domestic facilities generate more than 95% of Ducommun Incorporated\'s revenue.
• Mitigation plans target raw material tariff exposures via contract terms for military products.

Finance: draft 13-week cash view by Friday.

Ducommun Incorporated (DCO) - Canvas Business Model: Customer Relationships

You're looking at how Ducommun Incorporated manages its relationships across its diverse customer base, which is heavily weighted toward the defense sector right now. Honestly, the nature of these relationships dictates the revenue stability and long-term planning.

Dedicated program management for long-cycle contracts

For the long-cycle defense work, which is clearly the engine right now, the relationship is deep and requires dedicated management. This is necessary because the work involves complex, mission-critical components for programs like missile defense systems. The strength of this commitment is reflected in the order book; for instance, Ducommun's Remaining Performance Obligations (RPO) established a new record following the third quarter of 2025, signaling strong future commitment from these partners. While there are conflicting reports on the total backlog figure, one report for Q3 2025 indicated a backlog of $1.14 billion, up 8.8% year-on-year, which speaks to the long-term nature of these engagements. The defense segment, particularly missiles, saw growth of 21% in Q3 2025, which is the direct result of this focused relationship management on long-term defense spending cycles.

Close, collaborative relationships with defense primes

Ducommun Incorporated focuses on being a Tier 1 supplier, which means the relationships with prime contractors are inherently close and collaborative, moving beyond simple vendor status. You see this in the recognition they receive; Ducommun was named BAE Systems Supplier of the Year for 2025, and a Gold Supplier for the third consecutive year, which shows a high degree of operational alignment and trust. The company is positioned on over a dozen missile platforms and is expected to supply Boeing at a rate roughly equal to its production rate by mid-2026, showing direct integration into the prime's production planning. These relationships are the bedrock of the business, especially as the Electronic Systems segment revenue reached $123.1 million in Q3 2025, largely driven by military and space programs.

The key defense and aerospace customers Ducommun focuses on include:

• RTX Corporation
• Lockheed Martin
• Northrop Grumman
• BAE Systems

Customer-specific engineering and design support

To maintain these high-value relationships, Ducommun is actively moving up the value chain, which requires significant customer-specific engineering and design support. This strategy is evidenced by the increasing revenue mix from engineered products, which accounted for 23% of sales as of Q1 2025, up from 19% some years ago. This shift means the company is not just building to print; it is co-developing or providing specialized, higher-margin solutions. The Structural Systems segment, which produces complex metal components, saw its operating margin expand to 13.3% in Q3 2025, partly due to higher revenue in military rotorcraft and ground vehicles, areas where bespoke engineering is critical.

Here's a quick look at the segment revenue contribution in Q3 2025:

Transactional sales for certain industrial last-time buys

Not all customer interactions are deep partnerships; the industrial end-use market often involves more transactional relationships, especially when dealing with obsolescence management. In Q3 2025, revenue for the industrial end-use markets increased by $5.1 million compared to the prior year, which management specifically attributed to restocking and last time buys. This suggests that for certain industrial customers, Ducommun Incorporated acts as a necessary, but perhaps less strategically embedded, supplier for end-of-life product support, making those sales more transactional in nature.

The relationship profile is clearly bifurcated; you have the high-touch, long-term defense/aerospace primes, and the more transactional industrial segment, which still provided a needed boost of $5.1 million in Q3 2025 revenue from specific activities. Finance: draft 13-week cash view by Friday.

Ducommun Incorporated (DCO) - Canvas Business Model: Channels

You're looking at how Ducommun Incorporated gets its products and services into the hands of its customers, which is heavily weighted toward the aerospace and defense sectors. The company organizes its channels around direct engagement with major platform builders and primes, supported by a growing focus on aftermarket content.

Direct sales force to major aerospace and defense OEMs

The direct sales channel is strongly represented by the Military and Space segment, which accounted for 55% of Last Twelve Months (LTM) Q1 2025 net revenues. This channel involves direct engagement with defense primes for mission-critical programs. Key customers served through this direct channel include Lockheed Martin, Northrop Grumman, and RTX Corporation. Revenue growth in this area has been robust, with the defense business seeing double-digit growth in the last 3 quarters leading up to Q3 2025. The company's backlog, or Remaining Performance Obligations (RPO), stood at a record high of $1.03 billion as of Q3 2025, reflecting strong future commitments from these direct customers.

Direct supply chain integration with Tier 1 contractors

Integration within the commercial aerospace supply chain is substantial, with the Commercial segment making up 41% of LTM Q1 2025 net revenues. This channel focuses on integrating components into major commercial platforms. Ducommun Incorporated supplies components for platforms such as the Boeing 737 and 787, and the Airbus A320 and A220. The company explicitly names Boeing and Spirit Aerosystems as key customers in this space. The company is actively working to burn down inventory in the system, encouraged by the FAA's decision to allow Boeing to increase 737 MAX production rates to 42 aircraft per month.

Aftermarket support and services

Ducommun Incorporated is strategically increasing its presence in aftermarket support, which is considered a sizable and necessary portion of any good aerospace business. The company's focus on higher-value content is evident in the growth of its Engineered Products revenue, which reached 23% of revenues as of LTM Q3 2025, up from 9% in 2017. While the specific aftermarket revenue percentage for 2025 isn't explicitly stated, the company has a stated Vision 2027 target of achieving more than 25% from Engineered Products and a target of 15% from aftermarket mix by 2027, up from approximately 10% in 2022.

The following table summarizes key financial and customer data relevant to Ducommun Incorporated's channel strategy as of late 2025:

Ducommun Incorporated utilizes several key mechanisms to deliver value through these channels:

• Direct Defense Engagement: Focus on growing the Missile franchise and radar systems.
• Commercial Platform Content: Securing and growing content on high-rate narrow-body aircraft like the 737 MAX.
• Strategic Offloading: Building out the defense business by supporting off-loading from strategic defense primes.
• Product Portfolio Diversification: Increasing the mix of higher-value Engineered Products to over 20% of revenue.
• Geographic Concentration: Approximately 95% of revenues are generated from U.S. facilities.

Ducommun Incorporated (DCO) - Canvas Business Model: Customer Segments

You're looking at the core customer base for Ducommun Incorporated (DCO) as of late 2025, which is heavily weighted toward defense and space, a strategic choice that has paid off well this year. Honestly, the numbers clearly show where the growth is coming from.

Military and Space end-use markets represent the primary driver of Ducommun Incorporated's current financial momentum. This segment has been exceptionally strong, evidenced by the 13% year-over-year growth in Q3 2025, which helped push total net revenue to a record $212.6 million for that quarter. The company's U.S.-centric manufacturing base, generating more than 95% of revenue domestically, provides a solid foundation for these defense contracts. This focus is central to their VISION 2027 plan.

The customer base within this segment is diverse, spanning critical defense platforms:

• Missile systems, where the franchise saw strong growth in Q3 2025.
• Fixed-wing aircraft platforms.
• Military rotary-wing aircraft platforms.
• Ground vehicle weapon platforms.
• Radar systems.

Commercial Aerospace OEMs, including major players like Boeing and Airbus, are a significant, though currently softer, part of the customer mix. While Ducommun Incorporated is shipping components, this market has faced headwinds. For the third quarter of 2025, revenue from commercial aerospace was down by $8.1 million year-over-year. This softness was attributed to lower rates across large commercial aircraft platforms and business jet platforms.

The Industrial end-use customers segment is smaller and is being actively managed through selective pruning of non-core business, as noted when industrial revenue decreased in Q1 2025 compared to Q1 2024. However, this segment saw a temporary lift in Q3 2025, increasing by $5.1 million due to certain customers making last time buys and restocking activities.

Here's a look at the revenue performance by Ducommun Incorporated's reporting segments in Q3 2025, which directly reflects the demand from these customer groups:

The growth in the Electronic Systems segment was driven by $14.2 million higher revenue in military and space markets in Q3 2025, while the Structural Systems segment saw $6.0 million higher revenue from military and space platforms in the same period. The commercial aerospace weakness impacted both segments, with Structural Systems noting $2.5 million lower revenue from business jet platforms.

The platforms Ducommun Incorporated supports are clearly tied to the end-use markets:

• Missile systems, electronic warfare equipment, and radar platforms are key for the Electronic Systems segment's defense revenue.
• Fixed-wing and rotary-wing aircraft components are critical across both segments, with military rotorcraft showing strength.
• Large commercial aircraft and business jets fall under the Commercial Aerospace OEM category, which is currently a headwind.

The company's remaining performance obligations (RPO), which is a good proxy for future committed customer revenue, hit a record high of $1.03 billion as of late 2025, showing strong forward visibility from these customer segments.

Finance: draft 13-week cash view by Friday.

Ducommun Incorporated (DCO) - Canvas Business Model: Cost Structure

You're looking at the core expenses driving Ducommun Incorporated's operations as of late 2025. The cost structure is heavily influenced by production scale, one-time legal events, and ongoing efficiency initiatives.

Cost of Goods Sold (COGS) remains the foundational expense, directly tied to the company's manufacturing output across its Structural Systems and Electronic Systems segments. For the third quarter of 2025, Ducommun Incorporated reported a Gross Profit of $56.5 million on Net Revenue of $212.6 million, resulting in a Gross Margin of 26.6%.

A significant, non-recurring item heavily impacted the GAAP results for Q3 2025. The company recorded a one-time litigation settlement and related costs totaling $99.7 million. This charge was the primary driver behind the GAAP Operating Loss of $80.1 million for the quarter, though adjusted operating income was $22.4 million.

Manufacturing and labor costs are embedded within the COGS structure, reflecting the complexity of producing components for aerospace, defense, and industrial markets across multiple facilities. The company is actively managing these through consolidation efforts.

The ongoing restructuring costs are related to facility consolidation, specifically the wind-down of the Monrovia, CA, and Berryville, AR, locations. For Q3 2025, Ducommun Incorporated recorded $0.6 million in restructuring charges. Management estimates an additional ~$0.5 million in costs for the rest of 2025, mainly for product requalification and final consolidation activities. The goal of these actions is substantial, targeting $11 million to $13 million in annualized run-rate savings.

Financing costs are also a component of the overall cost profile. Interest expense for the third quarter of 2025 was $2.9 million, an improvement from $3.8 million in Q3 2024, largely due to lower interest rates and a reduced debt balance.

Here's a quick look at some of the key cost and margin metrics from Q3 2025:

The company's Selling, General, and Administrative (SG&A) expenses were significantly inflated by the legal costs. SG&A was $113.1 million, or 53.2% of total Company revenue in Q3 2025, compared to just $11.9 million, or 5.9% of revenue, in the prior year quarter, with the difference being the litigation charge net.

You should keep an eye on the realization of the expected savings, as that will directly impact the ongoing operating cost structure moving into 2026.

Finance: draft 13-week cash view by Friday.

Ducommun Incorporated (DCO) - Canvas Business Model: Revenue Streams

Ducommun Incorporated's revenue streams are clearly segmented across its two primary operating divisions, with a strong current emphasis on defense-related programs as of late 2025.

The segment-level performance for the third quarter ended September 27, 2025, provides the core financial structure for Ducommun Incorporated's revenue generation:

The Electronic Systems segment revenue of $123.1 million was driven by robust activity in military and space end-use markets, which saw a year-over-year increase of 13%, encompassing several key product lines.

Revenue drivers within the Electronic Systems segment include:

• Higher rates on selected missile and fixed-wing aircraft platforms.
• Strong growth in radar systems.
• The industrial business increased by $5 million during Q3 2025.

The Structural Systems segment, reporting $89.5 million in net revenue, saw its growth primarily supported by defense spending, which offset continued softness in commercial aerospace OEM demand.

Key contributors to Structural Systems revenue growth included:

• Higher revenue within military and space end-use markets, specifically from selected rotary-wing aircraft and ground vehicle weapon platforms.
• The company reiterated continued strength in its defense business, particularly in missiles and radar systems, maintaining momentum for 2025.

Regarding aftermarket and repair services, specific standalone revenue figures were not explicitly itemized as a separate line item in the provided segment data; however, the overall strength in military and space platforms suggests a significant portion of the $14.2 million higher revenue in that combined end-use market for the quarter is tied to sustainment and production rates for existing platforms.