Ducommun Incorporated Announces Award of TOW Missile Order from Raytheon Missiles and Defense for Guaymas, Mexico
Ducommun announced a major $12M award from Raytheon Missiles and Defense for the production of the TOW missile system at its Guaymas, Mexico facility. This represents the first order for this legacy program at the new location, moving from Monrovia, California. CEO Stephen G. Oswald highlighted the continuation of the TOW program after a pause due to order timing and emphasized this as a milestone in their Vision 2027 strategy to shift operations to low-cost, high-productivity locations. Ducommun will continue supplying Raytheon with various electronic and structural components for both legacy and emerging programs.
- Secured a $12M award from Raytheon.
- First TOW missile system order for Guaymas, Mexico facility.
- Supports Ducommun's Vision 2027 strategy to transfer operations to cost-effective locations.
- Continuation of TOW program after a pause.
- Strengthened partnership with Raytheon.
- None.
Insights
Ducommun Incorporated has announced a significant order from Raytheon for the production of the TOW missile system, generating over
The strategic shift of production to Guaymas, Mexico, is also a critical financial move. By relocating to a low-cost, high-productivity location, Ducommun stands to enhance its profit margins, aligning with its Vision 2027 strategy. The execution of this strategy should be closely monitored by investors for its impact on profitability and overall cost management.
However, investors should consider potential risks such as geopolitical tensions and labor market conditions in Mexico, which could impact operations. Overall, the financial implications of this deal are positive, promising an uplift in revenue and profitability through cost-efficient production.
The order from Raytheon highlights Ducommun's strong position within the aerospace and defense market. This market is characterized by long-term contracts and significant barriers to entry, which can provide stable revenue streams for firms like Ducommun. This order not only reinstates Ducommun's role in the TOW missile program but also reflects its ability to secure substantial contracts in a competitive landscape.
By moving production to Mexico, Ducommun is leveraging cost efficiencies that can make their offerings more competitive. This aligns with broader industry trends where companies are increasingly shifting operations to lower-cost regions to maintain margins. For investors, this strategic move could mean enhanced competitiveness and sustained contract wins in the future.
Additionally, this order could positively influence investor sentiment and market perception of Ducommun's strategic execution capabilities. However, investors should be wary of potential supply chain disruptions or political factors that can affect production continuity in Mexico.
The TOW missile system is a critical asset in the defense sector, known for its precision and effectiveness. Ducommun's renewed involvement in this legacy program signals trust and reliability in their manufacturing capabilities. Shifting production to Guaymas, Mexico can significantly reduce costs while maintaining the quality standards required by defense contracts.
This agreement also underscores Raytheon's confidence in Ducommun's ability to deliver essential components under stringent requirements. For stakeholders, this can be seen as a testament to Ducommun's technological and operational excellence. However, the defense industry is subject to stringent regulations and oversight, which Ducommun must navigate carefully to sustain and grow its involvement in defense contracts.
In summary, this development is a positive indicator of Ducommun's standing and future prospects within the defense sector, as well as its adaptability to changing operational landscapes.
SANTA ANA, Calif., June 20, 2024 (GLOBE NEWSWIRE) -- Ducommun Incorporated (NYSE: DCO) (“Ducommun” or the “Company”), a global supplier of innovative electronic and structural solutions for the aerospace & defense industry, is proud to announce the receipt of a major award totaling over
“We are thrilled to continue to earn the trust and confidence of Raytheon and welcome the opportunity to support the needs of our nation and the warfighter. As mentioned on previous earning calls, the TOW program demand for Ducommun had a pause over the past year due to the timing of orders but our value proposition for this program is world class and we had high confidence the customer would come back for additional orders and support. This is also another important milestone for us as we continue to execute on our Vision 2027 strategy which includes transferring meaningful work to our low-cost, high productivity operation in Guaymas, Mexico,” said Stephen G. Oswald, chairman, president, and chief executive officer. “Raytheon continues to treat us as a true partner, which we very much appreciate and as always remain relentless in our pursuit of building value for our customers and shareholders."
Ducommun currently provides Raytheon with electronics, controllers, circuit card assemblies, harness cable assemblies and structural products on both legacy and emerging programs.
About Ducommun Incorporated
Ducommun Incorporated delivers value-added innovative manufacturing solutions to customers in the aerospace, defense, and industrial markets. Founded in 1849, the company 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. For more information, visit Ducommun.com.
About RTX Corporation
RTX is the world's largest aerospace and defense company. With more than 185,000 global employees, it pushes the limits of technology and science to redefine how it connects and protects our world. Through industry-leading businesses – Collins Aerospace, Pratt & Whitney, and Raytheon – it is advancing aviation, engineering integrated defense systems for operational success, and developing next-generation technology solutions and manufacturing to help global customers address their most critical challenges.
Forward-Looking Statements
This press release includes "forward looking statements" within the meaning of the of the federal securities laws relating to Ducommun Incorporated, including statements relating to Ducommun’s expectations pertaining to opportunities and the Company’s ability to execute under agreements with its key customers and similar expressions that concern Ducommun’s intentions or beliefs about future occurrences, expectations, or results. Forward looking statements are subject to risks, uncertainties and other factors that may change over time and may cause actual results to differ materially from those that are expected. It is very difficult to predict the effect of known factors, and Ducommun cannot anticipate all factors that could affect actual results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties, and other factors, including those factors disclosed under “Risk Factors” in our reports filed with the SEC, including the Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, Current Reports on Form 8-K and its other filings with the SEC. The forward-looking statements included in this press release are made only as of the date of this press release, and Ducommun does not undertake any obligation to (and expressly disclaims any such obligation to) update the forward-looking statements to reflect subsequent events or circumstances.
MEDIA CONTACTS:
Suman Mookerji, Senior Vice President, Chief Financial Officer, 657.335.3665
SMookerji@ducommun.com
FAQ
What recent award did Ducommun receive related to the TOW missile system?
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