Ducommun, a name synonymous with aerospace and defense for over a century and a half, might just be on the verge of a breakout. While the recent Q1 2024 earnings call showcased a solid performance, a deeper dive into the transcript reveals a subtle but crucial shift in strategy, one that could propel the company to unprecedented heights.

Ducommun's narrative, on the surface, is one of steady progress towards "Vision 2027." Facility consolidation, strategic acquisitions, and a growing emphasis on engineered products paint a picture of measured growth. But nestled within the CEO's words, a new theme emerges: a whisper strategy of quietly gaining market share on key commercial aerospace platforms.

While analysts zero in on the short-term 737 MAX production uncertainties, Ducommun is laying the groundwork for a long-term dominance of the single-aisle market. CEO Steve Oswald casually mentions, almost as an afterthought, "We're working real hard with...[and] can't go making any announcement right now, but we're working on gaining share on the MAX, as well as the A320." This seemingly innocuous statement packs a powerful punch, signaling an aggressive pursuit of market share on the two most important commercial aerospace programs.

This whisper strategy extends beyond Boeing. Oswald hints at potential upside in the Airbus A320 program within the next 12 months. While no specifics are revealed, the timeline suggests Ducommun is already engaged in discussions with Airbus, potentially securing additional work packages on the highly successful A320 family.

The implications of this whisper strategy are significant. Imagine a scenario where Ducommun captures a meaningful portion of the work on both the MAX and the A320. With production rates expected to increase significantly over the next few years, Ducommun would find itself at the heart of a commercial aerospace boom. This, coupled with their ongoing defense offloading strategy, could supercharge the company's growth trajectory.

Ducommun's Backlog Growth

The company's total backlog currently stands at a record $1.46 billion, with defense backlog alone reaching $569 million. This robust pipeline, combined with the whisper strategy, suggests a substantial revenue acceleration could be on the horizon.

A few data points support this hypothesis. The company's Electronic Systems segment, a key beneficiary of both offloading and commercial aerospace growth, delivered a record 18.4% adjusted operating margin in Q1. While attributed to restructuring savings and favorable product mix, this performance could be an early indicator of the whisper strategy's impact.

Ducommun's Electronic Systems Segment Margin

"Ducommun's Electronic Systems segment achieved a record 18.4% adjusted operating margin in Q1 2024, a significant increase compared to previous quarters. This strong performance could be driven by restructuring savings and favorable product mix, and possibly the early impact of the "whisper strategy" to gain market share."

There's an interesting parallel here to Ducommun's own history. Founded in 1849, the company initially specialized in metalwork for the booming gold rush era. As industries evolved, so did Ducommun, adapting to the changing landscape while staying true to its core competencies in manufacturing and engineering. The current whisper strategy echoes this historic adaptability, positioning the company for success in the next era of aerospace.

Ducommun's quiet confidence is palpable. CEO Oswald, with a twinkle in his metaphorical eye, reflects on the company's 175-year journey, noting, "The door of the company has been continuously open for over 43,000 business days...What a great story with a very bright future ahead." This whisper strategy, carefully concealed within a narrative of measured growth, might just be the key to unlocking Ducommun's explosive potential.

"Fun Fact: Ducommun's history spans over 175 years, starting in 1849. That's over 43,000 business days of continuous operation! From its origins in metalwork during the California Gold Rush, the company has continuously adapted to serve evolving industries, showcasing its resilience and adaptability."