ATRO Astronics Corporation

• Sales increased $40.8 million to $203.7 million, highest quarterly level since the first quarter of 2019
• Higher sales drove Aerospace operating income of $14.3 million, or 8.0%; Adjusted Aerospace operating income1 was $25.3 million, or 14.2% of sales
• Net loss for the quarter of $11.7 million, or $0.34 per diluted share, included impact of $7.0 million in refinancing costs; Adjusted net income1 was $12.2 million, or $0.35 per diluted share
• Adjusted EBITDA1 grew 207% to $27.1 million, or 13.3% of sales, up $18.2 million over the prior-year period and up $6.8 million over trailing second quarter
• Generated $8.5 million in cash from operations in the quarter
• Bookings in the quarter were $189.2 million, driving backlog of $611.9 million with book to bill ratio of 0.93x
• Revised 2024 revenue guidance to a new range of $777 million to $797 million

Astronics Corporation (Nasdaq: ATRO) (“Astronics” or the “Company”), a leading supplier of advanced technologies and products to the global aerospace, defense, and other mission-critical industries, today reported financial results for the three and nine months ended September 28, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20241106971275/en/

Astronics Segment Sales and Bookings (Graphic: Business Wire)

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “We delivered a solid third quarter operationally. Revenue was at the high end of our range, up 25% over the comparator quarter. Adjusted EBITDA was $27.1 million for the quarter and $91 million for the trailing twelve months. Operating margins improved from both volume and the initiatives we have executed to drive profitability. Our Aerospace segment adjusted operating margin was 14.2%. We are clearly making progress towards our operational goals, though our results include the impact of expenses related to our July refinancing, a customer bankruptcy and a warranty reserve. All in all, we feel it was another quarter of progress as we continue to recover from the disruption of the past few years.”

1 Adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted operating margin, adjusted segment operating profit, adjusted segment operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted diluted earnings per share (“EPS”) are Non-GAAP Performance Measures. Please see the reconciliation of GAAP to non-GAAP performance measures in the tables that accompany this release.

Third Quarter Results

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

September 28, 2024

 

September 30, 2023

% Change

 

September 28, 2024

 

September 30, 2023

% Change

 

 

 

 

 

 

 

 

 

 

Sales

$

203,698

 

 

$

162,922

 

25.0

%

 

$

586,886

 

 

$

493,914

 

18.8

%

Income (Loss) from Operations

$

8,374

 

 

$

(14,479

)

157.8

%

 

$

17,590

 

 

$

(14,453

)

221.7

%

Operating Margin %

 

4.1

%

 

 

(8.9

)%

 

 

 

3.0

%

 

 

(2.9

)%

 

Net Gain on Sale of Business

$

—

 

 

$

—

 

 

 

$

—

 

 

$

(3,427

)

 

Loss on Extinguishment of Debt

$

6,987

 

 

$

—

 

 

 

$

6,987

 

 

$

—

 

 

Net Loss

$

(11,738

)

 

$

(16,983

)

30.9

%

 

$

(13,383

)

 

$

(33,397

)

59.9

%

Net Loss %

 

(5.8

)%

 

 

(10.4

)%

 

 

 

(2.3

)%

 

 

(6.8

)%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income (Loss)1

$

12,163

 

 

$

(2,262

)

637.7

%

 

$

21,287

 

 

$

(3,892

)

646.9

%

Adjusted EBITDA1

$

27,059

 

 

$

8,827

 

206.5

%

 

$

66,375

 

 

$

30,749

 

115.9

%

Adjusted EBITDA Margin %1

 

13.3

%

 

 

5.4

%

 

 

 

11.3

%

 

 

6.2

%

 

Third Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Consolidated sales were up $40.8 million, or 25.0%. Aerospace sales increased $35.5 million and Test Systems sales increased $5.3 million.

Gross profit increased $22.1 million to $42.7 million, or 21.0% of sales. Adjusted gross profit1 for the 2024 third quarter was $47.2 million, or 23.2% of sales. Third quarter gross profit was negatively impacted by a $3.5 million atypical warranty reserve related to a new product launch that requires a field modification, and a $0.9 million inventory reserve related to a bankruptcy filing for an Aerospace customer. The comparator quarter of 2023 included a $3.6 million write-down of inventory related to a separate customer bankruptcy.

Third quarter 2024 selling, general and administrative expenses (“SG&A”) included $1.3 million in reserves for outstanding receivables and fixed asset impairment related to the bankruptcy filing of an Aerospace customer compared to a separate bankruptcy reserve of $7.5 million against outstanding receivables in the prior year.

Despite the unusual impacts to gross profit and operating income, consolidated operating income increased $22.9 million to $8.4 million, or 4.1% of sales, compared with operating loss of $14.5 million in the prior-year period. Adjusted operating income1 for the 2024 third quarter was $19.6 million, or 9.6% of sales.

Improved operating income reflects the operating leverage gained on higher sales volume, partially offset by $4.5 million for resumed incentive programs, an increase of $1.9 million in litigation-related legal expenses and reserve adjustments in 2024 and a $3.2 million increase in non-bankruptcy related inventory reserves.

Third quarter 2024 expenses included a $3.2 million call premium on the previous term loan and the write-off of $3.8 million of associated deferred financing costs. The $7.0 million total has been reflected as Loss on Extinguishment of Debt.

Tax expense in the quarter was $6.6 million, primarily due to a valuation allowance applied against the deferred tax asset associated with research and development costs that are required to be capitalized for tax purposes.

Consolidated net loss was $11.7 million, or $0.34 per diluted share, measurably improved compared with the net loss of $17.0 million, or $0.51 per diluted share, in the prior year. Adjusted net income1 for the 2024 third quarter was $12.2 million, or $0.35 per diluted share.

Consolidated adjusted EBITDA1 increased to $27.1 million, or 13.3% of consolidated sales, compared with adjusted EBITDA1 of $8.8 million, or 5.4% of consolidated sales, in the prior-year period primarily as a result of increased profitability from higher sales.

Bookings were $189.2 million in the quarter resulting in a book-to-bill ratio of 0.93:1. For the trailing twelve months, bookings totaled $795.5 million and the book-to-bill ratio was 1.02:1.

Aerospace Segment Review (refer to sales by market and segment data in accompanying tables)

Aerospace Third Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $35.5 million, or 24.9%, to $177.6 million. The improvement was driven by a 31.6% increase, or $32.1 million, in Commercial Transport sales. Sales to this market were $133.9 million, or 65.8% of consolidated sales in the quarter, compared with $101.7 million, or 62.5% of consolidated sales in the third quarter of 2023. Growth was primarily related to increased demand by airlines for inflight entertainment & connectivity (“IFEC”) products which are in Electrical Power & Motion and Avionics product groups.

Military Aircraft sales increased $5.0 million, or 30.0%, to $21.7 million, driven by progress on the FLRAA program. General Aviation sales increased $1.9 million, or 11.6%, to $18.1 million due to higher VVIP sales. Other sales decreased $3.6 million as the Company is winding down its non-core contract manufacturing arrangements.

Aerospace segment operating profit of $14.3 million was up $21.7 million compared with operating loss of $7.5 million in the same period last year. Operating margin was 8.0%. Adjusted Aerospace operating profit1 was $25.3 million, an increase of $20.3 million, or over five times the prior-year period. Adjusted Aerospace operating margin1 expanded 10.7 points to 14.2% reflecting the leverage gained on higher volume and improving production efficiencies.

The segment’s operating profit in the third quarter of 2024 was impacted by $3.5 million in warranty expense related to the previously-mentioned field modification, $5.1 million in litigation-related legal expenses and reserve adjustments related to an ongoing patent dispute, $3.9 million in inventory reserves, $3.2 million in compensation expense related to the resumption of the Company’s incentive programs, and a non-cash reserve associated with a customer bankruptcy of $2.2 million.

Aerospace bookings were $173.6 million for a book-to-bill ratio of 0.98:1. Backlog for the Aerospace segment was $543.6 million at quarter end and excludes $9.3 million of backlog that was associated with the customer bankruptcy referred to previously.

Mr. Gundermann commented, “Our Aerospace business had a strong quarter, with sales up 24.9% over the comparator quarter and adjusted operating income1 achieving our targeted mid-teens level of 14.2%. We achieved this despite the Boeing strike, which hurt revenue in the quarter by about $2 million, with bookings impacted by approximately $7 million to $8 million. Given the measurably improved profitability, we are pleased with our Aerospace performance during the quarter.”

Test Systems Segment Review (refer to sales by market and segment data in accompanying tables)

Test Systems Third Quarter 2024 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $26.1 million, up $5.3 million. The improvement was driven by the U.S. Marine Corps’ Handheld Radio Test Sets (“HHRTS”) and the U.S. Army’s TS-4549/T programs, which contributed $5.3 million and $1.2 million, respectively, in sales during the quarter.

Test Systems segment operating loss was near break-even, compared with operating loss of $1.8 million in the third quarter of 2023. The improvement was the result of lower litigation-related legal expenses, partially offset by additional compensation expense from the resumption of the Company’s incentive programs. Test Systems continues to be negatively affected by mix and under absorption of fixed costs at current volume levels.

Additional restructuring initiatives were implemented in the 2024 fourth quarter. In October 2024, the Company offered a voluntary separation program which is currently expected to provide annualized savings of approximately $2 million, beginning in the first quarter of 2025. The Company expects to record severance expense of approximately $1 million in the fourth quarter of 2024 related to this initiative.

Bookings for the Test Systems segment in the quarter were $15.6 million. The book-to-bill ratio was 0.60:1 for the quarter. Backlog for the Test Systems segment was $68.2 million at quarter end.

Mr. Gundermann commented, “Our Test business had some success in the third quarter, with revenue up 25.6%. The business has initiated further restructuring to focus on the most critical initiatives going forward, including the radio test program for the U.S. Army, which is now expected to enter volume production in the second half of 2025.”

Liquidity and Financing

Cash provided by operations in the third quarter of 2024 was $8.5 million, primarily the result of increased net income, after adjusted for non-cash expenses.

Capital expenditures in the quarter were $1.9 million and $5.2 million year-to-date. Net debt was $174.6 million, up from $161.2 million at December 31, 2023.

On July 11, 2024, the Company announced it had amended and expanded its revolving line of credit and refinanced its term loan. The refinancing provided improved liquidity, lower cash costs, and greater financial flexibility for the Company. The refinancing was comprised of an expanded asset-based line of credit and a reduced, lower-cost term loan. Both mature in July 2027.

Legal Proceedings

Since 2010, the Company has been defending itself in a long-running series of patent infringement cases brought by a single plaintiff. Cases were filed in the United States, France, Germany, and the United Kingdom (UK).

The United States case was resolved in 2017, when the court found that the patent was not novel and was therefore invalid.

The French case similarly found that the subject patent was invalid, though the plaintiff is seeking to appeal that decision.

The German court dismissed some claims of the patent but upheld others and found that Astronics had been infringing. The Company has paid $3.5 million in penalties and interest to date and has taken a reserve of $17.3 million to cover estimated damages and associated interest. Damages proceedings in this case are likely to conclude in 2026.

Unlike in the US, French, and German proceedings, the UK court fully upheld the subject patent and found that the Company was infringing. A damages hearing was conducted in October 2024 and a ruling is expected later this year or early in 2025. Astronics reserved $7.4 million to cover anticipated damages, but the plaintiff is seeking damages of up to approximately $105 million, excluding interest. Based on UK legal practices, the Company expects that some amount of damages may be due in early 2025. The Company is engaged with its lenders to seek to arrange financing to cover the wide range of possible outcomes and satisfy any potential damages award as required.

The Company believes that permission will be granted to either or both of the parties to appeal the judgement to a higher court subsequently.

All patents related to the infringement cases have expired years ago and the lawsuits do not restrict the Company’s current business activities.

2024 Outlook

The Company expects fourth quarter sales of $190 million to $210 million and is adjusting its 2024 revenue guidance to $777 million to $797 million. The midpoint of this range would be a 14.2% increase over 2023 sales. Astronics considered the broad range of factors affecting the business, including the work stoppage at Boeing, in issuing its guidance.

Backlog at the end of the third quarter was $611.9 million. Planned capital expenditures in 2024 are expected to be in the range of $9 million to $11 million.

Mr. Gundermann commented, “We are closing in on another year of strong double-digit growth. Assuming we attain the mid-point of the range for 2024, we will have averaged 21% growth over each of the last three years. Our profitability has benefited from the growth and the many improvement initiatives we have implemented over the last several years, and we believe 2025 will see a continuation of these trends.”

Third Quarter 2024 Webcast and Conference Call

The Company will host a teleconference today at 4:45 p.m. ET. During the teleconference, management will review the financial and operating results for the period and discuss Astronics’ corporate strategy and outlook. A question-and-answer session will follow.

The Astronics conference call can be accessed by calling (201) 493-6784. The listen-only audio webcast can be monitored at investors.astronics.com. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13749130. The telephonic replay will be available from 8:00 p.m. on the day of the call through Wednesday, November 20, 2024. The webcast replay can be accessed via the investor relations section of the Company’s website where a transcript will also be posted once available.

About Astronics Corporation

Astronics Corporation (Nasdaq: ATRO) serves the world’s aerospace, defense, and other mission-critical industries with proven innovative technology solutions. Astronics works side-by-side with customers, integrating its array of power, connectivity, lighting, structures, interiors, and test technologies to solve complex challenges. For over 50 years, Astronics has delivered creative, customer-focused solutions with exceptional responsiveness. Today, global airframe manufacturers, airlines, military branches, completion centers, and Fortune 500 companies rely on the collaborative spirit and innovation of Astronics. The Company’s strategy is to increase its value by developing technologies and capabilities that provide innovative solutions to its targeted markets.

Safe Harbor Statement

This news release contains forward-looking statements as defined by the Securities Exchange Act of 1934. One can identify these forward-looking statements by the use of the words “expect,” “anticipate,” “plan,” “may,” “will,” “estimate,” “feeling” or other similar expressions and include all statements with regard to the timing for the ruling on the Company’s UK and French patent infringement damages proceedings and the amount of any such damages that may become due and payable by the Company as a result, the Company’s ability to appeal the ruling on the Company’s UK patent infringement damages claim, the timing as to when the damages in the UK patent infringement claim will become due and payable, achieving any revenue or profitability expectations, aircraft production rates, the effectiveness on profitability of cost reduction efforts, the level of liquidity and its sufficiency to meet current needs, the level of cash generation, the level of demand by customers and markets. Because such statements apply to future events, they are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the statements. Important factors that could cause actual results to differ materially from what may be stated here include the trend in growth with passenger power and connectivity on airplanes, the state of the aerospace and defense industries, the market acceptance of newly developed products, internal production capabilities, the timing of orders received, the status of customer certification processes and delivery schedules, the demand for and market acceptance of new or existing aircraft which contain the Company’s products, the impact of regulatory activity and public scrutiny on production rates of a major U.S. aircraft manufacturer, the need for new and advanced test and simulation equipment, customer preferences and relationships, the effectiveness of the Company’s supply chain, and other factors which are described in filings by Astronics with the Securities and Exchange Commission. Except as required by applicable law, the Company assumes no obligation to update forward-looking information in this news release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

FINANCIAL TABLES FOLLOW

ASTRONICS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS DATA

(Unaudited, $ in thousands, except per share amounts)

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

 

9/30/2023

 

9/28/2024

 

9/30/2023

Sales

$

203,698

 

 

$

162,922

 

 

$

586,886

 

 

$

493,914

 

Cost of products sold

 

160,955

 

 

 

142,304

 

 

 

468,598

 

 

 

413,091

 

Gross profit

 

42,743

 

 

 

20,618

 

 

 

118,288

 

 

 

80,823

 

Gross margin

 

21.0

%

 

 

12.7

%

 

 

20.2

%

 

 

16.4

%

 

 

 

 

 

 

 

 

Selling, general and administrative

 

34,369

 

 

 

35,097

 

 

 

100,698

 

 

 

95,276

 

SG&A % of sales

 

16.9

%

 

 

21.5

%

 

 

17.2

%

 

 

19.3

%

Income (loss) from operations

 

8,374

 

 

 

(14,479

)

 

 

17,590

 

 

 

(14,453

)

Operating margin

 

4.1

%

 

 

(8.9

)%

 

 

3.0

%

 

 

(2.9

)%

 

 

 

 

 

 

 

 

Net gain on sale of business

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,427

)

Loss on extinguishment of debt

 

6,987

 

 

 

—

 

 

 

6,987

 

 

 

—

 

Other expense (income)

 

343

 

 

 

348

 

 

 

1,214

 

 

 

(562

)

Interest expense, net

 

6,217

 

 

 

5,991

 

 

 

17,832

 

 

 

17,381

 

Loss before tax

 

(5,173

)

 

 

(20,818

)

 

 

(8,443

)

 

 

(27,845

)

Income tax expense (benefit)

 

6,565

 

 

 

(3,835

)

 

 

4,940

 

 

 

5,552

 

Net loss

$

(11,738

)

 

$

(16,983

)

 

$

(13,383

)

 

$

(33,397

)

Net loss % of sales

 

(5.8

)%

 

 

(10.4

)%

 

 

(2.3

)%

 

 

(6.8

)%

 

 

 

 

 

 

 

 

Basic loss per share:

$

(0.34

)

 

$

(0.51

)

 

$

(0.38

)

 

$

(1.02

)

Diluted loss per share:

$

(0.34

)

 

$

(0.51

)

 

$

(0.38

)

 

$

(1.02

)

 

 

 

 

 

 

 

 

Adjusted net income (loss)1

$

12,163

 

 

$

(2,262

)

 

$

21,287

 

 

$

(3,892

)

Adjusted diluted earnings (loss) per share1

$

0.35

 

 

$

(0.07

)

 

$

0.61

 

 

$

(0.12

)

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding (in thousands)

 

35,011

 

 

 

33,000

 

 

 

34,961

 

 

 

32,707

 

 

 

 

 

 

 

 

 

Capital expenditures

$

1,850

 

 

$

2,231

 

 

$

5,244

 

 

$

6,037

 

Depreciation and amortization

$

6,041

 

 

$

6,385

 

 

$

18,572

 

 

$

19,758

 

1 Adjusted Net Income and adjusted diluted EPS are Non-GAAP Performance Measures. Please see the reconciliation of GAAP to non-GAAP performance measures in the tables that accompany this release.

Use of Non-GAAP Financial Metrics and Additional Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Astronics provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. Astronics management uses these measures for reviewing the financial results of Astronics for budget planning purposes and for making operational and financial decisions. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, help investors evaluate Astronics core operating and financial performance and business trends consistent with how management evaluates such performance and trends.

ASTRONICS CORPORATION

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

(Unaudited, $ in thousands)

 

 

 

 

 

 

 

 

 

Consolidated

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

 

9/30/2023

 

9/28/2024

 

9/30/2023

Net loss

$

(11,738

)

 

$

(16,983

)

 

$

(13,383

)

 

$

(33,397

)

Add back (deduct):

 

 

 

 

 

 

 

Interest expense

 

6,217

 

 

 

5,991

 

 

 

17,832

 

 

 

17,381

 

Income tax (benefit) expense

 

6,565

 

 

 

(3,835

)

 

 

4,940

 

 

 

5,552

 

Depreciation and amortization expense

 

6,041

 

 

 

6,385

 

 

 

18,572

 

 

 

19,758

 

Equity-based compensation expense

 

1,772

 

 

 

1,611

 

 

 

6,414

 

 

 

5,603

 

Non-cash annual stock bonus accrual

 

—

 

 

 

—

 

 

 

1,448

 

 

 

—

 

Non-cash 401K contribution and quarterly bonus accrual

 

—

 

 

 

1,237

 

 

 

3,454

 

 

 

3,773

 

Restructuring-related charges including severance

 

259

 

 

 

—

 

 

 

1,033

 

 

 

564

 

Legal reserve, settlements and recoveries

 

(332

)

 

 

(1,227

)

 

 

(332

)

 

 

(2,532

)

Litigation-related legal expenses

 

5,558

 

 

 

4,574

 

 

 

13,680

 

 

 

14,024

 

Equity investment accrued payable write-off

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,800

)

Net gain on sale of business

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,427

)

Loss on extinguishment of debt

 

6,987

 

 

 

—

 

 

 

6,987

 

 

 

—

 

Non-cash reserves for customer bankruptcy

 

2,203

 

 

 

11,074

 

 

 

2,203

 

 

 

11,074

 

Warranty reserve

 

3,527

 

 

 

—

 

 

 

3,527

 

 

 

—

 

Deferred liability recovery

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,824

)

Adjusted EBITDA

$

27,059

 

 

$

8,827

 

 

$

66,375

 

 

$

30,749

 

 

 

 

 

 

 

 

 

Sales

$

203,698

 

 

$

162,922

 

 

$

586,886

 

 

$

493,914

 

Adjusted EBITDA margin %

 

13.3

%

 

 

5.4

%

 

 

11.3

%

 

 

6.2

%

Adjusted EBITDA is defined as net income before interest expense, income taxes, depreciation, amortization, and other adjustments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted EBITDA and Adjusted EBITDA Margin as used by other companies. Nevertheless, the Company believes that providing non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA Margin, are important for investors and other readers of the Company’s financial statements.

ASTRONICS CORPORATION

RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT

(Unaudited, $ in thousands)

 

 

 

 

 

 

 

 

 

Consolidated

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

 

9/30/2023

 

9/28/2024

 

9/30/2023

Gross profit

$

42,743

 

 

$

20,618

 

 

$

118,288

 

 

$

80,823

 

Add back (deduct):

 

 

 

 

 

 

 

Warranty reserve

 

3,527

 

 

 

—

 

 

 

3,527

 

 

 

—

 

Non-cash reserves for customer bankruptcy

 

909

 

 

 

3,601

 

 

 

909

 

 

 

3,601

 

Deferred liability recovery

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,824

)

Adjusted gross profit

$

47,179

 

 

$

24,219

 

 

$

122,724

 

 

$

78,600

 

 

 

 

 

 

 

 

 

Sales

$

203,698

 

 

$

162,922

 

 

$

586,886

 

 

$

493,914

 

 

 

 

 

 

 

 

 

Gross margin

 

21.0

%

 

 

12.7

%

 

 

20.2

%

 

 

16.4

%

Adjusted gross margin

 

23.2

%

 

 

14.9

%

 

 

20.9

%

 

 

15.9

%

Adjusted Gross Profit is defined as gross profit as reported, adjusted for certain items. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by sales. Adjusted Gross Profit and Adjusted Gross Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted Gross Profit and Adjusted Gross Profit Margin as used by other companies. Nevertheless, the Company believes that providing non-GAAP financial measures, such as Adjusted Gross Profit and Adjusted Gross Profit Margin, are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's gross profit and gross profit margin to the historical periods' gross profit, as well as facilitates a more meaningful comparison of the Company’s gross profit and gross profit margin to that of other companies.

ASTRONICS CORPORATION

RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME

(Unaudited, $ in thousands)

 

 

 

 

 

 

 

 

 

Consolidated

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

 

9/30/2023

 

9/28/2024

 

9/30/2023

Income (loss) from operations

$

8,374

 

 

$

(14,479

)

 

$

17,590

 

 

$

(14,453

)

Add back (deduct):

 

 

 

 

 

 

 

Restructuring-related charges including severance

 

259

 

 

 

—

 

 

 

1,033

 

 

 

564

 

Legal reserve, settlements and recoveries

 

(332

)

 

 

(1,227

)

 

 

(332

)

 

 

(2,532

)

Litigation-related legal expenses

 

5,558

 

 

 

4,574

 

 

 

13,680

 

 

 

14,024

 

Non-cash reserves for customer bankruptcy

 

2,203

 

 

 

11,074

 

 

 

2,203

 

 

 

11,074

 

Warranty reserve

 

3,527

 

 

 

—

 

 

 

3,527

 

 

 

—

 

Deferred liability recovery

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,824

)

Adjusted operating income (loss)

$

19,589

 

 

$

(58

)

 

$

37,701

 

 

$

2,853

 

 

 

 

 

 

 

 

 

Sales

$

203,698

 

 

$

162,922

 

 

$

586,886

 

 

$

493,914

 

 

 

 

 

 

 

 

 

Operating margin

 

4.1

%

 

 

(8.9

)%

 

 

3.0

%

 

 

(2.9

)%

Adjusted operating margin

 

9.6

%

 

 

—

%

 

 

6.4

%

 

 

0.6

%

Adjusted Operating Income is defined as income from operations as reported, adjusted for certain items. Adjusted Operating Margin is defined as Adjusted Operating Income divided by sales. Adjusted Operating Income and Adjusted Operating Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted Operating Income and Adjusted Operating Margin as used by other companies. Nevertheless, the Company believes that providing non-GAAP financial measures, such as Adjusted Operating Income and Adjusted Operating Margin, are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's income from operations to the historical periods' income from operations and operating margin, as well as facilitates a more meaningful comparison of the Company’s income from operations and operating margin to that of other companies.

ASTRONICS CORPORATION

RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE

TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE

(Unaudited, $ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Consolidated

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

 

9/30/2023

 

9/28/2024

 

9/30/2023

Net loss

$

(11,738

)

 

$

(16,983

)

 

$

(13,383

)

 

$

(33,397

)

Add back (deduct):

 

 

 

 

 

 

 

Amortization of intangibles

 

3,188

 

 

 

3,381

 

 

 

9,728

 

 

 

10,577

 

Restructuring-related charges including severance

 

259

 

 

 

—

 

 

 

1,033

 

 

 

564

 

Legal reserve, settlements and recoveries

 

(332

)

 

 

(1,227

)

 

 

(332

)

 

 

(2,532

)

Litigation-related legal expenses

 

5,558

 

 

 

4,574

 

 

 

13,680

 

 

 

14,024

 

Equity investment accrued payable write-off

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,800

)

Net gain on sale of business

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,427

)

Loss on extinguishment of debt

 

6,987

 

 

 

—

 

 

 

6,987

 

 

 

—

 

Non-cash reserves for customer bankruptcy

 

2,203

 

 

 

11,074

 

 

 

2,203

 

 

 

11,074

 

Warranty reserve

 

3,527

 

 

 

—

 

 

 

3,527

 

 

 

—

 

Deferred liability recovery

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,824

)

Normalize tax rate1

 

2,511

 

 

 

(3,081

)

 

 

(2,156

)

 

 

6,849

 

Adjusted net income (loss)

$

12,163

 

 

$

(2,262

)

 

$

21,287

 

 

$

(3,892

)

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding (in thousands)

 

35,011

 

 

 

33,000

 

 

 

34,961

 

 

 

32,707

 

 

 

 

 

 

 

 

 

Diluted loss per share

$

(0.34

)

 

$

(0.51

)

 

$

(0.38

)

 

$

(1.02

)

Adjusted diluted earnings (loss) per share

$

0.35

 

 

$

(0.07

)

 

$

0.61

 

 

$

(0.12

)

Adjusted Net Income and Adjusted Diluted EPS are defined as net income and diluted EPS as reported, adjusted for certain items, including amortization of intangibles, and also adjusted for a normalized tax rate. Adjusted Net Income and Adjusted Diluted EPS are not measures determined in accordance with GAAP and may not be comparable with the measures used by other companies. Nevertheless, the Company believes that providing non-GAAP financial measures, such as Adjusted Net Income and Adjusted Diluted EPS, are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's net income and diluted EPS to the historical periods' net income and diluted EPS, as well as facilitates a more meaningful comparison of the Company’s net income and diluted EPS to that of other companies. The Company believes that presenting Adjusted Diluted EPS provides a better understanding of its earnings power inclusive of adjusting for the non-cash amortization of intangible assets, reflecting the Company’s strategy to grow through acquisitions as well as organically.

1 Applies a normalized tax rate of 25% to GAAP pre-tax income and non-GAAP adjustments above, which are each pre-tax.

ASTRONICS CORPORATION

SEGMENT SALES AND OPERATING PROFIT

(Unaudited, $ in thousands)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

9/30/2023

 

9/28/2024

9/30/2023

Sales

 

 

 

 

 

Aerospace

$

177,564

 

$

142,116

 

 

$

518,187

 

$

436,217

 

Less inter-segment

 

(10

)

 

(12

)

 

 

(52

)

 

(134

)

Total Aerospace

 

177,554

 

 

142,104

 

 

 

518,135

 

 

436,083

 

 

 

 

 

 

 

Test Systems

 

26,183

 

 

20,818

 

 

 

68,790

 

 

57,831

 

Less inter-segment

 

(39

)

 

—

 

 

 

(39

)

 

—

 

Total Test Systems

 

26,144

 

 

20,818

 

 

 

68,751

 

 

57,831

 

 

 

 

 

 

 

Total consolidated sales

 

203,698

 

 

162,922

 

 

 

586,886

 

 

493,914

 

 

 

 

 

 

 

Segment operating profit (loss) and margins

 

 

 

 

 

Aerospace

 

14,251

 

 

(7,464

)

 

 

45,628

 

 

10,342

 

 

 

8.0

%

 

(5.3

)%

 

 

8.8

%

 

2.4

%

Test Systems

 

(13

)

 

(1,781

)

 

 

(8,428

)

 

(8,521

)

 

 

—

%

 

(8.6

)%

 

 

(12.3

)%

 

(14.7

)%

Total segment operating profit (loss)

 

14,238

 

 

(9,245

)

 

 

37,200

 

 

1,821

 

 

 

 

 

 

 

Net gain on sale of business

 

—

 

 

—

 

 

 

—

 

 

(3,427

)

Loss on extinguishment of debt

 

6,987

 

 

—

 

 

 

6,987

 

 

—

 

Interest expense

 

6,217

 

 

5,991

 

 

 

17,832

 

 

17,381

 

Corporate expenses and other

 

6,207

 

 

5,582

 

 

 

20,824

 

 

15,712

 

Loss before taxes

$

(5,173

)

$

(20,818

)

 

$

(8,443

)

$

(27,845

)

ASTRONICS CORPORATION

RECONCILIATION OF SEGMENT OPERATING PROFIT TO ADJUSTED SEGMENT OPERATING PROFIT

(Unaudited, $ in thousands)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

9/28/2024

 

9/30/2023

 

9/28/2024

 

9/30/2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace operating profit (loss)

$

14,251

 

 

$

(7,464

)

 

$

45,628

 

 

$

10,342

 

Restructuring-related charges including severance

 

237

 

 

 

—

 

 

 

237

 

 

 

—

 

Legal reserve, settlements and recoveries

 

(332

)

 

 

(1,227

)

 

 

(332

)

 

 

(2,532

)

Litigation-related legal expenses

 

5,405

 

 

 

2,658

 

 

 

13,161

 

 

 

6,779

 

Non-cash reserves for customer bankruptcy

 

2,203

 

 

 

11,074

 

 

 

2,203

 

 

 

11,074

 

Warranty reserve

 

3,527

 

 

 

—

 

 

 

3,527

 

 

 

—

 

Adjusted Aerospace operating profit

$

25,291

 

 

$

5,041

 

 

$

64,424

 

 

$

25,663

 

 

 

 

 

 

 

 

 

Aerospace sales

$

177,554

 

 

$

142,104

 

 

$

518,135

 

 

$

436,083

 

 

 

 

 

 

 

 

 

Aerospace margin

 

8.0

%

 

 

(5.3

)%

 

 

8.8

%

 

 

2.4

%

Adjusted Aerospace margin

 

14.2

%

 

 

3.5

%

 

 

12.4

%

 

 

5.9

%

 

 

 

 

 

 

 

 

Test Systems operating loss

$

(13

)

 

$

(1,781

)

 

$

(8,428

)

 

$

(8,521

)

Restructuring-related charges including severance

 

22

 

 

 

—

 

 

 

796

 

 

 

564

 

Litigation-related legal expenses

 

153

 

 

 

1,916

 

 

 

519

 

 

 

7,245

 

Deferred liability recovery

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,824

)

Adjusted Test Systems operating profit (loss)

$

162

 

 

$

135

 

 

$

(7,113

)

 

$

(6,536

)

 

 

 

 

 

 

 

 

Test Systems sales

$

26,144

 

 

$

20,818

 

 

$

68,751

 

 

$

57,831

 

 

 

 

 

 

 

 

 

Test Systems margin

 

—

%

 

 

(8.6

)%

 

 

(12.3

)%

 

 

(14.7

)%

Adjusted Test Systems margin

 

0.6

%

 

 

0.6

%

 

 

(10.3

)%

 

 

(11.3

)%

Adjusted Segment Operating Profit is defined as segment operating profit as reported, adjusted for certain items. Adjusted Segment Margin is defined as Adjusted Segment Operating Profit divided by segment sales. Adjusted Segment Operating Profit and Adjusted Segment Margin are not measures determined in accordance with GAAP and may not be comparable with Adjusted Segment Operating Profit and Adjusted Segment Margin as used by other companies. Nevertheless, the Company believes that providing non-GAAP financial measures, such as Adjusted Segment Operating Profit and Adjusted Segment Margin, are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year's segment operating profit to the historical periods' segment operating profit and segment margin, as well as facilitates a more meaningful comparison of the Company’s segment operating profit and segment margin to that of other companies.

ASTRONICS CORPORATION

CONSOLIDATED BALANCE SHEET DATA

($ in thousands)

 

(unaudited)

 

 

 

9/28/2024

 

12/31/2023

ASSETS

 

 

 

Cash and cash equivalents

$

5,177

 

$

4,756

Restricted cash

 

1,187

 

 

6,557

Accounts receivable and uncompleted contracts

 

193,494

 

 

172,108

Inventories

 

204,952

 

 

191,801

Other current assets

 

19,371

 

 

14,560

Property, plant and equipment, net

 

81,309

 

 

85,436

Other long-term assets

 

32,236

 

 

34,944

Intangible assets, net

 

55,702

 

 

65,420

Goodwill

 

58,169

 

 

58,210

Total assets

$

651,597

 

$

633,792

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current maturities of long-term debt

$

550

 

$

8,996

Accounts payable and accrued expenses

 

130,342

 

 

112,309

Customer advances and deferred revenue

 

19,144

 

 

22,029

Long-term debt

 

178,423

 

 

159,237

Other liabilities

 

73,934

 

 

81,703

Shareholders' equity

 

249,204

 

 

249,518

Total liabilities and shareholders' equity

$

651,597

 

$

633,792

 

ASTRONICS CORPORATION

CONSOLIDATED CASH FLOWS DATA

 

 

 

 

 

Nine Months Ended

(Unaudited, $ in thousands)

9/28/2024

 

9/30/2023

Cash flows from operating activities:

 

 

 

Net loss

$

(13,383

)

 

$

(33,397

)

Adjustments to reconcile net loss to cash from operating activities:

 

 

 

Non-cash items:

 

 

 

Depreciation and amortization

 

18,572

 

 

 

19,758

 

Amortization of deferred financing fees

 

2,711

 

 

 

2,148

 

Provisions for non-cash losses on inventory and receivables

 

8,023

 

 

 

13,713

 

Equity-based compensation expense

 

6,414

 

 

 

5,603

 

Loss on extinguishment of debt

 

6,987

 

 

 

—

 

Net gain on sale of business

 

—

 

 

 

(3,427

)

Operating lease non-cash expense

 

3,869

 

 

 

3,816

 

Non-cash 401K contribution and quarterly bonus accrual

 

3,454

 

 

 

3,773

 

Non-cash annual stock bonus accrual

 

1,448

 

 

 

—

 

Non-cash litigation provision adjustment

 

—

 

 

 

(1,305

)

Non-cash deferred liability reversal

 

—

 

 

 

(5,824

)

Other

 

2,899

 

 

 

911

 

Cash flows from changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(22,712

)

 

 

(12,980

)

Inventories

 

(19,829

)

 

 

(24,024

)

Accounts payable

 

(3,304

)

 

 

4,033

 

Accrued expenses

 

13,517

 

 

 

5,111

 

Income taxes

 

798

 

 

 

3,443

 

Operating lease liabilities

 

(3,777

)

 

 

(3,660

)

Customer advance payments and deferred revenue

 

(2,919

)

 

 

(562

)

Supplemental retirement plan liabilities

 

(309

)

 

 

(304

)

Other assets and liabilities

 

1,690

 

 

 

898

 

Net cash provided (used) by operating activities

 

4,149

 

 

 

(22,276

)

Cash flows from investing activities:

 

 

 

Proceeds on sale of business and assets

 

—

 

 

 

3,427

 

Capital expenditures

 

(5,244

)

 

 

(6,037

)

Net cash used by investing activities

 

(5,244

)

 

 

(2,610

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt

 

195,978

 

 

 

135,732

 

Principal payments on long-term debt

 

(187,498

)

 

 

(125,984

)

Stock award and employee stock purchase plan activity

 

(3,219

)

 

 

2,480

 

Financing-related costs

 

(5,863

)

 

 

(6,447

)

Financing extinguishment costs

 

(3,210

)

 

 

—

 

Proceeds from at-the-market stock sales

 

—

 

 

 

13,045

 

Other

 

(96

)

 

 

(47

)

Net cash (used) provided by financing activities

 

(3,908

)

 

 

18,779

 

Effect of exchange rates on cash

 

54

 

 

 

(20

)

Decrease in cash and cash equivalents and restricted cash

 

(4,949

)

 

 

(6,127

)

Cash and cash equivalents and restricted cash at beginning of period

 

11,313

 

 

 

13,778

 

Cash and cash equivalents and restricted cash at end of period

$

6,364

 

 

$

7,651

 

Supplemental disclosure of cash flow information

 

 

 

Interest paid

$

15,261

 

 

$

14,136

 

Income taxes refunded, net of payments

$

3,975

 

 

$

2,192

 

ASTRONICS CORPORATION

SALES BY MARKET

(Unaudited, $ in thousands)

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

2024 YTD

 

9/28/2024

9/30/2023

% Change

 

9/28/2024

9/30/2023

% Change

% of Sales

Aerospace Segment

 

 

 

 

 

 

 

 

Commercial Transport

$

133,850

$

101,724

31.6

%

 

$

383,679

$

308,016

24.6

%

65.4

%

Military Aircraft

 

21,685

 

16,687

30.0

%

 

 

63,545

 

44,335

43.3

%

10.8

%

General Aviation

 

18,077

 

16,193

11.6

%

 

 

56,643

 

60,656

(6.6

)%

9.7

%

Other

 

3,942

 

7,500

(47.4

)%

 

 

14,268

 

23,076

(38.2

)%

2.4

%

Aerospace Total

 

177,554

 

142,104

24.9

%

 

 

518,135

 

436,083

18.8

%

88.3

%

 

 

 

 

 

 

 

 

 

Test Systems Segment1

 

 

 

 

 

 

 

 

Government & Defense

 

26,144

 

20,818

25.6

%

 

 

68,751

 

57,831

18.9

%

11.7

%

 

 

 

 

 

 

 

 

 

Total Sales

$

203,698

$

162,922

25.0

%

 

$

586,886

$

493,914

18.8

%

 

SALES BY PRODUCT LINE

(Unaudited, $ in thousands)

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

2024 YTD

 

9/28/2024

9/30/2023

% Change

 

9/28/2024

9/30/2023

% Change

% of Sales

Aerospace Segment

 

 

 

 

 

 

 

 

Electrical Power & Motion

$

90,467

$

64,312

40.7

%

 

$

263,919

$

185,712

42.1

%

45.0

%

Lighting & Safety

 

46,921

 

38,496

21.9

%

 

 

135,162

 

116,967

15.6

%

23.0

%

Avionics

 

29,151

 

22,347

30.4

%

 

 

83,716

 

83,011

0.8

%

14.3

%

Systems Certification

 

4,460

 

6,535

(31.8

)%

 

 

12,272

 

19,832

(38.1

)%

2.1

%

Structures

 

2,613

 

2,914

(10.3

)%

 

 

8,798

 

7,485

17.5

%

1.5

%

Other

 

3,942

 

7,500

(47.4

)%

 

 

14,268

 

23,076

(38.2

)%

2.4

%

Aerospace Total

 

177,554

 

142,104

24.9

%

 

 

518,135

 

436,083

18.8

%

88.3

%

 

 

 

 

 

 

 

 

 

Test Systems Segment1

 

26,144

 

20,818

25.6

%

 

 

68,751

 

57,831

18.9

%

11.7

%

 

 

 

 

 

 

 

 

 

Total Sales

$

203,698

$

162,922

25.0

%

 

$

586,886

$

493,914

18.8

%

 

1 Test Systems sales in the nine months ended September 30, 2023 included a $5.8 million reversal of a deferred revenue liability recorded with a previous acquisition.

ASTRONICS CORPORATION

ORDER AND BACKLOG TREND

(Unaudited, $ in thousands)

 

Q4 2023

Q1 2024

Q2 2024

Q3 2024

Trailing Twelve Months

 

9/30/2023

12/31/2023

3/30/2024

9/28/2024

9/28/2024

Sales

 

 

 

 

 

Aerospace

$

168,747

$

163,638

$

176,943

$

177,554

$

686,882

Test Systems

 

26,545

 

21,436

 

21,171

 

26,144

 

95,296

Total Sales

$

195,292

$

185,074

$

198,114

$

203,698

$

782,178

 

 

 

 

 

 

Bookings

 

 

 

 

 

Aerospace

$

172,106

$

184,149

$

192,515

$

173,569

$

722,339

Test Systems

 

11,176

 

19,986

 

26,359

 

15,597

 

73,118

Total Bookings

$

183,282

$

204,135

$

218,874

$

189,166

$

795,457

 

 

 

 

 

 

Backlog

 

 

 

 

 

Aerospace1

$

511,540

$

532,051

$

547,623

$

543,638

 

Test Systems

 

75,036

 

73,586

 

78,774

 

68,227

 

Total Backlog

$

586,576

$

605,637

$

626,397

$

611,865

 

N/A

 

 

 

 

 

 

Book:Bill Ratio

 

 

 

 

 

Aerospace

 

1.02

 

1.13

 

1.09

 

0.98

 

1.05

Test Systems

 

0.42

 

0.93

 

1.25

 

0.60

 

0.77

Total Book:Bill

 

0.94

 

1.10

 

1.10

 

0.93

 

1.02

1 In October of 2024, a customer reported within the Aerospace segment declared bankruptcy. Aerospace and Total Backlog included $9.3 million related to that customer. In the table and bar chart presented above, Aerospace and Total Bookings was reduced by $9.3 million, in the periods in which the original bookings occurred. While the customer has not cancelled those orders and seeks to reorganize and continue operations, we have removed all outstanding backlog until additional information is available to confirm whether those orders are expected to be satisfied. For a customer bankruptcy that occurred during 2023, Aerospace and Total Bookings of $2.6 million and $17.2 million was removed in second and third quarters of 2021, respectively.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106971275/en/

For more information: Company: David C. Burney, Chief Financial Officer Phone: (716) 805-1599, ext. 159 Email: david.burney@astronics.com

Investor Relations: Deborah K. Pawlowski, Kei Advisors LLC Phone: (716) 843-3908 Email: dpawlowski@keiadvisors.com