• Sales for the quarter were $156.5 million, up 35% over prior year
• Bookings totaled $157.8 million and achieved record backlog of $578.5 million
• Aerospace segment sales increased 34% to $135.6 million; bookings were $150.1 million
• Net loss for the quarter was $4.4 million and adjusted EBITDA was $6.1 million
• Expect second quarter revenue to be $165 million to $175 million; maintaining guidance of $640 million to $680 million for 2023, a 23% increase over 2022 at mid-point of range

Please replace the release with the following version due to corrected footnote numbering in the SEGMENT DATA and SALES BY MARKET tables.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230509006179/en/

Astronics Corporation Segment Sales and Bookings (Graphic: Business Wire)

The updated release reads:

ASTRONICS CORPORATION REPORTS 2023 FIRST QUARTER FINANCIAL RESULTS

• Sales for the quarter were $156.5 million, up 35% over prior year
• Bookings totaled $157.8 million and achieved record backlog of $578.5 million
• Aerospace segment sales increased 34% to $135.6 million; bookings were $150.1 million
• Net loss for the quarter was $4.4 million and adjusted EBITDA was $6.1 million
• Expect second quarter revenue to be $165 million to $175 million; maintaining guidance of $640 million to $680 million for 2023, a 23% increase over 2022 at mid-point of range

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 months ended April 1, 2023.

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “We had a solid start to the year as continued strong customer demand and an improving supply chain helped us exceed the upper end of our revenue expectations for the quarter. Our leading position in passenger power and inflight connectivity for commercial aerospace combined with the robust recovery in that market has driven demand for our products. The trends give us confidence in the revenue ramp we are planning for the rest of 2023.”

Mr. Gundermann continued, “We expect revenue to increase significantly in the second quarter to $165 million to $175 million and are maintaining full year guidance of $640 million to $680 million. We have also restructured our Test segment to take out approximately $4 million to $5 million in costs and improve operating results. We expect this effort, together with the cooperation of our supply chain and strong customer demand, will improve financial results as we advance through the year.”

First Quarter Results

First Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Consolidated sales were up $40.4 million, or 34.7%, from the first quarter of 2022. Aerospace sales increased $34.2 million, or 33.7%, driven by higher sales to the commercial transport market. Test Systems sales increased $6.2 million, due primarily to the reversal of a $5.8 million deferred revenue liability assumed with an acquisition and associated with a customer program which is no longer expected to occur.

Consolidated operating loss was $2.4 million, an improvement over the operating loss of $4.2 million in the prior-year period. The current period operating loss benefited from higher volume and the $5.8 million liability reversal, which was offset by higher material and labor costs and an increase of $3.2 million in litigation-related legal expenses. The prior period operating loss benefited from an Aviation Manufacturing Jobs Protections (“AMJP”) Program grant which provided a $6.0 million offset to cost of products sold.

The Company recognized in the quarter a final earnout of $3.4 million for the 2019 sale of its semiconductor test business, compared with $11.3 million recognized in the prior-year period. Other income in the 2023 first quarter included $1.8 million associated with the reversal of a liability related to an equity investment.

Interest expense was $5.5 million in the current period, compared with $1.6 million in the prior-year period, primarily driven by higher interest rates on the Company’s new credit facilities. Interest expense includes approximately $0.6 million of non-cash amortization of capitalized financing-related fees.

Income tax expense was $1.3 million in the current period, 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 $4.4 million, or $0.14 per diluted share, compared with net loss of $3.1 million, or $0.10 per diluted share, in the prior year.

Consolidated adjusted EBITDA was $6.1 million, or 3.9% of consolidated sales, compared with $0.9 million, or 0.8% of consolidated sales, in the prior-year period.

Bookings were $157.8 million in the quarter resulting in a book-to-bill ratio of 1.05:1, excluding the impact of the $5.8 million adjustment to sales referred to previously. Backlog was a record $578.5 million. Approximately $498.7 million of backlog is expected to ship over the next twelve months.

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

Aerospace First Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $34.2 million, or 33.7%, to $135.6 million driven by a 47.0%, or $30.1 million increase in commercial transport sales. Sales to this market were $94.2 million, or 60.2% of consolidated sales in the quarter, compared with $64.1 million, or 55.1% of consolidated sales in the first quarter of 2022. Improving global airline travel driving higher fleet utilization and increased production rates resulted in increased demand.

General Aviation sales increased $3.6 million, or 22.6%, to $19.4 million.

Aerospace segment operating profit improved to $4.1 million compared with operating profit of $3.1 million in the same period last year, which included an AMJP grant offset to cost of sales of $6.0 million. Absent the impact of the AMJP grant on last year’s first quarter, aerospace operating profit improved $7.0 million on a sales increase of $34.2 million. The improvement in operating profit was driven by higher volume primarily in the commercial transport market, partially offset by the effects of material and labor inflation.

Aerospace bookings were $150.1 million for a book-to-bill ratio of 1.11:1. Backlog for the Aerospace segment was a record $492.2 million at quarter end.

Mr. Gundermann commented, “Our Aerospace business continues to accelerate, in step with the air travel recovery that is underway worldwide. Our business is trending back to pre-pandemic levels and will benefit further from a number of high-profile programs that we have won during the downturn, including our involvement on the U.S. Army’s Future Long-Range Assault Aircraft (FLRAA) program which we expect to begin in the next several weeks. Margin performance will continue to improve as supply chain spot buys decline and volume increases.”

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

Test Systems First Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $20.9 million, up $6.2 million compared with the prior-year period primarily as a result of a reversal of $5.8 million deferred revenue liability recorded with a previous acquisition. Absent that item, Test Systems sales increased $0.4 million.

Test Systems segment operating loss was $0.6 million compared with operating loss of $1.8 million in the first quarter of 2022. Absent the non-operating sales adjustment resulting from the reversal of the deferred revenue liability, Test Systems operating loss for the current period was $6.4 million and was negatively affected by mix, under absorption of fixed costs due to volume and $2.6 million in increased litigation-related legal expenses.

Shortly after the quarter ended the Test Systems segment implemented restructuring initiatives to align the workforce and management structure with near-term revenue expectations and operational needs. These initiatives are expected to provide savings of $4 million to $5 million annually, beginning with the third quarter.

Bookings for the Test Systems segment in the quarter were $7.7 million, for a book-to-bill ratio of 0.51:1 for the quarter, excluding the impact of the $5.8 million adjustment to sales referred to previously. Backlog was $86.3 million at the end of the first quarter of 2023 compared with backlog of $81.1 million at the end of the first quarter of 2022.

In April 2023, Astronics announced that the Test business had been awarded a contract award to produce portable radio test equipment for the U.S. Marine Corps’ Handheld Radio Test Sets program (“HHRTS”). This program is expected to generate revenue of approximately $40 million over a five-year period. An initial task order for approximately $10 million is expected in the coming weeks.

Mr. Gundermann commented, “Our Test business is going through a transition period. We have been quite successful winning new business, including radio test programs for both the U.S. Army and U.S. Marine Corps, which promise to be major contributors to our results in the near future. However, these programs have developed more slowly than expected, so we found it necessary to restructure and right size the business for the interim period. We expect the restructuring to improve profitability for the segment at current run rates until the new programs gain traction.”

Liquidity and Financing

Cash on hand at the end of the quarter was $5.7 million. Capital expenditures in the quarter were $1.6 million. Net debt was $172.4 million, compared with $150.2 million at the end of 2022.

Cash used in operations was $19.2 million in the quarter, primarily due to increased levels of working capital to support higher projected sales volume. Astronics expects to be cash flow positive for the remainder of 2023.

2023 Outlook

Revenue for the second quarter of 2023 is expected to be $165 million to $175 million and for the full year to be in the range of $640 million to $680 million. Planned capital expenditures for 2023 are expected to be in the range of $14 million to $17 million.

First Quarter 2023 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 (412) 317-6060. 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 10177171. The telephonic replay will be available from 7:45 p.m. on the day of the call through Tuesday, May 16, 2023. A transcript of the call will also be posted to the Company’s Web site 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” or other similar expressions and include all statements with regard to achieving any revenue or profitability expectations, the rate of recovery of the commercial aerospace widebody/long haul markets, the improvement in the supply chain and reduction of spot buys, the timing of pricing and impact of inflation on margins, the effectiveness on profitability of cost reduction efforts, the timing of receipt of task orders or future orders, and the expectations 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 continued global impact of COVID-19 and related governmental and other actions taken in response, 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 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. 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

Reconciliation to Non-GAAP Performance Measures

In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, restructuring charges, gains or losses associated with the sale of businesses and grant benefits recorded related to the AMJP program), which is a non-GAAP measure. The Company’s management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, litigation-related expenses, restructuring charges, gains or losses associated with the sale of businesses and grant benefits recorded related to the AMJP program, which is not commensurate with the core activities of the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006179/en/