- Sales for the quarter were $129.1 million, up 16% over
prior-year period
- Operating loss was $8.4 million without benefit of AMJP
grant and earnouts
- Bookings totaled $148.4 million, up 17% over prior-year
period; Achieved book-to-bill ratio of 1.15
- Backlog increased 19% from year end 2021 to a record $494.4
million; Aerospace backlog reached a record $410.8 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 six months ended July 2, 2022.
Peter J. Gundermann, Chairman, President and Chief Executive
Officer, commented, “Our second quarter sales of $129 million were
our highest since the pandemic took hold in the first quarter of
2020, significantly exceeding the average revenue of $114 million
in our previous four quarters. Demand stayed strong through the
quarter, with consolidated bookings of $148 million. Our cumulative
bookings for the last four quarters were $655 million, easily
exceeding shipments during that same period of $473 million. These
orders have resulted in another record backlog at the end of the
second quarter and is expected to drive a significant sales ramp in
the second half of 2022.”
He added, “Margins were under pressure in the second quarter, in
part because we did not receive any AMJP nor earnout benefits like
we have in recent quarters, but also because of inflation and
supply chain challenges that are common these days. We are passing
these costs on as we can, but our ability to respond in the short
term is limited. Encouragingly, we have some evidence that our
supply chain is beginning to loosen up, although risks remain.”
Second Quarter
Results
Three Months Ended
Six Months Ended
($ in thousands)
July 2,
2022
July 3,
2021
%
Change
July 2,
2022
July 3,
2021
%
Change
Sales
$
129,127
$
111,158
16.2
%
$
245,303
$
217,015
13.0
%
Loss from Operations
$
(8,396
)
$
(5,920
)
(41.8
)%
$
(12,563
)
$
(15,432
)
18.6
%
Operating Margin %
(6.5
)%
(5.3
)%
(5.1
)%
(7.1
)%
Net Gain on Sale of Business
$
—
$
—
$
(11,284
)
$
—
Net Loss
$
(11,010
)
$
(8,099
)
(35.9
)%
$
(14,111
)
$
(20,008
)
29.5
%
Net Loss %
(8.5
)%
(7.3
)%
(5.8
)%
(9.2
)%
*Adjusted EBITDA
$
1,209
$
363
233.1
%
$
856
$
(133
)
743.6
%
*Adjusted EBITDA Margin %
0.9
%
0.3
%
0.3
%
(0.1
)%
*Adjusted EBITDA is a Non-GAAP Performance
Measure. Please see the attached table for a reconciliation of
adjusted EBITDA to GAAP net income.
Second Quarter 2022 Results (compared with
the prior-year period, unless noted otherwise)
Consolidated sales were up $18.0 million from the second quarter
of 2021. Aerospace sales were up $20.1 million, or 22.5%, while
Test System sales decreased $2.1 million.
Consolidated operating loss was $8.4 million, compared with
operating loss of $5.9 million in the prior-year period. The prior
year period benefited by a $2.2 million non-cash reduction of the
fair value of a contingent consideration liability related to the
2019 acquisition of Diagnosys Test Systems that offset SG&A
expenses. Compared with the first quarter of 2022, operating loss
increased as a result of not having the benefit of the $6.0 million
Aviation Manufacturing Jobs Protection Program grant combined with
the impact of material and labor inflation, addressing supply chain
constraints to meet customer requirements, the lag in price
increases implemented where possible to offset higher costs and
product mix.
Tax expense in the quarter was $0.6 million primarily due to the
impact of the required capitalization of research and development
costs for tax purposes.
Consolidated net loss was $11.0 million, or $0.34 per diluted
share, compared with net loss of $8.1 million, or $0.26 per diluted
share, in the prior year.
Consolidated adjusted EBITDA improved to $1.2 million, or 0.9%
of consolidated sales, compared with adjusted EBITDA of $0.4
million, or 0.3% of consolidated sales, in the prior-year
period.
Bookings were $148.4 million in the quarter resulting in a
book-to-bill ratio of 1.15:1. Backlog at the end of the quarter
reached another record of $494.4 million for the third consecutive
quarter. Approximately $278.0 million, or 56%, of backlog is
expected to ship in the remainder of 2022.
Aerospace Segment Review (refer to sales by market and
segment data in accompanying tables)
Aerospace Second Quarter 2022 Results
(compared with the prior-year period, unless noted
otherwise)
Aerospace segment sales increased $20.1 million, or 22.5%, to
$109.3 million. Commercial aerospace sales increased 44.9%, or
$21.5 million, and drove the improvement. Sales to this market were
$69.2 million compared with $47.8 million in the second quarter of
2021. Improving domestic airline travel that is driving higher
fleet utilization and increased narrowbody production rates,
including the 737 MAX, resulted in higher demand for Astronics’
products.
General Aviation sales increased $3.1 million, or 20.9%, to a
near record $18.1 million due in part to higher demand in the
business jet market for antenna products. The Company expects the
strong end user demand in the business jet industry to drive higher
OEM production rates in the near future, resulting in higher demand
for its products.
Military Aircraft sales decreased $2.9 million, or 17.3%, to
$13.9 million. The prior-year period benefited from incremental
non-recurring engineering revenue associated with development
programs and higher sales of avionics products.
Aerospace segment operating loss was $3.3 million compared with
operating loss of $2.7 million for the same period last year.
Higher operating losses were driven by inflationary impacts on
input costs and inefficiencies associated with production execution
due to supply chain constraints that restricted shipment
volume.
Aerospace bookings in the second quarter of 2022 were $126.0
million for a book-to-bill ratio of 1.15:1. Bookings were down 22%
sequentially, but up 7% over the comparator quarter of 2021,
continuing the strong trend of improvement since the pandemic took
hold. Backlog for the Aerospace segment was a record $410.8 million
at the end of the second quarter of 2022.
Mr. Gundermann commented, “During the quarter, we announced some
significant program wins. These included the award by Southwest
Airlines to provide in-seat power systems, selection by Safran to
provide satellite communication hardware for Airbus aircraft and
being named the designer and developer of the electrical power
distribution system for the Lilium eVTOL aircraft, our first
announced eVTOL program. While these wins did not contribute
meaningfully to bookings in the quarter, we expect they will be
major drivers for our business going forward.”
Test Systems Segment Review (refer to sales by market and
segment data in accompanying tables)
Test Systems Second Quarter 2022 Results
(compared with the prior-year period,
unless noted otherwise)
Test Systems segment sales were $19.8 million, down $2.1 million
compared with the prior-year period driven by lower defense
revenue.
Test Systems was nearly break-even compared with operating loss
of $0.9 million, or (4.3)% of sales, in the second quarter of 2021.
Continued lower volume has driven operating losses in the second
quarters of 2022 and 2021.
Bookings for the Test Systems segment in the quarter were $22.4
million, for a book-to-bill ratio of 1.13:1 for the quarter.
Backlog was $83.6 million at the end of the second quarter of
2022.
Mr. Gundermann noted, “Our Test business has been pursuing some
significant awards which have been delayed to the second half of
the year. Our go-forward plan assumes that these awards will be
made in the near future, supporting our plans for 2023 and
beyond.”
Liquidity and Financing
Cash on hand at the end of the quarter was $10.7 million and
capital expenditures in the quarter were $1.3 million. Net debt was
down to $125.3 million, compared with $133.2 million at the end of
2021.
On August 9, 2022, the Company entered into an amended and
extended revolving credit facility with its bank group. The purpose
of the amendment was to extend the scheduled expiration of the
agreement from May 30, 2023 to August 31, 2023, giving the Company
more time to complete the refinancing of its revolving credit
facility, which it expects to have complete in the coming months.
The Company was in compliance with its financial covenants as of
July 2, 2022.
Dave Burney, Chief Financial Officer, commented, “We have made
steady progress towards refinancing our existing lending facility,
and we expect the process will be completed in the coming weeks.
The extension gives us time to finalize an appropriate agreement in
collaboration with our bank group.”
2022 Outlook
Mr. Gundermann commented, “We are revising our expected 2022
revenue to be in the range of $550 million to $580 million, which
incorporates a reduction at the high end of the range from previous
guidance. The midpoint of this range would mean growth for the year
of 27% over 2021 and implies average quarterly revenue of $160
million in the second half, a significant step up from recent
levels. This ramp is expected to be weighted more toward the fourth
quarter, however, and while we continue to be challenged by ongoing
supply chain challenges, we believe today that this expansion in
revenue is necessary and achievable. Higher volume will help
satisfy customer demand, along with improved profitability and
momentum as we close out 2022.”
Planned capital expenditures for 2022 are expected to be
approximately $9 million to $10 million.
Second Quarter 2022 Webcast and Conference Call
The Company will host a teleconference today at 11:00 a.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 13731543. The telephonic
replay will be available from 2:00 p.m. on the day of the call
through Wednesday, August 17, 2022. 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 the impact of
COVID-19 on the Company and its future, reaching any revenue or
Adjusted EBITDA margin expectations, being in compliance with
credit agreement covenants and executing a revised credit
agreement, expected revenue from recently announced programs, the
recovery of the commercial aerospace and test systems markets,
expected program awards for the Test segment, and the outcome of
demand streams or 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, 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
ASTRONICS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(Unaudited, $ in thousands except
per share data)
Three
Months Ended
Six
Months Ended
7/2/2022
7/3/2021
7/2/2022
7/3/2021
Sales
$
129,127
$
111,158
$
245,303
$
217,015
Cost of products sold
113,418
95,763
209,661
187,347
Gross profit
15,709
15,395
35,642
29,668
Gross margin
12.2
%
13.8
%
14.5
%
13.7
%
Selling, general and administrative 1
24,105
21,315
48,205
45,100
SG&A % of sales
18.7
%
19.2
%
19.7
%
20.8
%
Loss from operations
(8,396
)
(5,920
)
(12,563
)
(15,432
)
Operating margin
(6.5
)%
(5.3
)%
(5.1
)%
(7.1
)%
Net gain on sale of business
—
—
(11,284
)
—
Other expense, net of other income
291
547
753
1,081
Interest expense, net
1,662
1,699
3,293
3,457
Loss before tax
(10,349
)
(8,166
)
(5,325
)
(19,970
)
Income tax expense (benefit)
661
(67
)
8,786
38
Net loss
$
(11,010
)
$
(8,099
)
$
(14,111
)
$
(20,008
)
Net loss % of sales
(8.5
)%
(7.3
)%
(5.8
)%
(9.2
)%
*Basic loss per share:
$
(0.34
)
$
(0.26
)
$
(0.44
)
$
(0.65
)
*Diluted loss per share:
$
(0.34
)
$
(0.26
)
$
(0.44
)
$
(0.65
)
*Weighted average diluted shares
outstanding (in thousands)
32,082
30,926
32,007
30,914
Capital expenditures
$
1,333
$
1,661
$
2,493
$
3,566
Depreciation and amortization
$
7,000
$
7,426
$
14,088
$
14,879
1 Includes fair value adjustment of
contingent consideration liabilities, which was a $2.2 million
benefit in the three and six months ended July 3, 2021.
ASTRONICS CORPORATION
SEGMENT
DATA
(Unaudited, $ in thousands)
Three
Months Ended
Six
Months Ended
7/2/2022
7/3/2021
7/2/2022
7/3/2021
Sales
Aerospace
$
109,300
$
89,220
$
210,694
$
170,650
Less inter-segment
(10
)
—
(10
)
(14
)
Total Aerospace
109,290
89,220
210,684
170,636
Test Systems
19,840
21,938
34,638
46,683
Less inter-segment
(3
)
—
(19
)
(304
)
Total Test Systems
19,837
21,938
34,619
46,379
Total consolidated sales
129,127
111,158
245,303
217,015
Segment operating (loss) profit and
margins
Aerospace
(3,276
)
(2,706
)
(226
)
(8,269
)
(3.0
)%
(3.0
)%
(0.1
)%
(4.8
)%
Test Systems
(26
)
(946
)
(1,813
)
243
(0.1
)%
(4.3
)%
(5.2
)%
0.5
%
Total segment operating loss
(3,302
)
(3,652
)
(2,039
)
(8,026
)
Net gain on sale of business
—
—
(11,284
)
—
Interest expense
1,662
1,699
3,293
3,457
Corporate expenses and other 1
5,385
2,815
11,277
8,487
Loss before taxes
$
(10,349
)
$
(8,166
)
$
(5,325
)
$
(19,970
)
1 Includes fair value adjustment of
contingent consideration liabilities, which was a $2.2 million
benefit in the three and six months ended July 3, 2021.
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, restructuring charges, fair value
adjustments to the valuation of contingent consideration
liabilities, 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.
ASTRONICS CORPORATION
RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA
(Unaudited, $ in thousands)
Consolidated
Three
Months Ended
Six
Months Ended
7/2/2022
7/3/2021
7/2/2022
7/3/2021
Net loss
$
(11,010
)
$
(8,099
)
$
(14,111
)
$
(20,008
)
Add back (deduct):
Interest expense
1,662
1,699
3,293
3,457
Income tax expense (benefit)
661
(67
)
8,786
38
Depreciation and amortization expense
7,000
7,426
14,088
14,879
Equity-based compensation expense
1,620
1,604
3,721
3,701
Contingent consideration liability fair
value adjustment
—
(2,200
)
—
(2,200
)
Restructuring-related charges including
severance
90
—
174
—
Non-cash accrued 401K contribution
1,186
—
2,197
—
AMJP grant benefit
—
—
(6,008
)
—
Net gain on sale of business
—
—
(11,284
)
—
Adjusted EBITDA
$
1,209
$
363
$
856
$
(133
)
Sales
$
129,127
$
111,158
$
245,303
$
217,015
Adjusted EBITDA margin
0.9
%
0.3
%
0.3
%
(0.1
)%
ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET DATA
($ in thousands)
(unaudited)
7/2/2022
12/31/2021
ASSETS
Cash and cash equivalents
$
10,684
$
29,757
Accounts receivable and uncompleted
contracts
118,342
107,439
Inventories
175,204
157,576
Other current assets
20,126
45,089
Property, plant and equipment, net
90,837
95,236
Other long-term assets
22,198
21,439
Intangible assets, net
86,638
94,320
Goodwill
58,252
58,282
Total assets
$
582,281
$
609,138
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current maturities of long-term debt
$
—
$
—
Accounts payable and accrued expenses
98,176
91,257
Customer advances and deferred revenue
26,790
27,356
Long-term debt
136,000
163,000
Other liabilities
70,639
70,921
Shareholders' equity
250,676
256,604
Total liabilities and shareholders'
equity
$
582,281
$
609,138
ASTRONICS CORPORATION
CONSOLIDATED CASH FLOWS DATA
(Unaudited, $ in thousands)
Six
Months Ended
(Unaudited, $ in thousands)
7/2/2022
7/3/2021
Cash flows from operating
activities:
Net loss
$
(14,111
)
$
(20,008
)
Adjustments to reconcile net loss to cash
from operating activities:
Depreciation and amortization
14,088
14,879
Provisions for non-cash losses on
inventory and receivables
677
2,145
Equity-based compensation expense
3,721
3,701
Non-cash accrued 401(k) contribution
2,197
—
Deferred tax benefit
—
(153
)
Operating lease non-cash expense
2,928
2,343
Net gain on sale of business, before
taxes
(11,284
)
—
Contingent consideration liability fair
value adjustment
—
(2,200
)
Other
1,320
2,105
Cash flows from changes in operating
assets and liabilities:
Accounts receivable
(11,449
)
(5,281
)
Inventories
(19,293
)
720
Accounts payable
11,660
4,210
Accrued expenses
(458
)
(946
)
Other current assets and liabilities
(3,030
)
(70
)
Customer advance payments and deferred
revenue
(389
)
(927
)
Income taxes
16,909
(51
)
Operating lease liabilities
(3,601
)
(2,606
)
Supplemental retirement plan and other
liabilities
(215
)
(199
)
Cash flows from operating activities
(10,330
)
(2,338
)
Cash flows from investing
activities:
Proceeds on sale of business and
assets
21,977
—
Capital expenditures
(2,493
)
(3,566
)
Cash flows from investing activities
19,484
(3,566
)
Cash flows from financing
activities:
Proceeds from long-term debt
52,625
5,000
Principal payments on long-term debt
(79,625
)
(5,000
)
Stock award activity
104
(59
)
Finance lease principal payments
(55
)
(854
)
Debt acquisition costs
(771
)
—
Cash flows from financing activities
(27,722
)
(913
)
Effect of exchange rates on cash
(505
)
(8
)
Decrease in cash and cash equivalents
(19,073
)
(6,825
)
Cash and cash equivalents at beginning of
period
29,757
40,412
Cash and cash equivalents at end of
period
$
10,684
$
33,587
ASTRONICS CORPORATION
SALES BY
MARKET
(Unaudited, $ in thousands)
Three
Months Ended
Six
Months Ended
7/2/2022
7/3/2021
%
Change
7/2/2022
7/3/2021
%
Change
% of
Sales
Aerospace Segment
Commercial Transport
$
69,243
$
47,793
44.9
%
$
133,332
$
86,001
55.0
%
54.3
%
Military
13,897
16,801
(17.3
)%
28,873
37,783
(23.6
)%
11.8
%
General Aviation
18,130
14,994
20.9
%
33,997
29,022
17.1
%
13.9
%
Other
8,020
9,632
(16.7
)%
14,482
17,830
(18.8
)%
5.9
%
Aerospace Total
109,290
89,220
22.5
%
210,684
170,636
23.5
%
85.9
%
Test Systems Segment
19,837
21,938
(9.6
)%
34,619
46,379
(25.4
)%
14.1
%
Total Sales
$
129,127
$
111,158
16.2
%
$
245,303
$
217,015
13.0
%
SALES BY
PRODUCT LINE
(Unaudited, $ in thousands)
Three
Months Ended
Six
Months Ended
7/2/2022
7/3/2021
%
Change
7/2/2022
7/3/2021
%
Change
% of
Sales
Aerospace Segment
Electrical Power & Motion
$
42,135
$
34,748
21.3
%
$
86,602
$
64,092
35.1
%
35.4
%
Lighting & Safety
31,388
24,368
28.8
%
60,599
51,468
17.7
%
24.7
%
Avionics
24,406
18,021
35.4
%
43,281
32,864
31.7
%
17.6
%
Systems Certification
1,669
960
73.9
%
2,671
1,838
45.3
%
1.1
%
Structures
1,672
1,491
12.1
%
3,049
2,544
19.9
%
1.2
%
Other
8,020
9,632
(16.7
)%
14,482
17,830
(18.8
)%
5.9
%
Aerospace Total
109,290
89,220
22.5
%
210,684
170,636
23.5
%
85.9
%
Test Systems Segment
19,837
21,938
(9.6
)%
34,619
46,379
(25.4
)%
14.1
%
Total Sales
$
129,127
$
111,158
16.2
%
$
245,303
$
217,015
13.0
%
ASTRONICS CORPORATION
ORDER
AND BACKLOG TREND
(Unaudited, $ in thousands)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Trailing
Twelve Months
10/2/2021
12/31/2021
4/2/2022
7/2/2022
7/2/2022
Sales
Aerospace
$
95,766
$
98,836
$
101,394
$
109,290
$
405,286
Test Systems
16,075
17,216
14,782
19,837
67,910
Total Sales
$
111,841
$
116,052
$
116,176
$
129,127
$
473,196
Bookings
Aerospace
$
142,484
$
147,689
$
160,778
$
126,012
$
576,963
Test Systems
11,052
29,651
14,844
22,377
77,924
Total Bookings
$
153,536
$
177,340
$
175,622
$
148,389
$
654,887
Backlog
Aerospace
$
285,806
$
334,659
$
394,043
$
410,765
Test Systems
68,598
81,033
81,095
83,635
Total Backlog
$
354,404
$
415,692
$
475,138
$
494,400
N/A
Book:Bill Ratio
Aerospace
1.49
1.49
1.59
1.15
1.42
Test Systems
0.69
1.72
1.00
1.13
1.15
Total Book:Bill
1.37
1.53
1.51
1.15
1.38
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220810005200/en/
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
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