Astronics Corporation (NASDAQ: ATRO), a trusted leader in
innovative, high performance lighting, power generation, control
and distribution systems for the global aerospace industry, today
reported sales of $40.4 million in the third quarter of 2008, which
ended September 27, 2008, up 7.0% compared with $37.7 million in
the third quarter of 2007. Net income declined to $2.4 million, or
$0.22 per diluted share, in the third quarter of 2008 compared with
$4.1 million, or $0.38 per diluted share, in the same period the
prior year. Net income was adversely impacted by higher engineering
and development spending, higher manufacturing costs related to
increased infrastructure and capacity, and sales mix. All per share
data was adjusted to reflect a one-for-four Class B Stock
distribution that was distributed on or about October 17, 2008.
Commercial transport market sales increased to $25.5 million in the
third quarter of 2008, up 10.3% compared with $23.1 million in the
same period the prior year primarily as a result of increased cabin
electronics sales. Military sales increased 12.2% to $7.6 million
in the third quarter of 2008 compared with $6.7 million in the
prior year�s third quarter. Sales to the business jet market
decreased $0.5 million to $7.1 million compared with $7.6 million
in the third quarters of 2008 and 2007, respectively. Lower sales
to this market were directly related to a $1.7 million decline in
sales to Eclipse Aviation, a very light jet manufacturer, in the
third quarter of 2008 compared with the prior year�s third quarter.
This decrease was mostly offset by higher sales to other business
jet manufacturers, which included new aircraft that had higher
values of product content. Peter J. Gundermann, President and Chief
Executive Officer of Astronics, commented, �Our third quarter
demonstrated solid results despite weakening macro-economic
conditions and the reduction in aircraft production by Eclipse
Aviation. However, strong sales to our customers in the commercial
transport and military markets, as well as other business jet
manufacturers, more than offset the impact of Eclipse�s decline.�
Third Quarter Operating Results Gross profit was $7.9 million, or
19.6% of sales, in the third quarter of 2008 compared with $10.1
million, or 26.9% of sales, in the same period the prior year. The
third quarter of 2007 was positively impacted by a $0.9 million
adjustment related to the 2007 estimated manufacturing overhead
cost absorption. The reduction in gross margin reflects higher
engineering and development (E&D) spending, combined with
overall higher manufacturing costs primarily related to increased
infrastructure and capacity somewhat offset by greater operating
leverage from higher sales. E&D expenses were $5.7 million in
the third quarter of 2008 compared with $3.9 million in the third
quarter of 2007. Selling, general and administrative and other
(SG&A) expense was $4.1 million, or 10.1% of sales, in the
third quarter of 2008, up slightly on an absolute basis compared
with $3.9 million, or 10.3% of sales, in the same period the prior
year. Operating margin for the third quarter of 2008 was 9.6%
compared with 16.6% in the third quarter of 2007, primarily as a
result of the lower gross margin. Nine-Month Review For the first
nine months of 2008, sales were $129.3 million, up $7.3 million, or
6.0%, compared with $122.0 million in the first nine months of
2007. Gross profit was down $4.7 million in the 2008 nine-month
period. Gross margin was 22.1% in the first nine months of 2008,
down from 27.2% in the same period the prior year primarily due to
higher E&D expenses, combined with an overall increase in
manufacturing costs related to increased infrastructure and
capacity somewhat offset by greater operating leverage from higher
sales and sales mix. E&D expense for the first nine months of
2008 was $16.6 million compared with $11.1 million in the first
nine months on 2007. E&D expense is expected to be
approximately $22 million for 2008. SG&A expense remained flat
at $12.6 million for the first nine months of 2008 and 2007.
Operating margin was 12.4% for the first nine months of 2008
compared with 16.9% in the same period the prior year reflecting
the lower gross margin. Net income was $10.1 million, or $0.95 per
diluted share, in the first nine months of 2008 compared with $13.3
million, or $1.25 per diluted share, in the same period the prior
year. Mr. Gundermann noted, �Margins this year have been affected
by our increased E&D spending, which is focused on applied
development of new technologies and products. We believe these
innovations are key enablers of our future growth.� Liquidity and
Capital Expenditures Cash and cash equivalents were $0.5 million at
September 27, 2008 compared with $2.8 million at December 31, 2007,
as cash was used to pay down debt and fund increasing working
capital requirements. The Company has a $60 million line of credit
of which $56 million was available at the end of the third quarter.
Capital expenditures for the third quarter and first nine months of
2008 were $1.1 million and $3.2 million, respectively, compared
with $1.6 million and $7.6 million in the same periods the prior
year, respectively. The higher expenditures in 2007 were primarily
to support facility expansions and equipment investments. Capital
expenditures are expected to be approximately $4.5 million to $6
million for 2008. Outlook Orders in the third quarter of 2008 were
$30.8 million compared with $33.3 million in the third quarter of
2007. Backlog at September 27, 2008 was $92.1 million, up from
backlog of $90.0 million at the end of the third quarter of 2007.
Approximately 50% of backlog is currently planned for shipment in
the fourth quarter of 2008. Mr. Gundermann concluded, �Bookings in
the third quarter were lower than our recent pace due, in part, to
the removal of $3.6 million in Eclipse orders and because the third
quarter tends to be the lightest quarter for bookings. While we
recognize that there are serious economic issues right now, our
market continues to show strength. Most of our original equipment
manufacturer customers are planning production levels next year
that will be at or above the current rates. We are maintaining a
revenue forecast at the lower end of our previous range at
approximately $175 million for fiscal 2008, which represents an 11%
increase compared with 2007 sales. We plan to provide revenue
guidance for 2009 when we release our fourth quarter results early
in 2009.� Third Quarter 2008 Webcast and Conference Call The
Company will host a teleconference at 11 a.m. ET today. During the
teleconference, Peter J. Gundermann, President and CEO, and David
C. Burney, Vice President and CFO, 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 the following ways:
The live webcast can be found at http://www.astronics.com.
Participants should go to the website 10 - 15 minutes prior to the
scheduled conference in order to register and download any
necessary audio software. The teleconference can be accessed by
dialing (201) 689-8562 and requesting conference ID number 300129
approximately 5 - 10 minutes prior to the call. To listen to the
archived call: The archived webcast will be at
http://www.astronics.com. A transcript will also be posted once
available. A replay can also be heard by calling (201) 612-7415 and
referencing account number 3055 and conference ID number 300129.
The telephonic replay will be available from 2 p.m. ET the day of
the call through 11:59 p.m. ET on November 6, 2008. ABOUT ASTRONICS
CORPORATION Astronics Corporation is a trusted leader in
innovative, high performance lighting, power generation, control
and distribution systems for the global aerospace industry. Its
strategy is to expand the value and content it provides to various
aircraft platforms through product development and acquisition.
Astronics Corporation, and its wholly-owned subsidiaries Astronics
Advanced Electronic Systems Corp. and Luminescent Systems Inc.,
have a reputation for high quality designs, exceptional
responsiveness, strong brand recognition and best-in-class
manufacturing practices. For more information on Astronics and its
products, visit its website at www.Astronics.com. Safe Harbor
Statement This press 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
expression. Because such statements apply to future events, they
are subject to risks and uncertainties that could cause the actual
results to differ materially from those contemplated by the
statements. Important factors that could cause actual results to
differ materially include the state of the aerospace industry, the
market acceptance of newly developed products, internal production
capabilities, the timing of orders received, the status of customer
certification processes, the demand for and market acceptance of
new or existing aircraft which contain the Company�s products,
customer preferences, 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 press release whether to reflect changed
assumptions, the occurrence of unanticipated events or changes in
future operating results, financial conditions or prospects, or
otherwise. ASTRONICS CORPORATION CONSOLIDATED INCOME STATEMENT DATA
(unaudited) � � (in thousands except per share data) Three months
ended Nine months ended � 9/27/2008 � � 9/29/2007 � � � � 9/27/2008
� � 9/29/2007 � Sales $ 40,363 $ 37,724 $ 129,341 $ 121,967 Cost of
products sold � 32,455 � � 27,582 � � 100,811 � � 88,740 � Gross
profit 7,908 10,142 28,530 33,227 Gross margin 19.6 % 26.9 % 22.1 %
27.2 % Selling general and administrative � 4,030 � � 3,877 � � � �
12,552 � � 12,557 � Income from operations 3,878 6,265 15,978
20,670 Operating margin 9.6 % 16.6 % 12.4 % 16.9 % Interest
expense, net 182 396 554 1,072 Other (income) expense � 60 � � - �
� � � 73 � � (11 ) Income before tax 3,636 5,869 15,351 19,609
Income taxes � 1,257 � � 1,743 � � � � 5,209 � � 6,287 � Net Income
$ 2,379 � $ 4,126 � � � $ 10,142 � $ 13,322 � � Basic earnings per
share:* $ 0.23 $ 0.41 $ 0.99 $ 1.32 Diluted earnings per share:* $
0.22 $ 0.38 $ 0.95 $ 1.25 � Weighted average diluted shares
outstanding* 10,688 10,669 10,681 10,618 � � � � � � � Capital
Expenditures $ 1,058 $ 1,649 $ 3,188 $ 7,566 Depreciation and
Amortization $ 980 � $ 876 � � � $ 2,989 � $ 2,447 � * All share
quantities and per share data reported have been adjusted to
reflect the impact of a one-for-four Class B stock distribution
that was distributed on or about October 17, 2008. ASTRONICS
CORPORATION ORDER AND BACKLOG TREND � � � � � � � ($, in thousands)
2007 2008 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Twelve Months Q1 2008 Q2
2008 Q3 2008 � � � 3/31/07 � � � 6/30/07 � � � 9/29/07 � � �
12/31/07 � � � 12/31/07 � � � 3/29/08 � � � 6/28/08 � � � 9/27/08
Sales $ � 42,875 � $ � 41,368 � $ � 37,724 � $ � 36,273 � $ �
158,240 � $ � 41,089 � $ � 47,889 � $ � 40,363 Net Income $ � 4,695
� $ � 4,501 � $ � 4,126 � $ � 2,069 � $ � 15,391 � $ � 2,647 � $ �
5,116 � $ � 2,379 Bookings $ � 40,351 � $ � 38,711 � $ � 33,347 � $
� 38,712 � $ � 151,121 � $ � 45,830 � $ � 52,386 � $ � 30,798
Backlog $ � 97,003 � $ � 94,346 � $ � 89,969 � $ � 92,408 � $ �
92,408 � $ � 97,149 � $ � 101,646 � $ � 92,081 Book:Bill � 0.94 �
0.94 � 0.88 � 1.07 � 0.96 � 1.12 � 1.09 � 0.76 ASTRONICS
CORPORATION CONSOLIDATED BALANCE SHEET DATA (unaudited) (in
thousands) � � 9/27/2008 � � 12/31/2007 ASSETS: Cash and cash
equivalents $ 509 $ 2,818 Accounts receivable 27,818 20,720
Inventories 42,661 36,920 Other current assets 3,184 3,563
Property, plant and equipment, net 30,611 30,083 Other assets �
9,169 � � 10,017 Total Assets $ 113,952 � $ 104,121 � LIABILITIES
AND SHAREHOLDERS' EQUITY: Current maturities of long term debt $
943 $ 951 Note payable 4,000 7,300 Accounts payable and accrued
expenses 25,986 23,670 Long-term debt 14,093 14,684 Other
liabilities 8,253 8,284 Shareholders' equity � 60,677 � � 49,232
Total liabilities and shareholders' equity $ 113,952 � $ 104,121
ASTRONICS CORPORATION SALES BY MARKET ($, in thousands) � � � � � �
� Three Months Ended Nine Months Ended � 9/27/2008 � � 9/29/2007 �
% change � � � 9/27/2008 � � 9/29/2007 � % change � � 2008 YTD % �
Commercial Transport $ 25,501 $ 23,116 10 % $ 77,609 $ 79,433 -2 %
60 % Military 7,556 6,731 12 % 24,225 19,696 23 % 19 % Business Jet
7,052 7,626 -8 % 26,687 21,952 22 % 20 % Other 254 251 1 % 820 886
-7 % 1 % � � � � � � � � � � � � � Total $ 40,363 � $ 37,724 � 7 %
� $ 129,341 � $ 121,967 � 6 % � 100 % � ASTRONICS CORPORATION �
SALES BY PRODUCT ($, in thousands) � � � � � Three Months Ended
Nine Months Ended � 9/27/2008 � � 9/29/2007 � % change � � �
9/27/2008 � � 9/29/2007 � % change � � 2008 YTD % � Cabin
Electronics $ 20,548 $ 18,803 9 % $ 63,418 $ 65,556 -3 % 49 %
Cockpit Lighting 9,689 10,051 -4 % 32,679 27,064 21 % 25 % Airframe
Power 5,169 4,079 27 % 17,493 15,362 14 % 14 % Exterior Lighting
2,247 2,353 -5 % 8,065 6,437 25 % 6 % Cabin Lighting 2,456 2,187 12
% 6,866 6,662 3 % 5 % Other 254 251 1 % 820 886 -7 % 1 % � � � � �
� � � � � � � � Total $ 40,363 � $ 37,724 � 7 % � $ 129,341 � $
121,967 � 6 % � 100 %
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