Astronics Corporation (NASDAQ: ATRO), a leader in advanced, high
performance lighting, electrical power and automated test systems
for the global aerospace and defense industries, today reported
financial results for the fourth quarter and full year 2009.
Results for the 2009 fourth quarter and year include DME
Corporation, which was acquired by Astronics on January 30,
2009.
Sales in the fourth quarter of 2009 were $45.6 million, up $1.2
million from the prior year period. Astronics’ organic business,
excluding the acquired business, had sales of $32.7 million in the
2009 fourth quarter, down 26.3%, or $11.7 million, from the 2008
fourth quarter. Sales related to the acquisition in the 2009 fourth
quarter were $12.9 million.
Full year 2009 revenue of $191.2 million was a record for
Astronics and up 10% from $173.7 million in 2008. The January 30,
2009 acquisition of DME added $51.2 million to organic sales of
$140.0 million in 2009.
The Company reported a net loss in the fourth quarter of 2009 of
$9.7 million, or $0.90 per diluted share, compared with a net loss
of $1.8 million, or $0.17 per diluted share, in the same period of
last year. In the 2009 fourth quarter, Astronics recorded a
non-cash pre-tax charge of $19.4 million, or $1.15 per diluted
share after tax, for impairment of goodwill and other intangible
assets related to its Test Systems business. In the fourth quarter
of 2008, the Company recorded a non-cash pre-tax charge of $10.0
million, or $0.61 per diluted share after tax, to write down assets
related to the bankruptcy of a customer, Eclipse Aviation
Corporation. For 2009, net loss was $3.8 million, or $0.35 per
diluted share, compared with net income in 2008 of $8.4 million, or
$0.79 per diluted share.
Peter J. Gundermann, President and Chief Executive Officer of
Astronics, commented, “The effects of the economic downturn and the
low bookings rate for our test systems segment resulted in 2009
revenue below our initial expectations at the beginning of the
year. However, we have adjusted our cost structure and will
continue to make adjustments that we feel are appropriate given our
sales level and our opportunity pipeline. On the positive side, we
have seen an increase in our quoting activity compared with earlier
in 2009 and believe we can convert many of these opportunities to
new orders.”
Fourth Quarter Operating
Results
(in millions)
Three Months Ended
Increase/(Decrease)
Dec. 31,2009
Dec. 31,2008
$ Percent Gross profit $
9.9 $ 1.9 $ 8.0
421.1 % Gross margin 21.7 % 4.4 %
SG&A
$ 5.4 $ 4.9 $ 0.5
10.2 % SG&A percent to sales 11.9 % 11.0 %
Loss from operations $ (14.9 ) $
(2.9 ) $ (12.0 ) (414.8
)% Operating margin (32.7 )% (6.6 )%
The increase in gross profit and gross margin percentage in the
fourth quarter of 2009 compared with last year’s fourth quarter
reflects charges recorded in last years’ fourth quarter for the
write down of inventory and equipment related to the bankrupt
Eclipse Aviation Corporation of $9.0 million. Gross margin improved
over the trailing third quarter of 2009 when it was 20.8%. The
margin improvement over the trailing third quarter reflects
reductions in estimated costs to complete several test systems
long-term contracts that are nearing completion as well as the
Company’s cost reduction efforts. The reduction of the estimated
cost to complete those contracts contributed approximately $2.3
million to revenue and gross profit for the fourth quarter of 2009.
Test Systems segment revenue is recognized from long-term,
fixed-price contracts using the percentage of completion method of
accounting.
Engineering and development (E&D) costs were $6.4 million
and $6.3 million in the fourth quarter of 2009 and 2008,
respectively. The increase of E&D costs was related to the
acquisition which added $1.4 million to E&D in the fourth
quarter of 2009, partially offset by decreased organic
spending.
The increase in selling, general and administrative (SG&A)
expense in the fourth quarter of 2009 compared with last year’s
fourth quarter was primarily due to SG&A costs of the acquired
business. SG&A expense was down $0.8 million, or 12.9%, from
the trailing third quarter of 2009 when it was 12.8% of sales
primarily as result of lower amortization expense. SG&A for the
2009 fourth quarter and the trailing third quarter included
approximately $1.9 million and $2.3 million, respectively, of DME
SG&A, including $0.2 million and $0.8 million of amortization,
respectively, of intangible assets related to the acquisition.
Fourth Quarter
Review: Aerospace
Segment (refer to sales by market and segment data in
accompanying tables)
Aerospace segment sales in the 2009 fourth quarter of $36.6
million were down 18% compared with sales of $44.4 million in the
2008 fourth quarter. Declines in the commercial transport, military
and business jet markets were offset slightly by the addition of
DME’s aerospace sales which were $3.9 million, including $2.1
million to the FAA/Airport market. Organic aerospace sales declined
by $11.7 million, or 26%, to $32.7 million compared with last
year’s fourth quarter.
Sales to the commercial transport market of $22.8 million
declined when compared with the 2008 fourth quarter sales of $26.8
million. Continued soft demand for worldwide air travel has caused
airlines to defer cabin upgrades on existing aircraft and customers
have been working through inventory. This has adversely affected
sales of Astronics’ EMPOWER® in-seat power product line, which is
used to enhance passengers’ flying experience by powering their
personal electronic devices and lap-top computers as well as
aircraft in-flight entertainment systems.
Sales to the military market of $7.0 million decreased $3.3
million, or 32%, compared with the prior year quarter, primarily
due to the winding down of the current Tactical Tomahawk cruise
missile program.
Business jet market sales of $4.8 million in the 2009 fourth
quarter were down 34% below sales in 2008’s fourth quarter as new
aircraft production rates have declined measurably.
Sales to the FAA/airport market, a new market added in 2009 as
part of the acquisition, were $2.1 million in the fourth quarter of
2009.
Aerospace operating profit was $4.5 million, or 12.3% of sales,
for the fourth quarter of 2009 which is improved when compared with
the fourth quarter of 2008, when the Company recorded a $10.0
million charge to write off accounts receivable, inventory and
equipment related to Eclipse.
Fourth Quarter
Review: Test Systems
Segment (refer to sales by market and segment data in
accompanying tables)
Sales were $9.0 million, down 6.9% below sales of $9.6 million
in the trailing third quarter of 2009 reflecting a slowdown in new
orders. The operating loss for the fourth quarter of 2009 was $18.6
million due to the $19.4 million charge for the impairment of
goodwill and other intangible assets. Excluding the charge,
operating profit would have been $0.8 million, or 8.9% of sales.
The fourth quarter included reductions in estimated costs to
complete several test systems long-term contracts that are nearing
completion. The reduction of the estimated cost to complete those
contracts contributed approximately $2.3 million to revenue and
gross profit for the fourth quarter of 2009.
2009 Review
2009 Operating Results
(in millions)
Increase/(Decrease)
Dec. 31,2009
Dec. 31,2008
$ % Gross profit $
37.3 $ 30.5 $ 6.8
22.3 % Gross margin 19.5 % 17.5 %
SG&A
$ 24.1 $ 17.4 $ 6.7
38.5 % SG&A percent to sales 12.6 % 10.0 %
(Loss) income from operations $ (6.2 )
$ 13.1 $ (19.3 ) (147.3
)% Operating margin (3.3 )% 7.5 %
Gross margin was 200 basis points above last year’s gross margin
due primarily to the write-down of Eclipse-related inventory and
equipment in the 2008 fourth quarter. Excluding the charge, 2009
gross margin was below gross margin in 2008 due to lower margins in
the acquired business combined with the deleveraging effect of
lower sales volume for the organic business. Included in the cost
of goods sold was $25.7 million in E&D expenditures of which
$5.1 million were associated with the acquisition. E&D costs
for 2008 were $22.9 million. Astronics plans for E&D expenses
to be approximately $20 million to $25 million in 2010.
The increase in SG&A expense compared with 2008 was due
primarily to the addition of $7.7 million in SG&A costs
associated with the acquired business which offset cost reduction
initiatives. The 2009 loss from operations was the result of the
pre-tax charge of $19.4 million for impairment of goodwill and
other intangible assets related to Astronics’ Test Systems
business.
The fourth quarter and 2009 effective tax benefit rates of 40.1%
and 50.9%, respectively, reflect the impact of the Company’s
pre-tax loss and recognition of research and development tax
credits of $0.9 million.
Balance Sheet
The cash balance at December 31, 2009 was $14.9 million compared
with $3.0 million at December 31, 2008 and $17.5 million at the end
of the trailing third quarter. Astronics used $15.0 million,
including $8.4 million in the fourth quarter, to pay down long-term
debt in 2009. The Company had availability from its revolving
credit facility of approximately $15.5 million at December 31,
2009.
Cash generated from operations was $6.0 million during the
fourth quarter compared with $7.9 million generated in last year’s
fourth quarter. For the year, Astronics generated $31.1 million in
cash from operations compared with $11.5 million in the 2008. The
significant improvement in cash generated from operations during
2009 was attributed to reduced investment in working capital
components and improved operating income when non-cash items are
excluded.
Capital expenditures in the fourth quarter of 2009 were $0.5
million compared with $1.1 million in the fourth quarter of 2008.
For the year, capital expenditures were $2.5 million and $4.3
million in 2009 and 2008, respectively. Astronics expects capital
spending in 2010 to be approximately $2.5 million to $3.5
million.
Outlook
(in
millions)
Fourth Qtr. Inc Full Year Inc
2009 2008 (Dec) %
2009 2008 (Dec) %
Bookings: Aerospace $ 29.3 $ 41.3 $ (12.0 ) (29.1 )% $ 132.0
$ 170.4 $ (38.4 ) (22.5 )% Test Systems 0.7 -
0.7 N/A 13.6 - 13.6 N/A
Total Bookings $ 30.0 $
41.3 $ (11.3 ) (27.4 )%
$ 145.6 $ 170.4 $ (24.8
) (14.6 )%
Total orders in the fourth quarter of 2009 were significantly
below both the level of the 2008 fourth quarter of $41.3 million
and trailing 2009 third quarter orders of $44.1 million due to
declines in both segments. Fluctuations in Astronics order levels
can vary measurably from quarter-to-quarter based on the timing and
magnitude of customer projects. In general, despite fluctuations,
order levels have trended down in both segments.
(in millions)
Backlog: 12/31/09
12/31/08 Inc/
(Dec) % Aerospace $ 75.6 $
89.0 $ (13.4 ) (15.1 )% Test Systems 9.8 - 9.8
N/A
Total Backlog $ 85.4
$ 89.0 $ (3.6 ) (4.0
)%
Backlog at December 31, 2009 was below backlog at the end of
2008 and down from backlog of $101.0 million at the end of the
trailing third quarter. Approximately $68 million of total backlog
is expected to ship in the next 12 months.
Mr. Gundermann stated, “We generated significant cash by
managing working capital which enabled us to pay down a portion of
the debt associated with the acquisition and allowed us to continue
to invest in engineering and development to be ready for the
eventual recovery in our markets. However, in many cases the
revenue resulting from these activities may not be recognized until
2011 and beyond as programs enter production. We continue to
believe 2010 revenue could be similar to, or slightly down from,
2009 revenue. Because the Test Systems orders are large and less
frequent than aerospace they are also more difficult to predict.
Because of this we are providing an expected range of revenue for
2010 of $170 million to $190 million. We expect the year to start
off slow and accelerate in the latter half.”
Astronics anticipates that approximately $145 million to $155
million of projected 2010 revenue will be from the Aerospace
segment, while approximately $25 million to $35 million will be
from the Test Systems segment.
“Looking beyond 2010, we are encouraged in our aerospace markets
by the next generation of commercial transports, such as the Boeing
787 and Airbus A380, which will have greater Astronics’ content
than the aircraft they are replacing. We are also expanding
Astronics’ content value on future platforms in both the business
jet and military markets with the Lear 85, Cessna CJ4, the V-22 and
the F-35.”
Fourth Quarter 2009 Webcast
and Conference Call
The Company will host a teleconference at 11:00 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 343030 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 343030. The telephonic replay will be
available from 2:00 p.m. ET today through 11:59 p.m. ET, Thursday,
February 16, 2010.
ABOUT ASTRONICS CORPORATION
Astronics Corporation is a trusted leader in innovative, high
performance lighting, power management systems for the global
aerospace industry; automated diagnostic test systems, training and
simulation devices for the defense industry; and safety and
survival equipment for airlines. Astronics’ strategy is to develop
and maintain positions of technical leadership in its chosen
aerospace and defense markets, to leverage those positions to grow
the amount of content and volume of product it sells to those
markets and to selectively acquire businesses with similar
technical capabilities that could benefit from our leadership
position and strategic direction. Astronics Corporation, and its
wholly-owned subsidiaries, DME Corporation, 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.
The Company routinely posts news and other important information on
its website at www.Astronics.com.
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 Twelve Months
Ended 12/31/2009 12/31/2008
12/31/2009 12/31/2008 Sales $
45,576 $ 44,381 $ 191,201
$ 173,722 Cost of products sold 35,677
42,438 153,928
143,249 Gross profit 9,899 1,943 37,273 30,473
Gross
margin 21.7 % 4.4 % 19.5
% 17.5 % Impairment loss 19,381 -
19,381 - Selling, general and administrative 5,403 4,867 24,114
17,419 (Loss) income from
operations (14,885 ) (2,924 ) (6,222 ) 13,054
Operating
margin (32.7 )% (6.6 )% (3.3
)% 7.5 % Interest expense, net 1,226
140 2,533 694 Other (income) expense* 11
(3 ) (1,009 ) 70 (Loss) income
before tax (16,122 ) (3,061 ) (7,746 ) 12,290 Income tax (benefit)
expense (6,467 ) (1,280 ) (3,944 )
3,929
Net (Loss) Income $
(9,655 ) $ (1,781 )
$ (3,802 ) $ 8,361
Basic (loss) earnings per share: $ (0.90 ) $ (0.17 ) $ (0.35
) $ 0.82 Diluted (loss) earnings per share: $ (0.90 ) $ (0.17 ) $
(0.35 ) $ 0.79 Weighted average diluted shares outstanding
10,775 10,556 10,733 10,650
Capital Expenditures $ 488 $
1,137 $ 2,466 $ 4,325 Depreciation and Amortization $ 1,693
$ 1,153 $ 7,342 $
4,142 *Includes contingent earnout liability fair
value adjustment of $1.0 million year-to-date 2009.
ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET
DATA
(Unaudited, $ in thousands)
12/31/2009
12/31/2008
ASSETS:
Cash and cash equivalents $ 14,949 $ 3,038 Accounts
receivable 30,560 22,053 Inventories 31,909 35,586 Other current
assets 5,075 6,078 Property, plant and equipment, net 31,243 29,075
Other long-term assets 3,763 3,254 Deferred income taxes 8,131
1,155 Intangible assets 5,591 1,853 Goodwill 7,493
2,582
Total Assets $ 138,714
$ 104,674
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current maturities of long term debt $ 6,238 $ 920 Accounts payable
and accrued expenses 23,398 22,475 Long-term debt 38,538 13,526
Other liabilities 10,427 9,498 Shareholders' equity 60,113
58,255
Total Liabilities and Shareholders'
Equity $ 138,714 $ 104,674
ASTRONICS CORPORATION
SEGMENT DATA
(Unaudited, $ in thousands)
Three Months Ended Twelve Months
Ended 12/31/2009 12/31/2008
12/31/2009 12/31/2008 Sales
Aerospace $ 36,613 $ 44,381 $ 155,605 $ 173,722 Test Systems
8,963 - 35,596
- Sales $ 45,576 $ 44,381 $
191,201 $ 173,722 Operating Profit and
Margins Aerospace $ 4,496 $ (1,958 ) $ 16,274 $ 16,253 Margin 12.3
% (4.4 )% 10.5 % 9.4 % Test Systems (18,649 ) - (18,219 ) - Margin
(208.1 )% - (51.2 )% - Corporate Expenses and Other (732 )
(966 ) (4,277 ) (3,199 )
Total Operating Profit $ (14,885 ) $ (2,924 ) $ (6,222 ) $
13,054 Operating Margin (32.7 )% (6.6 )%
(3.3 )% 7.5 %
ASTRONICS CORPORATION SALES BY MARKET (Unaudited, $
in thousands)
Three Months Ended
Twelve Months Ended 2009 12/31/2009
12/31/2008 % change 12/31/2009
12/31/2008 % change YTD % Aerospace
Segment Commercial Transport $ 22,784 $ 26,793 -15 %
$ 89,407 $ 105,222 -15 % 47 % Military 6,995 10,321 -32 % 36,539
34,546 6 % 19 % Business Jet 4,767 7,267 -34 % 21,630 33,954 -36 %
11 % FAA/Airport 2,067 -
8,029 - 4 %
Aerospace Total
36,613 44,381 -18
% 155,605 173,722
-10 % 81 % Test Systems Segment
Military
8,963 -
35,596 - 19 % Test
Systems Total 8,963 -
35,596 - 19 %
Total $ 45,576 $ 44,381
3 % $ 191,201 $
173,722 10 % 100 %
ASTRONICS CORPORATION SALES BY PRODUCT
(Unaudited, $ in thousands)
Three Months Ended
Twelve months Ended 2009 12/31/2009
12/31/2008 % change 12/31/2009
12/31/2008 % change YTD %
Aerospace Segment Aircraft Lighting $ 14,917 $ 17,158 -13 % $
64,347 $ 65,587 -2 % 34 % Cabin Electronics 15,825 21,541 -27 %
64,309 84,959 -24 % 33 % Airframe Power 3,804 5,682 -33 % 18,920
23,176 -18 % 10 % Airfield Lighting 2,067 -
8,029 - 4 %
Aerospace Total 36,613 44,381 -18
% 155,605 173,722 -10 %
81 % Test Systems Segment
8,963 -
35,596 - 19
% Total $ 45,576 $
44,381 3 % $ 191,201
$ 173,722 10 % 100
% ASTRONICS CORPORATION ORDER AND
BACKLOG TREND (Unaudited, $ in thousands)
Q2 2008 Q3 2008 Q4
2008 Q1 2009* Q2 2009 Q3 2009 Q4
2009
6/28/2008
9/27/2008
12/31/2008
4/4/2009
7/4/2009
10/3/2009
12/31/2009
Sales Aerospace $ 47,889 $ 40,363 $ 44,381 $ 41,818 $
38,216 $ 38,958 $ 36,613 Test Systems - - -
8,197 8,808
9,628
8,963
Total Sales $ 47,889 $
40,363 $ 44,381 $ 50,015
$ 47,024 $ 48,586 $
45,576 Bookings Aerospace $ 52,386 $ 30,798 $
41,348 $ 28,016 $ 34,605 $ 40,135 $ 29,270 Test Systems -
- - 2,798
6,168 3,932 743
Total Bookings
$ 52,386 $ 30,798
$ 41,348 $ 30,814
$ 40,773 $ 44,067
$ 30,013 Backlog Aerospace $ 101,646 $
92,081 $ 89,048 $ 85,418 $ 81,807 $ 82,983 $ 75,639 Test Systems
- - - 26,311
23,671 17,974 9,755
Total Backlog $ 101,646 $
92,081 $ 89,048 $
111,729 $ 105,478 $
100,957 $ 85,394
Book:Bill Aerospace
1.09
0.76 0.93 0.67 0.91 1.03 0.80 Test Systems
-
- - 0.34
0.70 0.41 0.08
Combined
Book:Bill 1.09 0.76
0.93 0.62
0.87 0.91 0.66
* On January 30, 2009, Astronics acquired DME
Corporation, including backlog of $10,172 for Aerospace and $31,710
for Test Systems. .
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