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 three and nine months ended
October 1, 2011.
Three Months Ended
Nine months Ended Oct 1,
Oct 2, % Oct
1, Oct 2, %
2011 2010 Change
2011 2010
Change Sales $ 56,404 $ 49,906
13 % $ 167,007 $ 143,931 16 %
Gross profit $ 14,255 $ 12,893
11 % $ 43,147 $ 35,124 23 % Gross margin 25 % 26 % 26 % 24 %
SG&A $ 6,360 $ 5,679 12 % $ 19,849 $ 17,183 16 %
SG&A percent to sales 11 % 11 % 12 % 12 %
Income from
Operations $ 7,895 $ 7,214 9 % $ 23,298 $ 17,941 30 % Operating
margin % 14 % 15 % 14 % 13 %
Net Income $ 6,665 $ 4,647 43 %
$ 16,422 $ 10,477 57 % Net Income % 12 % 9 % 10 % 7 %
Peter J. Gundermann, President and Chief Executive Officer,
commented, “We had another solid quarter with record quarterly
sales of $56 million and record net income equal to 12% of sales.
We also had record quarterly bookings of $64.5 million as we
continue to see strong demand in most of our markets.”
Sales in the third quarter of 2011 were $56.4 million, up $6.5
million, or 13.0%, from the prior year third quarter. Aerospace
sales, which represented approximately 95% of total third quarter
sales, increased 16.3% over the prior year period to $53.5 million.
Test Systems sales decreased to $2.9 million for the third quarter
2011 compared with last year’s third quarter of $3.9 million. Sales
for the first nine months of 2011 were $167.0 million, up $23.1
million, or 16.0%, from the same period last year. Aerospace sales,
which represented approximately 93% of total year-to-date sales,
increased 17.2% over the prior year period to $155.7 million. Test
Systems sales were $11.3 million compared with $11.1 million in the
first nine months of 2010.
Net income in the third quarter of 2011 was $6.7 million, or
$0.52 per diluted share, compared with net income of $4.6 million,
or $0.37 per diluted share, in the same period of last year.
Year-to-date net income for the first nine months of 2011 was $16.4
million, or $1.28 per diluted share, compared with net income of
$10.5 million, or $0.85 per diluted share, in the same period of
last year. The lower effective tax rate in the 2011 third quarter
and year-to-date periods of 11% and 25%, respectively, reflected a
$1.3 million reduction in income tax reserves related to research
and development tax credits established in prior years. Earnings
per share for the year-to-date period and 2010 periods have been
restated to reflect the impact of the one-for-ten Class B stock
distribution to shareholders of record on August 16, 2011.
Consolidated operating margin in the 2011 third quarter was
14.0% compared with 14.5% in the prior year period. Leverage from
increased sales was offset by increased engineering and development
(E&D) costs. E&D costs were $9.5 million in the 2011 third
quarter compared with $6.9 million in last year’s third
quarter.
Year-to-date consolidated operating margin increased to 14.0%
from 12.5% in the prior year, reflecting the leverage gained from
increased sales offset partially by increases in both engineering
and development costs, as well as increased selling, general and
administrative costs. SG&A increased primarily as a result of
increased year-to-date legal costs of $1.1 million as compared with
the prior year. Year-to-date E&D costs were $26.6 million and
$21.0 million in 2011 and 2010, respectively.
The Company expects E&D expenditures for 2011, which are
included in cost of goods sold, to be in the range of $34 million
to $35 million, up from its previous range of $32 million to $34
million.
Aerospace Segment Review
(refer to sales by market and segment data in accompanying
tables)
Third quarter and year-to-date sales to the Commercial Transport
market increased on higher demand for Cabin Electronics products,
as well as increased sales of Aircraft Lighting Products. Third
quarter and year-to-date Military sales were up primarily as a
result of improved Airframe Power sales related to deliveries of
power control units for the Tactical Tomahawk missile. Third
quarter sales to the Business Jet market reflected increased
Airframe Power and Aircraft Lighting sales. The decrease in third
quarter and year-to-date FAA/Airport sales was due to decreased
revenue from airport turnkey projects in 2011 and lower order rates
from the FAA in 2011.
Aerospace operating profit for the third quarter of 2011 was
$9.9 million, or 18.5% of sales, compared with $8.8 million, or
19.1% of sales, in the same period last year. Year-to-date
operating profit was $28.2 million in 2011, or 18.1% of sales,
compared with $22.3 million, or 16.8% of sales year-to-date in the
first nine months of 2010. The decline in the 2011 third quarter
margin was due to higher E&D costs and increased SG&A costs
offset by the leverage from the increased sales volume. The
year-to-date margin improvement was due to the leverage provided on
the increased sales volume offset somewhat by increased E&D
costs and increased legal and compensation costs.
Bookings for the Aerospace segment during the third quarter were
$61.7 million, up 6.0% from $58.3 million in the third quarter of
2010, and up 12.2% from bookings of $55.0 million in the trailing
second quarter of 2011. Backlog at the end of the third quarter was
$101.4 million.
Test Systems Segment Review
(refer to sales by market and segment data in accompanying
tables)
Sales in the 2011 third quarter decreased to $2.9 million when
compared with $3.9 million for the same period in 2010.
Year-to-date sales for 2011 increased slightly to $11.4 million
compared with $11.1 million for the same period last year.
Test Systems operating loss for the third quarter of 2011 was
$0.8 million compared with an operating loss of $0.6 million in the
same period last year. For the first nine months of 2011, Test
Systems operating loss was unchanged at $1.4 million compared with
the same period last year.
Test Systems bookings in the third quarter were $2.8 million
compared with $4.4 million in the third quarter of 2010, and down
from the trailing 2011 second quarter, which had bookings of $3.5
million. Backlog was $8.8 million at the end of the third
quarter.
Balance Sheet
Cash at the end of the 2011 third quarter declined by $2.1
million to $20.6 million compared with December 31, 2010, primarily
as a result of cash used for capital expenditures. Cash was up at
the end of the quarter from $16.1 million at the end of the
trailing second quarter this year.
Capital expenditures during the third quarter and first nine
months of 2011 were $5.9 million and $12.9 million, respectively,
compared with $1.1 million and $2.6 million in 2010,
respectively.
During the third quarter, the Company closed on its purchase of
the building that it had been leasing in Fort Lauderdale, Florida,
for approximately $5.1 million. Additionally, in the second quarter
of 2011, the Company acquired a partially completed building
located near its present Redmond, Washington, operation for
approximately $5.2 million. The Company expects to invest an
additional $7 million to $8 million, primarily in 2012, to
build-out this facility. Astronics Advanced Electronic Systems Corp
plans on moving into the new building in early 2013.
The Company expects capital spending in 2011 to be approximately
$14 million to $15 million.
Outlook
On October 1, 2011, backlog was $110.2 million, up from backlog
of $102.1 million at the end of the trailing second quarter of 2011
and slightly improved over backlog of $110.0 million at the end of
the third quarter of 2010. Approximately $56 million of this
backlog is expected to ship by the end of 2011 and $95 million is
expected to ship over the next four quarters.
Mr. Gundermann concluded, “We are tightening our revenue
forecast for 2011 to be in the range of $222 million to $225
million. We have seen some test systems revenue shift farther out
than we had previously expected, but with the strength we are
realizing in the Aerospace segment we remain on track for revenue
to be in the middle of our previous guidance.”
Astronics anticipates that approximately $208 million to $210
million of forecasted revenue will be from its Aerospace segment,
while approximately $14 million to $15 million of the forecasted
revenue will be from its Test Systems segment.
Third quarter 2011 Webcast and
Conference Call
The Company will host a teleconference at 11:00 AM ET on
Thursday, November 3, 2011. During the teleconference, Peter J.
Gundermann, President and CEO, and David C. Burney, Executive 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 by calling (201)
689-8562. The listen-only audio webcast can be monitored at
www.astronics.com. To listen to the archived call, dial (858)
384-5517 and enter conference ID number 380566. The telephonic
replay will be available from 2:00 p.m. on the day of the call
through Thursday, November 10, 2011. A transcript will also be
posted to the Company’s Web site, once available.
ABOUT ASTRONICS CORPORATION
Astronics Corporation is a leader in advanced, high-performance
lighting, electrical power and automated test systems for the
global aerospace and defense industries. 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, Astronics Advanced Electronic Systems
Corp., DME Corporation 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 Web site at www.astronics.com.
For more information on Astronics and its products, visit its
Web site at www.astronics.com.
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. 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 include 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, 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 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
INCOME STATEMENT DATA
(Unaudited, $ in thousands except per
share data)
Three Months Ended Nine months Ended
10/1/2011 10/2/2010
10/1/2011
10/2/2010 Sales $ 56,404
$ 49,906 $ 167,007
$ 143,931 Cost of products sold 42,149
37,013 123,860
108,807 Gross profit 14,255 12,893 43,147
35,124
Gross margin 25.3 % 25.8
% 25.8 % 24.4 % Selling,
general and administrative 6,360 5,679 19,849 17,183
SG&A %
of Sales 11.3 % 11.4 11.9 %
11.9 %
Income from operations 7,895 7,214 23,298 17,941
Operating margin 14.0 % 14.5 %
14.0 % 12.5 % Interest expense,
net 390 641 1,461
1,962 Income before tax 7,505
6,573 21,837 15,979 Income tax expense 840
1,926 5,415
5,502
Net Income $ 6,665
$ 4,647 $ 16,422
$ 10,477 Net income % of
Sales 11.8 % 9.3 % 9.8
% 7.3 % *Basic earnings per
share: $ 0.55 $ 0.39 $ 1.36 $ 0.88 *Diluted earnings per share: $
0.52 $ 0.37 $ 1.28 $ 0.85 *Weighted average diluted shares
outstanding 12,926 12,474 12,863 12,318
Capital Expenditures $ 5,896 $ 1,088 $ 12,875 $ 2,574 Depreciation
and Amortization $ 1,198 $ 1,194
$ 3,592 $ 3,657
*All share quantities and per share data reported for 2010 has
been restated to reflect the impact of the one-for-ten Class B
stock distribution to shareholders of record on August 16,
2011.
ASTRONICS CORPORATION
CONSOLIDATED
BALANCE SHEET DATA
( in thousands)
10/1/2011 12/31/2010
(Unaudited)
ASSETS:
Cash and cash equivalents $ 20,612 $ 22,709 Accounts receivable
37,036 30,941 Inventories 40,015 37,763 Other current assets 6,724
5,727 Property, plant and equipment, net 40,819 30,873 Deferred
taxes long-term 5,769 6,883 Other long-term assets 3,119 3,342
Intangible assets 4,721 5,040 Goodwill 7,516
7,610
Total Assets
$ 166,331 $ 150,888
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current maturities of long term debt $ 5,297 $ 5,314 Accounts
payable and accrued expenses 26,977 25,971 Long-term debt 29,356
33,264 Other liabilities 8,460 9,124 Shareholders' equity
96,241 77,215
Total Liabilities and Shareholders'
Equity
$ 166,331 $ 150,888
ASTRONICS CORPORATION
SEGMENT
DATA
(Unaudited, $ in thousands)
Three Months Ended
Nine months Ended 10/1/2011
10/2/2010
10/1/2011 10/2/2010
Sales Aerospace $ 53,509 $
46,024 $ 155,650 $ 132,813 Test Systems 2,895
3,882 11,357
11,118
Total Sales 56,404
49,906 167,007
143,931 Operating Profit (Loss) and Margins
Aerospace 9,897 8,778 28,223 22,269 18.5 % 19.1 % 18.1 % 16.8 %
Test Systems (832 ) (565 ) (1,360 ) (1,371 ) (28.7 )%
(14.6 )% (12.0 )% (12.3
)%
Total Operating Profit 9,065 8,213 26,863 20,898
Interest Expense 390 641 1,461 1,962 Corporate Expenses and Other
1,170 999 3,565
2,957
Income Before Taxes
$ 7,505 $ 6,573 $ 21,837
$ 15,979
ASTRONICS CORPORATION
SALES BY
MARKET
(Unaudited, $ in thousands)
Three Months Ended
Nine months Ended
2011
10/1/2011 10/2/2010 %
change 10/1/2011 10/2/2010
% change YTD % Aerospace
Segment
Commercial Transport $ 35,259 $ 28,627 23 % $ 102,456 $
80,963 27 % 61 % Military 8,737 7,349 19 % 25,916 25,267 3 % 16 %
Business Jet 6,363 5,285 20 % 20,425 17,257 18 % 12 % FAA/Airport
3,150 4,763 (34 )%
6,853 9,326 (27 )% 4 %
Aerospace Total 53,509 46,024 16
% 155,650 132,813 17 % 93
% Test Systems Segment Military
2,895 3,882
(25 )% 11,357
11,118 2 % 7 %
Total $ 56,404 $
49,906 13 % $
167,007 $ 143,931
16 % 100.0 %
ASTRONICS CORPORATION
SALES BY
PRODUCT
(Unaudited, $ in thousands)
Three Months Ended
Nine months Ended
2011 10/1/2011
10/2/2010 % change 10/1/2011
10/2/2010 % change YTD
%
Aerospace Segment Cabin Electronics $ 28,403 $ 22,908 24% $
81,352 $ 63,491 28% 49% Aircraft Lighting 16,936 15,400 10% 52,657
48,720 8% 31% Airframe Power 5,020 2,953 70% 14,788 11,276 31% 9%
Airfield Lighting 3,150 4,763 (34)% 6,853 9,326 (27)% 4%
Aerospace Total
53,509 46,024 16% 155,650
132,813 17% 93% Test
Systems
Segment
2,895 3,882 (25)%
11,357 11,118 2%
7% Total $ 56,404 $
49,906 13% $ 167,007
$ 143,931 16% 100.0%
ASTRONICS CORPORATION
ORDER AND BACKLOG
TREND
(Unaudited, $ in thousands)
Q4 Q1 Q2 Q3 Trailing 12
2010 2011 2011 2011 Months
12/31/2010
4/2/2011
7/2/2011
10/1/2011
10/1/2011
Sales Aerospace $ 46,773 $ 50,199 $ 51,942 $ 53,509 $
202,423 Test Systems 5,050 4,929
3,533 2,895
16,407
Total Sales $
51,823 $
55,128 $
55,475 $
56,404 $
218,830 Bookings
Aerospace $ 40,378 $ 48,682 $ 55,029 $ 61,718 $ 205,807 Test
Systems 1,224 5,756
3,459 2,761 13,200
Total Bookings $
41,602 $
54,438 $ 58,488
$ 64,479 $ 219,007
Backlog Aerospace $ 91,573 $ 90,056 $ 93,143 $ 101,352 N/A
Test Systems 8,216 9,043
8,969 8,835 N/A
Total Backlog $
99,789 $
99,099 $ 102,112
$ 110,187 N/A
Book:Bill Ratio Aerospace 0.86 0.97 1.06 1.15 1.02 Test
Systems 0.24 1.17
0.98 0.95 0.80
Total Book:Bill
0.80 0.99
1.05 1.14
1.00
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