Astronics Corporation (NASDAQ: ATRO), a leader in
advanced, high-performance lighting, electrical power, avionics
databus products and automated test systems for the global
aerospace and defense industries, today reported financial results
for the three and twelve months ended December 31, 2011. Results
include Ballard Technology, Inc. (“Ballard”) which was acquired on
November 30, 2011.
Three Months
Ended Twelve months Ended
Dec 31,2011
Dec 31,2010
%Change
Dec 31,2011
Dec 31,2010
%Change
Sales $ 61,156 $ 51,823 18.0 % $ 228,163 $
195,754 16.6 %
Gross Profit $ 17,349 $ 12,443 39.4 % $
60,496 $ 47,567 27.2 % Gross margin % 28.4 % 24.0 % 26.5 % 24.3 %
Impairment Loss $ 2,500 $ - $ 2,500 $ -
SG&A $ 7,326 $ 6,004 22.1 % $ 27,175 $ 23,187 17.2 %
SG&A percent to sales 12.0 % 11.6 % 11.9 % 11.8 %
Income
from Operations $ 7,523 $ 6,439 16.8 % $ 30,821 $ 24,380 26.4 %
Operating margin % 12.3 % 12.4 % 13.5 % 12.5 %
Net Income $
5,169 $ 4,471 15.6 % $ 21,591 $ 14,948 44.4 % Net Income % 8.5 %
8.6 % 9.5 % 7.6 %
Peter J. Gundermann, President and Chief Executive Officer,
commented, “The fourth quarter was a good one in many ways. We
again achieved record revenue, margins were strong, orders were
brisk, and we acquired Ballard, a leading designer and producer of
avionics databus solutions for the aerospace industry. However, we
had our share of disappointments during the quarter as well. We
learned recently that the United States Air Force decided to cancel
the VDATS procurement, which contributed to the $2.5 million
write-down of goodwill and intangible assets in our test systems
business. Additionally, the bankruptcy filing of American Airlines
led to a $500,000 receivable reserve.”
Sales in the fourth quarter of 2011 were $61.2 million, up $9.3
million, or 18.0%, from the prior year fourth quarter. Aerospace
sales, which represented approximately 95.2% of total fourth
quarter sales, increased 24.5% over the prior year period to $58.2
million. Test Systems sales decreased to $2.9 million for the
fourth quarter 2011 compared with $5.1 million in the 2010 fourth
quarter. For the full year, sales for 2011 were $228.2 million, up
$32.4 million, or 16.6%, from the same period last year. Aerospace
sales of $213.9 million, which represented approximately 93.7% of
2011 sales, increased 19.1% over prior year sales of $179.6
million. Test Systems sales in 2011 were $14.3 million compared
with $16.2 million in 2010.
Net income in the fourth quarter of 2011 was $5.2 million, or
$0.40 per diluted share, compared with net income of $4.5 million,
or $0.35 per diluted share, in the same period of last year. Net
income for 2011 was $21.6 million, or $1.67 per diluted share,
compared with net income of $14.9 million, or $1.20 per diluted
share, in 2010.
Earnings per share for prior periods have been adjusted 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 fourth quarter was
12.3% compared with 12.4% in the prior year period. In the 2011
fourth quarter, Astronics recorded a non-cash pre-tax charge of
$2.5 million, or $0.12 per diluted share after tax, for impairment
of goodwill and intangible assets related to its Test Systems
business. Leverage from increased sales in the 2011 fourth quarter
was offset by the impairment charge as well as increased bad debt
expense of $0.5 million related to the American Airlines’
bankruptcy and increased engineering and development (“E&D”)
costs. E&D costs were $9.5 million in the 2011 fourth quarter
compared with $7.3 million in the prior year’s fourth quarter.
Consolidated operating margin in 2011 increased to 13.5% from
12.5% in 2010, reflecting the leverage gained from increased sales
offset partially by the impairment charge, increased E&D costs
as well as higher selling, general and administrative costs
(“SG&A”). SG&A costs increased primarily as a result of
additional legal costs of $1.4 million, higher bad debt expenses of
$0.5 million related to the American Airlines’ bankruptcy and
increased compensation costs as compared with the prior year.
E&D costs were $36.1 million and $28.3 million in 2011 and
2010, respectively.
The effective tax rate in the 2011 fourth quarter and full year
periods were 28.0% and 25.6%, respectively. For the quarter and the
year, the effective rate was below the statutory rate of 35%
primarily due to research and development tax credits and the
domestic production activity deduction.
Aerospace Segment Review
(refer to sales by market and segment data in accompanying
tables)
Fourth quarter and full year sales to the commercial transport
market increased on higher demand for both cabin electronics
products and aircraft lighting products. Fourth quarter military
sales were relatively flat with the prior years’ fourth quarter,
while full year 2011 military sales were up slightly, primarily as
a result of higher airframe power sales, offset somewhat by lower
aircraft lighting product sales. For the business jet market,
fourth quarter sales increased slightly as increased airframe power
sales were offset by a slight decrease of aircraft lighting sales.
Increases to the business jet market in 2011 reflected higher sales
of airframe power products. The decrease in 2011 fourth quarter and
full year FAA/Airport sales was due to lower revenue from airport
turnkey projects and lower order rates from the FAA. Sales from
Ballard that are included in the fourth quarter results amounted to
approximately $0.4 million.
Aerospace operating profit for the fourth quarter of 2011 was
$12.2 million, or 20.9% of sales, compared with $7.8 million, or
16.8% of sales, in the same period last year. For the year, 2011
operating profit was $40.4 million, or 18.9% of sales, compared
with $30.1 million, or 16.8% of sales, in 2010. The margin increase
in the 2011 fourth quarter and year was due to the leverage gained
from increased sales volume partially offset by higher E&D
costs and increased SG&A costs. The primary increase of
SG&A costs were related to legal, compensation costs and bad
debt expense.
Bookings for the Aerospace segment during the fourth quarter
were $54.0 million, up 33.9% from $40.4 million in the fourth
quarter of 2010, and down 12.4% from bookings of $61.7 million in
the trailing third quarter of 2011. Backlog at the end of the
fourth quarter was $97.9 million of which $0.7 million was related
to Ballard. Ballard’s backlog remained virtually unchanged from the
date of acquisition to December 31, 2011.
Test Systems Segment Review
(refer to sales by market and segment data in accompanying
tables)
Sales in the 2011 fourth quarter decreased to $2.9 million when
compared with $5.1 million for the same period in 2010. Sales for
2011 decreased to $14.3 million compared with $16.2 million for the
same period last year.
Test Systems operating loss for the fourth quarter of 2011 was
$3.4 million compared with an operating loss of $0.4 million in the
same period last year. For the full year of 2011, Test Systems
operating loss increased to $4.8 million compared with $1.8 million
for 2010. The fourth quarter and full year loss reflects the $2.5
million impairment charge related to intangible assets and goodwill
and lower sales volume.
Astronics learned recently that the United States Air Force
decided to cancel the VDATS program, which the Company expected
would be a large part of Test Systems’ activities in 2012. The loss
of the program contributed to the write down of the Company’s Test
Systems intangible assets and goodwill. There are $1.3 million of
intangible assets remaining related to the Test Systems
business.
Test Systems bookings in the fourth quarter were $2.5 million
compared with $1.2 million in the fourth quarter of 2010, and down
slightly from the trailing 2011 third quarter, which had bookings
of $2.8 million. Backlog was $8.4 million at the end of the fourth
quarter.
Balance Sheet
Cash at the end of the 2011 was $10.9 million compared with
$22.7 million at the end of the prior year. The Company acquired
Ballard Technology for approximately $24 million in cash.
Additionally during 2011, Astronics acquired for approximately $10
million, the building that houses its Ft. Lauderdale operation and
a partially completed building in Kirkland, WA for its Astronics
AES subsidiary (“AES”). The Company expects to invest an additional
$7 million to $9 million to build out the Kirkland, WA facility
which AES plans to relocate to at the end of 2012.
Capital expenditures during the fourth quarter and twelve months
of 2011 were $1.4 million and $14.3 million, respectively, compared
with $1.0 million and $3.6 million in 2010, respectively.
In total, the Company expects capital spending in 2012 to be
approximately $13 million to $16 million, which includes the cost
to complete the Kirkland facility.
Outlook
On December 31, 2011, backlog was $106.3 million, improved over
backlog of $99.8 million at the end of 2010, though down slightly
from backlog of $110.2 million at the end of the trailing third
quarter of 2011. Approximately 87% of the current backlog is
expected to ship over the next four quarters.
Astronics expects sales in 2012 to be in the range of $235
million to $250 million. Astronics anticipates that approximately
$225 million to $238 million of forecasted revenue will be from its
Aerospace segment, while approximately $10 million to $12 million
of the forecasted revenue will be from its Test Systems segment.
The Company expects E&D expenditures for 2012, which are
included in cost of goods sold, to be in the range of $36 million
to $40 million.
Fourth Quarter 2011 Webcast and
Conference Call
The Company will host a teleconference at 11:00 AM ET on Monday,
February 6, 2012. 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 386478. The telephonic
replay will be available from 2:00 p.m. on the day of the call
through Monday, February 13, 2012. Alternatively, an archive of the
webcast will be available on the Company’s website at
www.astronics.com. A transcript will also be posted to the
Company’s website, 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., Ballard Technology Inc., 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.
ASTRONICS
CORPORATIONCONSOLIDATED INCOME STATEMENT
DATA(Unaudited, $ in thousands except per share
data)
Three Months Ended Twelve months Ended
12/31/2011 12/31/2010
12/31/2011 12/31/2010
Sales $ 61,156 $ 51,823
$ 228,163 $ 195,754 Cost of
products sold 43,807 39,380 167,667
148,187 Gross profit 17,349 12,443 60,496 47,567
Gross margin % 28.4% 24.0% 26.5%
24.3% Impairment Loss 2,500 - 2,500 - Selling,
general and administrative 7,326 6,004 27,175 23,187
SG&A %
of Sales 12.0% 11.6% 11.9% 11.8%
Income from operations 7,523 6,439 30,821 24,380
Operating margin% 12.3% 12.4% 13.5%
12.5% Interest expense, net 345
589 1,806 2,551 Income before tax 7,178 5,850
29,015 21,829 Income tax expense 2,009 1,379
7,424 6,881
Net Income $ 5,169
$ 4,471 $ 21,591
$ 14,948 Net income % of Sales 8.5%
8.6% 9.5% 7.6% *Basic earnings
per share: $ 0.42 $ 0.37 $ 1.78 $ 1.25 *Diluted earnings per share:
$ 0.40 $ 0.35 $ 1.67 $ 1.20
*Weighted average diluted
sharesoutstanding
13,056 12,693 12,911 12,412
Capital Expenditures $ 1,406 $ 994 $
14,281 $ 3,568 Depreciation and Amortization $ 1,351
$ 1,224 $
4,943 $ 4,881
*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)
12/31/2011
12/31/2010 (Unaudited)
ASSETS:
Cash and cash equivalents $ 10,919 $ 22,709 Accounts receivable
35,669 30,941 Inventories 40,094 37,763 Other current assets 5,628
5,727 Property, plant and equipment, net 41,122 30,873 Deferred
taxes long-term 7,039 6,883 Other long-term assets 3,249 3,342
Intangible assets 14,000 5,040 Goodwill 17,185
7,610
Total Assets $ 174,905
$ 150,888
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current maturities of long term debt $ 5,290 $ 5,314 Accounts
payable and accrued expenses 28,187 25,971 Long-term debt 27,973
33,264 Other liabilities 10,592 9,124 Shareholders' equity
102,863 77,215
Total Liabilities and
Shareholders' Equity $ 174,905
$ 150,888
ASTRONICS CORPORATION
SEGMENT
DATA
(Unaudited, $ in thousands)
Three Months Ended
Twelve Months Ended
12/31/2011
12/31/2010 12/31/2011
12/31/2010 Sales
Aerospace $ 58,224 $ 46,773 $ 213,874 $
179,586 Test Systems 2,932
5,050 14,289
16,168
Total Sales 61,156
51,823 228,163
195,754 Operating Profit (Loss)
and Margins Aerospace 12,177 7,845 40,400 30,112 20.9 % 16.8 % 18.9
% 16.8 % Test Systems (3,400 ) (435 ) (4,760 ) (1,806 )
(116.0 )% (8.6 )% (33.3 )%
(11.2 )%
Total Segment Operating
Profit 8,777 7,410 35,640 28,306 14.4 % 14.3 % 15.6 % 14.5 %
Interest Expense 345 591 1,806 2,551 Corporate Expenses and
Other 1,254 969
4,819 3,926
Income Before Taxes $ 7,178 $
5,850 $ 29,015 $ 21,829
11.7 % 11.3 % 12.7 % 11.2 %
ASTRONICS CORPORATION
SALES BY
MARKET
(Unaudited, $ in thousands)
Three Months Ended
Twelve months Ended 2011 12/31/2011
12/31/2010
% change 12/31/2011
12/31/2010 %
change YTD % Aerospace Segment
Commercial Transport $ 40,881 $ 28,993 41.0 % $
143,337 $ 109,956 30.4 % 62.8 % Military 9,478 9,600 (1.3 )% 35,394
34,867 1.5 % 15.5 % Business Jet 5,557 5,291 5.0 % 25,983 22,548
15.2 % 11.4 % FAA/Airport 2,308
2,889 (20.1 )% 9,160
12,215 (25.0 )% 4.0 %
Aerospace Total 58,224 46,773 24.5
% 213,874 179,586 19.1 %
93.7 % Test Systems Segment Military
2,932 5,050
(41.9 )% 14,289
16,168
(11.6 )% 6.3 % Total
$ 61,156 $ 51,823
18.0 % $ 228,163
$ 195,754
16.6 % 100.0 %
ASTRONICS CORPORATION
SALES BY
PRODUCT
(Unaudited, $ in thousands)
Three Months Ended
Twelve months Ended
2011
12/31/2011 12/31/2010
% change
12/31/2011 12/31/2010
% change YTD %
Aerospace Segment Cabin Electronics $ 33,186 $
23,019 44.2 % $ 114,540 $ 86,511 32.4 % 50.2 % Aircraft Lighting
16,997 16,289 4.3 % 69,653 65,009 7.1 % 30.5 % Airframe Power 5,321
4,576 16.3 % 20,109 15,851 26.9 % 8.8 % Airfield Lighting 2,308
2,889 (20.1 )% 9,160 12,215 (25.0 )% 4.0 % Avionics Databus 412 -
100.0 % 412 - 100.0 % 0.2 %
Aerospace Total
58,224 46,773 24.5 % 213,874
179,586 19.1 % 93.7 %
Test Systems Segment 2,932
5,050 (41.9
)% 14,289
16,168 (11.6 )%
6.3 % Total $ 61,156
$ 51,823
18.0 % $ 228,163
$ 195,754 16.6 %
100.0 %
ASTRONICS CORPORATIONORDER AND BACKLOG TREND(Unaudited, $ in
thousands)
Q12011
Q2 2011
Q3 2011
Q4 2011
TwelveMonthsEnded
4/2/2011 7/2/2011
10/1/2011 12/31/2011
12/31/2011 Sales Aerospace $
50,199 $ 51,942 $ 53,509 $ 58,224 $ 213,874 Test Systems
4,929 3,533
2,895 2,932
14,289
Total Sales $
55,128 $
55,475 $
56,404
$
61,156 $
228,163
Bookings Aerospace $ 48,682 $ 55,029 $ 61,718 $ 54,048 $
219,477 Test Systems 5,756 3,459
2,761 2,506
14,482
Total Bookings $
54,438 $ 58,488
$ 64,479 $
56,554 $ 233,959
Backlog* Aerospace $ 90,056 $ 93,143 $ 101,352 $ 97,903 N/A
Test Systems 9,043 8,969
8,835 8,409
N/A
Total Backlog $
99,099
$ 102,112
$ 110,187 $
106,312 N/A
Book:Bill Ratio Aerospace 0.97 1.06 1.15 0.93 1.03 Test
Systems 1.17 0.98
0.95 0.85
1.01
Total Book:Bill 0.99
1.05
1.14 0.92
1.03
Q12010
Q22010
Q32010
Q42010
TwelveMonthsEnded
4/3/2010 7/3/2010
10/2/2010 12/31/2010
2010 Sales Aerospace $
43,190 $ 43,599 $ 46,024 $ 46,773 $ 179,586 Test Systems
3,746 3,490
3,882 5,050
16,168
Total Sales $
46,936
$
47,089 $
49,906
$ 51,823
$ 195,754 Bookings Aerospace $ 50,668 $
46,227 $ 58,250 $ 40,378 $ 195,522 Test Systems 3,634
5,411 4,358
1,224
14,628
Total Bookings $
54,302 $
51,638 $
62,608
$ 41,602 $
210,150 Backlog Aerospace $ 83,116 $ 85,744 $
97,970 $ 91,573 N/A Test Systems 9,644
11,565 12,041
8,216 N/A
Total
Backlog $
92,760 $
97,309
$
110,011 $
99,789 N/A
Book:Bill Ratio Aerospace 1.17 1.06 1.27 0.86 1.09 Test
Systems 0.97 1.55
1.12 0.24
0.90
Total Book:Bill 1.16
1.10
1.25 0.80
1.07
* On November 30, 2011, Astronics acquired Ballard Technology,
Inc. including backlog of $727 thousand for the Aerospace
segment.
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