- Sales for the quarter were $105.9 million, slightly
better than guidance
- Net loss was $11.9 million
- Adjusted EBITDA* loss was $0.5 million
- Bookings for the quarter continued sequential improvement to
$120.0 million
- Backlog at the end of the quarter was
$297.5 million
*Adjusted EBITDA is a Non-GAAP Performance Measure.
Please see the attached table for a reconciliation of adjusted
EBITDA to GAAP net income .
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
months ended April 3, 2021.
Peter J. Gundermann, the Company’s President and CEO, commented,
“As we expected, our first quarter was a slow start to the year.
However, our Aerospace bookings continue to recover, increasing 36%
sequentially from the fourth quarter, resulting in our first
positive Aerospace book-to-bill ratio of 1.23 since the pandemic
began over a year ago. We are encouraged that the industry seems
poised for recovery as the pandemic comes under control.”
First Quarter Summary and Review of
Major Markets
First quarter revenue was $105.9 million, down 32.8% from the
comparator period of 2020. The Company incurred a net loss of $11.9
million and an adjusted EBITDA loss of $0.5 million, or 0.5% of
sales.
The Company evaluates three revenue streams to monitor demand
and analyze the impact of the pandemic to its business. These are
(1) the commercial aircraft market, which includes OEM line fit and
airline aftermarket business, (2) defense and other government
markets, and (3) general aviation.
- Commercial aerospace continues to be heavily impacted by the
pandemic and was $38.2 million, or 36% of total revenue in the
quarter, compared with $102.8 million, or 65% of total revenue in
the first quarter of 2020. Narrow body aircraft build rates are
expected to improve through 2021 from current levels as production
of the 737 MAX picks up. The aftermarket is expected to strengthen
over the course of the year as aircraft utilization and load
factors increase.
- Defense and government markets, including our military aircraft
sales and test segment sales*, have remained strong through the
pandemic. Sales to these markets were $45.4 million, or 43% of
first quarter revenue in 2021, up from $33.0 million, or 21% in the
comparator period of 2020.
- General aviation sales were $14.0 million, representing about
13% of first quarter revenue in 2021. This compares with $15.0
million, or 10% of revenue in the comparator period. Most of
general aviation revenue is line fit production driven by the
manufacture of new aircraft, although there is some amount of
aftermarket business as well. Demand for private aircraft has
recovered quickly and is expected to result in higher aircraft
production rates in the near future.
- Other revenue was about 8% of total revenue in the first
quarter of 2021.
* Test segment sales discussed in Defense and
Government markets for 2020 excludes sales to the semiconductor
industry.
Liquidity and Financing
In May 2020, the Company executed an amendment to its credit
agreement (the “amended facility”) which reduced the revolving
credit line from $500 million to $375 million. The amended facility
suspended the application of the maximum net leverage ratio
covenant up through and including the second quarter of 2021. The
maximum net leverage ratio on a trailing twelve-month basis will
resume at 6.00 to 1 for the third quarter of 2021, 5.50 to 1 for
the fourth quarter of 2021, 4.50 to 1 for the first quarter of
2022, and return to 3.75 to 1 in the second quarter of 2022 and
thereafter. As of April 3, 2021, the Company had $173.0 million
drawn on the facility, with net debt of $142.3 million.
In addition, through the second quarter of 2021, other financial
covenants require the Company to maintain a minimum interest
coverage ratio of 1.75x on a quarterly basis, except for the first
quarter of 2021, which was set at 1.50x. Also, through the third
quarter of 2021, the Company must maintain minimum liquidity,
defined as unrestricted cash plus the unused revolving credit
commitments, of $180 million at all times. The amended facility
also temporarily restricts certain activities, including
acquisitions and share repurchases, and requires mandatory
prepayments during the suspension period when the Company’s cash
balance exceeds $100 million.
Cash used in operations totaled $6.9 million in the first
quarter. The Company was compliant with its debt covenants as of
the end of the first quarter and expects to remain compliant.
In February 2021, the Company was notified by the acquirer of
its semiconductor business, which was sold in February 2019, that
$10.7 million is payable to the Company for earnouts related to
2020. In April 2021, the acquirer provided a revised calculation,
indicating, rather, that
$7.1 million is payable to the Company for the 2020 earnout. The
Company is currently reviewing the calculations and underlying data
and expects to record the additional gain on the sale when that
review is complete and the issue resolved.
First Quarter Results
Three Months Ended
($ in thousands)
April 3, 2021
March 28, 2020
% Change
Sales
$
105,857
$
157,584
(32.8)
%
Loss from Operations
$
(9,512)
$
(67,556)
(85.9)
%
Operating Margin %
(9.0)
%
(42.9)
%
Net Loss
$
(11,909)
$
(66,963)
(82.2)
%
Net Loss %
(11.3)
%
(42.5)
%
*Adjusted EBITDA
$
(496)
$
16,763
(103.0)
%
*Adjusted EBITDA Margin %
(0.5)
%
10.6
%
*Adjusted EBITDA is a Non-GAAP Performance Measure. Please see
the attached table for a reconciliation of adjusted EBITDA to GAAP
net income.
First Quarter 2021 Results (compared with
the prior-year period, unless noted otherwise)
Consolidated sales were down $51.7 million. Aerospace sales were
down $59.7 million from the 2020 first quarter, which had been
largely unaffected by the COVID pandemic. Test System sales
increased $7.9 million.
Consolidated operating loss was $9.5 million, compared with
operating loss of $67.6 million in the prior-year period. The loss
in the first quarter of 2021 was due to low volume related to the
continued impacts of the COVID-19 pandemic on the global aerospace
industry. The prior-year period reflected non-cash goodwill and
other asset impairment charges of $74.4 million in the aerospace
segment due to revised expectations regarding future operating
results as the COVID-19 pandemic took hold.
Consolidated net loss was $11.9 million, or $0.39 per diluted
share, compared with net loss of $67.0 million, or $2.17 per
diluted share, in the prior year. The after-tax impact of the prior
year impairment was $68.8 million, or $2.23 per diluted share.
Consolidated adjusted EBITDA loss was $0.5 million, or 0.5% of
consolidated sales, compared with adjusted EBITDA of $16.8 million,
or 10.6% of consolidated sales, in the prior-year period.
Bookings were $120.0 million resulting in a book-to-bill ratio
of 1.13:1. Backlog at the end of the quarter was $297.5 million.
Approximately $217.2 million, or 73%, of backlog is expected to
ship in the remainder of 2021.
Aerospace Segment Review (refer to sales by market and
segment data in accompanying tables)
Aerospace First Quarter 2021 Results
(compared with the prior-year period, unless noted
otherwise)
Aerospace segment sales decreased $59.7 million, or 42.3%, to
$81.4 million. Sales continued to be negatively affected by low
commercial aircraft build rates and a weak commercial aircraft
aftermarket as airlines have reduced spending and grounded aircraft
due to the global COVID-19 pandemic.
Aerospace segment operating loss was $5.6 million compared with
operating loss of $63.1 million for the same period last year.
Leverage lost on reduced sales significantly impacted operating
results. Aerospace operating profit in the prior-year period was
impacted by goodwill and other asset impairment charges of $74.4
million, as previously discussed.
Aerospace bookings in the first quarter of 2021 improved
sequentially by 36%, to $100.5 million, for a book-to-bill ratio
for the quarter of 1.23:1. Backlog was $210.2 million at the end of
the first quarter of 2021.
Test Systems Segment Review (refer to sales by market and
segment data in accompanying tables)
Test Systems First Quarter 2021 Results
(compared with the prior-year period, unless noted
otherwise)
Test Systems segment sales were $24.4 million, up $7.9 million
compared with the prior-year period.
Test Systems operating profit was $1.2 million, or 4.9% of
sales, compared with $0.7 million, or 4.4% of sales, in the first
quarter of 2020. Operating profit in the first quarter of 2021 was
negatively affected by $0.9 million in legal fees related to
infringement claims. Operating results in 2020 benefited from $1.6
million in semiconductor warranty revenue.
Bookings for the Test Systems segment in the quarter were $19.5
million, for a book-to-bill ratio of 0.80:1 for the quarter.
Backlog was $87.4 million at the end of the first quarter of
2021.
2021 Outlook
Mr. Gundermann commented, “We are pleased with the continued
strong demand for our Test business, which had core sales up 64%
over last year. We also are encouraged by the consistent sequential
ramping of Aerospace bookings since the second quarter of last
year. We are optimistic that demand will strengthen as 2021
progresses, but it is too early to forecast results confidently.
However, we expect our revenue in the second quarter to be about
$115 million. Our goals remain to generate cash and reduce debt.
Evidence suggests that our largest market, which is dependent upon
the health of the commercial airline industry, will recover when
and where the pandemic comes under control. While we are making
strides in the U.S., we look forward to progress in this regard
worldwide through the remainder of this year.”
Our expectation for capital expenditures for 2021 remain
unchanged at approximately $10 million to $11 million.
First Quarter 2021 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
www.astronics.com. To listen to the archived call, dial
412.317.6671 and enter replay pin number 13718343. The telephonic
replay will be available from 2:00 p.m. on the day of the call
through Thursday, May 13, 2021. 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 cash positive in 2021,
the recovery of the commercial aerospace market, the opportunities
to leverage capabilities in other markets 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 impact of the global outbreak
of COVID-19 and 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
4/3/2021
3/28/2020
Sales
$
105,857
$
157,584
Cost of products sold
91,584
121,865
Gross profit
14,273
35,719
Gross margin
13.5
%
22.7
%
Selling, general and administrative
23,785
28,867
SG&A % of sales
22.5
%
18.3
%
Impairment loss1
—
74,408
Loss from operations
(9,512)
(67,556)
Operating margin
(9.0)
%
(42.9)
%
Other expense, net of other income
534
388
Interest expense, net
1,758
1,333
Loss before tax
(11,804)
(69,277)
Income tax expense (benefit)
105
(2,314)
Net loss
$
(11,909)
$
(66,963)
Net loss % of sales
(11.3)
%
(42.5)
%
*Basic loss per share:
$
(0.39)
$
(2.17)
*Diluted loss per share:
$
(0.39)
$
(2.17)
*Weighted average diluted shares
outstanding (in thousands)
30,903
30,814
Capital expenditures
$
1,905
$
2,793
Depreciation and amortization
$
7,453
$
7,971
1 Impairment loss primarily represents the goodwill impairment
charges incurred in the Aerospace segment. Full impairment charges
totaling $73.7 million were recorded in Q1 2020 for goodwill
associated to the CSC, PGA and CCC reporting units and a partial
goodwill impairment was recorded at the PECO reporting unit.
ASTRONICS CORPORATION
SEGMENT
DATA
(Unaudited, $ in thousands)
Three Months Ended
4/3/2021
3/28/2020
Sales
Aerospace
$
81,430
$
141,137
Less inter-segment
(14)
(67)
Total Aerospace
81,416
141,070
Test Systems
24,745
16,553
Less inter-segment
(304)
(39)
Total Test Systems
24,441
16,514
Total consolidated sales
105,857
157,584
Segment operating loss and
margins
Aerospace
(5,563)
(63,145)
(6.8)
%
(44.8)
%
Test Systems
1,189
722
4.9
%
4.4
%
Total segment operating loss
(4,374)
(62,423)
Interest expense
1,758
1,333
Corporate expenses and other
5,672
5,521
Loss before taxes
$
(11,804)
$
(69,277)
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 and gains or losses associated
with the sale of businesses), 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 and gains or
losses associated with the sale of businesses, 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 INCOME TO ADJUSTED
EBITDA
(Unaudited, $ in thousands)
Consolidated
Three Months Ended
4/3/2021
3/28/2020
Net loss
$
(11,909)
$
(66,963)
Add back (deduct):
Interest expense
1,758
1,333
Income tax expense (benefit)
105
(2,314)
Depreciation and amortization expense
7,453
7,971
Equity-based compensation expense
2,097
1,703
Goodwill and other asset impairments
—
74,408
Restructuring-related charges including
severance
—
518
Equity investment loss
—
107
Adjusted EBITDA
$
(496)
$
16,763
Sales
$
105,857
$
157,584
Adjusted EBITDA margin
(0.5)
%
10.6
%
ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET DATA
($ in thousands)
(unaudited)
4/3/2021
12/31/2020
ASSETS
Cash and cash equivalents
$
30,729
$
40,412
Accounts receivable and uncompleted
contracts
98,701
93,056
Inventories
155,254
157,059
Other current assets
25,552
26,420
Property, plant and equipment, net
104,931
106,678
Other long-term assets
26,563
27,952
Intangible assets, net
105,930
109,886
Goodwill
58,297
58,282
Total assets
$
605,957
$
619,745
LIABILITIES AND SHAREHOLDERS'
EQUITY
Accounts payable and accrued expenses
$
67,795
$
69,165
Customer advances and deferred revenue
27,407
24,571
Long-term debt
173,000
173,000
Other liabilities
77,451
82,638
Shareholders' equity
260,304
270,371
Total liabilities and shareholders'
equity
$
605,957
$
619,745
ASTRONICS CORPORATION
CONSOLIDATED CASH FLOWS DATA
Three Months Ended
(Unaudited, $ in thousands)
4/3/2021
3/28/2020
Cash flows from operating
activities:
Net loss
$
(11,909)
$
(66,963)
Adjustments to reconcile net loss to cash
from operating activities:
Depreciation and amortization
7,453
7,971
Provisions for non-cash losses on
inventory and receivables
1,269
872
Equity-based compensation expense
2,097
1,703
Deferred tax (benefit) expense
(51)
2,050
Operating lease non-cash expense
1,185
1,210
Impairment loss
—
74,408
Other
1,315
968
Cash flows from changes in operating
assets and liabilities:
Accounts receivable
(6,010)
13,644
Inventories
430
(7,224)
Accounts payable
(4,171)
6,295
Accrued expenses
(685)
(5,730)
Other current assets and liabilities
961
(557)
Customer advanced payments and deferred
revenue
2,915
(490)
Income taxes
(246)
(3,591)
Operating lease liabilities
(1,307)
(1,217)
Supplemental retirement plan and other
liabilities
(109)
(99)
Cash flows from operating activities
(6,863)
23,250
Cash flows from investing
activities:
Capital expenditures
(1,905)
(2,793)
Cash flows from investing activities
(1,905)
(2,793)
Cash flows from financing
activities:
Proceeds from long-term debt
—
150,000
Principal payments on long-term debt
—
(5,000)
Purchase of outstanding shares for
treasury
—
(7,732)
Stock option activity
(52)
33
Finance lease principal payments
(501)
(461)
Cash flows from financing activities
(553)
136,840
Effect of exchange rates on cash
(362)
(839)
(Decrease) Increase in cash and cash
equivalents
(9,683)
156,458
Cash and cash equivalents at beginning of
period
40,412
31,906
Cash and cash equivalents at end of
period
$
30,729
$
188,364
ASTRONICS CORPORATION
SALES BY
MARKET
(Unaudited, $ in thousands)
Three Months Ended
4/3/2021
3/28/2020
% Change
% of Sales
Aerospace Segment
Commercial Transport
$
38,208
$
102,775
(62.8)
%
36.1
%
Military
20,982
18,113
15.8
%
19.8
%
Business Jet
14,028
15,006
(6.5)
%
13.3
%
Other
8,198
5,176
58.4
%
7.7
%
Aerospace Total
81,416
141,070
(42.3)
%
76.9
%
Test Systems Segment excluding
Semiconductor
24,441
14,880
64.3
%
23.1
%
Total sales excluding
Semiconductor
105,857
155,950
(32.1)
%
100.0
%
Test-Semiconductor
—
1,634
(100.0)
%
—
%
Total Sales
$
105,857
$
157,584
(32.8)
%
SALES BY
PRODUCT LINE
(Unaudited, $ in thousands)
Three Months Ended
4/3/2021
3/28/2020
% Change
% of Sales
Aerospace Segment
Electrical Power & Motion
$
29,344
$
69,456
(57.8)
%
27.8
%
Lighting & Safety
27,100
37,922
(28.5)
%
25.6
%
Avionics
14,843
22,143
(33.0)
%
14.0
%
Systems Certification
878
3,331
(73.6)
%
0.8
%
Structures
1,053
3,042
(65.4)
%
1.0
%
Other
8,198
5,176
58.4
%
7.7
%
Aerospace Total
81,416
141,070
(42.3)
%
76.9
%
Test Systems Segment excluding
Semiconductor
24,441
14,880
64.3
%
23.1
%
Total sales excluding
Semiconductor
105,857
155,950
(32.1)
%
100.0
%
Test-Semiconductor
—
1,634
(100.0)
%
—
%
Total Sales
$
105,857
$
157,584
(32.8)
%
ASTRONICS CORPORATION
ORDER
AND BACKLOG TREND
(Unaudited, $ in thousands)
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Trailing Twelve Months
6/27/2020
9/26/2020
12/31/2020
4/3/2021
4/3/2021
Sales
Aerospace
$
102,573
$
82,548
$
91,797
$
81,416
$
358,334
Test Systems (excluding Semi)
19,933
23,373
22,930
24,441
90,677
Sales (excluding Semi)
122,506
105,921
114,727
105,857
449,011
Test-Semiconductor
1,188
585
76
—
1,849
Total Sales
$
123,694
$
106,506
$
114,803
$
105,857
$
450,860
Bookings
Aerospace
$
43,264
$
64,956
$
74,106
$
100,488
$
282,814
Test Systems (excluding Semi)
18,230
16,602
41,877
19,497
96,206
Bookings (excluding Semi)
61,494
81,558
115,983
119,985
379,020
Test-Semiconductor
—
—
—
—
—
Total Bookings
$
61,494
$
81,558
$
115,983
$
119,985
$
379,020
Backlog
Aerospace
$
226,364
$
208,772
$
191,081
$
210,153
Test Systems (excluding Semi)
80,161
73,390
92,337
87,393
Backlog (excluding Semi)
306,525
282,162
283,418
297,546
Test-Semiconductor
661
76
—
—
Total Backlog
$
307,186
$
282,238
$
283,418
$
297,546
N/A
Book:Bill Ratio 1
Aerospace
0.42
0.79
0.81
1.23
0.79
Test Systems excl. Semi
0.91
0.71
1.83
0.80
1.06
Total Book:Bill excl. Semi
0.50
0.77
1.01
1.13
0.84
1 Calculations of Test Systems and Total Book:Bill excludes the
total semiconductor business, which included residual warranty
backlog following the divestiture.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005218/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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