- Sales for the quarter were $116.2 million, up 10% over
prior-year period
- Pretax income was $5.0 million, up from a loss of $11.8
million in the prior-year period
- Bookings totaled $175.6 million, up 46% over prior-year
period; Achieved book-to-bill ratio of 1.51
- Backlog increased 14% from year end 2021 to a record $475.1
million; Aerospace backlog reached a record $394.0 million
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 2, 2022.
Peter J. Gundermann, Chairman, President and Chief Executive
Officer, commented, “We continue to see very strong demand from our
customers, with the first quarter being our second consecutive
quarter with a book-to-bill ratio above 1.5x. In fact, our
book-to-bill ratio for the trailing twelve months was 1.4x. This
strong demand is encouraging as it clearly indicates recovery in
our markets and enthusiasm for our products. We expect this demand
will drive growth throughout the remainder of 2022.”
He continued, “However, our operating environment remains very
challenging, especially with respect to our supply chain. Our sales
were up 10% over last year, but could have been much higher were it
not for supply chain challenges which caused about $15 million in
revenue to slide out of the quarter. These orders were not lost and
will remain in backlog until the required raw materials
arrive.”
First Quarter Results
Three Months Ended
($ in thousands)
April 2,
2022
April 3,
2021
%
Change
Sales
$
116,176
$
105,857
9.7
%
Loss from Operations
$
(4,167
)
$
(9,512
)
56.2
%
Operating Margin %
(3.6
)%
(9.0
)%
Net Gain on Sale of Business
$
(11,284
)
$
—
Net Loss
$
(3,101
)
$
(11,909
)
74.0
%
Net Loss %
(2.7
)%
(11.3
)%
*Adjusted EBITDA
$
(353
)
$
(496
)
28.8
%
*Adjusted EBITDA Margin %
(0.3
)%
(0.5
)%
*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 2022 Results (compared with
the prior-year period, unless noted otherwise)
Consolidated sales were up $10.3 million from the first quarter
of 2021. Aerospace sales were up $20.0 million, or 24.5%, and Test
System sales decreased $9.7 million. While demonstrating some
improvement, sales continued to reflect the ongoing impacts of the
COVID-19 pandemic on the global aerospace industry. Supply chain
pressures continue to impact delivery schedules and costs, limiting
the Company’s ability to respond to desired requests from customers
and delaying shipments.
In 2021, the Company was awarded a grant of up to $14.7 million
as part of the Aviation Manufacturing Jobs Protection (“AMJP”)
Program. The grant has been recognized ratably over a six-month
period of performance. In the first quarter of 2022, $6.0 million
was recognized as an offset to cost of products sold. The period of
performance concluded in March 2022.
Consolidated operating loss improved measurably over the
prior-year period as higher volume reflecting improvements in the
commercial aerospace industry and the benefit of the AMJP helped to
offset higher costs for inventory and labor.
In March 2022, the Company agreed with the earnout calculation
from the buyer of its former semiconductor test business, for an
earnout in the amount of $11.3 million related to performance in
calendar 2021. The Company recorded the gain and received the
payment in the first quarter of 2022. The semiconductor test
business was sold in 2019.
The effective income tax rate was 161.7% for the quarter. In the
past, research and development costs were deducted as incurred.
However, beginning with the 2022 tax year, these costs are required
to be capitalized for tax purposes and amortized over 5 years. The
tax rate was also impacted by a valuation allowance applied against
the associated deferred tax asset created by the new treatment, due
to the Company’s cumulative losses over the last three years.
Consolidated net loss was $3.1 million, or $0.10 per diluted
share, compared with net loss of $11.9 million, or $0.39 per
diluted share, in the prior year.
Consolidated adjusted EBITDA loss was $0.4 million, or 0.3% of
consolidated sales, compared with an adjusted EBITDA loss of $0.5
million, or 0.5% of consolidated sales, in the prior-year
period.
Sequentially, compared with the fourth quarter of 2021, while
revenue remained consistent, net loss was $3.1 million compared
with net income of $1.6 million, due to the $8.1 million income tax
expense in the first quarter of 2022 compared with the $1.8 million
income tax benefit in the fourth quarter of 2021. Adjusted EBITDA
loss improved to $0.4 million in the first quarter of 2022 from an
adjusted EBITDA loss of $0.8 million in the trailing fourth
quarter.
Bookings were $175.6 million in the quarter resulting in a
book-to-bill ratio of 1.51:1. Backlog at the end of the quarter
reached a new record level of $475.1 million. Approximately $364.3
million, or 77%, of backlog is expected to ship in the remainder of
2022.
Aerospace Segment Review (refer to sales by market and
segment data in accompanying tables)
Aerospace First Quarter 2022 Results
(compared with the prior-year period, unless noted
otherwise)
Aerospace segment sales increased $20.0 million, or 24.5%, to
$101.4 million. Commercial aerospace sales increased 67.7%, or
$25.9 million, and drove the improvement. Sales to this market were
$64.1 million, or 55.1% of consolidated revenue in the quarter,
compared with $38.2 million, or 36.1% of consolidated revenue in
the first quarter of 2021. Improving domestic airline travel,
increased narrowbody production rates including the 737 MAX, and
higher fleet utilization are driving increased demand for
Astronics’ products.
General Aviation sales increased $1.8 million, or 13.1%, to
$15.9 million as higher demand in the business jet market for
antenna and airframe power products offset lower VVIP activity. The
Company expects the strong demand being realized in the business
jet industry to translate into higher demand for its products as
OEM production levels increase.
Military Aircraft sales decreased $6.0 million, or 28.6%, to
$15.0 million. The prior-year period benefited from incremental
non-recurring engineering revenue associated with development of
new programs and higher sales of lighting and safety products.
Aerospace segment operating profit was $3.1 million compared
with operating loss of $5.6 million for the same period last year.
The improvement was driven by increased sales and the $6.0 million
AMJP benefit, partially offset by a $0.8 million increase of
expense associated with a reinstated 401K contribution accrual.
Aerospace bookings in the first quarter of 2022 were $160.8
million for a book-to-bill ratio of 1.59:1. Bookings were up 9%
sequentially over the fourth quarter of 2021 and up 60% over the
comparator quarter of 2021, continuing the strong trend of
improvement since the pandemic took hold. Backlog for the Aerospace
segment was a record $394.0 million at the end of the first quarter
of 2022.
Mr. Gundermann commented, “Demand has been very strong across
our aerospace product range, with a book-to-bill of 1.48 over the
last twelve months and a record high backlog at the end of the
first quarter. Most of this demand has been driven by recovery in
the narrowbody market. Encouragingly, in the first quarter we saw
signs that the widebody market is picking up also, which is
necessary for us to get back to pre-COVID levels in the near
future.”
Test Systems Segment Review (refer to sales by market and
segment data in accompanying tables)
Test Systems First Quarter 2022 Results
(compared with the prior-year period, unless noted
otherwise)
Test Systems segment sales were $14.8 million, down $9.7 million
compared with the prior-year period driven by lower defense
revenue.
Test Systems operating loss was $1.8 million, or 12.1% of sales,
compared with operating profit of $1.2 million, or 4.9% of sales,
in the first quarter of 2021. Operating loss in the first quarter
of 2022 was negatively affected primarily by lower volume.
Bookings for the Test Systems segment in the quarter were $14.8
million, for a book-to-bill ratio of 1:1 for the quarter. Backlog
was $81.1 million at the end of the first quarter of 2022.
Mr. Gundermann noted, “The first quarter was one of treading
water for our Test business, with light shipments and bookings. We
are pursuing some significant projects which are scheduled for
award mid-year. Those awards will largely determine the trajectory
of the business through the end of 2022 and into 2023.”
Liquidity and Financing
Cash on hand was $24.0 million at the end of the quarter. Net
debt was $113.0 million, compared with $133.2 million at the end of
2021. During the first quarter, the Company received $22.0 million
in earnout payments from the sale of its semiconductor business,
$9.2 million in tax refunds, and $5.2 million related to the AMJP.
The Company expects to receive a final installment of $2.1 million
from the AMJP later in 2022.
On March 1, 2022, the Company entered into an amended and
extended revolving credit facility with its bank group. The purpose
of the amendment was to extend the scheduled expiration of the
agreement from February 16, 2023 to May 30, 2023. The Company was
in compliance with its financial covenants as of April 2, 2022. The
extension also provides for more time to demonstrate economic
recovery from the severe downturn in the Aerospace industry before
executing a new longer-term financing agreement.
Based on Astronics’ financial projections, the Company expects
to be compliant with its financial covenants for the duration of
the agreement.
Astronics intends to replace the amended agreement with a new
long-term financing facility in the coming months.
2022 Outlook
Mr. Gundermann commented, “We are maintaining our previous
revenue guidance of $550 million to $600 million for the year. We
believe this range accommodates the supply chain and labor
challenges that we are likely to face, although some
unpredictability certainly exists. Our first quarter sales were
obviously not on the required pace, so we expect volume to ramp as
we move through the year. We expect revenue in the second quarter
will be between $125 million and $135 million, with similar rates
of improvement in the third and fourth quarters.”
Planned capital expenditures for 2022 are expected to be
approximately $15 million to $20 million.
First Quarter 2022 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 13729475. The telephonic
replay will be available from 2:00 p.m. on the day of the call
through Friday, May 13, 2022. 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 in compliance with
credit agreement covenants, the recovery of the commercial
aerospace and test systems markets, 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
4/2/2022
4/3/2021
Sales
$
116,176
$
105,857
Cost of products sold
96,243
91,584
Gross profit
19,933
14,273
Gross margin
17.2
%
13.5
%
Selling, general and administrative
24,100
23,785
SG&A % of sales
20.7
%
22.5
%
Loss from operations
(4,167
)
(9,512
)
Operating margin
(3.6
)%
(9.0
)%
Net gain on sale of business
(11,284
)
—
Other expense, net of other income
462
534
Interest expense, net
1,631
1,758
Income (Loss) before tax
5,024
(11,804
)
Income tax expense
8,125
105
Net loss
$
(3,101
)
$
(11,909
)
Net loss % of sales
(2.7
)%
(11.3
)%
*Basic loss per share:
$
(0.10
)
$
(0.39
)
*Diluted loss per share:
$
(0.10
)
$
(0.39
)
*Weighted average diluted shares
outstanding (in thousands)
31,933
30,903
Capital expenditures
$
1,160
$
1,905
Depreciation and amortization
7,088
7,453
ASTRONICS CORPORATION
SEGMENT
DATA
(Unaudited, $ in thousands)
Three
Months Ended
4/2/2022
4/3/2021
Sales
Aerospace
$
101,394
$
81,430
Less inter-segment
—
(14
)
Total Aerospace
101,394
81,416
Test Systems
14,798
24,745
Less inter-segment
(16
)
(304
)
Total Test Systems
14,782
24,441
Total consolidated sales
116,176
105,857
Segment operating profit (loss) and
margins
Aerospace
3,050
(5,563
)
3.0
%
(6.8
)%
Test Systems
(1,787
)
1,189
(12.1
)%
4.9
%
Total segment operating profit
(loss)
1,263
(4,374
)
Net gain on sale of business
(11,284
)
—
Interest expense
1,631
1,758
Corporate expenses and other
5,892
5,672
Income (loss) before taxes
$
5,024
$
(11,804
)
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, gains or losses associated with
the sale of businesses and grant benefits recorded related to the
AMJP program), 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, fair value
adjustments to the valuation of contingent consideration
liabilities, gains or losses associated with the sale of businesses
and grant benefits recorded related to the AMJP program, 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
4/2/2022
4/3/2021
Net loss
$
(3,101
)
$
(11,909
)
Add back (deduct):
Interest expense
1,631
1,758
Income tax expense
8,125
105
Depreciation and amortization expense
7,088
7,453
Equity-based compensation expense
2,101
2,097
Restructuring-related charges including
severance
84
—
Non-cash accrued 401K contribution
1,011
—
AMJP grant benefit
(6,008
)
—
Net gain on sale of business
(11,284
)
—
Adjusted EBITDA
$
(353
)
$
(496
)
Sales
$
116,176
$
105,857
Adjusted EBITDA margin
(0.3
)%
(0.5
)%
ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET DATA
($ in thousands)
(unaudited)
4/2/2022
12/31/2021
ASSETS
Cash and cash equivalents
$
24,015
$
29,757
Accounts receivable and uncompleted
contracts
117,495
107,439
Inventories
166,088
157,576
Other current assets
18,331
45,089
Property, plant and equipment, net
93,028
95,236
Other long-term assets
20,697
21,439
Intangible assets, net
90,504
94,320
Goodwill
58,313
58,282
Total assets
$
588,471
$
609,138
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses
$
93,987
$
91,257
Customer advances and deferred revenue
27,198
27,356
Long-term debt
137,000
163,000
Other liabilities
70,204
70,921
Shareholders' equity
260,082
256,604
Total liabilities and shareholders'
equity
$
588,471
$
609,138
ASTRONICS CORPORATION
CONSOLIDATED CASH FLOWS DATA
(Unaudited, $ in thousands)
Three
Months Ended
(Unaudited, $ in thousands)
4/2/2022
4/3/2021
Cash flows from operating
activities:
Net loss
$
(3,101
)
$
(11,909
)
Adjustments to reconcile net loss to cash
from operating activities:
Depreciation and amortization
7,088
7,453
Provisions for non-cash losses on
inventory and receivables
175
1,269
Equity-based compensation expense
2,101
2,097
Non-cash accrued 401(k) contribution
1,011
—
Deferred tax benefit
—
(51
)
Operating lease non-cash expense
1,424
1,185
Net gain on sale of business, before
taxes
(11,284
)
—
Other
513
1,315
Cash flows from changes in operating
assets and liabilities:
Accounts receivable
(10,024
)
(6,010
)
Inventories
(9,015
)
430
Accounts payable
8,625
(4,171
)
Accrued expenses
(1,380
)
(685
)
Other current assets and liabilities
(363
)
961
Customer advance payments and deferred
revenue
(113
)
2,915
Income taxes
16,492
(246
)
Operating lease liabilities
(1,724
)
(1,307
)
Supplemental retirement plan and other
liabilities
(109
)
(109
)
Cash flows from operating activities
316
(6,863
)
Cash flows from investing
activities:
Proceeds on sale of business
21,961
—
Capital expenditures
(1,160
)
(1,905
)
Cash flows from investing activities
20,801
(1,905
)
Cash flows from financing
activities:
Proceeds from long-term debt
17,925
—
Principal payments on long-term debt
(43,925
)
—
Stock award activity
108
(52
)
Finance lease principal payments
(23
)
(501
)
Debt acquisition costs
(771
)
—
Cash flows from financing activities
(26,686
)
(553
)
Effect of exchange rates on cash
(173
)
(362
)
Decrease in cash and cash equivalents
(5,742
)
(9,683
)
Cash and cash equivalents at beginning of
period
29,757
40,412
Cash and cash equivalents at end of
period
$
24,015
$
30,729
ASTRONICS CORPORATION
SALES BY
MARKET
(Unaudited, $ in thousands)
Three
Months Ended
4/2/2022
4/3/2021
%
Change
% of
Sales
Aerospace Segment
Commercial Transport
$
64,089
$
38,208
67.7
%
55.1
%
Military
14,976
20,982
(28.6
)%
12.9
%
Business Jet
15,867
14,028
13.1
%
13.7
%
Other
6,462
8,198
(21.2
)%
5.6
%
Aerospace Total
101,394
81,416
24.5
%
87.3
%
Test Systems Segment
14,782
24,441
(39.5
)%
12.7
%
Total Sales
$
116,176
$
105,857
9.7
%
SALES BY
PRODUCT LINE
(Unaudited, $ in thousands)
Three
Months Ended
4/2/2022
4/3/2021
%
Change
% of
Sales
Aerospace Segment
Electrical Power & Motion
$
44,467
$
29,344
51.5
%
38.3
%
Lighting & Safety
29,211
27,100
7.8
%
25.1
%
Avionics
18,875
14,843
27.2
%
16.2
%
Systems Certification
1,002
878
14.1
%
0.9
%
Structures
1,377
1,053
30.8
%
1.2
%
Other
6,462
8,198
(21.2
)%
5.6
%
Aerospace Total
101,394
81,416
24.5
%
87.3
%
Test Systems Segment
14,782
24,441
(39.5
)%
12.7
%
Total Sales
$
116,176
$
105,857
9.7
%
ASTRONICS CORPORATION
ORDER
AND BACKLOG TREND
(Unaudited, $ in thousands)
Trailing
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Twelve Months
7/3/2021
10/2/2021
12/31/2021
4/2/2022
4/2/2022
Sales
Aerospace
$
89,220
$
95,766
$
98,836
$
101,394
$
385,216
Test Systems
21,938
16,075
17,216
14,782
70,011
Total Sales
$
111,158
$
111,841
$
116,052
$
116,176
$
455,227
Bookings
Aerospace
$
118,155
$
142,484
$
147,689
$
160,778
$
569,106
Test Systems
8,166
11,052
29,651
14,844
63,713
Total Bookings
$
126,321
$
153,536
$
177,340
$
175,622
$
632,819
Backlog
Aerospace
$
239,088
$
285,806
$
334,659
$
394,043
Test Systems
73,621
68,598
81,033
81,095
Total Backlog
$
312,709
$
354,404
$
415,692
$
475,138
N/A
Book:Bill Ratio
Aerospace
1.32
1.49
1.49
1.59
1.48
Test Systems
0.37
0.69
1.72
1.00
0.91
Total Book:Bill
1.14
1.37
1.53
1.51
1.39
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220506005067/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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