Astronics Corporation (NASDAQ:ATRO) Q3 2023 Earnings Conference Call November 8, 2023 4:45 PM ET Company Participants Deborah Pawlowski - Chairman, CEO and Founder, Kei Advisors LLC Peter Gundermann - Chairman, CEO & President David Burney - EVP, Finance, CFO & Treasurer Conference Call Participants Pete Osterland - Truist Securities Jon Tanwanteng - CJS Securities Operator Good afternoon, everyone, and welcome to the Astronics Corporation Third Quarter 2023 Financial Results Conference Call. [Operator Inst ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2023 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 0-7087 | --- | --- | |--------------------------------------------------------------------------------------------------- ...

Astronics Corporation (NASDAQ:ATRO) Q2 2023 Earnings Conference Call August 3, 2023 4:45 PM ET Company Participants Deborah Pawlowski - Chairman, CEO and Founder, Kei Advisors LLC Peter Gundermann - Chairman, CEO & President David Burney - EVP, Finance, CFO & Treasurer Conference Call Participants Jon Tanwanteng - CJS Securities Sam Struhsaker - Truist Securities Operator Good afternoon, and welcome to the Astronics Corporation Second Quarter Fiscal Year 2023 Financial Results Conference Call. [Operator Ins ...

Astronics Corporation (NASDAQ:ATRO) Q1 2023 Results Conference Call May 9, 2023 4:45 PM ET Company Participants Debbie Pawlowski - Chairman, CEO and Founder Peter Gundermann - Chairman, CEO & President David Burney - Executive VP of Finance, CFO & Treasurer Conference Call Participants Jon Tanwanteng - CJS Securities Pete Oberland - Truist Securities Scott Lewis - Lewis Capital Management Operator Good afternoon, and welcome to the Astronics Corporation First Quarter Fiscal Year 2023 Conference Call. [Opera ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ Form 10-K ___________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________ to __________ Commission File Number 0-7087 ...

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $159 million, a significant increase from the previous range of $105 million to $130 million, indicating a positive revenue ramp [8][17] - Bookings for Q4 2022 were $182 million, the second highest since COVID, contributing to a record backlog of $571 million entering 2023 [10][11] - The company achieved a book-to-bill ratio of 1.29 for the year, with total bookings for 2022 at $690 million [10] Business Line Data and Key Metrics Changes - Sales to the commercial transport market increased by 76% to approximately $103 million in Q4 2022, up over $44 million year-over-year [24] - Contribution margin on incremental sales is currently around 40%, lower than pre-pandemic levels of 45% to 50%, primarily due to increased input costs [25][20] Market Data and Key Metrics Changes - The recovery in the commercial airline industry has been driven by the U.S. and Europe, with expectations for a strong return of widebody aircraft as travel restrictions ease [12][14] - The company anticipates that the opening of China will positively impact the overall industry recovery [14] Company Strategy and Development Direction - The company is maintaining its revenue guidance for 2023 at $640 million to $680 million, reflecting a growth expectation of approximately 23% over 2022 [33][36] - The focus is on improving supply chain performance and capitalizing on strong demand, particularly in the narrowbody and emerging widebody markets [12][35] Management's Comments on Operating Environment and Future Outlook - Management noted that while supply chain issues persist, there are improvements in predictability and response times compared to the previous year [18][19] - The company expects to see continued strong demand driven by both narrowbody and widebody aircraft, with a positive outlook for the recovery of the airline industry [12][14] Other Important Information - The company completed a refinancing deal in January 2023, which includes a $90 million term loan and a $150 million revolving credit facility [29][30] - The effective tax rate for the year is projected to be negative 500%, primarily due to deferred tax asset reserves [32] Q&A Session Summary Question: Supply chain improvements into Q1 - Management indicated that while supply chain improvements are noted, lead times remain longer than pre-COVID levels, affecting the ability to accelerate production [41][42] Question: Contribution margin expectations - The contribution margin is expected to gradually improve as spot buys decrease and new contracts reflect higher costs [46] Question: Cash tax burden clarification - The cash tax burden for 2023 is expected to be around $6 million to $7 million, not $67 million as initially misheard [47] Question: Aerospace margins and pricing - Management expects aerospace margins to improve with top-line growth and better absorption of fixed costs [52] Question: Widebody revenue forecast - Last year's widebody revenue was approximately 10% to 15% of pre-COVID levels, with expectations to reach 30% to 40% this year [65][66]

Financial Data and Key Metrics Changes - The company reported third-quarter revenue of $131 million, which was below the expected $150 million, primarily due to supply chain issues and program delays [7][8] - Adjusted EBITDA for the quarter was negative 0.6%, reflecting margin pressure from lower volume and elevated input costs [17] - Bookings for the third quarter were strong at $184 million, resulting in a book-to-bill ratio of 1.4, indicating robust demand [18][19] Business Line Data and Key Metrics Changes - Consolidated sales increased to $131.4 million, driven by a 36% increase in the commercial transport market compared to the previous year [22] - General Aviation sales rose to $14.8 million, while military aerospace sales decreased to $12.5 million due to reduced non-recurring engineering revenue [23] - The test segment saw sales increase to $19.3 million, driven by higher instrument test and transit test volumes [23] Market Data and Key Metrics Changes - The commercial transport market showed significant recovery, with a 36% year-over-year increase in sales [22] - The company noted a strong demand for its products, particularly in the narrowbody and widebody segments, with expectations of increased aftermarket sales [50][66] Company Strategy and Development Direction - The company is optimistic about future revenue growth, projecting fourth-quarter revenue in the range of $140 million to $150 million and 2023 revenue between $640 million and $680 million [32][33] - The company is focusing on addressing supply chain challenges and expects improvements in lead times and inventory levels to support future growth [11][34] - The company is also working on securing significant contracts, such as the FLRAA and Army radio business, which could contribute an estimated $20 million to $25 million in revenue next year [59] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing supply chain issues but expressed optimism about improvements, indicating that lead times are beginning to decrease [11][12] - The company is facing margin pressures due to inflation and atypical costs but expects to pass some of these costs onto customers in future contracts [25][26] - Management remains confident in achieving breakeven EBITDA in the fourth quarter and anticipates a positive cash flow as inventory levels stabilize [40][54] Other Important Information - The company experienced atypical costs of $4.6 million in the third quarter due to lease exit costs and legal settlements [16] - The company has amended its credit facility, extending the expiration to November 2023, which provides more time to secure a long-term credit arrangement [27] Q&A Session Summary Question: Does the inventory built give confidence to shift revenue guidance? - Management indicated that they have good visibility on inventory for the fourth quarter, with some hotspots being actively managed [36][38] Question: What is the new estimate for breakeven on a pretax income basis? - Management stated that the GAAP pretax breakeven point is around $165 million, factoring in current spot buys [40] Question: What is the status of the refinancing process? - Management is targeting to complete refinancing before year-end and is confident about finalizing it in December [42] Question: What are the current production rates and their impact on guidance? - Management noted that production rates for Boeing's 737 MAX are stable, and there is a positive trend in aftermarket demand [50] Question: How much of the guidance includes FLRAA and Army radio business? - Management indicated that the guidance includes a risk-reduced estimate of $20 million to $25 million from these programs [58] Question: Is there potential for repricing contracts due to inflation? - Management clarified that while long-term contracts are less flexible, they are successfully repricing some products and addressing cost increases with customers [60][62] Question: What is the pricing situation for aftermarket business? - Management expressed confidence in the pricing for recent demand, noting that older price levels are under pressure but newer contracts are more favorable [64][66]

Financial Data and Key Metrics Changes - Second quarter bookings were $148 million, resulting in a book-to-bill ratio of 1.15 and a record backlog of $494 million [5][6] - Revenue for the second quarter was $129 million, an increase from the previous four-quarter average of $114 million, marking the highest volume since the pandemic began [9][10] - The company revised its full-year revenue guidance to a range of $550 million to $580 million, implying an average quarterly volume of $160 million in the second half of the year [10][14] Business Line Data and Key Metrics Changes - The commercial transport market continues to drive revenue growth, with a significant increase in bookings and sales [21] - Major program wins include in-seat power for Southwest Airlines, SATCOM hardware with Safran, and an electrical distribution system for the Lilium aircraft, although these did not significantly contribute to second quarter bookings [7][8][41] Market Data and Key Metrics Changes - The aviation industry, particularly commercial transport, is recovering, contributing to strong demand for the company's products [5][9] - Supply chain challenges, particularly with electronic components, continue to impact operations and revenue realization [12][14] Company Strategy and Development Direction - The company is focused on maintaining its product line strategy and customer relationships as the aviation industry recovers from the pandemic [36] - There is an emphasis on developing capabilities for the electric vertical takeoff and landing (eVTOL) market, with expectations of significant future contributions [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand but acknowledged ongoing supply chain struggles and inflationary pressures affecting margins [12][16] - The company expects a revenue ramp-up in the second half of the year, driven by strong bookings and backlog, despite supply chain challenges [10][64] Other Important Information - The company extended its revolving credit facility by three months to allow for a new long-term credit arrangement [20][27] - Cash flow for the quarter was negative, with a $10.6 million use for operations, primarily due to increased inventory levels [25][26] Q&A Session Summary Question: What specific components are causing supply chain difficulties? - Management indicated that electronic components are the primary issue, along with raw materials like plastics and hardware, describing the situation as a "whackamole" effort [32] Question: Can you elaborate on the new contracts with Southwest Airlines and others? - The Southwest contract involves in-seat power for their Max fleet, with potential revenues around $100,000 per ship. The Safran program aims to provide flexible satellite communication capabilities, while the Lilium project focuses on eVTOL systems [36][40] Question: What is the outlook for the FLRAA and FARA programs? - The FLRAA program award is expected in mid to late October, while the FARA program has been delayed by about a year [56] Question: Will the company be operating income positive in the second half? - Management stated that breakeven sales are around $160 million to $165 million per quarter, and they expect to generate positive cash flow if they can manage working capital effectively [49] Question: What are the details of the new credit facilities? - The new credit facilities will be SOFR-based, with expected increases in annual interest expense due to rising SOFR rates and spreads [51]

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2022 was $116 million, up nearly 10% from Q1 2021, but flat sequentially from Q4 2021 [16] - The company is not expected to reach breakeven until the second half of the year, with breakeven revenue estimated at around $160 million per quarter [16] - Consolidated gross margin was $19.9 million, representing 17.2%, with a loss from operations of $4.2 million [16][17] Business Line Data and Key Metrics Changes - Aerospace revenue was $101 million, while test revenue was $15 million for the quarter [16] - Aerospace bookings totaled $161 million with a book-to-bill ratio of 1.59, while test bookings were $15 million with a book-to-bill ratio of about 1 [20] - The aerospace segment showed significant improvement with sales up 68% from Q1 2021, while the test segment experienced a sales drop of $9.7 million from the previous year [20][21] Market Data and Key Metrics Changes - Bookings for the last 12 months totaled $633 million against sales of $455 million, resulting in a rolling 12-month book-to-bill ratio of 1.39 [12] - The commercial transport market is strengthening, with sales up 10% sequentially from Q4 2021 [20] - The military market and business jet markets remained steady, while the test segment is pursuing several large opportunities [21] Company Strategy and Development Direction - The company is maintaining its revenue guidance for 2022, projecting revenues between $550 million and $600 million, which would represent a growth of about 30% to 35% over 2021 [24][25] - The company is focusing on significant opportunities in both segments, particularly in the Army's future lift competition and the emerging eVTOL market [28][30] - The company is adapting its core power expertise to meet the needs of the eVTOL market, which is gaining attention from both established OEMs and startups [30][31] Management's Comments on Operating Environment and Future Outlook - Management highlighted ongoing supply chain struggles as a significant challenge, affecting the ability to meet customer demand [7][10] - Despite supply chain issues, management expressed confidence in achieving revenue growth in the second half of the year, supported by a strong backlog [11][24] - The company is optimistic about the potential for new business wins and the recovery of the aerospace market, particularly in wide-body orders [14][40] Other Important Information - The company recognized $6 million from the AMJP grant as a reduction in cost of goods sold, which helped offset higher wages and material costs [18][20] - Net debt decreased to $113 million from $133 million at the end of the previous fiscal year, with cash flow from operations slightly positive at $316,000 [22] Q&A Session Summary Question: Current production rate for the 737 Max and alignment with Boeing - The company is aligned with Boeing's production rates, currently in the high 20s trending to 30 [35] Question: Improvements in the wide-body market and impact of 787 delays - The slowdown of the 787 has already been absorbed, and there are signs of increased orders for products specific to wide-body applications [36][37] Question: Confidence in increasing sales despite supply chain issues - The company has scheduled work and sourced components, allowing for a ramp in production despite potential supply chain surprises [43][44] Question: Progress in closing the labor gap - The company is making progress in hiring, with an increase in applicant flow, but supply chain issues remain a greater concern [46][47] Question: Scale of potential new projects and their impact on growth - Potential new projects could exceed $500 million over their lifetime, with significant opportunities in both segments [49] Question: Ability to generate free cash flow amid improving sales - The company does not expect to generate significant free cash flow due to inefficiencies in inventory turnover [52][53] Question: Ability to pass on inflationary costs to customers - The company has been able to pass on price increases where possible, with customers generally receptive to the situation [56] Question: Impact of military spending on existing programs - Military spending is expected to increase, particularly for helicopter programs, in light of recent global security concerns [58]