Summary of Astronics Corp (ATRO) FY Conference Call - August 27, 2025 Company Overview - **Company**: Astronics Corp (ATRO) - **Market Capitalization**: Just above $1 billion [4] - **Stock Structure**: Two classes of stock; Class B shares have 10 votes, common shares have 1 vote [4] - **Ownership**: Strong institutional and insider ownership [4] Business Segments - **Aerospace Segment**: 90% of revenue, primarily from commercial aerospace [5][6] - **Test Segment**: 10% of revenue [5] - **Major Markets**: - Commercial aerospace (largest market) - Defense and government (20% of recent sales) - General aviation (8%) [6] Financial Performance - **Sales Decline**: Revenue dropped from $770 million in 2019 to $445 million during the pandemic [7] - **Recovery**: Strong bookings and backlog near record highs indicate recovery [8] - **Recent Sales**: Q2 sales were approximately $204.7 million, with $193.6 million from the aerospace segment [39] - **Bookings**: Q2 bookings were $177 million, lower due to timing but demand remains robust [40] - **Backlog**: Elevated at $645 million, mostly deliverable within 12 months [41] - **Gross Profit**: Q2 GAAP gross profit was $52.8 million, impacted by an EAC adjustment [42] - **Adjusted Metrics**: Adjusted net income increased to $13.7 million, with adjusted EBITDA rising 25.5% to $25.4 million [45] Strategic Focus Areas 1. **In-Flight Entertainment and Connectivity**: Represents half of the business, with a dominant market share in passenger power systems [10][18] 2. **Aircraft Lighting**: Largest aerospace lighting company, involved in military, commercial, and private aircraft [12] 3. **Flight Critical Electrical Power**: Focus on high-tech systems for smaller aircraft, utilizing electronic circuit breakers [24][28] 4. **Test Systems**: Includes military radio tests and subway systems, with significant contracts in progress [34][36] Key Programs and Opportunities - **FLRAA Program**: Involvement in the US Army's Future Long Range Assault Aircraft, expected to be a significant revenue driver [30][59] - **Boeing and Airbus Production Rates**: Increased production rates for both companies are expected to positively impact revenue [60][62] Challenges and Risks - **Tariffs and Supply Chain**: Current tariffs could impact the business by approximately $20 million, with significant portions coming from Malaysia and China [50][51] - **Rare Earth Materials**: Sourcing challenges for rare earths used in products, but potential redesigns are being explored [53][55] - **Market Conditions**: The test segment has faced challenges due to reduced ridership in transit systems, but long-term opportunities are anticipated [37] Financial Position - **Liquidity**: Total liquidity of approximately $191 million, providing flexibility for growth investments [48] - **CapEx Expectations**: Elevated CapEx of $40 to $50 million for 2025 to support growth initiatives [47] Conclusion - **Outlook**: Positive visibility into the next five years, with expectations for improved performance and value delivery for shareholders [48]

Core Viewpoint - Astronics Corporation (ATRO) shows a significantly improving earnings outlook, making it a strong investment choice as analysts continue to raise earnings estimates for the company [1][2]. Earnings Estimates - Analysts' optimism is reflected in the rising earnings estimates, which historically correlate with stock price movements [2]. - The consensus earnings estimate for the current quarter is $0.40 per share, indicating a +14.3% change from the previous year, with a 17.65% increase in the Zacks Consensus Estimate over the last 30 days [5]. - For the full year, Astronics is expected to earn $1.60 per share, representing a +46.8% change from the prior year, with similar positive trends in estimate revisions [6]. Zacks Rank - Astronics currently holds a Zacks Rank 2 (Buy), indicating promising estimate revisions that can help investors make informed decisions [7]. - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have shown significant outperformance compared to the S&P 500 [7]. Stock Performance - The stock has gained 5.4% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [8].

Core Insights - Gabelli Funds, LLC is hosting the annual Aerospace & Defense Symposium on September 4, 2025, at The Harvard Club in New York City, focusing on strong demand outlook and high barriers to entry in the Aerospace and Defense industry [1] - The symposium will feature top executives from over ten companies, discussing themes such as defense spending, aftermarket opportunities, and M&A potential [1] Agenda Highlights - The event will start at 7:30 AM with a welcome and introduction by the Gabelli Funds Team [2] - Notable companies participating include Astronics Corporation, Textron Inc., Moog Inc., HEICO Corporation, and Elbit Systems Ltd., among others, with scheduled presentations throughout the day [2][3] - The agenda includes one-on-one meetings with management, providing attendees with networking opportunities [1]

Core Viewpoint - The sustainability of a trend is crucial for successful short-term investing, and confirming fundamental factors is essential to maintain momentum in stocks [1][2]. Group 1: Trend Analysis - Timing entries into a trend significantly impacts investment success, as trends can reverse before exiting a trade, leading to potential losses [1][2]. - A predefined screening strategy, "Recent Price Strength," helps identify stocks with strong fundamentals that can sustain their upward momentum [3]. Group 2: Stock Performance - Astronics Corporation (ATRO) has shown a solid price increase of 16.1% over the past 12 weeks, indicating investor confidence in its potential upside [4]. - The stock has also maintained a price increase of 1.3% over the last four weeks, suggesting that the upward trend is still intact [5]. - ATRO is currently trading at 90.2% of its 52-week high-low range, indicating it may be on the verge of a breakout [5]. Group 3: Fundamental Strength - ATRO holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. - The Zacks Rank system has a strong historical performance, with Rank 1 stocks averaging a +25% annual return since 1988 [7]. Group 4: Investment Opportunities - In addition to ATRO, there are several other stocks that meet the criteria of the "Recent Price Strength" screen, providing additional investment opportunities [8]. - The Zacks Premium Screens offer over 45 strategically created options to help investors find winning stock picks based on their personal investing styles [8].

Core Viewpoint - Astronics Corporation (ATRO) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it focuses on earnings estimate revisions, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - The increase in earnings estimates and the Zacks rating upgrade indicate an improvement in Astronics' underlying business, which is expected to drive the stock price higher [4][9]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Astronics is projected to earn $1.60 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 6.7% over the past three months [7]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6][8]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [8][9].

Group 1 - Gabelli Funds, LLC is hosting the annual Aerospace & Defense Symposium on September 4, 2025, at The Harvard Club in New York City, focusing on strong demand outlook and high barriers to entry in the industry [1] - The symposium will feature top executives from over ten companies, discussing themes such as large aftermarket opportunities, growth exceeding GDP, defense spending, and M&A potential [1] - Attendees will have the opportunity for one-on-one meetings with management, enhancing networking and investment insights [1] Group 2 - Featured companies at the symposium include AIRO Group Holdings, Elbit Systems, Albany International, Graham Corporation, and several others, indicating a diverse representation within the Aerospace and Defense sector [2] - The event is set to start at 8:30 am, providing a structured schedule for discussions and networking [3]

Group 1 - Astronics Corporation reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, and showing a significant increase from $0.04 per share a year ago, representing an earnings surprise of +15.15% [1] - The company posted revenues of $204.68 million for the quarter ended June 2025, which was slightly below the Zacks Consensus Estimate by 1.17%, but an increase from $198.11 million year-over-year [2] - Astronics has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Group 2 - The stock has gained approximately 124.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.1% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors to assess future stock performance [4] - The current consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $209.49 million, and for the current fiscal year, it is $1.50 on revenues of $846.29 million [7] Group 3 - The Aerospace - Defense Equipment industry, to which Astronics belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - The correlation between near-term stock movements and trends in earnings estimate revisions is strong, suggesting that investors should monitor these revisions closely [5][6]

Financial Data and Key Metrics Changes - Sales for the second quarter were just under $205 million, up 3.3% from the previous year, driven by record sales in the Aerospace segment, which offset lower Test segment sales [5][6] - Year-to-date sales reached $411 million, a 7.2% increase from $383 million last year, indicating solid sales momentum [6] - Adjusted EBITDA for the quarter was $25.4 million, or 12.4% of sales, reflecting improved profitability from higher volume and productivity in the Aerospace segment [16][17] - GAAP earnings per share remained unchanged at $0.04, while non-GAAP adjusted EPS nearly doubled to $0.38 from $0.20 in the prior year [16] Business Line Data and Key Metrics Changes - Aerospace segment sales reached a record $193.6 million, a 9% increase year-over-year, primarily driven by a 13% increase in commercial transport sales and an 11% increase in military sales [17] - The Test segment reported sales of $11.1 million, significantly impacted by a $6.4 million adjustment related to estimated costs at completion of certain projects, resulting in an adjusted operating loss of $6.6 million [18] Market Data and Key Metrics Changes - The market demand for Aerospace products remains strong, with a positive book-to-bill ratio of 1.11 for 2025 and 1.02 for the last twelve months [7] - The company expects a strong second half of 2025, driven by increasing passenger traffic, aircraft utilization, and adoption of modern passenger entertainment systems [25] Company Strategy and Development Direction - The company is focusing on simplifying its operations by exiting non-core product lines, which resulted in $6.2 million of restructuring charges [10] - A small acquisition in the Aerospace segment, Envoy Aerospace, is expected to enhance competitive differentiation by providing FAA certification approval authority [13] - The company is committed to disciplined capital allocation and continuous improvement to drive further margin expansion [24] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong tailwinds in the Aerospace industry and expects solid improvement in the Test business based on recent bookings [25] - The company is increasing its 2025 revenue guidance to $840 million to $860 million, reflecting a 6.9% year-over-year increase at the midpoint [26] - Management acknowledged challenges related to tariffs but believes mitigation efforts can significantly reduce the impact [23][39] Other Important Information - The company closed eight facilities in recent years to reduce its footprint and simplify operations [11] - Capital expenditures for the quarter were low at $4.7 million, but the company expects total CapEx for the year to be in the range of $40 million to $50 million [22] Q&A Session Summary Question: Drivers of Aerospace Momentum and Test Business Outlook - Management highlighted production rates and strong demand in both commercial and military sectors as key drivers for Aerospace momentum, while the Test business is expected to improve despite delays in the US Army radio test program [28][30][31] Question: Margin Expectations for the Year - Management indicated that while tariffs present an unknown, they are optimistic about maintaining adjusted operating margins above 16% in the Aerospace segment, supported by pricing increases and volume growth [35][39] Question: Strategic Alternatives for the Test Segment - Management stated there are no immediate plans to evaluate strategic alternatives for the Test segment, focusing instead on improving performance and outlook for the business [54][55]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Peter J. Gundermann highlighted a solid Q2 2025 with revenue stabilizing above **$200 million**, strategic actions to improve future earnings by divesting low-margin/low-growth product lines, and a significant adjustment to estimated costs for Test business projects, expressing confidence in the company's future positioning due to supportive market conditions and simplification efforts - Revenue stabilized above **$200 million** per quarter, indicating continued progress[3](index=3&type=chunk) - Strategic actions taken to improve future earnings power include stepping away from low-margin and low-growth product lines after a company-wide portfolio review[3](index=3&type=chunk) - A meaningful increase in the estimate to complete for some projects in the Test business masked restructuring progress[3](index=3&type=chunk) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Astronics Corporation reported a **3.3%** increase in Q2 sales to **$204.7 million**, driven by record Aerospace segment growth of **9.4%** to **$193.6 million**, with net income at **$1.3 million** (**$0.04**/diluted share) and adjusted EBITDA at **$25.4 million** (**12.4%** of sales), also raising the lower end of its 2025 revenue guidance Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :----- | :------ | :------ | :------- | | Sales | $204.7 million | $198.1 million | 3.3% | | Aerospace Sales | $193.6 million | N/A | 9.4% | | Net Income | $1.3 million | N/A | N/A | | Diluted EPS | $0.04 | N/A | N/A | | Adjusted EBITDA | $25.4 million | N/A | N/A | | Adjusted EBITDA Margin | 12.4% | N/A | N/A | - Raised lower end of revenue guidance to range of **$840 million to $860 million** for 2025[4](index=4&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) [Second Quarter 2025 Performance Overview](index=2&type=section&id=Second%20Quarter%202025%20Results) Consolidated sales for Q2 2025 increased **3.3%** to **$204.7 million**, primarily due to **9.4%** growth in the Aerospace segment, which offset a decline in Test Systems sales, though revisions to estimated costs for long-term mass transit contracts in Test Systems negatively impacted consolidated sales by **$6.4 million** Consolidated Sales Performance (Three Months Ended) | Metric | June 28, 2025 (in thousands of dollars) | June 29, 2024 (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Sales | $204,678 | $198,114 | 3.3% | - Aerospace sales increased **$16.7 million**, or **9.4%**, offsetting a **$10.1 million** decline in Test Systems sales[7](index=7&type=chunk) - Consolidated sales were negatively impacted by **$6.4 million** due to revisions of estimated costs to complete certain long-term mass transit contracts in the Test Systems segment[7](index=7&type=chunk) [Gross Profit Analysis](index=2&type=section&id=Gross%20Profit%20Analysis) Gross profit decreased by **$2.7 million** to **$52.8 million** (**25.8%** of sales) in Q2 2025, primarily due to a **$6.9 million** impact from revisions of estimated costs for Test Systems contracts and **$5.8 million** in charges from Aerospace simplification initiatives, though adjusted gross profit improved to **$59.7 million** (**29.2%** of sales) due to higher volume and productivity Consolidated Gross Profit Performance (Three Months Ended) | Metric | June 28, 2025 (in thousands of dollars) | June 29, 2024 (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Gross Profit | $52,827 | $55,568 | (4.9)% | | Gross Margin | 25.8% | 28.0% | (2.2) ppts | - Gross profit was negatively impacted by a **$6.9 million** revision of estimated costs for Test Systems contracts and **$5.8 million** in charges for Aerospace simplification initiatives[8](index=8&type=chunk) - Adjusted gross profit improved to **$59.7 million** (**29.2%** of sales) from **28.0%** in the prior year, driven by higher volume and improving productivity[8](index=8&type=chunk) [Operating Income Analysis](index=2&type=section&id=Operating%20Income%20Analysis) Consolidated operating income decreased by **$2.8 million** to **$4.8 million** (**2.3%** of sales) in Q2 2025, largely impacted by a **$6.9 million** revision of estimated costs, while adjusted operating income, excluding these impacts, increased significantly to **$18.3 million** (**8.9%** of sales) from **$12.6 million** (**6.4%** of sales) in the prior year, reflecting margin gains from increased volume and productivity in Aerospace, and cost rationalization in Test Systems Consolidated Operating Income Performance (Three Months Ended) | Metric | June 28, 2025 (in thousands of dollars) | June 29, 2024 (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Income from Operations | $4,758 | $7,550 | (37.0)% | | Operating Margin % | 2.3% | 3.8% | (1.5) ppts | - The revision of estimated costs had a **$6.9 million** impact on operating income[9](index=9&type=chunk) - Adjusted operating income increased to **$18.3 million** (**8.9%** of sales) from **$12.6 million** (**6.4%** of sales) in Q2 2024, reflecting margin gain on increased volume and improved productivity in Aerospace, and realized savings from Test Systems cost rationalization[9](index=9&type=chunk) [Net Income and EPS Analysis](index=2&type=section&id=Net%20Income%20and%20EPS%20Analysis) Consolidated net income for Q2 2025 was **$1.3 million** (**$0.04** per diluted share), a slight decrease from **$1.5 million** in the prior year, though adjusted net income significantly increased by **$6.5 million** to **$13.7 million** (**$0.38** per diluted share), driven by stronger profitability and lower interest expense due to refinancing Consolidated Net Income and EPS (Three Months Ended) | Metric | June 28, 2025 (in thousands of dollars) | June 29, 2024 (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Net Income (Loss) | $1,314 | $1,533 | (14.3)% | | Diluted EPS | $0.04 | $0.04 | 0.0% | - Adjusted net income for Q2 2025 increased **$6.5 million** to **$13.7 million**, or **$0.38** per diluted share, due to stronger profitability and lower interest expense[11](index=11&type=chunk) [Adjusted Non-GAAP Financial Measures](index=2&type=section&id=Adjusted%20Non-GAAP%20Financial%20Measures) Consolidated adjusted EBITDA increased **25.5%** to **$25.4 million**, representing **12.4%** of consolidated sales, reflecting improved core operating performance despite GAAP figures being impacted by specific charges Consolidated Adjusted EBITDA (Three Months Ended) | Metric | June 28, 2025 (in thousands of dollars) | June 29, 2024 (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Adjusted EBITDA | $25,408 | $20,243 | 25.5% | | Adjusted EBITDA Margin % | 12.4% | 10.2% | 2.2 ppts | - Adjusted EBITDA increased **25.5%** to **$25.4 million**, reaching **12.4%** of consolidated sales[11](index=11&type=chunk) [Bookings and Backlog](index=3&type=section&id=Bookings%20and%20Backlog) Q2 2025 bookings were **$177.0 million**, resulting in a book-to-bill ratio of **0.86:1**, with trailing twelve-month bookings totaling **$841.8 million** and a book-to-bill ratio of **1.02:1**, and backlog at quarter-end standing at **$645.4 million** Consolidated Bookings and Backlog | Metric | Q2 2025 | Trailing Twelve Months | | :----- | :------ | :--------------------- | | Bookings | $177.0 million | $841.8 million | | Book-to-bill ratio | 0.86:1 | 1.02:1 | | Backlog | $645.4 million | N/A | [Segment Performance](index=3&type=section&id=Segment%20Performance) [Aerospace Segment Review](index=3&type=section&id=Aerospace%20Segment%20Review) The Aerospace segment achieved record sales of **$193.6 million** in Q2 2025, a **9.4%** increase, driven by strong demand in Commercial Transport and Military Aircraft markets, and despite a decrease in GAAP operating profit due to one-time charges, adjusted operating profit significantly improved to **16.3%** of sales - Record Aerospace segment sales of **$193.6 million**, an increase of **9.4%**[12](index=12&type=chunk) - Adjusted Aerospace operating profit was **$31.5 million**, or **16.3%** of sales, up **300 basis points** from the comparator quarter[13](index=13&type=chunk) [Sales by Market](index=3&type=section&id=Aerospace%20Sales%20by%20Market) Aerospace Sales by Market (Three Months Ended) | Market | Q2 2025 Sales (in thousands of dollars) | Q2 2024 Sales (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Commercial Transport | $145,573 | $128,399 | 13.4% | | Military Aircraft | $27,433 | $24,781 | 10.7% | | General Aviation | $18,370 | $19,015 | (3.4)% | - Growth in Commercial Transport was primarily related to increased demand by airlines for cabin power and inflight entertainment & connectivity (IFEC) products[12](index=12&type=chunk) [Sales by Product Line](index=11&type=section&id=Aerospace%20Sales%20by%20Product%20Line) Aerospace Sales by Product Line (Three Months Ended) | Product Line | Q2 2025 Sales (in thousands of dollars) | Q2 2024 Sales (in thousands of dollars) | % Change | | :----------- | :-------------------------------------- | :-------------------------------------- | :------- | | Electrical Power & Motion | $95,166 | $90,328 | 5.4% | | Lighting & Safety | $52,999 | $46,454 | 14.1% | | Avionics | $37,050 | $28,971 | 27.9% | [Operating Profit](index=3&type=section&id=Aerospace%20Operating%20Profit) Aerospace Operating Profit (Three Months Ended) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Operating Profit | $18.0 million | $19.3 million | | Operating Margin | 9.3% | 10.9% | - Operating profit decreased due to a **$6.2 million** charge for simplification initiatives, a **$3.5 million** legal fee reimbursement charge, and a **$1.0 million** warranty expense true-up[13](index=13&type=chunk) [Bookings and Backlog](index=3&type=section&id=Aerospace%20Bookings%20and%20Backlog) Aerospace Bookings and Backlog (Q2 2025) | Metric | Q2 2025 | | :----- | :------ | | Bookings | $150.6 million | | Book-to-bill ratio | 0.78:1 | | Backlog | $570.9 million | [Test Systems Segment Review](index=3&type=section&id=Test%20Systems%20Segment%20Review) The Test Systems segment experienced a significant sales decline of **$10.1 million** to **$11.1 million** in Q2 2025, primarily due to a **$6.4 million** negative impact from revisions of estimated costs for long-term mass transit contracts, reporting an increased operating loss of **$6.7 million**, which was detrimentally impacted by a **$6.9 million** adjustment to estimated costs - Test Systems segment sales were **$11.1 million**, down **$10.1 million** from the prior-year quarter[14](index=14&type=chunk) - Segment sales were negatively impacted by **$6.4 million** due to revisions of estimated costs to complete certain long-term mass transit Test contracts[14](index=14&type=chunk) - Test Systems segment operating loss was **$6.7 million**, compared with an operating loss of **$5.3 million** in Q2 2024[15](index=15&type=chunk) [Sales Performance](index=3&type=section&id=Test%20Systems%20Sales%20Performance) Test Systems Sales (Three Months Ended) | Metric | Q2 2025 Sales (in thousands of dollars) | Q2 2024 Sales (in thousands of dollars) | % Change | | :----- | :-------------------------------------- | :-------------------------------------- | :------- | | Test Systems Sales | $11,052 | $21,171 | (47.8)% | [Operating Loss](index=4&type=section&id=Test%20Systems%20Operating%20Loss) Test Systems Operating Loss (Three Months Ended) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Operating Loss | $6.7 million | $5.3 million | - The revisions to estimated costs to complete had a **$6.9 million** detrimental impact to operating income, masking savings from restructuring activities[15](index=15&type=chunk) - The second half of 2025 is expected to improve for revenue and operating income despite a six-to-eight-week delay in a U.S. Army radio test program[15](index=15&type=chunk) [Bookings and Backlog](index=4&type=section&id=Test%20Systems%20Bookings%20and%20Backlog) Test Systems Bookings and Backlog (Q2 2025) | Metric | Q2 2025 | | :----- | :------ | | Bookings | $26.4 million | | Book-to-bill ratio | 2.39:1 | | Backlog | $74.5 million | [Financial Position & Outlook](index=4&type=section&id=Financial%20Position%20%26%20Outlook) [Liquidity and Financing](index=4&type=section&id=Liquidity%20and%20Financing) Cash used by operations in Q2 2025 was **$7.6 million**, including **$21.6 million** for patent dispute payments and **$12.0 million** in tax payments, with capital expenditures at **$4.6 million**, long-term debt (net of cash) decreasing by **$4.4 million** to **$145.8 million**, and **$191.3 million** in available liquidity maintained - Cash used by operations in Q2 2025 was **$7.6 million**, including **$21.6 million** for UK patent dispute payments and **$12.0 million** in net income tax payments[18](index=18&type=chunk) - Long-term debt, net of cash, decreased **$4.4 million** to **$145.8 million** at quarter end[18](index=18&type=chunk) - Available liquidity at the end of Q2 was **$191.3 million**[18](index=18&type=chunk) [2025 Outlook](index=4&type=section&id=2025%20Outlook) Astronics raised the lower end of its 2025 revenue guidance to **$840 million to $860 million**, with the midpoint representing a **6.9%** increase over 2024 sales, anticipating potential tariff impacts of **$15 million to $20 million** on annual material costs but expecting significant mitigation, and projecting approximately **75%** of the **$645.4 million** backlog to be recognized as revenue in the next twelve months, with planned capital expenditures between **$40 million and $50 million** - Raised 2025 revenue guidance to **$840 million to $860 million**, with the midpoint representing a **6.9%** increase over 2024 sales[19](index=19&type=chunk) - Potential incremental impact of tariffs on annual costs of materials is estimated at **$15 million to $20 million** before mitigation[20](index=20&type=chunk) - Approximately **75%** of the **$645.4 million** backlog is expected to be recognized as revenue over the next twelve months[21](index=21&type=chunk) - Planned capital expenditures in 2025 are expected to be in the range of **$40 million to $50 million**[21](index=21&type=chunk) [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) [Webcast and Conference Call](index=5&type=section&id=Second%20Quarter%202025%20Webcast%20and%20Conference%20Call) Astronics Corporation hosted a teleconference on August 6, 2025, at 4:45 p.m. ET to discuss financial and operating results, corporate strategy, and outlook, with replay information for both telephonic and webcast access provided - A teleconference was held on August 6, 2025, at 4:45 p.m. ET to review financial and operating results, corporate strategy, and outlook[23](index=23&type=chunk) - Access details for the live call and archived replay (telephonic and webcast) were provided[24](index=24&type=chunk) [About Astronics Corporation](index=5&type=section&id=About%20Astronics%20Corporation) Astronics Corporation (Nasdaq: ATRO) is a leading supplier of advanced technology solutions to the global aerospace, defense, and other mission-critical industries, providing innovative solutions in power, connectivity, lighting, structures, interiors, and test technologies for over 50 years, aiming to increase value by developing innovative solutions for its target markets - Astronics Corporation (Nasdaq: ATRO) serves the global aerospace, defense, and other mission-critical industries[25](index=25&type=chunk) - The company provides innovative technology solutions in power, connectivity, lighting, structures, interiors, and test technologies[25](index=25&type=chunk) - Strategy is to increase value by developing technologies and capabilities that provide innovative solutions to targeted markets[25](index=25&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) This section clarifies that the news release contains forward-looking statements, identifiable by terms like 'expect,' 'anticipate,' or 'plan,' which are subject to risks and uncertainties that could cause actual results to differ materially, and the company disclaims any obligation to update these statements, except as required by law - The news release contains forward-looking statements, identifiable by specific keywords, regarding future events and financial expectations[26](index=26&type=chunk) - These statements are subject to risks and uncertainties that could cause actual results to differ materially[26](index=26&type=chunk) - The Company assumes no obligation to update forward-looking information, except as required by applicable law[26](index=26&type=chunk) [Use of Non-GAAP Financial Metrics](index=6&type=section&id=Use%20of%20Non-GAAP%20Financial%20Metrics) Astronics provides Adjusted Non-GAAP financial measures as supplementary information to GAAP results, which management uses for internal review, budget planning, and operational decisions, believing they help investors evaluate core operating and financial performance consistent with management's perspective - Adjusted Non-GAAP information is provided as additional information to GAAP results[27](index=27&type=chunk) - These measures are not GAAP-compliant and may differ from those used by other companies[27](index=27&type=chunk) - Management uses these measures for budget planning and operational/financial decisions, believing they help investors evaluate core performance[27](index=27&type=chunk) [Financial Statements (Tables)](index=7&type=section&id=Financial%20Statements%20(Tables)) [Consolidated Statement of Operations](index=7&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS%20DATA) Presents the consolidated income statement data for the three and six months ended June 28, 2025, and June 29, 2024, detailing sales, cost of products sold, gross profit, operating expenses, income from operations, interest expense, and net income Consolidated Statement of Operations Data | Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Sales | $204,678 | $198,114 | $410,614 | $383,188 | | Gross profit | $52,827 | $55,568 | $113,676 | $103,082 | | Income from operations | $4,758 | $7,550 | $17,895 | $9,216 | | Net income (loss) | $1,314 | $1,533 | $10,842 | $(1,645) | | Diluted earnings (loss) per share | $0.04 | $0.04 | $0.30 | $(0.05) | [Consolidated Balance Sheets](index=8&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Provides a snapshot of the company's financial position as of June 28, 2025, and December 31, 2024, including assets, liabilities, and shareholders' equity Consolidated Balance Sheets Data | Metric | 6/28/2025 (in thousands of dollars) | 12/31/2024 (in thousands of dollars) | | :-------------------------------- | :---------------------------------- | :----------------------------------- | | Total current assets | $418,709 | $426,172 | | Total assets | $646,688 | $648,764 | | Total current liabilities | $137,883 | $156,152 | | Long-term debt | $159,276 | $168,669 | | Total liabilities | $375,117 | $392,667 | | Total shareholders' equity | $271,571 | $256,097 | [Consolidated Cash Flows](index=9&type=section&id=CONSOLIDATED%20CASH%20FLOWS%20DATA) Details the cash flows from operating, investing, and financing activities for the six months ended June 28, 2025, and June 29, 2024, showing a net cash provided by operating activities in 2025 compared to cash used in 2024 Consolidated Cash Flows Data (Six Months Ended) | Metric | 6/28/2025 (in thousands of dollars) | 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | | Net cash provided (used) by operating activities | $13,008 | $(4,223) | | Net cash used by investing activities | $(6,710) | $(3,394) | | Net cash (used) provided by financing activities | $(12,546) | $805 | | Cash and cash equivalents and restricted cash at end of period | $13,460 | $4,392 | [Segment Sales and Profit](index=10&type=section&id=SEGMENT%20SALES%20AND%20PROFIT) Presents sales, gross profit, and operating profit broken down by the Aerospace and Test Systems segments for the three and six months ended June 28, 2025, and June 29, 2024 Segment Sales and Profit Data | Segment/Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | **Sales** | | | | | | Aerospace | $193,626 | $176,943 | $385,001 | $340,581 | | Test Systems | $11,052 | $21,171 | $25,613 | $42,607 | | **Gross Profit** | | | | | | Aerospace | $54,891 | $54,019 | $113,374 | $98,400 | | Test Systems | $(2,064) | $1,549 | $302 | $4,682 | | **Operating Profit (Loss)** | | | | | | Aerospace | $18,039 | $19,280 | $40,303 | $31,377 | | Test Systems | $(6,710) | $(5,336) | $(8,933) | $(8,415) | [Sales by Market](index=11&type=section&id=SALES%20BY%20MARKET) Details sales figures for the Aerospace segment across Commercial Transport, Military Aircraft, and General Aviation markets, and for the Test Systems segment in Government & Defense, for both three and six months ended June 28, 2025, and June 29, 2024 Sales by Market Data | Market | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | % Change (3M) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | % Change (6M) | 2025 YTD % of Sales | | :----------------- | :-------------------------------------- | :-------------------------------------- | :------------ | :-------------------------------------- | :-------------------------------------- | :------------ | :------------------ | | Commercial Transport | $145,573 | $128,399 | 13.4% | $283,115 | $249,829 | 13.3% | 69.0% | | Military Aircraft | $27,433 | $24,781 | 10.7% | $60,696 | $41,860 | 45.0% | 14.8% | | General Aviation | $18,370 | $19,015 | (3.4)% | $33,613 | $38,566 | (12.8)% | 8.2% | | Government & Defense (Test Systems) | $11,052 | $21,171 | (47.8)% | $25,613 | $42,607 | (39.9)% | 6.2% | [Sales by Product Line](index=11&type=section&id=SALES%20BY%20PRODUCT%20LINE) Provides a breakdown of sales by product line within the Aerospace segment (Electrical Power & Motion, Lighting & Safety, Avionics, Systems Certification, Structures, Other) and for the Test Systems segment, for the three and six months ended June 28, 2025, and June 29, 2024 Sales by Product Line Data | Product Line | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | % Change (3M) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | % Change (6M) | 2025 YTD % of Sales | | :------------------------ | :-------------------------------------- | :-------------------------------------- | :------------ | :-------------------------------------- | :-------------------------------------- | :------------ | :------------------ | | Electrical Power & Motion | $95,166 | $90,328 | 5.4% | $195,246 | $173,452 | 12.6% | 47.7% | | Lighting & Safety | $52,999 | $46,454 | 14.1% | $102,670 | $88,241 | 16.4% | 25.0% | | Avionics | $37,050 | $28,971 | 27.9% | $65,284 | $54,565 | 19.6% | 15.9% | | Test Systems Segment | $11,052 | $21,171 | (47.8)% | $25,613 | $42,607 | (39.9)% | 6.2% | [Order and Backlog Trend](index=12&type=section&id=ORDER%20AND%20BACKLOG%20TREND) Presents quarterly sales, bookings, and backlog data for the Aerospace and Test Systems segments, as well as consolidated totals, for Q3 2024 through Q2 2025, including trailing twelve-month figures and book-to-bill ratios Order and Backlog Trend Data | Metric | Q3 2024 (in thousands of dollars) | Q4 2024 (in thousands of dollars) | Q1 2025 (in thousands of dollars) | Q2 2025 (in thousands of dollars) | Trailing Twelve Months (in thousands of dollars) | | :----------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------------------------------------- | | Total Sales | $203,698 | $208,540 | $205,936 | $204,678 | $822,852 | | Total Bookings | $189,166 | $195,904 | $279,726 | $177,026 | $841,822 | | Total Backlog | $611,865 | $599,229 | $673,019 | $645,367 | N/A | | Total Book:Bill Ratio | 0.93 | 0.94 | 1.36 | 0.86 | 1.02 | [Reconciliation of Non-GAAP Financial Measures](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of GAAP financial measures to various Adjusted Non-GAAP financial measures, including Adjusted EBITDA, Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Segment Operating Profit, for the reported periods, with these adjustments accounting for specific non-recurring or non-operational items to provide a clearer view of core performance [Adjusted EBITDA Reconciliation](index=13&type=section&id=RECONCILIATION%20OF%20NET%20INCOME%20(LOSS)%20TO%20ADJUSTED%20EBITDA) Reconciliation of Net Income (Loss) to Adjusted EBITDA | Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $1,314 | $1,533 | $10,842 | $(1,645) | | Add back: Interest expense | $3,097 | $5,856 | $6,247 | $11,615 | | Add back: Income tax expense (benefit) | $537 | $(274) | $1,183 | $(1,625) | | Add back: Depreciation and amortization expense | $5,378 | $6,203 | $10,966 | $12,531 | | Add back: Simplification and restructuring initiatives | $6,229 | $657 | $6,508 | $774 | | Add back: Legal reserve, settlements and recoveries | $3,504 | — | $9,732 | — | | Add back: Litigation-related legal expenses | $2,753 | $4,428 | $5,728 | $8,122 | | Add back: Warranty reserve | $1,039 | — | $1,039 | — | | Adjusted EBITDA | $25,408 | $20,243 | $56,147 | $37,868 | | Adjusted EBITDA margin % | 12.4% | 10.2% | 13.7% | 9.9% | [Adjusted Gross Profit Reconciliation](index=14&type=section&id=RECONCILIATION%20OF%20GROSS%20PROFIT%20TO%20ADJUSTED%20GROSS%20PROFIT) Reconciliation of Gross Profit to Adjusted Gross Profit | Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Gross profit | $52,827 | $55,568 | $113,676 | $103,082 | | Add back: Simplification and restructuring initiatives | $5,807 | — | $5,807 | — | | Add back: Warranty reserve | $1,039 | — | $1,039 | — | | Adjusted gross profit | $59,673 | $55,568 | $120,522 | $103,082 | | Adjusted gross margin | 29.2% | 28.0% | 29.4% | 26.9% | [Adjusted Operating Income Reconciliation](index=15&type=section&id=RECONCILIATION%20OF%20OPERATING%20INCOME%20TO%20ADJUSTED%20OPERATING%20INCOME) Reconciliation of Operating Income to Adjusted Operating Income | Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Income from operations | $4,758 | $7,550 | $17,895 | $9,216 | | Add back: Simplification and restructuring initiatives | $6,229 | $657 | $6,508 | $774 | | Add back: Legal reserve, settlements and recoveries | $3,504 | — | $9,732 | — | | Add back: Litigation-related legal expenses | $2,753 | $4,428 | $5,728 | $8,122 | | Add back: Warranty reserve | $1,039 | — | $1,039 | — | | Adjusted operating income | $18,283 | $12,635 | $40,902 | $18,112 | | Adjusted operating margin | 8.9% | 6.4% | 10.0% | 4.7% | [Adjusted Net Income and EPS Reconciliation](index=16&type=section&id=RECONCILIATION%20OF%20NET%20INCOME%20(LOSS)%20AND%20DILUTED%20EARNINGS%20(LOSS)%20PER%20SHARE%20TO%20ADJUSTED%20NET%20INCOME%20AND%20ADJUSTED%20DILUTED%20EARNINGS%20PER%20SHARE) Reconciliation of Net Income (Loss) and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS | Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $1,314 | $1,533 | $10,842 | $(1,645) | | Add back: Amortization of intangibles | $2,945 | $3,269 | $5,920 | $6,539 | | Add back: Simplification and restructuring initiatives | $6,229 | $657 | $6,508 | $774 | | Add back: Legal reserve, settlements and recoveries | $3,504 | — | $9,732 | — | | Add back: Litigation-related legal expenses | $2,753 | $4,428 | $5,728 | $8,122 | | Add back: Warranty reserve | $1,039 | — | $1,039 | — | | Normalize tax rate | $(4,043) | $(2,677) | $(9,055) | $(4,666) | | Adjusted net income | $13,741 | $7,210 | $30,714 | $9,124 | | Adjusted diluted earnings per share | $0.38 | $0.20 | $0.85 | $0.26 | [Adjusted Segment Operating Profit Reconciliation](index=17&type=section&id=RECONCILIATION%20OF%20SEGMENT%20OPERATING%20PROFIT%20TO%20ADJUSTED%20SEGMENT%20OPERATING%20PROFIT) Reconciliation of Segment Operating Profit to Adjusted Segment Operating Profit | Segment/Metric | Three Months Ended 6/28/2025 (in thousands of dollars) | Three Months Ended 6/29/2024 (in thousands of dollars) | Six Months Ended 6/28/2025 (in thousands of dollars) | Six Months Ended 6/29/2024 (in thousands of dollars) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | **Aerospace** | | | | | | Aerospace operating profit | $18,039 | $19,280 | $40,303 | $31,377 | | Adjusted Aerospace operating profit | $31,487 | $23,502 | $62,502 | $39,133 | | Adjusted Aerospace margin | 16.3% | 13.3% | 16.2% | 11.5% | | **Test Systems** | | | | | | Test Systems operating loss | $(6,710) | $(5,336) | $(8,933) | $(8,415) | | Adjusted Test Systems operating loss | $(6,633) | $(4,473) | $(8,125) | $(7,275) | | Adjusted Test Systems margin | (60.0)% | (21.1)% | (31.7)% | (17.1)% | [Supplemental Prior Period Adjusted EBITDA](index=18&type=section&id=Supplemental%20Prior%20Period%20Tables) Reconciliation of Net Income (Loss) to Adjusted EBITDA (Trailing Twelve Months Ended 6/28/2025) | Metric | Q3 2024 (in thousands of dollars) | Q4 2024 (in thousands of dollars) | Q1 2025 (in thousands of dollars) | Q2 2025 (in thousands of dollars) | Trailing Twelve Months (6/28/2025) (in thousands of dollars) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------------------- | | Net income (loss) | $(11,738) | $(2,832) | $9,528 | $1,314 | $(3,728) | | Adjusted EBITDA | $27,059 | $31,539 | $30,739 | $25,408 | $114,745 | Reconciliation of Net Income (Loss) to Adjusted EBITDA (Trailing Twelve Months Ended 6/29/2024) | Metric | Q3 2023 (in thousands of dollars) | Q4 2023 (in thousands of dollars) | Q1 2024 (in thousands of dollars) | Q2 2024 (in thousands of dollars) | Trailing Twelve Months (6/29/2024) (in thousands of dollars) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------------------- | | Net income (loss) | $(16,983) | $6,976 | $(3,178) | $1,533 | $(11,652) | | Adjusted EBITDA | $8,827 | $24,830 | $17,625 | $20,243 | $71,525 |

Core Viewpoint - Astronics Corporation (ATRO) is expected to report second-quarter 2025 results on August 6, with projected revenues of $207.1 million, reflecting a 4.5% year-over-year growth, and earnings estimated at 33 cents per share, indicating a significant 725% increase from the previous year's 4 cents [1][4]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for revenues is $207.1 million, which represents a 4.5% increase from the same quarter last year [1][4]. - The earnings consensus is set at 33 cents per share, suggesting a substantial improvement of 725% from the prior year's figure of 4 cents [1][4]. Segment Performance - The Aerospace segment is anticipated to drive sales growth, with expected sales of $190.2 million, up 7.5% year-over-year, due to increased demand for cabin power, in-flight entertainment, and military aircraft products [5][6]. - The Test Systems unit is projected to see a decline in sales, estimated at $16.9 million, down 20% from the previous year, attributed to delays and cost challenges [7]. Historical Performance - Astronics has a strong earnings surprise history, beating the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 55.64% [2][3]. Stock Performance and Valuation - ATRO's stock has increased by 84% over the past six months, outperforming the Zacks Aerospace-Defense Equipment industry's gain of 20.5% and the broader sector's rise of 19% [10]. - The forward 12-month price-to-earnings (P/E) ratio for ATRO is 20.21X, which is significantly lower than the peer group's average of 49.78X, indicating a more attractive valuation relative to expected earnings growth [11][14]. Industry Context - The aerospace and defense industry presents substantial growth opportunities, driven by expanding commercial air traffic and a solid presence in the defense sector, which provides a diversified cushion against crises [16]. - However, challenges such as supply chain pressures, raw material costs, and labor availability persist, which could impact performance [15][17].