Astronics (ATRO) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights CEO Commentary 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] - 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] - A meaningful increase in the estimate to complete for some projects in the Test business masked restructuring progress[3] Q2 2025 Financial Highlights 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] Consolidated Financial Results Second Quarter 2025 Performance Overview 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] - 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] Gross Profit Analysis 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] - 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] Operating Income Analysis 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] - 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] Net Income and EPS Analysis 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] Adjusted Non-GAAP Financial Measures 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] Bookings and Backlog 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 Aerospace Segment Review 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] - Adjusted Aerospace operating profit was $31.5 million, or 16.3% of sales, up 300 basis points from the comparator quarter[13] Sales by Market 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] Sales by Product Line 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 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] Bookings and Backlog 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 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] - 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] - Test Systems segment operating loss was $6.7 million, compared with an operating loss of $5.3 million in Q2 2024[15] Sales Performance 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 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] - 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] Bookings and Backlog 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 Liquidity and Financing 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] - Long-term debt, net of cash, decreased $4.4 million to $145.8 million at quarter end[18] - Available liquidity at the end of Q2 was $191.3 million[18] 2025 Outlook 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] - Potential incremental impact of tariffs on annual costs of materials is estimated at $15 million to $20 million before mitigation[20] - Approximately 75% of the $645.4 million backlog is expected to be recognized as revenue over the next twelve months[21] - Planned capital expenditures in 2025 are expected to be in the range of $40 million to $50 million[21] Company Information & Disclosures Webcast and Conference Call 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] - Access details for the live call and archived replay (telephonic and webcast) were provided[24] About Astronics Corporation 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] - The company provides innovative technology solutions in power, connectivity, lighting, structures, interiors, and test technologies[25] - Strategy is to increase value by developing technologies and capabilities that provide innovative solutions to targeted markets[25] Safe Harbor Statement 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] - These statements are subject to risks and uncertainties that could cause actual results to differ materially[26] - The Company assumes no obligation to update forward-looking information, except as required by applicable law[26] Use of Non-GAAP Financial Metrics 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] - These measures are not GAAP-compliant and may differ from those used by other companies[27] - Management uses these measures for budget planning and operational/financial decisions, believing they help investors evaluate core performance[27] Financial Statements (Tables) Consolidated Statement of Operations 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 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 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 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 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 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 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 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 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 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 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 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 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 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 |