Astronics (US:ATRO)2026-02-12 19:22Summary of Astronics (NasdaqGS:ATRO) FY Conference Call - February 12, 2026 Company Overview - Industry: Aerospace and Defense - Company: Astronics - Business Segments: - 90% Aerospace - 70% Commercial Transport - 10% Military - 10% Business Jet - 10% Test - Revenue Expectation: Projecting top-line revenue approaching $1 billion for the year, with a record fourth quarter reported [6][16] Core Business Insights - In-Flight Entertainment and Connectivity: Approximately 50% of revenue comes from in-flight entertainment and connectivity products, catering to over 200 airlines globally [6][7] - Aircraft Lighting: Astronics is one of the largest aircraft lighting companies, providing various lighting solutions for both cabin and exterior aircraft needs [7][10] - Flight Critical Electrical Power: Focus on advanced electrical systems for small aircraft, with significant opportunities in military programs like FLRAA [10][11] Financial Performance - Growth Trends: - Experienced a recovery from pandemic lows, with an average growth of 18% until 2025, followed by an 8% growth in 2025 [25][26] - Fourth quarter revenue increased to approximately $240 million, indicating a new baseline for future growth [27][32] - Contribution Margins: Expected contribution margins of 40% on incremental revenue [27][41] Market Dynamics - Backlog and Lead Times: - 75% of revenue expected to ship within a year, with a record backlog despite normalizing lead times [35][48] - Improvements in supply chain, particularly in electronics from Asia, have contributed to reduced lead times [49][53] Retrofit Business - Market Recognition: Airlines increasingly recognize the importance of in-flight entertainment and connectivity, leading to a strong retrofit market [58][62] - Opportunity: Retrofit opportunities are significant due to the shorter life cycles of in-flight entertainment systems compared to traditional aircraft components [75][79] Competitive Landscape - Connectivity Technologies: Astronics is adapting to the evolving landscape of connectivity technologies, including LEO satellites, and can work with various providers [106][121] - Aftermarket Opportunities: Anticipated aftermarket opportunities for the FLRAA program, similar to long-term production runs seen in other military aircraft [159] M&A Strategy - Acquisition Approach: Open to various acquisition strategies, focusing on product line extensions, customer relationships, and market share [166][171] - Current Focus: Prioritizing existing opportunities over new acquisitions, with a more robust balance sheet post-pandemic [171][172] Financial Management - Convertible Debt: Successfully refinanced convertible debt, reducing potential dilution and improving the balance sheet [185][190] - Future Plans: Committed to strengthening the balance sheet and managing dilution risks associated with convertible notes [196][203] Test Systems Segment - U.S. Army Contract: Awaiting production turn-on for a test station contract with the U.S. Army, which has faced delays but is expected to proceed soon [208][220] Conclusion - Astronics is positioned for growth in the aerospace sector, with strong demand for in-flight entertainment, retrofit opportunities, and military contracts. The company is focused on leveraging its existing capabilities while managing financial health and exploring strategic acquisitions.