Astronics (US:ATRO)2023-03-03 03:22Financial 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]