Astronics Corporation (NASDAQ:ATRO), a leading supplier of
advanced technologies and products to the global aerospace,
defense, and semiconductor industries, today reported financial
results for the three and nine months ended September 30,
2017. Earnings per share for prior periods are adjusted for the 3
for 20 (15%) distribution of Class B Stock for shareholders of
record on October 11, 2016. Results include the acquisition of
Custom Control Concepts (“CCC”) on April 3, 2017.
Three Months Ended Nine
Months Ended
September30, 2017
October
1,2016
%Change
September30, 2017
October
1,2016
%Change
Sales $ 149,636 $ 155,099 (3.5 )% $ 453,146 $ 479,055
(5.4 )%
Gross profit $ 32,493 $ 38,663 (16.0 )% $ 104,960 $
122,981 (14.7 )% Gross margin 21.7 % 24.9 % 23.2 % 25.7 %
SG&A $ 22,410 $ 21,138 6.0 % $ 66,504 $ 65,246 1.9 %
SG&A percent of sales 15.0 % 13.6 % 14.7 % 13.6 %
Income
from Operations $ 10,083 $ 17,525 (42.5 )% $ 38,456 $ 57,735
(33.4 )% Operating margin % 6.7 % 11.3 % 8.5 % 12.1 %
Net
Income $ 6,060 $ 12,074 (49.8 )% $ 25,332 $ 38,539 (34.3 )% Net
Income % 4.0 % 7.8 % 5.6 % 8.0 %
Peter J. Gundermann, President and Chief Executive Officer,
commented, "Our third quarter results were a continuation of the
challenges we have had throughout 2017. While Aerospace sales
improved modestly over the prior-year period, consolidated revenue
was nonetheless weaker than expected as programs continued to shift
to the right. Accordingly, our operating margin and net income were
negatively impacted. However, on a more positive note, we expect to
make up lost ground in the fourth quarter, and our revenue guidance
for the year remains relatively unchanged. Even better, our third
quarter saw our strongest bookings total in almost three years,
solidifying our strong expectations for 2018. Our initial guidance
for next year anticipates organic growth of well over 10%."
Consolidated Review
Third Quarter 2017 Results
Consolidated sales were down $5.5 million from the same period
last year. Aerospace segment sales of $128.7 million were up $3.5
million and Test Systems segment sales of $21.0 million were down
$9.0 million.
Consolidated gross margin was 21.7% in the third quarter of 2017
compared with 24.9% in the third quarter of 2016. Consolidated
gross margin was negatively affected by lower organic sales volumes
coupled with the Custom Control Concepts ("CCC") acquisition having
a significantly lower margin profile at this point in its business
cycle, compared with the organic business. Organic Engineering and
Development ("E&D") costs were $22.2 million in the quarter,
compared with $21.6 million in last year’s third quarter. As a
percent of sales, organic E&D costs were 14.8% and 13.9% in the
third quarters of 2017 and 2016, respectively. CCC incurred E&D
costs of $1.5 million in the third quarter.
Selling, general and administrative (“SG&A”) expenses were
$22.4 million, or 15.0% of sales, in the third quarter of 2017
compared with $21.1 million, or 13.6% of sales, in the same period
last year.
The effective tax rate for the quarter was 29.9%, compared with
26.5% in the third quarter of 2016. The 2017 third quarter tax rate
was unfavorably impacted by additional state income tax expense
when compared with the third quarter of 2016.
Net income was $6.1 million, or $0.21 per diluted share compared
with $12.1 million or $0.41 per diluted share in the prior
year.
Year-to-Date 2017 Results
Consolidated sales for the first nine months of 2017 decreased
by $25.9 million, or 5.4%, to $453.1 million. Aerospace segment
sales were down $11.0 million, or 2.7%, year-over-year to $395.0
million, while Test Systems segment sales were down $15.0 million,
or 20.5%, to $58.1 million.
Consolidated gross margin was 23.2% in the first nine months of
2017 compared with 25.7% in the first nine months of 2016.
Consolidated gross margin was negatively affected by lower organic
sales volumes coupled with CCC's lower margin profile. Organic
E&D costs were 14.7% of sales, or $66.8 million, compared with
$66.2 million, or 13.8% of sales, in the prior year’s first nine
months. SG&A expenses were $66.5 million, or 14.7% of sales, in
the first nine months of 2017 compared with $65.2 million, or 13.6%
of sales, in the same period last year.
The effective tax rate for the first nine months of 2017 was
27.0%, compared with 29.3% in the first nine months of 2016. The
tax rate in the first nine months of 2017 was favorably impacted by
the federal research and development tax credit when compared to
the first nine months of 2016.
Net income for the first half of 2017 totaled $25.3 million, or
$0.85 per diluted share.
During the third quarter, the Company repurchased approximately
702,000 shares at an aggregate cost of $18.9 million under its
share repurchase program. Since the inception of the program in
February 2016, the Company has repurchased approximately 1,675,000
shares and has completed the program, which authorized repurchases
up to $50.0 million.
Mr. Gundermann commented, “2017 has been a challenging year for
our company. Our top five customers, which collectively account for
50% of our sales, are down 13% as a group for the year. We have
partially compensated for this decline by growth elsewhere, but the
hole has been too deep to cover. The good news is that bookings
have been strengthening steadily through the year for both segments
and our book to bill ratio was a very healthy 1.25:1 in the third
quarter. These are solid indications that 2018 will be a much
better year.”
Aerospace Segment Review (refer to sales by market and
segment data in accompanying tables)
Aerospace Third Quarter 2017
Results
Aerospace segment sales increased by $3.5 million, or 2.8%, when
compared with the prior year’s third quarter to $128.7 million. CCC
contributed $3.5 million in sales in the 2017 third quarter.
Electrical Power & Motion sales decreased $4.3 million, or
6.3%, due to lower sales of in-seat and cabin power products due to
a combination of lower volume and pricing. Lighting & Safety
sales decreased by $2.0 million primarily due to lower passenger
service unit sales. Avionics sales were up $5.5 million as a result
of $2.0 million increase in antennae and other avionics sales
combined with the CCC acquisition. Structures sales increased by
$2.5 million and Systems Certification sales increased by $1.9
million on higher project activity.
Aerospace operating profit for the third quarter of 2017 was
$13.0 million, or 10.1% of sales, compared with $17.6 million, or
14.0% of sales, in the same period last year. Aerospace operating
profit was negatively impacted by market pricing pressures
primarily relating to cabin power products, a $1.8 million
operating loss from the CCC acquisition and slightly higher E&D
costs. Organic Aerospace E&D costs were $19.6 million compared
with $18.9 million in the same period last year. CCC incurred
E&D costs of $1.5 million during the quarter.
Aerospace orders in the third quarter of 2017 were $146.2
million, for a book-to-bill ratio of 1.14:1 for the quarter.
Backlog was $233.2 million at the end of the third quarter of
2017.
Aerospace Year-to-Date 2017
Results
Aerospace segment sales decreased by $11.0 million, or 2.7%, to
$395.0 million, when compared with the prior year’s first nine
months.
Electrical Power & Motion sales decreased $20.2 million, or
9.2%, for similar reasons as discussed in the quarter. Systems
Certifications sales decreased $3.2 million from lower project
activity earlier in the year. These declines were partially offset
by increased Avionics sales, up $8.7 million of which $7.0 million
was from the CCC acquisition and $1.7 million from other avionics
products. Structures sales increased by $4.4 million.
Aerospace operating profit for the first nine months of 2017 was
$46.8 million, or 11.8% of sales, compared with $61.1 million, or
15.0% of sales, in the same period last year. Aerospace operating
profit was negatively impacted by lower sales volumes and market
pricing pressures, coupled with the operating loss from the
acquired CCC business. E&D costs for Aerospace were $62.5
million (inclusive of $2.7 million related to the acquired CCC
business) and $58.3 million in the first nine months of 2017 and
2016, respectively.
Mr. Gundermann commented, “While 2017 has been a challenging
year for our Aerospace business due to program delays and softness
in some of our core markets, we see things turning around. This is
evidenced by the increasing strength of our booking activity and
the execution of new customer agreements. We expect to finish 2017
with a strong fourth quarter and to enter 2018 with strong
momentum.”
Test Systems Segment Review (refer to sales by market and
segment data in accompanying tables)
Test Systems Third Quarter 2017
Results
Sales in the third quarter of 2017 decreased approximately $9.0
million to $21.0 million compared with the same period in 2016, a
decrease of 29.9%. The $10.2 million decline in sales to the
Semiconductor market were somewhat offset by a $1.3 million
increase in sales to the Aerospace & Defense market when
compared with the prior-year period.
Operating profit was $1.1 million, or 5.2% of sales, compared
with $3.2 million, or 10.8% of sales, in last year’s third quarter.
E&D costs were $2.6 million, down slightly from $2.7 million in
the third quarter of 2016.
Orders for the Test Systems segment in the quarter were $40.2
million, for a book-to-bill ratio of 1.91:1 for the quarter.
Backlog was $69.1 million at the end of the third quarter of 2017,
up from $49.9 million at the end of the trailing second
quarter.
Test Systems Year-to-Date 2017
Results
Sales in the first nine months of 2017 decreased 20.5% to $58.1
million compared with sales of $73.1 million for the same period in
2016, due to lower sales to the Semiconductor market. Sales to the
Semiconductor market decreased $15.5 million compared with the same
period in 2016.
Operating profit was $2.8 million, or 4.9% of sales, compared
with $6.5 million, or 8.9% of sales, in the first nine months of
2016. E&D costs were $7.0 million in the first nine months of
2017 compared with $7.9 million in the same period in the prior
year.
Mr. Gundermann commented, "Bookings in the quarter were the
highlight for our Test Systems segment. We received $29 million of
Semiconductor Test bookings during the quarter, which supported our
backlog growth and also received another $15 million in orders in
the opening weeks of the fourth quarter which are not reflected in
the quarter's results. And, we have line of sight to a number of
other large opportunities for both A&D and Semi Test, setting
the stage for a strong 2018 for our Test business."
2017 Fourth Quarter Outlook and Initial View of 2018
Fourth quarter sales are forecasted to be in the range of $169
million to $183 million, with $139 million to $150 million expected
from the Aerospace segment and $30 million to $33 million from the
Test segment.
Mr. Gundermann commented, “We have high expectations for the
fourth quarter based on a solid book of business in backlog as well
as several anticipated new orders, though timing of these is
important in terms of 2017 contribution.”
Consolidated annual sales in 2017 are forecasted to be in the
range of $622 million to $636 million. Approximately $534 million
to $545 million of revenue is expected from the Aerospace segment
and $88 million to $91 million is expected from the Test
segment.
Consolidated backlog at September 30, 2017 was $302.3
million, of which approximately $148.5 million is expected to ship
in 2017.
The effective tax rate for 2017 is expected to be in the range
of 28% to 30%.
Capital equipment spending in 2017 is expected to be in the
range of $17 million to $19 million.
E&D costs for 2017 are expected to be in the range of $96
million to $97 million including CCC.
The Company issued its initial revenue outlook for 2018 of $675
million to $750 million. The Aerospace segment is expected to have
2018 revenue of $570 million to $630 million. The Test segment is
expected to generate $105 million to $120 million in revenue in
2018. These estimates are without effect of the new revenue
recognition rules that will be effective January 1, 2018.
Mr. Gundermann commented, “We have high expectations for 2018.
Our initial range suggests organic growth in excess of 10% over
2017, led by a rebound of our in-seat power and antenna product
lines and recent orders for semiconductor test equipment. This
range does not include contributions from our announced acquisition
of Telefonix PDT, which we expect to close in the next several
weeks, and neither does it include a number of substantial
opportunities for our Test segment that we expect will be
determined by year end. As such, we anticipate we will revise our
2018 revenue range upward before the year begins.”
Third Quarter 2017 Webcast and Conference Call
The Company will host a teleconference today at 11:00 a.m. ET.
During the teleconference, Peter J. Gundermann, President and CEO,
and David C. Burney, Executive Vice President and CFO, will review
the financial and operating results for the period and discuss
Astronics’ corporate strategy and outlook. A question-and-answer
session will follow.
The Astronics conference call can be accessed by calling (201)
689-8562. The listen-only audio webcast can be monitored at
www.astronics.com. To listen to the archived call, dial (412)
317-6671 and enter replay pin number 13672263. The telephonic
replay will be available from 2:00 p.m. on the day of the call
through Tuesday, November 14, 2017. A transcript will also be
posted to the Company’s Web site once available.
About Astronics
Corporation
Astronics Corporation (NASDAQ: ATRO) is a leading supplier of
advanced technologies and products to the global aerospace, defense
and semiconductor industries. Astronics’ products and services
include advanced, high-performance electrical power generation and
distribution systems, seat motion solutions, lighting and safety
systems, avionics products, aircraft structures, systems
certification and automated test systems. Astronics’ strategy is to
increase its value by developing technologies and capabilities,
either internally or through acquisition, and using those
capabilities to provide innovative solutions to its targeted
markets and other markets where its technology can be beneficial.
Through its wholly owned subsidiaries, Astronics has a reputation
for high-quality designs, exceptional responsiveness, strong brand
recognition and best-in-class manufacturing practices. The Company
routinely posts news and other important information on its website
at www.astronics.com.
For more information on Astronics and its products, visit its
Web site at www.astronics.com.
Safe Harbor Statement
This news release contains forward-looking statements as defined
by the Securities Exchange Act of 1934. One can identify these
forward-looking statements by the use of the words “expect,”
“anticipate,” “plan,” “may,” “will,” “estimate” or other similar
expressions. Because such statements apply to future events, they
are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated by the
statements. Important factors that could cause actual results to
differ materially from what may be stated here include the state of
the aerospace, defense, consumer electronics and semiconductor
industries, the market acceptance of newly developed products,
internal production capabilities, the timing of orders received,
the status of customer certification processes and delivery
schedules, the demand for and market acceptance of new or existing
aircraft which contain the Company’s products, the need for new and
advanced test and simulation equipment, customer preferences and
other factors which are described in filings by Astronics with the
Securities and Exchange Commission. The Company assumes no
obligation to update forward-looking information in this news
release whether to reflect changed assumptions, the occurrence of
unanticipated events or changes in future operating results,
financial conditions or prospects, or otherwise.
FINANCIAL TABLES FOLLOW
ASTRONICS CORPORATION
CONSOLIDATED
INCOME STATEMENT DATA
(Unaudited, $ in thousands except per share data)
Three Months Ended Nine Months Ended 9/30/2017
10/1/2016 9/30/2017 10/1/2016
Sales $ 149,636 $ 155,099
$ 453,146 $ 479,055 Cost of
products sold 117,143 116,436 348,186
356,074 Gross profit 32,493 38,663 104,960 122,981
Gross margin 21.7 % 24.9 %
23.2 % 25.7 % Selling, general
and administrative 22,410 21,138 66,504 65,246
SG&A % of
sales 15.0 % 13.6 %
14.7 % 13.6 % Income from
operations 10,083 17,525 38,456 57,735
Operating margin
6.7 % 11.3 % 8.5 %
12.1 % Interest expense, net 1,437
1,103 3,750 3,246 Income before
tax 8,646 16,422 34,706 54,489 Income tax expense 2,586
4,348 9,374 15,950
Net income
$ 6,060 $ 12,074
$ 25,332 $ 38,539
Net income % of sales 4.0 % 7.8
% 5.6 % 8.0 %
*Basic earnings per share: $ 0.21 $ 0.42 $ 0.88 $ 1.32 *Diluted
earnings per share: $ 0.21 $ 0.41 $ 0.85 $ 1.28 *Weighted
average diluted shares outstanding (in thousands) 29,000 29,808
29,757 30,136 Capital expenditures $ 3,965 $ 3,693 $ 9,715 $
9,869 Depreciation and amortization $ 6,681 $ 6,311 $ 19,268 $
19,457 *October 1, 2016 share quantities and per-share data
have been restated to reflect the impact of the fifteen percent
Class B stock distribution to shareholders of record on October 11,
2016.
ASTRONICS CORPORATION
CONSOLIDATED
BALANCE SHEET DATA
($ in thousands) (unaudited)
9/30/2017
12/31/2016
ASSETS
Cash and cash equivalents $ 15,377 $ 17,901 Accounts receivable and
uncompleted contracts 114,985 109,415 Inventories 139,265 116,597
Other current assets 16,044 11,160 Property, plant and equipment,
net 124,281 122,812 Other long-term assets 16,503 13,149 Intangible
assets, net 95,055 98,103 Goodwill 119,118 115,207
Total
assets $ 640,628 $
604,344
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current maturities of long term debt $ 2,695 $ 2,636 Accounts
payable and accrued expenses 68,409 60,756 Customer advances and
deferred revenue 21,988 23,168 Long-term debt 174,652 145,484 Other
liabilities 35,554 34,851 Shareholders' equity 337,330
337,449
Total liabilities and shareholders' equity $
640,628 $ 604,344
ASTRONICS CORPORATION
Segment
Data
(Unaudited, $ in thousands)
Three Months Ended
Nine Months Ended
9/30/2017 10/1/2016 9/30/2017
10/1/2016 Sales Aerospace $ 128,663 $
125,179 $ 395,037 $ 406,356 Less Inter-segment — —
— (367 ) Total Aerospace 128,663
125,179 395,037 405,989 Total Test Systems 20,973
29,920 58,109 73,066
Total consolidated sales 149,636 155,099
453,146 479,055 Operating
profit and margins Aerospace 13,015 17,557 46,753 61,099 10.1 %
14.0 % 11.8 % 15.0 % Test Systems 1,093 3,240 2,843 6,524 5.2 %
10.8 % 4.9 % 8.9 %
Total operating
profit 14,108 20,797 49,596 67,623 Interest
expense 1,437 1,103 3,750 3,246 Corporate expenses and other 4,025
3,272 11,140 9,888
Income before taxes $ 8,646 $ 16,422
$ 34,706 $ 54,489
ASTRONICS CORPORATION
SALES BY
MARKET
(Unaudited, $ in thousands)
Three Months
Ended
Nine Months
Ended
9/30/2017
10/1/2016
%
change
9/30/2017
10/1/2016
%
change
2017
YTD
Aerospace Segment Commercial Transport $ 98,821 $ 101,355
-2.5% $ 306,898 $ 331,174 -7.3% 67.7% Military 15,365 13,679 12.3%
46,297 39,932 15.9% 10.2% Business Jet 10,592 6,133 72.7% 28,844
20,365 41.6% 6.4% Other 3,885 4,012 -3.2% 12,998
14,518 -10.5% 2.9%
Aerospace Total
128,663 125,179 2.8% 395,037 405,989 -2.7% 87.2%
Test
Systems Segment Semiconductor 6,632 16,878 -60.7% 18,343 33,863
-45.8% 4.0% Aerospace & Defense 14,341 13,042
10.0% 39,766 39,203 1.4% 8.8%
Test Systems
Total 20,973 29,920 -29.9% 58,109 73,066
-20.5% 12.8%
Total $ 149,636 $
155,099 -3.5% $ 453,146 $ 479,055 -5.4%
ASTRONICS CORPORATION
SALES BY PRODUCT
LINE
(Unaudited, $ in thousands)
Three Months
Ended
Nine Months
Ended
9/30/2017
10/1/2016
%
change
9/30/2017
10/1/2016
%
change
2017
YTD
Aerospace Segment Electrical Power & Motion $
63,972 $ 68,259 -6.3% $ 199,014 $ 219,215 -9.2% 43.9% Lighting
& Safety 37,001 38,975 -5.1% 122,317 121,520 0.7% 27.0%
Avionics 11,348 5,866 93.5% 31,424 22,684 38.5% 6.9% Systems
Certification 4,454 2,580 72.6% 9,405 12,577 -25.2% 2.1% Structures
8,003 5,487 45.9% 19,879 15,475 28.5% 4.4% Other 3,885 4,012
-3.2% 12,998 14,518 -10.5% 2.9%
Aerospace Total 128,663 125,179 2.8% 395,037 405,989 -2.7%
87.2%
Test Systems 20,973 29,920 -29.9%
58,109 73,066 -20.5% 12.8%
Total
$ 149,636 $ 155,099 -3.5% $ 453,146 $ 479,055
-5.4%
ASTRONICS CORPORATION
ORDER AND BACKLOG
TREND
(Unaudited, $ in thousands)
Q42016
Q12017
Q22017
Q32017
TrailingTwelveMonths
12/31/2016 4/1/2017 7/1/2017
9/30/2017 9/30/2017 Sales
Aerospace $ 128,052 $ 136,827 $ 129,547 $ 128,663 $ 523,089 Test
Systems 26,016 15,569 21,567 20,973
84,125
Total Sales $ 154,068 $
152,396 $ 151,114 $
149,636 $ 607,214
Bookings Aerospace $ 113,756 $ 122,836 $ 134,822 $ 146,178 $
517,592 Test Systems 23,118 24,236 23,944
40,161 111,459
Total Bookings $ 136,874
$ 147,072 $ 158,766
$ 186,339 $ 629,051
Backlog* Aerospace $ 219,146 $ 205,155 $ 215,647 $
233,162 Test Systems 38,887 47,554 49,931
69,119
Total Backlog $ 258,033
$ 252,709 $ 265,578
$ 302,281 N/A
Book:Bill Ratio Aerospace 0.89 0.90 1.04 1.14 0.99 Test
Systems 0.89 1.56 1.11 1.91 1.32
Total Book:Bill 0.89 0.97
1.05 1.25 1.04 * During
the second quarter, acquisitions added backlog of approximately
$5.2 million for the Aerospace segment.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107005667/en/
Company:Astronics CorporationDavid C. Burney,
716-805-1599, ext. 159Chief Financial
Officerdavid.burney@astronics.comorInvestor Relations:Kei
Advisors LLCDeborah K. Pawlowski,
716-843-3908dpawlowski@keiadvisors.com
Astronics (NASDAQ:ATRO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Astronics (NASDAQ:ATRO)
Historical Stock Chart
From Apr 2023 to Apr 2024