- Record quarterly sales of $141.0 million, up 90.6% from
2013 first quarter
- Organic sales of $82.1 million, up 11.0% from 2013
first quarter
- Completed acquisition of Astronics Test Systems ("ATS")
on February 28, 2014
- Raises 2014 full year sales forecast to range of $625
million to $660 million
Astronics Corporation (Nasdaq:ATRO), a leading provider of advanced
technologies for the global aerospace and defense industries, today
reported financial results for the three months ended March 29,
2014.
|
Three Months
Ended |
|
March 29, 2014 |
March 30, 2013 |
% Change |
|
|
|
|
Sales |
$ 140,951 |
$ 73,967 |
90.6% |
Gross profit |
$ 30,005 |
$ 20,219 |
48.4% |
Gross profit percentage |
21.3% |
27.3% |
|
SG&A |
$ 16,378 |
$ 9,157 |
78.9% |
SG&A percent to sales |
11.6% |
12.4% |
|
Income from Operations |
$ 13,627 |
$ 11,062 |
23.2% |
Operating margin % |
9.7% |
15.0% |
|
Net Income |
$ 7,507 |
$ 8,564 |
(12.3)% |
Net Income % |
5.3% |
11.6% |
|
Peter J. Gundermann, President and Chief Executive Officer,
commented, "Our first quarter results were strong, reflecting solid
conditions in the industry, double digit organic growth and
positive contributions from our recent acquisitions. Results are
especially notable when one considers that we incurred about $8.7
million of fair value inventory step-up expense relating to
acquisition accounting during the quarter. Our acquisitions,
including Astronics Test Systems which we acquired in February, are
performing collectively to plan and have helped us get off to a
great start for 2014."
Consolidated Review
First Quarter 2014 Results
Consolidated sales for the first quarter of 2014 increased by
90.6% to $141.0 million compared with $74.0 million for the same
period last year. Aerospace sales increased by $50.7 million
and Test Systems sales increased by $16.3 million. From July
2013 through the end of the 2014 first quarter, Astronics completed
four business acquisitions, three in its Aerospace segment and one
in the Test Systems segment. Acquisitions contributed $58.8
million to consolidated sales, while organic sales increased $8.2
million, or 11.0%.
Consolidated gross margin was 21.3% in the first quarter of 2014
compared with 27.3% in the first quarter of 2013. Margin
leverage achieved from increased organic sales volume was more than
offset by costs of approximately $8.7 million relating to the fair
value step-up of inventory from acquired businesses and increased
engineering and development ("E&D") costs in Astronics organic
businesses of approximately $1.2 million. Total E&D costs
were $17.3 million in the first quarter of 2014 including $3.2
million for businesses acquired since the first quarter of 2013.
Last year's first quarter had $12.8 million in E&D
expense.
Selling, general and administrative ("SG&A") expenses were
approximately $16.4 million, or 11.6% of sales in the first quarter
of 2014 compared with $9.2 million, or 12.4% of sales in the same
period last year. The increase was due primarily to the incremental
SG&A costs of acquired businesses, which added approximately
$7.0 million to SG&A in the first quarter of 2014 when compared
with the prior year first quarter.
Diluted earnings per share for the 2014 first quarter were $0.40
compared with $0.47 in the prior year period. This includes
the impact of fair value inventory step-up charges for inventory of
acquired businesses, which totaled approximately $8.7 million
before taxes, or approximately $0.30 per diluted share after tax in
the first quarter of 2014.
Earnings per share for all periods presented have been
calculated reflecting the effect of the one-for-five Class B share
distribution for shareholders of record on October 10, 2013.
Aerospace Segment Review (refer to sales by
market and segment data in accompanying tables)
Aerospace First Quarter 2014 Results
Aerospace segment sales increased by $50.7 million, or 70.7%,
compared with the prior year's first quarter. Organic sales
grew 12.6%, or $9.1 million, and sales from acquired businesses
added $41.6 million. Sales to the Commercial Transport market
increased due primarily to the sales contributed by the acquired
businesses of approximately $35.6 million. Additionally,
sales of Electrical Power & Motion products excluding acquired
businesses increased approximately $12.1 million as global demand
for passenger power systems continued to be strong. Military
sales were up slightly when compared with the prior year's first
quarter as sales contributed by the acquired businesses added $1.0
million and was partially offset by lower organic sales to the
Military market. Sales to the Business Jet market were up when
compared with last year's first quarter due primarily to the sales
contribution from acquired businesses of $2.7 million which was
partially offset by a decrease of organic sales of $1.5 million as
Lighting & Safety and Electrical Power & Motion sales both
decreased slightly. The increase in first quarter Other sales
was due primarily to sales from the acquired businesses of
approximately $2.3 million partially offset by decreased organic
Other sales of $1.4 million.
Aerospace operating profit for the first quarter of 2014 was
$17.5 million, or 14.3% of sales, compared with $14.3 million, or
19.9% of sales, in the same period last year. The margin
leverage achieved from increased organic sales volume was offset by
increased depreciation and amortization expense of $2.8 million and
increased organic E&D costs of approximately $1.3 million.
Additionally, cost of products sold was approximately $2.4
million greater due to the lower margins recognized from the sale
of inventory written up to fair value at the time of acquisition
for the acquired businesses. Aerospace SG&A expense increased
$5.7 million in 2014 as compared with 2013. The increase was
due to the incremental SG&A for the acquired businesses.
Test Systems Segment Review (refer to sales by
market and segment data in accompanying tables)
Test Systems First Quarter 2014 Results
Sales in the 2014 first quarter increased approximately $16.3
million to $18.6 million when compared with sales of $2.3 million
for the same period in 2013, due primarily to the incremental sales
to both the Commercial Electronics and Military markets that was
provided by the acquisition of ATS on February 28, 2014. ATS
contributed $17.2 million in sales which was partially offset by
decreased sales of our organic Test Systems business of
approximately $0.9 million.
Test Systems operating loss for the first quarter of 2014 was
$1.7 million compared with an operating loss of $1.5 million in the
same period last year. The operating loss in the first quarter of
2014 includes $6.3 million in cost of products sold that is related
to the fair value step-up of inventory from acquired businesses.
Depreciation and amortization expense relating to the
acquisition was $0.2 million in the first quarter of 2014.
Balance Sheet
Cash at the end of the first quarter of 2014 was $29.1 million
compared with $54.6 million at December 31, 2013. Cash
provided by operating activities in the first quarter of 2014 was
approximately $2.6 million.
Cash used for investing activities was $87.2 million. This
included $14.9 million for the purchase and modifications of a new
building in Oregon and the acquisition of ATS for $70.3 million.
The Company expects capital spending in 2014 to be in the
range of $33 million to $37 million, including the purchase and
modifications of the new Oregon building.
Outlook
On March 31, 2014, backlog was a record $362.4 million, improved
from $214.2 million at the end of the trailing fourth quarter of
2013 and $119.0 million at the end of the first quarter of
2013. Approximately $324.1 million of this backlog is expected
to ship over the balance of 2014.
The Company has raised its expectations for 2014 revenue to be
in the range of $625 million to $660 million from its previous
expectation of $585 million to $640 million. Astronics
anticipates that approximately $480 million to $505 million of
forecasted 2014 revenue will be from its Aerospace segment, while
approximately $145 million to $155 million of the forecasted
revenue will be from its Test Systems segment.
Mr. Gundermann concluded, "We had record bookings in the first
quarter of $146 million, an increase of 34% over our previous
high. This gave us a record backlog as we entered the second
quarter and put us in a good position to execute our plan for the
remainder of the year.
The midpoint of our new range for 2014 would suggest revenue
increasing almost 90% over last year, which would obviously be a
very strong year for our company."
First Quarter 2014 Webcast and Conference
Call
The Company will host a teleconference at 11:00 AM
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 (858)
384-5517 and enter conference ID number 13580034. The
telephonic replay will be available from 2:00 p.m. on the day of
the call through Wednesday, May 14, 2014. A transcript will
also be posted to the Company's Web site, once available.
About Astronics Corporation
Astronics Corporation is a leader in advanced, high-performance
lighting, electrical power and automated test systems for the
global aerospace and defense industries. Astronics' strategy
is to develop and maintain positions of technical leadership in its
chosen aerospace and defense markets, to leverage those positions
to grow the amount of content and volume of product it sells to
those markets and to selectively acquire businesses with similar
technical capabilities that could benefit from our leadership
position and strategic direction. Astronics Corporation, and
its wholly-owned subsidiaries, Astronics Advanced Electronic
Systems Corp., Astronics AeroSat Corporation, Astronics Test
Systems, Inc., Ballard Technology, Inc., DME Corporation,
Luminescent Systems Inc., Luminescent Systems Canada, Inc.,
Max-Viz, Inc., Peco, Inc. and PGA Electronic s.a. have 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
Web site 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 include the state of the aerospace and defense
industries, the market acceptance of newly developed products,
internal production capabilities, the timing of orders received,
the status of customer certification processes, the demand for and
market acceptance of new or existing aircraft which contain the
Company's products, 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 |
|
|
|
3/29/2014 |
3/30/2013 |
|
|
Sales |
$ 140,951 |
$ 73,967 |
|
|
Cost of products sold |
110,946 |
53,748 |
|
|
Gross profit |
30,005 |
20,219 |
|
|
Gross margin |
21.3% |
27.3% |
|
|
|
|
|
|
|
Selling, general and administrative |
16,378 |
9,157 |
|
|
SG&A % of Sales |
11.6% |
12.4% |
|
|
Income from operations |
13,627 |
11,062 |
|
|
Operating margin |
9.7% |
15.0% |
|
|
|
|
|
|
|
Interest expense, net |
2,323 |
218 |
|
|
Income before tax |
11,304 |
10,844 |
|
|
Income tax expense |
3,797 |
2,280 |
|
|
Net Income |
$ 7,507 |
$ 8,564 |
|
|
Net income % of Sales |
5.3% |
11.6% |
|
|
|
|
|
|
|
|
|
|
|
|
*Basic earnings per share |
$ 0.42 |
$ 0.49 |
|
|
*Diluted earnings per share |
$ 0.40 |
$ 0.47 |
|
|
|
|
|
|
|
*Weighted average diluted shares
outstanding (in thousands) |
18,877 |
18,211 |
|
|
|
|
|
|
|
Capital Expenditures |
$ 16,906 |
$ 1,828 |
|
|
Depreciation and Amortization |
$ 4,838 |
$ 1,749 |
|
|
|
|
|
|
*All share quantities and per
share data reported has been restated to reflect the impact of the
effect of the one-for-five Class B share distribution for
shareholders of record on October 10, 2013. |
|
|
ASTRONICS
CORPORATION |
CONSOLIDATED BALANCE
SHEET DATA |
( in thousands) |
|
3/29/2014 |
12/31/2013 |
|
(Unaudited) |
|
ASSETS |
|
|
Cash and cash equivalents |
$ 29,117 |
$ 54,635 |
Accounts receivable |
109,015 |
60,942 |
Inventories |
141,106 |
85,269 |
Other current assets |
11,473 |
10,352 |
Property, plant and equipment, net |
100,883 |
70,900 |
Other long-term assets |
6,137 |
5,474 |
Intangible assets, net |
101,570 |
102,701 |
Goodwill |
103,418 |
100,998 |
Total Assets |
$ 602,719 |
$ 491,271 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current maturities of long term debt |
$ 13,092 |
$ 12,279 |
Accounts payable and accrued expenses |
110,238 |
72,958 |
Long-term debt |
255,326 |
188,041 |
Other liabilities |
43,067 |
46,484 |
Shareholders' equity |
180,996 |
171,509 |
Total Liabilities and
Shareholders' Equity |
$ 602,719 |
$ 491,271 |
|
ASTRONICS
CORPORATION |
SEGMENT
DATA |
(Unaudited, $ in
thousands) |
|
|
|
Three Months
Ended |
|
3/29/2014 |
3/30/2013 |
Sales |
|
|
Aerospace |
$ 122,372 |
$ 71,669 |
|
|
|
Test Systems |
18,689 |
2,390 |
Less Intersegment Sales |
(110) |
(92) |
Test Systems Sales - Net |
18,579 |
2,298 |
|
|
|
Total Consolidated
Sales |
$ 140,951 |
$ 73,967 |
|
|
|
Operating Profit and Margins |
|
|
Aerospace |
$ 17,490 |
$ 14,288 |
|
14.3% |
19.9% |
Test Systems |
(1,695) |
(1,525) |
|
(9.1)% |
(63.8)% |
Total Operating Profit |
15,795 |
12,763 |
|
11.2% |
17.3% |
|
|
|
Interest Expense |
2,323 |
218 |
Corporate Expenses and Other |
2,168 |
1,701 |
Income Before Taxes |
$ 11,304 |
$10,844 |
Income Before Taxes
% of Sales |
8.0% |
14.7% |
|
|
ASTRONICS
CORPORATION |
SALES BY
MARKET |
(Unaudited, $ in
thousands) |
|
Three Months
Ended |
|
3/29/2014 |
3/30/2013 |
$ change |
% change |
2014 YTD % |
Aerospace Segment |
|
|
|
|
|
Commercial Transport |
$ 99,287 |
$ 50,962 |
$ 48,325 |
94.8% |
70.3% |
Military |
8,958 |
8,616 |
342 |
4.0% |
6.5% |
Business Jet |
9,866 |
8,665 |
1,201 |
13.9% |
7.0% |
Other |
4,261 |
3,426 |
835 |
24.4% |
3.0% |
Aerospace Total |
122,372 |
71,669 |
50,703 |
70.7% |
86.8% |
|
|
|
|
|
|
Test Systems Segment |
|
|
|
|
|
Commercial |
14,337 |
-- |
14,337 |
100.0% |
10.2% |
Military |
4,242 |
2,298 |
1,944 |
84.6% |
3.0% |
Test Systems Total |
18,579 |
2,298 |
16,281 |
708.5% |
13.2% |
|
|
|
|
|
|
Total |
$ 140,951 |
$ 73,967 |
$ 66,984 |
90.6% |
100.0% |
|
|
|
|
|
|
ASTRONICS
CORPORATION |
SALES BY
PRODUCT |
(Unaudited, $ in
thousands) |
|
Three Months
Ended |
|
3/29/2014 |
3/30/2013 |
$ change |
% change |
2014 YTD % |
Aerospace Segment |
|
|
|
|
|
Electrical Power & Motion |
$ 65,833 |
$ 44,796 |
$ 21,037 |
47.0% |
46.7% |
Lighting & Safety |
35,091 |
18,117 |
16,974 |
93.7% |
24.9% |
Avionics |
12,752 |
5,330 |
7,422 |
139.2% |
9.0% |
Structures |
3,638 |
-- |
3,638 |
100.0% |
2.6% |
Other |
5,058 |
3,426 |
1,632 |
47.6% |
3.6% |
Aerospace Total |
122,372 |
71,669 |
50,703 |
70.7% |
86.8% |
|
|
|
|
|
|
Test Systems |
18,579 |
2,298 |
16,281 |
708.5% |
13.2% |
|
|
|
|
|
|
Total |
$ 140,951 |
$ 73,967 |
$ 66,984 |
90.6% |
100.0% |
|
|
ASTRONICS
CORPORATION |
ORDER AND BACKLOG
TREND |
(Unaudited, $ in
thousands) |
|
|
|
|
|
|
|
|
Q2 2013 |
Q3 2013 |
Q4 2013 |
Q1 2014 |
Trailing
Twelve Months |
|
6/29/2013 |
9/28/2013 |
12/31/2013 |
3/29/2014 |
3/29/2014 |
Sales |
|
|
|
|
|
Aerospace |
$ 68,676 |
$ 87,525 |
$ 102,660 |
$ 122,372 |
$ 381,233 |
Test Systems |
2,157 |
2,156 |
2,796 |
18,579 |
24,688 |
Total Sales |
$ 70,833 |
$ 89,681 |
$ 105,456 |
$ 140,951 |
$ 405,921 |
|
|
|
|
|
|
Bookings |
|
|
|
|
|
Aerospace |
$ 65,714 |
$ 95,852 |
$ 107,633 |
$ 123,578 |
$ 392,777 |
Test Systems |
620 |
8,066 |
1,127 |
22,677 |
32,490 |
Total Bookings |
$ 66,334 |
$ 103,918 |
$ 108,760 |
$ 146,255 |
$ 425,267 |
|
|
|
|
|
|
Backlog* |
|
|
|
|
|
Aerospace |
$ 111,674 |
$ 159,468 |
$ 207,101 |
$ 208,307 |
N/A |
Test Systems |
2,822 |
8,731 |
7,062 |
154,095 |
N/A |
Total Backlog |
$ 114,496 |
$ 168,199 |
$ 214,163 |
$ 362,402 |
N/A |
|
|
|
|
|
|
Book:Bill Ratio |
|
|
|
|
|
Aerospace |
0.96 |
1.10 |
1.05 |
1.01 |
1.03 |
Test Systems |
0.29 |
3.74 |
0.40 |
1.22 |
1.26 |
Total Book:Bill |
0.94 |
1.16 |
1.03 |
1.04 |
1.05 |
|
|
|
|
|
|
* During the third quarter of
2013, acquisitions added backlog of approximately $39.5 million for
the Aerospace segment. |
During the fourth quarter of
2013, acquisitions added backlog of approximately $42.6 million for
the Aerospace segment. |
During the first quarter of 2014,
acquisitions added backlog of approximately $142.9 million for the
Test Systems segment. |
CONTACT: Company:
David C. Burney, Chief Financial Officer
Phone: (716) 805-1599, ext. 159
Email: david.burney@astronics.com
Investor Relations:
Deborah K. Pawlowski, Kei Advisors LLC
Phone: (716) 843-3908
Email: dpawlowski@keiadvisors.com
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