Astronics Corporation Reports 2016 Third Quarter Financial Results

Operating profit was $6.5 million, or 8.9% of sales, compared with $24.6 million, or 20.2% of sales, in the first nine months of 2015.  E&D costs were $9.2 million in the first nine months of 2016 compared with $8.8 million in the prior year period.

Mr. Gundermann commented, “As anticipated, our Test segment continued to experience lower volume in its Semiconductor business.  Our Aerospace & Defense test offerings, on the other hand, are up 10% year to date.  We expect the Aerospace & Defense market to continue its growth into 2017 and anticipate improvement in the Semiconductor business as we expand our capabilities and customers.” 

Forecast

Consolidated sales in 2016 are forecasted to be in the range of $635 million to $645 million, which represents a decline from the previous range which was $655 million to $685 million.  Approximately $539 million to $545 million of revenue is expected from the Aerospace segment.  Expectations for Test Systems segment revenue in 2016 remains relatively unchanged at approximately $96 million to $100 million.    

Consolidated backlog at October 1, 2016 was $275.2 million, of which approximately $121.9 million is expected to ship in 2016.

Mr. Gundermann commented, “We are disappointed to drop our revenue forecast for 2016, but view it as necessary given the weakness in bookings we have experienced.  We remain confident, however, in our product offerings and market prospects, and continue to work diligently to execute our plans for maintaining market leadership and innovate with new offerings.”

The effective tax rate for 2016 is expected to be approximately 29% to 31%.

Capital equipment spending in 2016 is expected to be in the range of $15 million to $17 million. 

E&D costs are on track to be similar to 2015, as originally expected. 

Mr. Gundermann continued, “Our planning processes are well under way for 2017.  Early indications are that Aerospace revenue will grow in the mid-single digit range.  We expect our strong performing product lines to continue their success, along with substantial improvement in certain under-performing product areas.  With the improvements anticipated in the Test segment, we expect the combination to result in a very solid year of growth.”

Third Quarter 2016 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 conference ID number 13646063.  The telephonic replay will be available from 2:00 p.m. on the day of the call through Wednesday, November 15, 2016.  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, electronics and semiconductor industries.  Astronics’ products and services include advanced, high-performance electrical power generation, distribution and motion systems, lighting & 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.  Astronics Corporation, through its wholly-owned subsidiaries, 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
  10/1/2016 10/3/2015   10/1/2016 10/3/2015
Sales $ 155,099    $ 200,145      $ 479,055   $ 534,939   
Cost of products sold 116,436  140,718   356,074  385,898 
Gross profit 38,663  59,427   122,981  149,041 
Gross margin   24.9 %   29.7 %     25.7 %   27.9 %
           
Selling, general and administrative   21,138     22,297       65,246     66,213  
SG&A % of sales   13.6 %   11.1 %     13.6 %   12.4 %
Income from operations   17,525     37,130       57,735     82,828  
Operating margin   11.3 %   18.6 %     12.1 %   15.5 %
           
Interest expense, net   1,103     1,243       3,246     3,600  
Income before tax   16,422     35,887       54,489     79,228  
Income tax expense   4,348     11,193       15,950     26,161  
Net income $ 12,074   $ 24,694     $ 38,539   $ 53,067  
Net income % of sales   7.8 %   12.3 %     8.0 %   9.9 %
           
           
*Basic earnings per share: $ 0.42   $ 0.84     $ 1.32   $ 1.82  
*Diluted earnings per share: $ 0.41   $ 0.82     $ 1.28   $ 1.76  
           
*Weighted average diluted shares outstanding (in thousands)   29,808     30,150       30,136     30,173  
           
Capital expenditures $ 3,693   $ 3,580     $ 9,869   $ 15,857  
Depreciation and amortization $ 6,311   $ 6,286     $ 19,457   $ 18,831  

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