Astronics Corporation Reports 2018 Third Quarter Financial Results

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

9/29/2018   9/30/2017 9/29/2018   9/30/2017
Sales $ 212,674   $ 149,636 $ 600,339   $ 453,146
Cost of products sold   166,354     117,143   467,315     348,186
Gross profit 46,320 32,493 133,024 104,960
Gross margin 21.8% 21.7% 22.2% 23.2%
 
Selling, general and administrative 27,976 22,099 87,919 65,573
SG&A % of sales   13.2%     14.8%   14.6%     14.5%
Income from operations 18,344 10,394 45,105 39,387
Operating margin 8.6% 6.9% 7.5% 8.7%
 
Other expense, net of other income 253 311 1,091 931
Interest expense, net   2,511     1,437   7,326     3,750
Income before tax 15,580 8,646 36,688 34,706
Income tax (benefit) expense   (1,419)     2,586   2,370     9,374
Net income $ 16,999   $ 6,060 $ 34,318   $ 25,332
Net income % of sales 8.0% 4.0% 5.7% 5.6%
 
 
*Basic earnings per share: $ 0.53 $ 0.19 $ 1.06 $ 0.77
*Diluted earnings per share: $ 0.52 $ 0.18 $ 1.04 $ 0.74
 
*Weighted average diluted shares

outstanding (in thousands)

32,969 33,350 33,035 34,220
 
Capital expenditures $ 3,921 $ 3,965 $ 12,416 $ 9,715
Depreciation and amortization $ 8,172 $ 6,681 $ 26,756 $ 19,269
*All 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 12, 2018.
 
ASTRONICS CORPORATION

CONSOLIDATED BALANCE SHEET DATA

($ in thousands)
  (unaudited)  
9/29/2018   12/31/2017

ASSETS

Cash and cash equivalents $ 4,893 $ 17,914
Accounts receivable and uncompleted contracts 189,110 132,633
Inventories 154,870 150,196
Other current assets 17,155 14,586
Property, plant and equipment, net 124,652 125,830
Other long-term assets 21,893 15,659
Intangible assets, net 138,347 153,493
Goodwill   125,136     125,645
Total assets $ 776,056   $ 735,956
 

LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long term debt $ 1,965 $ 2,689
Accounts payable and accrued expenses 85,522 80,595
Customer advances and deferred revenue 30,186 19,607
Long-term debt 257,680 269,078
Other liabilities 31,258 34,060
Shareholders' equity   369,445     329,927
Total liabilities and shareholders' equity $ 776,056   $ 735,956
 
 

SEGMENT DATA

(Unaudited, $ in thousands)
   

Three Months Ended

Nine Months Ended

9/29/2018   9/30/2017   9/29/2018   9/30/2017
Sales    
Aerospace $ 169,588 $ 128,663 $ 500,445 $ 395,037
Less inter-segment (9)     (62)  
Total Aerospace 169,579 128,663 500,383 395,037
 
Test Systems 43,095   20,973   99,956   58,109
Total consolidated sales 212,674   149,636   600,339   453,146
 
Operating profit and margins
Aerospace 16,210 13,015 47,525 46,753
9.6% 10.1% 9.5% 11.8%
Test Systems 5,833 1,093 10,151 2,843
13.5%   5.2%   10.2%   4.9%
Total operating profit 22,043 14,108 57,676 49,596
 
 
Interest expense 2,511 1,437 7,326 3,750
Corporate expenses and other 3,952   4,025   13,662   11,140
Income before taxes $ 15,580   $ 8,646   $ 36,688   $ 34,706
 
 
ASTRONICS CORPORATION

CONSOLIDATED CASH FLOWS DATA

(Unaudited, $ in thousands)
   

Nine Months Ended

September 29, September 30,
2018 2017
Cash flows from operating activities:
Net income $ 34,318 $ 25,332
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 26,756 19,269
Provisions for non-cash losses on inventory and receivables 2,432 943
Stock compensation expense 2,349 2,203
Deferred tax benefit (1,536 ) (920 )
Other (507 ) (657 )
Cash flows from changes in operating assets and liabilities:
Accounts receivable (52,890 ) (1,515 )
Inventories (15,768 ) (18,480 )
Accounts payable 571 8,267
Accrued expenses 4,977 (5,483 )
Other current assets and liabilities (1,620 ) (4,556 )
Customer advanced payments and deferred revenue 19,241 (2,336 )
Income taxes (4,315 ) (883 )
Supplemental retirement and other liabilities 1,351   1,129  
Cash provided by operating activities 15,359   22,313  
Cash flows from investing activities:
Acquisition of business, net of cash acquired (10,199 )
Capital expenditures (12,416 ) (9,715 )
Other investing activities (3,376 ) (2,070 )
Cash used for investing activities (15,792 ) (21,984 )
Cash flows from financing activities:
Proceeds from long-term debt 35,015 42,000
Payments for long-term debt (47,116 ) (13,031 )
Purchase of outstanding shares for treasury (32,382 )
Debt acquisition costs (516 )
Proceeds from exercise of stock options 283   349  
Cash used for financing activities (12,334 ) (3,064 )
Effect of exchange rates on cash (254 ) 211  
Decrease in cash and cash equivalents (13,021 ) (2,524 )
Cash and cash equivalents at beginning of period 17,914   17,901  
Cash and cash equivalents at end of period $ 4,893   $ 15,377  
 
 
ASTRONICS CORPORATION

SALES BY MARKET

(Unaudited, $ in thousands)
     

Three Months Ended

Nine Months Ended

2018 YTD

9/29/2018

 

9/30/2017

 

% change

9/29/2018

 

9/30/2017

 

% change

% of Sales

Aerospace Segment
Commercial Transport $ 136,692 $ 98,821 38.3% $ 402,539 $ 306,898 31.2% 67.1%
Military 16,125 15,365 4.9% 46,410 46,297 0.2% 7.7%
Business Jet 9,289 10,592 (12.3)% 30,291 28,844 5.0% 5.1%
Other 7,473   3,885   92.4% 21,143   12,998   62.7%   3.5%
Aerospace Total 169,579 128,663 31.8% 500,383 395,037 26.7% 83.4%
 
Test Systems Segment
Semiconductor 33,596 6,632 406.6% 72,061 18,343 292.9% 12.0%
Aerospace & Defense 9,499   14,341   (33.8)% 27,895   39,766   (29.9)%   4.6%
Test Systems Total 43,095   20,973   105.5% 99,956   58,109   72.0%   16.6%
 
Total $ 212,674   $ 149,636   42.1% $ 600,339   $ 453,146   32.5%
 
 

SALES BY PRODUCT LINE

(Unaudited, $ in thousands)
 

Three Months Ended

Nine Months Ended

2018 YTD

9/29/2018

9/30/2017

% change

9/29/2018

9/30/2017

% change

% of Sales

Aerospace Segment
Electrical Power & Motion $ 78,610 $ 63,972 22.9% $ 218,931 $ 199,014 10.0% 36.5%
Lighting & Safety 43,481 37,001 17.5% 129,244 122,317 5.7% 21.6%
Avionics 31,059 11,348 173.7% 100,354 31,424 219.4% 16.7%
Systems Certification 2,373 4,454 (46.7)% 12,028 9,405 27.9% 2.0%
Structures 6,583 8,003 (17.7)% 18,683 19,879 (6.0)% 3.1%
Other 7,473   3,885   92.4% 21,143   12,998   62.7%   3.5%
Aerospace Total 169,579 128,663 31.8% 500,383 395,037 26.7% 83.4%
 
Test Systems Segment 43,095   20,973   105.5% 99,956   58,109   72.0%   16.6%
 
Total $ 212,674   $ 149,636   42.1% $ 600,339   $ 453,146   32.5%
 
 
ASTRONICS CORPORATION

ORDER AND BACKLOG TREND

(Unaudited, $ in thousands)
         

Q4
2017

Q1
2018

Q2
2018

Q3
2018

Trailing
Twelve
Months

12/31/2017   3/31/2018   6/30/2018   9/29/2018   9/29/2018
Sales
Aerospace $ 139,566 $ 164,600 $ 166,204 $ 169,579 $ 639,949
Test Systems   31,752     14,459     42,402     43,095     131,708
Total Sales $ 171,318   $ 179,059   $ 208,606   $ 212,674   $ 771,657
 
Bookings
Aerospace $ 179,340 $ 180,883 $ 158,870 $ 196,671 $ 715,764
Test Systems   57,719     15,280     28,060     37,137     138,196
Total Bookings $ 237,059   $ 196,163   $ 186,930  

$

233,808   $ 853,960
 
Backlog*
Aerospace $ 298,604 $ 305,977 $ 298,643 $ 325,735
Test Systems   95,086     92,635     78,293     72,335    
Total Backlog $ 393,690   $ 398,612   $ 376,936   $ 398,070     N/A
 
Book:Bill Ratio
Aerospace 1.28 1.10 0.96 1.16 1.12
Test Systems   1.82     1.06     0.66     0.86     1.05
Total Book:Bill   1.38     1.10     0.90     1.10     1.11
* During the fourth quarter of 2017, the Telefonix PDT acquisition added backlog of approximately $25.7 million for the Aerospace segment. In the first quarter of 2018, the implementation of new required revenue recognition accounting rules resulted in a reduction to backlog of $8.9 million and $3.3 million for the Aerospace and Test Systems segments, respectively.

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