Sales for the quarter were $156.5 million, up 35% over prior year
Bookings totaled $157.8 million and achieved record backlog of $578.5 million
Aerospace segment sales increased 34% to $135.6 million; bookings were $150.1 million
Net loss for the quarter was $4.4 million and adjusted EBITDA was $6.1 million
Expect second quarter revenue to be $165 million to $175 million; maintaining guidance of $640 million to $680 million for 2023, a 23% increase over 2022 at mid-point of range

Astronics Corporation (NASDAQ:ATRO) ("Astronics" or the "Company"), a leading supplier of advanced technologies and products to the global aerospace, defense and other mission critical industries, today reported financial results for the three months ended April 1, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230509006179/en/

Astronics Corporation Segment Sales and Bookings (Graphic: Business Wire)

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, "We had a solid start to the year as continued strong customer demand and an improving supply chain helped us exceed the upper end of our revenue expectations for the quarter. Our leading position in passenger power and inflight connectivity for commercial aerospace combined with the robust recovery in that market has driven demand for our products. The trends give us confidence in the revenue ramp we are planning for the rest of 2023."

Mr. Gundermann continued, "We expect revenue to increase significantly in the second quarter to $165 million to $175 million and are maintaining full year guidance of $640 million to $680 million. We have also restructured our Test segment to take out approximately $4 million to $5 million in costs and improve operating results. We expect this effort, together with the cooperation of our supply chain and strong customer demand, will improve financial results as we advance through the year."

First Quarter Results

	Three Months Ended
*($ in thousands)*	April 1, 2023			April 2, 2022			% Change

Sales	$	156,538		$	116,176		34.7	%
Loss from Operations	$	(2,370	)	$	(4,167	)	43.1	%
Operating Margin %		(1.5	)%		(3.6	)%
Net Gain on Sale of Business	$	(3,427	)	$	(11,284	)
Net Loss	$	(4,415	)	$	(3,101	)	(42.4	)%
Net Loss %		(2.8	)%		(2.7	)%

*Adjusted EBITDA	$	6,078		$	949		540.5	%
*Adjusted EBITDA Margin %		3.9	%		0.8	%

*Adjusted EBITDA is a Non-GAAP Performance Measure. Please see the attached table for a reconciliation of adjusted EBITDA to GAAP net loss.

First Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Consolidated sales were up $40.4 million, or 34.7%, from the first quarter of 2022. Aerospace sales increased $34.2 million, or 33.7%, driven by higher sales to the commercial transport market. Test Systems sales increased $6.2 million, due primarily to the reversal of a $5.8 million deferred revenue liability assumed with an acquisition and associated with a customer program which is no longer expected to occur.

Consolidated operating loss was $2.4 million, an improvement over the operating loss of $4.2 million in the prior-year period. The current period operating loss benefited from higher volume and the $5.8 million liability reversal, which was offset by higher material and labor costs and an increase of $3.2 million in litigation-related legal expenses. The prior period operating loss benefited from an Aviation Manufacturing Jobs Protections ("AMJP") Program grant which provided a $6.0 million offset to cost of products sold.

The Company recognized in the quarter a final earnout of $3.4 million for the 2019 sale of its semiconductor test business, compared with $11.3 million recognized in the prior-year period. Other income in the 2023 first quarter included $1.8 million associated with the reversal of a liability related to an equity investment.

Interest expense was $5.5 million in the current period, compared with $1.6 million in the prior-year period, primarily driven by higher interest rates on the Company's new credit facilities. Interest expense includes approximately $0.6 million of non-cash amortization of capitalized financing-related fees.

Income tax expense was $1.3 million in the current period, primarily due to a valuation allowance applied against the deferred tax asset associated with research and development costs that are required to be capitalized for tax purposes.

Consolidated net loss was $4.4 million, or $0.14 per diluted share, compared with net loss of $3.1 million, or $0.10 per diluted share, in the prior year.

Consolidated adjusted EBITDA was $6.1 million, or 3.9% of consolidated sales, compared with $0.9 million, or 0.8% of consolidated sales, in the prior-year period.

Bookings were $157.8 million in the quarter resulting in a book-to-bill ratio of 1.05:1, excluding the impact of the $5.8 million adjustment to sales referred to previously. Backlog was a record $578.5 million. Approximately $498.7 million of backlog is expected to ship over the next twelve months.

Aerospace Segment Review (refer to sales by market and segment data in accompanying tables)

Aerospace First Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $34.2 million, or 33.7%, to $135.6 million driven by a 47.0%, or $30.1 million increase in commercial transport sales. Sales to this market were $94.2 million, or 60.2% of consolidated sales in the quarter, compared with $64.1 million, or 55.1% of consolidated sales in the first quarter of 2022. Improving global airline travel driving higher fleet utilization and increased production rates resulted in increased demand.

General Aviation sales increased $3.6 million, or 22.6%, to $19.4 million.

Aerospace segment operating profit improved to $4.1 million compared with operating profit of $3.1 million in the same period last year, which included an AMJP grant offset to cost of sales of $6.0 million. Absent the impact of the AMJP grant on last year's first quarter, aerospace operating profit improved $7.0 million on a sales increase of $34.2 million. The improvement in operating profit was driven by higher volume primarily in the commercial transport market, partially offset by the effects of material and labor inflation.

Aerospace bookings were $150.1 million for a book-to-bill ratio of 1.11:1. Backlog for the Aerospace segment was a record $492.2 million at quarter end.

Mr. Gundermann commented, "Our Aerospace business continues to accelerate, in step with the air travel recovery that is underway worldwide. Our business is trending back to pre-pandemic levels and will benefit further from a number of high-profile programs that we have won during the downturn, including our involvement on the U.S. Army's Future Long-Range Assault Aircraft (FLRAA) program which we expect to begin in the next several weeks. Margin performance will continue to improve as supply chain spot buys decline and volume increases."

Test Systems Segment Review (refer to sales by market and segment data in accompanying tables)

Test Systems First Quarter 2023 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $20.9 million, up $6.2 million compared with the prior-year period primarily as a result of a reversal of $5.8 million deferred revenue liability recorded with a previous acquisition. Absent that item, Test Systems sales increased $0.4 million.

Test Systems segment operating loss was $0.6 million compared with operating loss of $1.8 million in the first quarter of 2022. Absent the non-operating sales adjustment resulting from the reversal of the deferred revenue liability, Test Systems operating loss for the current period was $6.4 million and was negatively affected by mix, under absorption of fixed costs due to volume and $2.6 million in increased litigation-related legal expenses.

Shortly after the quarter ended the Test Systems segment implemented restructuring initiatives to align the workforce and management structure with near-term revenue expectations and operational needs. These initiatives are expected to provide savings of $4 million to $5 million annually, beginning with the third quarter.

Bookings for the Test Systems segment in the quarter were $7.7 million, for a book-to-bill ratio of 0.51:1 for the quarter, excluding the impact of the $5.8 million adjustment to sales referred to previously. Backlog was $86.3 million at the end of the first quarter of 2023 compared with backlog of $81.1 million at the end of the first quarter of 2022.

In April 2023, Astronics announced that the Test business had been awarded a contract award to produce portable radio test equipment for the U.S. Marine Corps' Handheld Radio Test Sets program ("HHRTS"). This program is expected to generate revenue of approximately $40 million over a five-year period. An initial task order for approximately $10 million is expected in the coming weeks.

Mr. Gundermann commented, "Our Test business is going through a transition period. We have been quite successful winning new business, including radio test programs for both the U.S. Army and U.S. Marine Corps, which promise to be major contributors to our results in the near future. However, these programs have developed more slowly than expected, so we found it necessary to restructure and right size the business for the interim period. We expect the restructuring to improve profitability for the segment at current run rates until the new programs gain traction."

Liquidity and Financing

Cash on hand at the end of the quarter was $5.7 million. Capital expenditures in the quarter were $1.6 million. Net debt was $172.4 million, compared with $150.2 million at the end of 2022.

Cash used in operations was $19.2 million in the quarter, primarily due to increased levels of working capital to support higher projected sales volume. Astronics expects to be cash flow positive for the remainder of 2023.

2023 Outlook

Revenue for the second quarter of 2023 is expected to be $165 million to $175 million and for the full year to be in the range of $640 million to $680 million. Planned capital expenditures for 2023 are expected to be in the range of $14 million to $17 million.

First Quarter 2023 Webcast and Conference Call

The Company will host a teleconference today at 4:45 p.m. ET. During the teleconference, management 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 (412) 317-6060. The listen-only audio webcast can be monitored at investors.astronics.com. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10177171. The telephonic replay will be available from 7:45 p.m. on the day of the call through Tuesday, May 16, 2023. A transcript of the call will also be posted to the Company's Web site once available.

About Astronics Corporation

Astronics Corporation (NASDAQ:ATRO) serves the world's aerospace, defense, and other mission critical industries with proven, innovative technology solutions. Astronics works side-by-side with customers, integrating its array of power, connectivity, lighting, structures, interiors, and test technologies to solve complex challenges. For over 50 years, Astronics has delivered creative, customer-focused solutions with exceptional responsiveness. Today, global airframe manufacturers, airlines, military branches, completion centers, and Fortune 500 companies rely on the collaborative spirit and innovation of Astronics. The Company's strategy is to increase its value by developing technologies and capabilities that provide innovative solutions to its targeted markets.

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 and include all statements with regard to achieving any revenue or profitability expectations, the rate of recovery of the commercial aerospace widebody/long haul markets, the improvement in the supply chain and reduction of spot buys, the timing of pricing and impact of inflation on margins, the effectiveness on profitability of cost reduction efforts, the timing of receipt of task orders or future orders, and the expectations of demand by customers and markets. 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 continued global impact of COVID-19 and related governmental and other actions taken in response, trend in growth with passenger power and connectivity on airplanes, 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 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 relationships, the effectiveness of the Company's supply chain, 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 STATEMENT OF OPERATIONS DATA
(Unaudited, $ in thousands except per share data)

	Three Months Ended
	4/1/2023			4/2/2022
Sales¹	$	156,538		$	116,176
Cost of products sold²		129,028			96,243
Gross profit		27,510			19,933
*Gross margin*		*17.6*	%		*17.2*	%

Selling, general and administrative		29,880			24,100
*SG&A % of sales*		*19.1*	%		*20.7*	%
Loss from operations		(2,370	)		(4,167	)
*Operating margin*		*(1.5*	)%		*(3.6*	)%

Net gain on sale of business³		(3,427	)		(11,284	)
Other (income) expense⁴		(1,288	)		462
Interest expense, net		5,470			1,631
(Loss) income before tax		(3,125	)		5,024
Income tax expense		1,290			8,125
Net loss	$	(4,415	)	$	(3,101	)
*Net loss % of sales*		*(2.8*	)%		*(2.7*	)%


*Basic loss per share:	$	(0.14	)	$	(0.10	)
*Diluted loss per share:	$	(0.14	)	$	(0.10	)

*Weighted average diluted shares outstanding (in thousands)		32,505			31,933

Capital expenditures	$	1,573		$	1,160
Depreciation and amortization	$	6,662		$	7,088

________________________________ ¹In the quarter ended April 1, 2023, $5.8 million was recognized in sales related to the reversal of a deferred revenue liability recorded with a previous acquisition within our Test Systems Segment. ²In the quarter ended April 2, 2022, $6.0 million of the Aviation Manufacturing Jobs Protection Program grant was recognized as an offset to cost of products sold. ³ Net gain on sale of business for the quarters ended April 1, 2023 and April 2, 2022 is comprised of the additional gain on the sale of the Company's former semiconductor test business resulting from the contingent earnout for the 2022 and 2021 calendar year, respectively. ⁴ Other (income) expense, net for the quarter ended April 1, 2023 includes income of $1.8 million associated with the reversal of a liability related to an equity investment, as we will no longer be required to make the associated payment.


ASTRONICS CORPORATION
SEGMENT DATA
(Unaudited, $ in thousands)

	Three Months Ended
	4/1/2023			4/2/2022
Sales
Aerospace	$	135,715		$	101,394
Less inter-segment		(118	)		—
Total Aerospace		135,597			101,394

Test Systems⁵		20,941			14,798
Less inter-segment		—			(16	)
Total Test Systems		20,941			14,782

Total consolidated sales		156,538			116,176

Segment operating profit and margins
Aerospace⁶		4,087			3,050
		3.0	%		3.0	%
Test Systems¹		(597	)		(1,787	)
		(2.9	)%		(12.1	)%
Total segment operating profit		3,490			1,263


Net gain on sale of business		(3,427	)		(11,284	)
Interest expense		5,470			1,631
Corporate expenses and other⁷		4,572			5,892
(Loss) income before taxes	$	(3,125	)	$	5,024

________________________________ ¹ In the quarter ended April 2, 2023, $5.8 million was recognized in sales related to the reversal of a deferred revenue liability recorded with a previous acquisition within our Test Systems Segment, which also benefits operating loss for the period. Absent that benefit, Test Systems operating loss was $6.4 million. ² In the quarter ended April 2, 2022, $6.0 million of the Aviation Manufacturing Jobs Protection Program grant was recognized as an offset to the cost of products sold in the Aerospace segment. ³ Corporate expenses and other for the quarter ended April 1, 2023 includes income of $1.8 million associated with the reversal of a liability related to an equity investment, as we will no longer be required to make the associated payment.

Reconciliation to Non-GAAP Performance Measures

In addition to reporting net income, a U.S. generally accepted accounting principle ("GAAP") measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, restructuring charges, gains or losses associated with the sale of businesses and grant benefits recorded related to the AMJP program), which is a non-GAAP measure. The Company's management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, litigation-related expenses, restructuring charges, gains or losses associated with the sale of businesses and grant benefits recorded related to the AMJP program, which is not commensurate with the core activities of the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

ASTRONICS CORPORATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(Unaudited, $ in thousands)

	Consolidated
	Three Months Ended
	4/1/2023			4/2/2022
Net loss	$	(4,415	)	$	(3,101	)
Add back (deduct):
Interest expense		5,470			1,631
Income tax expense		1,290			8,125
Depreciation and amortization expense		6,662			7,088
Equity-based compensation expense		2,399			2,101
Restructuring-related charges including severance		—			84
Non-cash accrued 401K contribution		1,208			1,011
Litigation-related legal expenses		4,515			1,302
Equity investment accrued payable write-off		(1,800	)		—
AMJP grant benefit		—			(6,008	)
Net gain on sale of business		(3,427	)		(11,284	)
Deferred liability recovery		(5,824	)		—
Adjusted EBITDA	$	6,078		$	949

Sales	$	156,538		$	116,176
Adjusted EBITDA margin on sales		3.9	%		0.8	%


ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET DATA
($ in thousands)
	(unaudited)
	4/1/2023		12/31/2022
ASSETS
Cash and cash equivalents	$	4,220	$	13,778
Restricted cash		1,497		—
Accounts receivable and uncompleted contracts		152,365		147,790
Inventories		199,944		187,983
Other current assets		16,150		15,743
Property, plant and equipment, net		88,623		90,658
Other long-term assets		19,743		21,633
Intangible assets, net		75,697		79,277
Goodwill		58,169		58,169
Total assets	$	616,408	$	615,031

LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt	$	6,750	$	4,500
Accounts payable and accrued expenses		112,639		114,545
Customer advances and deferred revenue		27,432		32,567
Long-term debt		165,603		159,500
Other liabilities		65,060		63,999
Shareholders' equity		238,924		239,920
Total liabilities and shareholders' equity	$	616,408	$	615,031


ASTRONICS CORPORATION
CONSOLIDATED CASH FLOWS DATA

	Three Months Ended
(Unaudited, $ in thousands)	4/1/2023			4/2/2022
Cash flows from operating activities:
Net loss	$	(4,415	)	$	(3,101	)
Adjustments to reconcile net loss to cash from operating activities:
Non-cash items:
Depreciation and amortization		6,662			7,088
Amortization of deferred financing fees		616			—
Provisions for non-cash losses on inventory and receivables		627			175
Equity-based compensation expense		2,399			2,101
Net gain on sale of business		(3,427	)		(11,284	)
Operating lease non-cash expense		1,186			1,424
Non-cash 401K contribution accrual		1,208			1,011
Non-cash deferred liability reversal		(5,824	)		—
Other		(525	)		513
Cash flows from changes in operating assets and liabilities:
Accounts receivable		(4,170	)		(10,024	)
Inventories		(13,860	)		(9,015	)
Prepaid expenses and other current assets		16			(363	)
Accounts payable		(3,488	)		8,625
Accrued expenses		2,909			(1,380	)
Income taxes payable/receivable		1,262			16,492
Operating lease liabilities		(1,447	)		(1,724	)
Customer advance payments and deferred revenue		1,190			(113	)
Supplemental retirement plan and other liabilities		(100	)		(109	)
Cash flows from operating activities		(19,181	)		316
Cash flows from investing activities:
Proceeds on sale of business		3,437			21,961
Capital expenditures		(1,573	)		(1,160	)
Cash flows from investing activities		1,864			20,801
Cash flows from financing activities:
Proceeds from long-term debt		126,122			17,925
Principal payments on long-term debt		(111,986	)		(43,925	)
Stock award and employee stock purchase plan activity		(602	)		108
Finance lease principal payments		(11	)		(23	)
Financing-related costs		(4,347	)		(771	)
Cash flows from financing activities		9,176			(26,686	)
Effect of exchange rates on cash		80			(173	)
Decrease in cash and cash equivalents and restricted cash		(8,061	)		(5,742	)
Cash and cash equivalents and restricted cash at beginning of period		13,778			29,757
Cash and cash equivalents and restricted cash at end of period	$	5,717		$	24,015


ASTRONICS CORPORATION
SALES BY MARKET
(Unaudited, $ in thousands)

	Three Months Ended						*2023 YTD*
	4/1/2023		4/2/2022		% Change		% of Sales
Aerospace Segment
Commercial Transport	$	94,213	$	64,089	47.0	%	60.2	%
Military Aircraft		14,064		14,976	(6.1	)%	9.0	%
General Aviation		19,448		15,867	22.6	%	12.4	%
Other		7,872		6,462	21.8	%	5.0	%
Aerospace Total		135,597		101,394	33.7	%	86.6	%

Test Systems Segment⁸
Government & Defense		20,941		14,782	41.7	%	13.4	%

Total Sales	$	156,538	$	116,176	34.7	%


SALES BY PRODUCT LINE
(Unaudited, $ in thousands)

	Three Months Ended						*2023 YTD*
	4/1/2023		4/2/2022		% Change		% of Sales
Aerospace Segment
Electrical Power & Motion	$	53,454	$	44,467	20.2	%	34.1	%
Lighting & Safety		36,553		29,211	25.1	%	23.4	%
Avionics		29,741		18,875	57.6	%	19.0	%
Systems Certification		5,677		1,002	466.6	%	3.6	%
Structures		2,300		1,377	67.0	%	1.5	%
Other		7,872		6,462	21.8	%	5.0	%
Aerospace Total		135,597		101,394	33.7	%	86.6	%

Test Systems Segment¹		20,941		14,782	41.7	%	13.4	%

Total Sales	$	156,538	$	116,176	34.7	%

________________________________ ¹ Test Systems sales in the first quarter of 2023 included a $5.8 million reversal of a deferred revenue liability recorded with a previous acquisition.


ASTRONICS CORPORATION
ORDER AND BACKLOG TREND
(Unaudited, $ in thousands)
	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Trailing Twelve Months
	7/2/2022		10/1/2022		12/31/2022		4/1/2023		4/1/2023
Sales
Aerospace	$	109,290	$	112,177	$	138,335	$	135,597	$	495,399
Test Systems		19,837		19,261		19,818		20,941^A		79,857
Total Sales	$	129,127	$	131,438	$	158,153	$	156,538^A	$	575,256

Bookings
Aerospace	$	126,012	$	165,719	$	151,688	$	150,096	$	593,515
Test Systems		22,377		18,433		30,707		7,740		79,257
Total Bookings	$	148,389	$	184,152	$	182,395	$	157,836	$	672,772

Backlog
Aerospace	$	410,765	$	464,307	$	477,660	$	492,159
Test Systems		83,635		82,807		93,696		86,319
Total Backlog	$	494,400	$	547,114	$	571,356	$	578,478		N/A

Book:Bill Ratio
Aerospace		1.15		1.48		1.10		1.11		1.20
Test Systems		1.13		0.96		1.55		0.51^A		1.07
Total Book:Bill		1.15		1.40		1.15		1.05^A		1.18

________________________________ ^A In the first quarter of 2023, Test Systems and Total sales includes the $5.8 million reversal of a deferred revenue liability. The book:bill ratios have been calculated excluding the impact of that transaction.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006179/en/

Astronics Corporation Reports 2023 First Quarter Financial Results