Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Astronics Corp (ATRO, Financial) reported a strong start to 2025 with revenue of $206 million, up 11% year-over-year.
- The company achieved a record first-quarter bookings of $280 million, resulting in a book-to-bill ratio of 1.36.
- Astronics Corp (ATRO) set new records in its Aerospace segment for revenue, bookings, and backlog.
- Adjusted EBITDA increased significantly to $30.7 million, up from $17.6 million in the previous year.
- The company generated $20.6 million in operating cash flow, marking the second consecutive quarter with over $20 million in cash flow.
Negative Points
- The Test segment experienced a lackluster quarter with sales of only $14.6 million and an adjusted operating loss of $2.2 million.
- Astronics Corp (ATRO) faced a $1.9 million adjustment in the Test segment due to revised cost estimates on a long-term contract.
- The company incurred $3 million in legal expenses related to ongoing litigation in the UK.
- There is potential risk in the Test segment due to consistent misses on program estimates over the past few years.
- Astronics Corp (ATRO) is facing macroeconomic concerns due to potential tariffs, with estimated obligations ranging from $10 million to $20 million.
Q & A Highlights
Q: How much mitigation can you do this year to offset the $10 million to $20 million tariff impact? And are you able to quantify what is direct and indirect?
A: Peter Gundermann, CEO: It's challenging to quantify timing without knowing the exact tariffs. Previously, we moved $40 million of subcontract manufacturing out of China to lower tariff countries. Currently, it's roughly three-quarters direct and one-quarter indirect tariffs. We're still assessing indirect obligations.
Q: Does conducting reviews of each business mean more restructuring or is it a product and portfolio management type review?
A: Peter Gundermann, CEO: It could be any of those. We're not limiting it and it's premature to discuss until reviews are complete. The Test business is the biggest focus due to its size and challenges.
Q: Can you talk about your 737 expectations today versus last quarter, especially with Boeing's production needs?
A: Peter Gundermann, CEO: We haven't heard major changes from Boeing. We're encouraged by their progress and don't see the China situation affecting 2025. We're optimistic about Boeing's production ramp-up.
Q: How much of the demand growth in Aero was from airlines directly versus OEMs?
A: Peter Gundermann, CEO: Demand has been strong from both sides, roughly 50% line fit and 50% aftermarket. We're comfortable with the demand trends from both Boeing and Airbus.
Q: Is the $1.9 million charge in the Test segment contained, or is there potential incremental risk?
A: Peter Gundermann, CEO: There is potential risk, which is why we're reviewing it. The programs have had consistent misses, and we need to conclude these issues soon.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
