Astronics Corporation (ATRO, Financial) recently reported its first-quarter results for fiscal 2015 with both revenues and earnings missing the consensus estimate. The company logged net income of $10.7 million or diluted EPS of 47 cents a share, up from the year-ago quarter’s 33 cents a share, but significantly lower than the consensus estimate of 72 cents a share. Adjusted earnings for the manufacturer of lighting and electrical products for military and commercial planes came in at 49 cents a share. Following the results, Astronics shares dropped 19.23% to a low of $58.02 in premarket trading.
Armstrong Acquisition Boosts Revenues
Astronics reported 14.7% growth in consolidated sales to $161.6 million for Q1 2015, compared to $141.0 million in the prior-year quarter. However, the revenues fell short of the consensus estimate by over $10 million. Astronics’s gross margin for the quarter stood at 24.8% of net revenues, compared to 21.3% in the year-ago quarter. Astronics’ revenues for the quarter benefited from incremental sales to the tune of $6.6 million from Armstrong Aerospace that the company had acquired in January 2015. At the same time, consolidated organic sales increased 9.9% year-over-year t $155.0 million, with organic sales at the company’s Aerospace segment growing 10.9% to $142.4 million and organic sales at its Test Systems segment growing to $19.3 million during the quarter. Further, the company saw record bookings worth $141.1 million at its Aerospace segment for the quarter, while backlogs stood at $234.0 million.
At the Aerospace segment, Astronics saw an increase of $20.9 million in sales to the Commercial Transport market, with $6.6 million being contributed by the Armstrong acquisition. Concurrently, the company saw a decline of $1.8 million at its Business Jet market owing to decrease in organic sales on lighting and avionic products. Consequently, the Aerospace segment saw $23.4 million or 16.4% of revenues in operating profit for Q1 2015, compared to $17.5 million or 14.3% of revenues in the prior-year quarter. At its Test Systems segment, Astronics saw sales increasing to $19.3 million during the first quarter compared to $18.6 million in the year-ago quarter. While the segment saw a year-over-year decrease in sales in the Commercial Electronics market, the loss was offset by sales growth in the Military market. However, operating loss at the segment expanded from $1.7 million in the year-ago quarter to $2.2 million in Q1 2015.
Final Thoughts
Astronics Corporation reported year-over-year growth in revenues and earnings for the first quarter of fiscal 2015. However, these figures fell well short of the consensus estimate mark. Following the results, Astronics, which competes with privately held businesses such as Ultra Electronics Holdings Plc. (ULE, Financial) and Honeywell Aerospace (HON, Financial) in the Aerospace/Defence Lighting and Electrical products market, also reiterated its guidance for the full fiscal 2015. The company continues to expect revenues in the range of $680-$740 million for FY2015. The current consensus estimate pegs the company’s revenue at $718.3 million while earnings are expected to come in at $3.21 a share. Further, experts are looking at an average annual earnings growth rate of 13.5% for Astronics over the next five years, with a peak expected in fiscal 2016. Consequently, the Astronics stock carries a ‘buy’ guidance.
