Astronics Corporation Reports Sales Increase 7% for Third Quarter 2008
EAST AURORA, N.Y.--(BUSINESS WIRE)--
Astronics Corporation (NASDAQ: ATRO), a trusted leader in innovative, high performance lighting, power generation, control and distribution systems for the global aerospace industry, today reported sales of $40.4 million in the third quarter of 2008, which ended September 27, 2008, up 7.0% compared with $37.7 million in the third quarter of 2007. Net income declined to $2.4 million, or $0.22 per diluted share, in the third quarter of 2008 compared with $4.1 million, or $0.38 per diluted share, in the same period the prior year. Net income was adversely impacted by higher engineering and development spending, higher manufacturing costs related to increased infrastructure and capacity, and sales mix. All per share data was adjusted to reflect a one-for-four Class B Stock distribution that was distributed on or about October 17, 2008.
Commercial transport market sales increased to $25.5 million in the third quarter of 2008, up 10.3% compared with $23.1 million in the same period the prior year primarily as a result of increased cabin electronics sales. Military sales increased 12.2% to $7.6 million in the third quarter of 2008 compared with $6.7 million in the prior year's third quarter. Sales to the business jet market decreased $0.5 million to $7.1 million compared with $7.6 million in the third quarters of 2008 and 2007, respectively. Lower sales to this market were directly related to a $1.7 million decline in sales to Eclipse Aviation, a very light jet manufacturer, in the third quarter of 2008 compared with the prior year's third quarter. This decrease was mostly offset by higher sales to other business jet manufacturers, which included new aircraft that had higher values of product content.
Peter J. Gundermann, President and Chief Executive Officer of Astronics, commented, "Our third quarter demonstrated solid results despite weakening macro-economic conditions and the reduction in aircraft production by Eclipse Aviation. However, strong sales to our customers in the commercial transport and military markets, as well as other business jet manufacturers, more than offset the impact of Eclipse's decline."
Third Quarter Operating Results
Gross profit was $7.9 million, or 19.6% of sales, in the third quarter of 2008 compared with $10.1 million, or 26.9% of sales, in the same period the prior year. The third quarter of 2007 was positively impacted by a $0.9 million adjustment related to the 2007 estimated manufacturing overhead cost absorption. The reduction in gross margin reflects higher engineering and development (E&D) spending, combined with overall higher manufacturing costs primarily related to increased infrastructure and capacity somewhat offset by greater operating leverage from higher sales. E&D expenses were $5.7 million in the third quarter of 2008 compared with $3.9 million in the third quarter of 2007.
Selling, general and administrative and other (SG&A) expense was $4.1 million, or 10.1% of sales, in the third quarter of 2008, up slightly on an absolute basis compared with $3.9 million, or 10.3% of sales, in the same period the prior year. Operating margin for the third quarter of 2008 was 9.6% compared with 16.6% in the third quarter of 2007, primarily as a result of the lower gross margin.
Nine-Month Review
For the first nine months of 2008, sales were $129.3 million, up $7.3 million, or 6.0%, compared with $122.0 million in the first nine months of 2007. Gross profit was down $4.7 million in the 2008 nine-month period. Gross margin was 22.1% in the first nine months of 2008, down from 27.2% in the same period the prior year primarily due to higher E&D expenses, combined with an overall increase in manufacturing costs related to increased infrastructure and capacity somewhat offset by greater operating leverage from higher sales and sales mix. E&D expense for the first nine months of 2008 was $16.6 million compared with $11.1 million in the first nine months on 2007. E&D expense is expected to be approximately $22 million for 2008.
SG&A expense remained flat at $12.6 million for the first nine months of 2008 and 2007. Operating margin was 12.4% for the first nine months of 2008 compared with 16.9% in the same period the prior year reflecting the lower gross margin.
Net income was $10.1 million, or $0.95 per diluted share, in the first nine months of 2008 compared with $13.3 million, or $1.25 per diluted share, in the same period the prior year.
Mr. Gundermann noted, "Margins this year have been affected by our increased E&D spending, which is focused on applied development of new technologies and products. We believe these innovations are key enablers of our future growth."
Liquidity and Capital Expenditures
Cash and cash equivalents were $0.5 million at September 27, 2008 compared with $2.8 million at December 31, 2007, as cash was used to pay down debt and fund increasing working capital requirements. The Company has a $60 million line of credit of which $56 million was available at the end of the third quarter.
Capital expenditures for the third quarter and first nine months of 2008 were $1.1 million and $3.2 million, respectively, compared with $1.6 million and $7.6 million in the same periods the prior year, respectively. The higher expenditures in 2007 were primarily to support facility expansions and equipment investments. Capital expenditures are expected to be approximately $4.5 million to $6 million for 2008.
Outlook
Orders in the third quarter of 2008 were $30.8 million compared with $33.3 million in the third quarter of 2007. Backlog at September 27, 2008 was $92.1 million, up from backlog of $90.0 million at the end of the third quarter of 2007. Approximately 50% of backlog is currently planned for shipment in the fourth quarter of 2008.
Mr. Gundermann concluded, "Bookings in the third quarter were lower than our recent pace due, in part, to the removal of $3.6 million in Eclipse orders and because the third quarter tends to be the lightest quarter for bookings. While we recognize that there are serious economic issues right now, our market continues to show strength. Most of our original equipment manufacturer customers are planning production levels next year that will be at or above the current rates. We are maintaining a revenue forecast at the lower end of our previous range at approximately $175 million for fiscal 2008, which represents an 11% increase compared with 2007 sales. We plan to provide revenue guidance for 2009 when we release our fourth quarter results early in 2009."
Third Quarter 2008 Webcast and Conference Call
The Company will host a teleconference at 11 a.m. ET today. During the teleconference, Peter J. Gundermann, President and CEO, and David C. Burney, 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 the following ways:
-- The live webcast can be found at http://www.astronics.com.
Participants should go to the website 10 - 15 minutes prior to
the scheduled conference in order to register and download any
necessary audio software.
-- The teleconference can be accessed by dialing (201) 689-8562
and requesting conference ID number 300129 approximately 5 -
10 minutes prior to the call.
To listen to the archived call:
-- The archived webcast will be at http://www.astronics.com. A
transcript will also be posted once available.
-- A replay can also be heard by calling (201) 612-7415 and
referencing account number 3055 and conference ID number
300129.
The telephonic replay will be available from 2 p.m. ET the day of the call through 11:59 p.m. ET on November 6, 2008.
ABOUT ASTRONICS CORPORATION
Astronics Corporation is a trusted leader in innovative, high performance lighting, power generation, control and distribution systems for the global aerospace industry. Its strategy is to expand the value and content it provides to various aircraft platforms through product development and acquisition. Astronics Corporation, and its wholly-owned subsidiaries Astronics Advanced Electronic Systems Corp. and Luminescent Systems Inc., have a reputation for high quality designs, exceptional responsiveness, strong brand recognition and best-in-class manufacturing practices.
For more information on Astronics and its products, visit its website at www.Astronics.com.
Safe Harbor Statement
This press 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 expression. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materially from those contemplated by the statements. Important factors that could cause actual results to differ materially include the state of the aerospace industry, the market acceptance of newly developed products, internal production capabilities, the timing of orders received, the status of customer certification processes, the demand for and market acceptance of new or existing aircraft which contain the Company's products, 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 press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.
ASTRONICS CORPORATION
CONSOLIDATED INCOME STATEMENT DATA
----------------------------------------------------------------------
(unaudited)
(in thousands except per
share data)
Three months ended Nine months ended
9/27/2008 9/29/2007 9/27/2008 9/29/2007
----------------------------------------------
Sales $ 40,363 $ 37,724 $ 129,341 $ 121,967
Cost of products sold 32,455 27,582 100,811 88,740
---------------------- ----------------------
Gross profit 7,908 10,142 28,530 33,227
Gross margin 19.6% 26.9% 22.1% 27.2%
Selling general and
administrative 4,030 3,877 12,552 12,557
----------------------------------------------
Income from operations 3,878 6,265 15,978 20,670
Operating margin 9.6% 16.6% 12.4% 16.9%
Interest expense, net 182 396 554 1,072
Other (income) expense 60 - 73 (11)
----------------------------------------------
Income before tax 3,636 5,869 15,351 19,609
Income taxes 1,257 1,743 5,209 6,287
----------------------------------------------
Net Income $ 2,379 $ 4,126 $ 10,142 $ 13,322
==============================================
Basic earnings per
share:* $ 0.23 $ 0.41 $ 0.99 $ 1.32
Diluted earnings per
share:* $ 0.22 $ 0.38 $ 0.95 $ 1.25
Weighted average diluted
shares outstanding* 10,688 10,669 10,681 10,618
----------------------------------------------------------------------
Capital Expenditures $ 1,058 $ 1,649 $ 3,188 $ 7,566
Depreciation and
Amortization $ 980 $ 876 $ 2,989 $ 2,447
----------------------------------------------------------------------
* All share quantities and per share data reported have been adjusted to reflect the impact of a one-for-four Class B stock distribution that was distributed on or about October 17, 2008.
ASTRONICS CORPORATION
ORDER AND BACKLOG TREND
($, in thousands) 2007
Q1 2007 Q2 2007 Q3 2007 Q4 2007 Twelve
Months
3/31/07 6/30/07 9/29/07 12/31/07 12/31/07
----------------------------------------------------------------------
Sales $ 42,875 $ 41,368 $ 37,724 $ 36,273 $ 158,240
----------------------------------------------------------------------
Net Income $ 4,695 $ 4,501 $ 4,126 $ 2,069 $ 15,391
----------------------------------------------------------------------
Bookings $ 40,351 $ 38,711 $ 33,347 $ 38,712 $ 151,121
----------------------------------------------------------------------
Backlog $ 97,003 $ 94,346 $ 89,969 $ 92,408 $ 92,408
----------------------------------------------------------------------
Book:Bill 0.94 0.94 0.88 1.07 0.96
($, in thousands) 2008
Q1 2008 Q2 2008 Q3 2008
3/29/08 6/28/08 9/27/08
----------------------------------------------------------------------
Sales $ 41,089 $ 47,889 $ 40,363
----------------------------------------------------------------------
Net Income $ 2,647 $ 5,116 $ 2,379
----------------------------------------------------------------------
Bookings $ 45,830 $ 52,386 $ 30,798
----------------------------------------------------------------------
Backlog $ 97,149 $ 101,646 $ 92,081
----------------------------------------------------------------------
Book:Bill 1.12 1.09 0.76
ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET DATA
----------------------------------------------------------------------
(unaudited)
(in thousands)
9/27/2008 12/31/2007
----------------------
ASSETS:
------------------------------------------------
Cash and cash equivalents $ 509 $ 2,818
Accounts receivable 27,818 20,720
Inventories 42,661 36,920
Other current assets 3,184 3,563
Property, plant and equipment, net 30,611 30,083
Other assets 9,169 10,017
----------------------
Total Assets $ 113,952 $ 104,121
======================
LIABILITIES AND SHAREHOLDERS' EQUITY:
------------------------------------------------
Current maturities of long term debt $ 943 $ 951
Note payable 4,000 7,300
Accounts payable and accrued expenses 25,986 23,670
Long-term debt 14,093 14,684
Other liabilities 8,253 8,284
Shareholders' equity 60,677 49,232
----------------------
Total liabilities and shareholders' equity $ 113,952 $ 104,121
======================
ASTRONICS CORPORATION
SALES BY MARKET
($, in thousands)
Three Months Ended
9/27/2008 9/29/2007 % change
--------------------------------
Commercial Transport $ 25,501 $ 23,116 10%
Military 7,556 6,731 12%
Business Jet 7,052 7,626 -8%
Other 254 251 1%
--------------------------------
Total $ 40,363 $ 37,724 7%
--------------------------------
Nine Months Ended
2008
YTD
9/27/2008 9/29/2007 % change %
------------------------------------
Commercial Transport $ 77,609 $ 79,433 -2% 60%
Military 24,225 19,696 23% 19%
Business Jet 26,687 21,952 22% 20%
Other 820 886 -7% 1%
------------------------------------
Total $ 129,341 $ 121,967 6% 100%
------------------------------------
ASTRONICS CORPORATION
SALES BY PRODUCT
($, in thousands)
Three Months Ended
9/27/2008 9/29/2007 % change
-------------------------------
Cabin Electronics $ 20,548 $ 18,803 9%
Cockpit Lighting 9,689 10,051 -4%
Airframe Power 5,169 4,079 27%
Exterior Lighting 2,247 2,353 -5%
Cabin Lighting 2,456 2,187 12%
Other 254 251 1%
-------------------------------
Total $ 40,363 $ 37,724 7%
-------------------------------
Nine Months Ended
2008
YTD
9/27/2008 9/29/2007 % change %
-------------------------------------
Cabin Electronics $ 63,418 $ 65,556 -3% 49%
Cockpit Lighting 32,679 27,064 21% 25%
Airframe Power 17,493 15,362 14% 14%
Exterior Lighting 8,065 6,437 25% 6%
Cabin Lighting 6,866 6,662 3% 5%
Other 820 886 -7% 1%
-------------------------------------
Total $ 129,341 $ 121,967 6% 100%
-------------------------------------
Source: Astronics Corporation
Released October 30, 2008
