Astronics Awarded Contract for U.S. Army Radio Test Set TS-4549/T Valued at Approximately $215 Million

Rhea-AI Summary

Astronics (Nasdaq: ATRO) announced it has been awarded a $215 million contract by the U.S. Army for the production of the Radio Test Set TS-4549/T. This firm-fixed price, indefinite delivery, indefinite quantity (IDIQ) contract spans five years. The initial delivery order of $15.5 million will cover qualification and low-rate initial production, with an anticipated revenue of $10 million to $12 million in 2024, including $5 million to $7 million in the second quarter. CEO Peter J. Gundermann noted that this contract is a significant milestone for their Test business and is expected to enhance the company’s financial performance.

Positive

• Astronics awarded a $215 million contract by the U.S. Army.
• Contract spans five years, indicating long-term revenue potential.
• Initial $15.5 million order will generate $10 million to $12 million in 2024.
• Revenue of $5 million to $7 million expected by Q2 2024.
• CEO Peter J. Gundermann anticipates improved financial performance for the Test business.

Negative

• Initial order is $15.5 million, which is a small fraction of the total contract value.
• Revenue generation starts in 2024, indicating a delay in financial benefits.

Insights

Financial Analyst

The recent contract award to Astronics Corporation is a significant development. The contract, valued at $215 million over five years, will have a meaningful impact on the company's revenue streams. Specifically, the initial delivery order of $15.5 million for 2024, with expected revenues of $10 million to $12 million, represents a notable increase in cash flow. This boost will likely enhance the company's financial stability and allow for reinvestment in further technological advancements.

From a valuation standpoint, this contract can positively influence Astronics' market position. Investors should note the increase in revenue tied directly to high-margin defense contracts, contributing to sustained profitability. With the defense sector often experiencing less volatility compared to commercial aerospace, the overall risk profile of Astronics might be perceived as lower.

In summary, this contract reinforces the company's financial health and augments its future revenue potential, which is a positive signal for stakeholders.

Market Research Analyst

Securing a firm-fixed price, indefinite delivery, indefinite quantity (IDIQ) contract with the U.S. Army not only demonstrates Astronics' technical capabilities but also strengthens its market position in the defense sector. The defense market is characterized by long-term contracts and stable revenue streams, which can provide a substantial competitive advantage. The ability to secure such contracts often indicates a high level of trust and reliability perceived by the customer, in this case, the U.S. Army.

Investors should recognize that in the defense industry, the barriers to entry are high due to stringent requirements and the need for proven technology. Astronics' success in this realm flags its potential for future contract awards and partnerships. Additionally, the defense sector is less susceptible to economic downturns compared to commercial sectors, making it a relatively stable investment choice.

Overall, this contract enhances Astronics' credibility and indicates robust future growth opportunities within the defense sector.

EAST AURORA, N.Y.--(BUSINESS WIRE)-- Astronics Corporation (Nasdaq: ATRO), a leading provider of advanced technologies for global aerospace, defense and other mission critical industries, announced today it has been awarded the production contract for the U.S. Army Radio Test Set TS-4549/T. The award provides for the program management, engineering, and product manufacturing to support the operational readiness of the Army's extensive range of radio communication devices.

The firm-fixed price, indefinite delivery, indefinite quantity (IDIQ) contract has a total value of up to $215 million with an expected period of performance of five years. The contract was awarded with an initial delivery order of $15.5 million to cover qualification and low-rate initial production. The Company expects this effort will generate revenue of approximately $10 million to $12 million in 2024 of which $5 million to $7 million is expected in the second quarter.

Peter J. Gundermann, President and CEO of Astronics Corporation, commented, "We are honored by the U.S. Army's confidence in our capabilities with this critical opportunity. Our advanced testing solutions are designed to ensure the Army maintains optimal force readiness across its communication infrastructure. This contract validates our commitment to supporting our defense customers and substantiates the investments made in our radio test technology. A significant milestone for our Test business, we expect that financial performance for the segment will improve considerably as production ramps."

This award corroborates Astronics Corporation's dedication to delivering innovative solutions that meet the stringent requirements for critical applications and further solidifies Astronics Test Systems as a leader in tactical radio test solutions.

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.

For more information on Astronics and its solutions, visit Astronics.com.

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,” “feeling” or other similar expressions and include all statements with regard to achieving any revenue or profitability expectations, the level of financial performance improvement of the Test business, and the timing of receipt of orders or future orders. 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 impact of global pandemics and related governmental and other actions taken in response, funding of the program, the state of the aerospace and defense industries, internal production capabilities, the timing of orders received, the status of customer certification processes and delivery schedules, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240617835446/en/

Company Contact:

David C. Burney

Executive Vice President and CFO

invest@astronics.com

+1.716.805.1599



Astronics AES Contact:

Dennis Markert

Director Business Development

Dennis.Markert@astronics.com

+1.425.895.4374



Investor Contact:

Kei Advisors LLC

Deborah K. Pawlowski

Investor Relations

dpawlowski@keiadvisors.com

+1.716.843.3908

Source: Astronics Corporation

FAQ

What is the value of the U.S. Army contract awarded to Astronics?

The U.S. Army contract awarded to Astronics is valued at approximately $215 million.

When will Astronics start generating revenue from the new U.S. Army contract?

Astronics expects to generate revenue from the new U.S. Army contract starting in 2024.

How much revenue is expected from the U.S. Army contract in the second quarter of 2024?

Astronics expects to generate $5 million to $7 million in revenue from the U.S. Army contract in the second quarter of 2024.

What is the purpose of the Radio Test Set TS-4549/T contract?

The Radio Test Set TS-4549/T contract aims to support the operational readiness of the U.S. Army's radio communication devices.

How will the new U.S. Army contract impact Astronics' financial performance?

CEO Peter J. Gundermann expects the contract to improve Astronics' financial performance as production ramps up.