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Astronics Corporation Reports 2021 First Quarter Financial Results

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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 3, 2021.

Peter J. Gundermann, the Company’s President and CEO, commented, “As we expected, our first quarter was a slow start to the year. However, our Aerospace bookings continue to recover, increasing 36% sequentially from the fourth quarter, resulting in our first positive Aerospace book-to-bill ratio of 1.23 since the pandemic began over a year ago. We are encouraged that the industry seems poised for recovery as the pandemic comes under control.”

First Quarter Summary and Review of Major Markets

First quarter revenue was $105.9 million, down 32.8% from the comparator period of 2020. The Company incurred a net loss of $11.9 million and an adjusted EBITDA loss of $0.5 million, or 0.5% of sales.

The Company evaluates three revenue streams to monitor demand and analyze the impact of the pandemic to its business. These are (1) the commercial aircraft market, which includes OEM line fit and airline aftermarket business, (2) defense and other government markets, and (3) general aviation.

  • Commercial aerospace continues to be heavily impacted by the pandemic and was
    $38.2 million, or 36% of total revenue in the quarter, compared with $102.8 million, or 65% of total revenue in the first quarter of 2020. Narrow body aircraft build rates are expected to improve through 2021 from current levels as production of the 737 MAX picks up. The aftermarket is expected to strengthen over the course of the year as aircraft utilization and load factors increase.
  • Defense and government markets, including our military aircraft sales and test segment sales*, have remained strong through the pandemic. Sales to these markets were
    $45.4 million, or 43% of first quarter revenue in 2021, up from $33.0 million, or 21% in the comparator period of 2020.
  • General aviation sales were $14.0 million, representing about 13% of first quarter revenue in 2021. This compares with $15.0 million, or 10% of revenue in the comparator period. Most of general aviation revenue is line fit production driven by the manufacture of new aircraft, although there is some amount of aftermarket business as well. Demand for private aircraft has recovered quickly and is expected to result in higher aircraft production rates in the near future.
  • Other revenue was about 8% of total revenue in the first quarter of 2021.

* Test segment sales discussed in Defense and Government markets for 2020 excludes sales to the semiconductor industry.

Liquidity and Financing

In May 2020, the Company executed an amendment to its credit agreement (the “amended facility”) which reduced the revolving credit line from $500 million to $375 million. The amended facility suspended the application of the maximum net leverage ratio covenant up through and including the second quarter of 2021. The maximum net leverage ratio on a trailing twelve-month basis will resume at 6.00 to 1 for the third quarter of 2021, 5.50 to 1 for the fourth quarter of 2021, 4.50 to 1 for the first quarter of 2022, and return to 3.75 to 1 in the second quarter of 2022 and thereafter. As of April 3, 2021, the Company had $173.0 million drawn on the facility, with net debt of $142.3 million.

In addition, through the second quarter of 2021, other financial covenants require the Company to maintain a minimum interest coverage ratio of 1.75x on a quarterly basis, except for the first quarter of 2021, which was set at 1.50x. Also, through the third quarter of 2021, the Company must maintain minimum liquidity, defined as unrestricted cash plus the unused revolving credit commitments, of $180 million at all times. The amended facility also temporarily restricts certain activities, including acquisitions and share repurchases, and requires mandatory prepayments during the suspension period when the Company’s cash balance exceeds $100 million.

Cash used in operations totaled $6.9 million in the first quarter. The Company was compliant with its debt covenants as of the end of the first quarter and expects to remain compliant.

In February 2021, the Company was notified by the acquirer of its semiconductor business, which was sold in February 2019, that $10.7 million is payable to the Company for earnouts related to 2020. In April 2021, the acquirer provided a revised calculation, indicating, rather, that

$7.1 million is payable to the Company for the 2020 earnout. The Company is currently reviewing the calculations and underlying data and expects to record the additional gain on the sale when that review is complete and the issue resolved.

First Quarter Results

 

Three Months Ended

($ in thousands)

April 3, 2021

 

March 28, 2020

% Change

 

 

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Astronics

NASDAQ:ATRO

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Aerospace & Defense
Aircraft Parts & Auxiliary Equipment, Nec
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