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Actionable news in ATRO: Astronics Corporation,

Astronics: Deborah K. Pawlowski, Kei Advisors Llc

The following excerpt is from the company's SEC filing.

Phone: (716) 805-1599, ext. 159

Phone: (716) 843-3908

Email:

david.burney@astronics.com

dpawlowski@keiadvisors.com

FOR IMMEDIATE RELEASE

Astronics Corporation Reports Record Third Quarter Results

Achieved record quarterly sales of $200.1 million and record quarterly net income of $24.7 million

Record diluted earnings per share was $0.94 for the quarter

2015 sales guidance tightened to $690 million to $705 million

Initial 2016 sales guidance established at $690 million to $750 million

EAST AURORA, NY, November 10, 2015

Astroni cs Corporation (NASDAQ: ATRO), a leading supplier of products to the global aerospace, defense, and semiconductor industries, today reported financial results for the third quarter and nine months ended October 3, 2015. Earnings per share for all periods presented are adjusted for the 3 for 20 (15%) distribution of Class B Stock for shareholders of record on October 8, 2015.

Three Months Ended

Nine Months Ended

9/27/2014

% Change

200,145

179,442

534,939

494,956

Gross profit

59,427

51,310

149,041

124,517

Gross margin

22,297

25,539

66,213

62,638

SG&A percent of sales

Income from Operations

37,130

25,771

82,828

61,879

Operating margin %

Net Income

24,694

17,080

53,067

37,731

Net Income %

Peter J. Gundermann, President and Chief Executive Officer, commented, The third quarter was very strong for Astronics Corporation with new records set for sales and earnings. Sales crossed the $200 million level for the first time, and net income approached $25 million. Both our Aerospace and Test Systems segments turned in very strong performances. We are excited about the strength of the business, and look forward to a solid close to 2015 while maintaining positive momentum going into 2016.

-MORE-

Consolidated Review

Third Quarter 2015 Results

Consolidated sales for the third quarter of 2015 were $200.1 million, up from $179.4 million, or 11.5%, over the same period last year. The 2015 third quarter included $6.5 million in sales from Armstrong Aerospace, Inc. (Armstrong), acquired on January 14, 2015. Organic sales for the quarter increased $14.2 million, or 7.9%, and were achieved with increases across both the Aerospace and Test Systems segments.

Consolidated gross margin was 29.7% in the third quarter of 2015 compared with 28.6% in the third quarter of 2014. The third quarter of 2014 included $1.3 million of inventory fair value step-up expense of acquired businesses compared with $0.3 million in the third quarter of 2015. Engineering and development (E&D) costs were $22.5 million in the third quarter of 2015, including $1.8 million for Armstrong. E&D costs in last years third quarter were $19.1 million. As a percent of sales, E&D was 11.3% and 10.7% in the third quarters of 2015 and 2014, respectively.

Selling, general and administrative (SG&A) expenses were $22.3 million, or 11.1% of sales, in the third quarter of 2015 compared with $25.5 million, or 14.2% of sales, in the same period last year. The third quarter of 2014 included intangible asset amortization expense related to Astronics Test Systems, Inc. (ATS) (acquired in February 2014) of $5.3 million compared with $0.3 million in the third quarter of 2015. This decrease was partially offset by the incremental SG&A costs of Armstrong, which added approximately $1.4 million to SG&A in the third quarter of 2015, including $0.6 million of amortization expense for acquired intangible assets of that business.

Diluted earnings per share for the 2015 third quarter were $0.94 compared with $0.65 in the prior-year period, an increase of 44.6%.

Year-to-Date 2015 Results

Consolidated sales for the first nine months of 2015 increased by $40.0 million, or 8.1%, to $534.9 million, from $494.9 million for the same period last year. The acquisition of Armstrong contributed $20.3 million to consolidated sales, while consolidated organic sales increased $19.7 million, or 4.0%.

Consolidated gross margin was 27.9% in the first nine months of 2015 compared with 25.2% in the first nine months of 2014. The first nine months of 2015 included $1.0 million of inventory step-up expense compared with $18.6 million in the first nine months of 2014. E&D costs were 12.4% of sales, or $66.1 million, which included $4.8 million for Armstrong, compared with $57.1 million, or 11.5% of sales, in the prior years first nine months.

Selling, general and administrative (SG&A) expenses were $66.2 million, or 12.4% of sales, in the first nine months of 2015 compared with $62.6 million, or 12.7% of sales, in the same period last year. The increase was due primarily to the incremental SG&A costs of Armstrong, which added approximately $4.1 million to SG&A in the first nine months of 2015. Organically, higher SG&A expense reflected increased headcount and compensation costs to support growth. These increases were partially offset by a decrease in amortization expense for acquired intangible assets of ATS of $4.4 million and a $1.1 million reduction in the contingent consideration liability related to prior acquisitions.

Diluted earnings per share for the first nine months of 2015 were $2.02 compared with $1.45 for the same period last year, an increase of 39.3%.

Aerospace Segment Review

(refer to sales by market and segment data in accompanying tables)

Aerospace Third Quarter 2015 Results

Aerospace segment sales increased by $16.5 million, or 13.5%, when compared with the prior years third quarter to $138.7 million. Organic Aerospace sales grew 8.2%, or $10.0 million. Sales from Armstrong added $6.5 million.

Sales growth in the third quarter of 2015 was driven by increased Electrical Power & Motion sales, which were up $9.3 million, or 15%. Sales of in-seat power products grew at an even stronger rate, helping to offset reduced sales of seat motion products in this product line. The Electrical Power & Motion product lines are sold mostly to Commercial Transport customers, with lesser sales to Business Jets and Military customers. Sales of Lighting & Safety products increased $2.9 million, as higher production rates of commercial...


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