Astronics Corporation Reports Net Income Grows 24% in Second Quarter of 2010

Friday, Jul 30, 2010

Astronics Corporation (NASDAQ: ATRO), a leader in advanced, high performance lighting, electrical power and automated test systems for the global aerospace and defense industries, today reported financial results for its second quarter and year-to-date period ended July 3, 2010.

“As a result of our strong bookings over the past six months, we are increasing our revenue expectations for the year. We now expect that our sales for the year will be in the range of $185 to $195 million, up from the previous estimate of $170 to $190 million.”

Peter J Gundermann, President and Chief Executive Officer commented, “Overall, we had a solid quarter that was led by our Aerospace segment. We had strong cash flow and profitability and our bookings so far this year are very encouraging. New orders over the past six months total almost $106 million, up measurably over the $72 million for the same period last year.”

Sales in the second quarter of 2010 were $47.1 million, up $0.1 million, or 0.1%, from the prior year second quarter. Aerospace sales, which represent 93% of total sales, increased 14% to $43.6 million in the 2010 second quarter. Test Systems sales declined by $5.3 million to $3.5 million when compared with last year’s second quarter.

Net income in the second quarter of 2010 was $2.4 million, or $0.22 per diluted share, compared with net income of $2.0 million, or $0.18 per diluted share, in the same period of last year.

Consolidated gross margin and operating margin in the 2010 second quarter improved over the prior year period reflecting strong operating leverage in the Aerospace segment on higher volume, lower cost structure from actions taken last year to reduce costs and favorable sales mix. Also contributing to the operating margin expansion was a $0.7 million decline in amortization expense on purchased intangible assets in the Test Systems segment.

Engineering and development (E&D) costs were $7.0 million in the 2010 second quarter compared with $6.4 million in last year’s second quarter.

Sales for the first half of 2010 were $94.0 million, down $3.0 million, or 3.1%, from the same period last year. Net income for the 2010 six-month period was $5.8 million, or $0.52 per diluted share, compared with net income of $3.4 million, or $0.31 per diluted share, in the same period of last year.

The improved margins in the first half of 2010 were a result of higher margins in the Aerospace segment as leverage was achieved from increased sales volumes and reductions to our cost structure, as well as a favorable sales mix compared with last year. Also contributing to the operating margin expansion was a $1.1 million reduction in amortization expense on purchased intangible assets in the Test Systems segment.

Year-to-date engineering and development costs were $14.2 million and $13.8 million in 2010 and 2009, respectively.

The $0.4 million decrease in selling, general and administrative (SG&A) expense in the second quarter of 2010 compared with last year’s second quarter was primarily due to last year’s higher amortization expense for purchased intangible assets in the Test Systems business.

Second quarter Review: Aerospace Segment (refer to sales by market and segment data in accompanying tables)

Sales for the Aerospace segment were $43.6 million in the second quarter of 2010, up $5.4 million, or 14.1%, compared with the 2009 second quarter. The sales increase to the commercial transport market was a result of increased volume due primarily to a general improvement in the commercial transport market, as airlines increased their procurement and installation of in-flight entertainment and in-seat power systems that utilize the Company’s cabin electronics products. Sales to the business jet market were higher due to increased sales of the airframe power product line. FAA/Airport market sales increased due in part to the timing of shipments of airfield lighting equipment. Military sales were flat for the quarter compared with the previous year’s second quarter as a $2.0 million increase in sales of aircraft lighting products was offset by a decrease of airframe power product sales, as the Company’s shipments for the Tactical Tomahawk power conditioning unit concluded in the third quarter of 2009.

Year-to-date sales were $86.8 million in the first half of 2010, up $6.8 million, or 8.4%, compared with the first half of 2009. The increase in commercial transport sales was a result of a general improvement in the commercial transport market. In total, sales to the business jet market were flat as a $1.4 million increase in airframe power sales was offset by a similar decrease in aircraft lighting product sales. Military sales were lower primarily as a result of the conclusion of shipments of the Company’s power conditioning unit for the Tactical Tomahawk missile in the third quarter of 2009, somewhat offset by higher shipments of lighting products.

Aerospace operating profit for the second quarter of 2010 was $6.8 million, or 15.5% of sales, compared with $3.7 million, or 9.7% of sales, in the same period last year. Operating profit for the first half of 2010 was $13.5 million, or 15.5% of sales, compared with $7.1 million, or 8.9% of sales, in the same period last year. Margin improvement for both the three-month and year-to-date periods was due to the leverage provided on the increased sales volume, the effect of cost reductions and favorable product mix.

Bookings for the Aerospace segment during the second quarter were $46.2 million, up 34% over $34.6 million in the second quarter of 2009. Backlog at the end of the second quarter was $85.7 million compared with $83.1 million at the end of the trailing first quarter.

Source: Business Wire