Astronics Q3 Earnings Call Highlights

Key Points

• Astronics posted record Q3 sales of $271.7 million, up 28.5% year over year, while operating income doubled to $54 million. Adjusted EBITDA rose more than 81% to $59.3 million.
• Aerospace revenue climbed 27.4% to a record $245.5 million, and aerospace backlog reached a record $670 million. Test Systems revenue rose 40%, supported by the Army radio test program.
• The company maintained its 2026 revenue forecast of $1.02 billion to $1.04 billion and expects 2027 growth well above 10%. Astronics also reduced long-term debt by $25.5 million during the quarter, while noting electronic-component lead times and price increases as risks to monitor.

Astronics NASDAQ: ATRO reported record third-quarter sales and operating income as higher aerospace demand and an Army radio test program helped lift revenue 28.5% from a year earlier. The company maintained its 2026 revenue forecast and said it expects strong double-digit growth in 2027.

Sales rose to $271.7 million, while operating income doubled to $54 million, or 19.9% of sales. Adjusted operating income was $51 million, representing an 18.8% margin, as higher volume and improved productivity helped profitability across both segments.

Chairman, President and CEO Peter Gundermann said the company’s growth drivers remained intact, including rising aircraft production, demand for inflight entertainment and connectivity, premium seating and the ramp-up of the Army test program. He said higher sales volume, contract repricing and improved efficiency also had contributed to stronger margins.

Aerospace Sales and Backlog Reach Records

Aerospace revenue increased 27.4% to a record $245.5 million. Commercial transport sales rose 29%, general aviation sales climbed 52% and military aircraft sales increased 5%, CFO Nancy Hedges said.

Inflight entertainment and connectivity revenue grew 24% to $131 million, reflecting demand for connectivity and passenger power products. Seat motion sales more than doubled to $24.9 million, including a $6.4 million contribution from BMA, the German company Astronics acquired in October of the prior year.

Aerospace operating profit rose to $57.6 million from $31.2 million. The result benefited from higher volume and production efficiencies, as well as $1.9 million in tariff refunds and approximately $4.4 million associated with a favorable U.K. patent appeal. Adjusted aerospace operating profit rose 71.5% to $55.1 million.

The segment ended the quarter with a record $670 million in backlog, up from $657 million at the end of the second quarter. Companywide backlog was $780 million, roughly unchanged from the preceding quarter.

Army Program Lifts Test Systems

Test Systems revenue increased 40% to $26.2 million, its highest quarterly level since 2019. The Army 4549/T radio test program contributed $5.3 million, partially offset by a $2.2 million revision to estimated costs on certain long-term mass transit contracts that reduced revenue recognized in the quarter.

The segment generated $3.9 million in operating profit, compared with approximately break-even a year earlier. Gundermann attributed the improvement in part to cost cuts over the past year.

Hedges said Astronics expects similar Army program revenue in the fourth quarter, subject to suppliers keeping pace, and continues to expect approximately $9 million to $10 million per quarter at full production. Gundermann said the program should reach that rate in early 2027.

Profitability Improves and Debt Declines

Net income was $52.2 million, or $1.08 per diluted share, compared with a net loss of $11.1 million, or $0.26 per share, a year earlier. Hedges noted that the prior-year quarter included a $32.6 million loss related to a partial repurchase of convertible notes.

Adjusted net income rose to $38.9 million, or $0.81 per diluted share, from $19.4 million, or $0.41 per share. Adjusted EBITDA increased more than 81% to $59.3 million, with the margin expanding to 21.8% from 15.5%.

Astronics generated $25.8 million in operating cash flow during the quarter. Long-term debt fell $25.5 million from the end of the second quarter to $284.8 million, and available liquidity was $278 million.

The company lowered its full-year capital expenditure forecast to $25 million to $30 million from $40 million to $45 million. Hedges said the reduction reflected project timing rather than a change in planned growth investments.

2027 Outlook and Supply Chain Risks

Astronics maintained its 2026 revenue guidance of $1.02 billion to $1.04 billion, implying fourth-quarter revenue of $255 million to $275 million. Gundermann said the midpoint would be a small decline from the record third quarter because of customer scheduling, not a major change in the business.

Although the company has not issued formal 2027 guidance, Gundermann said he expects growth “well north of 10%.” Hedges said a margin of approximately 40% on incremental sales remained a realistic expectation for 2027.

Gundermann said Astronics had not seen significant backlog stretches or customer deferrals, but was monitoring longer lead times and price increases for some electronic components. He also pointed to rescheduling of the MV-75 program. Hedges said the company now expects approximately $35 million in MV-75 revenue for 2026; Gundermann said the best estimate for 2027 was roughly the same rate while Astronics awaits direction from Bell.

About Astronics (NASDAQ:ATRO)

Astronics Corporation designs and manufactures technologies for the aerospace, defense and other industries. Its aerospace products include aircraft lighting, electrical power generation and distribution systems, cabin electronics, connectivity solutions and avionics-related equipment used on commercial and military aircraft. The company also develops test systems, including automated equipment used to test aerospace and defense electronics. Astronics serves aircraft manufacturers, airlines, defense organizations and other customers, with products and services reaching markets around the world.

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