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Astronics Corporation Reports 2013 Fourth Quarter Sales of $105.5 Million and Net Income of $6.4 Million

Astronics Corporation Reports 2013 Fourth Quarter Sales of $105.5 Million and Net Income of $6.4 Million    *Fourth quarter results set new records for sales, bookings, and backlog   *Fourth quarter diluted earnings per share up nearly 10%, to $0.34 over     prior-year period   *2013 sales grew 28% to $339.9 million and net income increased 25% to     $27.3 million   *2014 revenue expected to be in a range from $585 million to $640 million     assuming a successful and timely close of the previously announced EADS     T&S acquisition  EAST AURORA, N.Y., Feb. 13, 2014 (GLOBE NEWSWIRE) -- Astronics Corporation (Nasdaq:ATRO), a leading provider of advanced technologies for the global aerospace and defense industries today reported financial results for the fourth quarter and year ended December 31, 2013. All share quantities and per share data reported for 2013 and prior have been adjusted to reflect the impact of the twenty percent Class B stock distribution in October 2013.                       Three Months Ended          Year Ended                      Dec. 31,   Dec. 31,  %      Dec. 31,   Dec. 31,   %                       2013       2012      Change 2013       2012       Change                                                                    Sales                 $105,456 $67,420 56.4%  $339,937 $266,446 27.6% Gross profit          $25,173  $17,551 43.4%  $87,858  $69,442  26.5% Gross margin          23.9%      26.0%           25.8%      26.1%       SG&A                  $14,262  $9,622  48.2%  $45,553  $36,817  23.7% SG&A percent ofsales 13.5%      14.3%           13.4%      13.8%       Income from           $10,911  $7,929  37.6%  $42,305  $32,625  29.7% operations Operating margin %    10.3%      11.8%           12.4%      12.2%       Net income            $6,389   $5,655  13.0%  $27,266  $21,874  24.7% Net income %          6.1%       8.4%            8.0%       8.2%         Peter J. Gundermann, President and Chief Executive Officer, commented, "2013 was an exciting year for Astronics and its shareholders. We made three significant acquisitions in the second half of the year that will add to Astronics growth opportunities in the future. Each is a technological leader in their niche and each is synergistic with our other products. PECO, acquired in July, is a leading provider of overhead passenger service units. AeroSat, acquired in October, is a leading provider of antennas used for airborne satellite connectivity and PGA, acquired in December, is a leading provider of cabin management/entertainment systems for VVIP aircraft and motion systems for premium aircraft seats. We expect these acquisitions will be significant contributors to our future success."  He continued, "The fourth quarter was a strong close to 2013, setting new records for revenue, bookings and backlog.And, after considering the impact of accounting rules for business combinations which included the $3.5 million expense during the quarter for the fair value step-up of acquired inventory, we believe our income statement for the quarter shows real strength.We believe this momentum will become increasingly obvious as we move into 2014, and look forward to another exciting year."  Consolidated Review  Fourth Quarter 2013 Results  Consolidated sales increased by $38.0 million, or 56.4%, to $105.5 million compared with the same period last year. The acquired businesses accounted for $23.8 million of sales in the 2013 fourth quarter, all in the aerospace segment.  Consolidated gross profit was $25.2 million, up $7.6 million from the fourth quarter of 2012. Consolidated gross margin was 23.9% compared with 26.0% for same period last year. The Company expensed $3.5 million for the fair value step-up of acquired inventory from the 2013 acquisitions that was sold during the quarter.Engineering and development ("E&D") costs were $14.3 million in the fourth quarter of 2013 compared with $11.1 million in the same period of 2012. Leverage from higher sales volume helped to offset these items.  Selling, general and administrative ("SG&A") expenses increased $4.7 million to $14.3 million, or 13.5% of sales, compared with $9.6 million, or 14.3 % of sales, in last year's fourth quarter. A $0.8 million decrease in legal costs was more than offset by the incremental SG&A costs for the acquired businesses, which was $4.6 million in the fourth quarter of 2013.  The effective tax rate of 28.2% for the fourth quarter of 2013 was lower than the federal statutory rate primarily as a result of U.S. Research & Development (R&D) tax credits.  Net income in the fourth quarter of 2013 was $6.4 million, or $0.34 per diluted share, up 13.0% compared with $5.7 million, or $0.31 per diluted share, last year.This includes the impact of inventory step up charges which was approximately $0.13 per diluted share.  Consolidated 2013 Full Year Review  Consolidated sales for 2013 increased by $73.5 million, or 27.6%, to $339.9 million, compared with sales of $266.4 million for 2012. The acquired businesses in 2013 accounted for $39.4 million of sales, all in the aerospace segment.  Consolidated gross profit was $87.9 million, up $18.5 million from $69.4 million in the prior year. The consolidated gross margin was 25.8% for the full year of 2013 compared with 26.1% last year. Lower warranty and inventory obsolescence expense of $2.9 million and leverage from higher sales were more than offset by a $7.9 million increase of E&D expense and the expensing of approximately $5.5 million for the fair value step-up of acquired inventory from the 2013 acquisitions that was sold during the year. E&D costs were $52.8 million for the full year of 2013 compared with $44.9 million in the prior-year.  SG&A expenses for the full year of 2013 increased $8.8 million to $45.6 million, or 13.4% of sales, compared with $36.8 million, or 13.8% of sales, in 2012. The increase was due primarily to $6.6 million in added SG&A costs for the acquired businesses and $1.8 million relating to the acquisition transactions including financing, legal and diligence efforts.  Interest expense for the year was $4.1 million, up from $1.0 million in 2012, due to the increased debt levels associated with the Company's 2013 acquisitions.  The effective tax rate for 2013 was lower than the federal statutory rate due to the recognition of $0.8 million of 2013 U.S. R&D tax credits and an additional $1.1 million of U.S. R&D tax credits from 2012 that was recognized in 2013. The 2012 R&D tax credits were not recognized in 2012, as the American Tax Payer Relief Act of 2012, which extended the R&D tax credit for 2012, was not enacted until 2013. Astronics expects the effective tax rate for 2014 to be in the range of 30% to 31%.  Year-to-date net income in 2013 was $27.3 million, or $1.49 per diluted share, up 24.7% compared with $21.9 million, or $1.20 per diluted share, for the prior-year period. This includes the impact of inventory step up charges which was approximately $0.21 per diluted share.  Depreciation and amortization expense for 2013 totaled $11.1 million, up from $6.9 million in 2012, largely due to the recent acquisitions.  Mr. Gundermann continued, "2013 was obviously a pivotal year for our Company, and we are pleased with our ongoing integration efforts and financial results.We will be living with higher interest and amortization expense from the 2013 acquisitions for some time, but the fair value step-up of inventory is mostly behind us.We expect another $2.6 million of this expense in the early part of 2014, and then the earnings power of our 2013 acquisitions will be more evident."  Aerospace Segment Review (refer to sales by market and segment data in accompanying tables)  Aerospace Fourth Quarter 2013 Results  Fourth quarter sales in Astronics' Aerospace segment increased $37.9 million compared with the prior year fourth quarter. The acquired businesses had $23.8 million in sales in the fourth quarter of 2013. Sales from the company's organic business's increased by $14.1 million primarily from Electrical Power & Motion and Lighting & Safety product sales increases.  Aerospace operating profit in the fourth quarter of 2013 was $14.1 million, or 13.7% of sales, compared with $10.8 million, or 16.6% of sales, in the same period last year.Leverage from higher sales volume and a $1.4 million reduction of warranty, inventory obsolescence and legal expenses contributed to the increased operating profit.These were partially offset by the a $3.5 million expense for the fair value step-up of inventory of the acquired businesses that was sold during the quarter and higher E&D expenses of $3.2 million of which approximately half relates to the acquired businesses. SG&A costs for the businesses acquired in 2013 totaled $4.6 million for the quarter.  Aerospace Year-to-Date Results  Year-to-date sales for our Aerospace segment increased $75.6 million compared with the prior year. Sales for this segment from the acquired businesses accounted for $39.4 million of the increase. Organic sales for this segment were up $36.2 million primarily from Electrical Power & Motion product sales.Also contributing slightly to the increase was increased organic sales of Lighting & Safety products. The Electrical Power and Motion product line now includes motion systems for premium aircraft seats acquired with PGA.  Aerospace operating profit for 2013 was $55.2 million, or 16.7% of sales, compared with $44.1 million, or 17.3% of sales, in the same period last year.The increase in the operating profit was due to leverage from a higher volume of sales, lower warranty and inventory obsolescence expense and lower legal expenses which more than offset the $5.5 million fair value expense for the step-up of acquired inventory from the 2013 acquisitions and higher E&D expenses of $8.0 million, of which approximately $1.9 million related to the acquired businesses. SG&A costs for the businesses acquired in 2013 totaled $6.6 million for 2013, including $3.2 million of purchased intangible amortization expense associated with these acquisitions.  Aerospace Orders and Backlog  Bookings during the fourth quarter and full year of 2013 were $107.6 million and $344.6 million, respectively, compared with bookings of $65.6 million and $264.5 million in the fourth quarter and 2012, respectively.Aerospace backlog at the end of the fourth quarter 2013 was $207.1 million.  Test Systems Segment Review (refer to sales by market and segment data in accompanying tables)  Sales in the 2013 fourth quarter increased $0.1 million to $2.8 million when compared with the same period in 2012.Sales for the first twelve months of 2013 decreased $2.1 million to $9.4 million compared with 2012.All sales for the Test Systems segment were to the Military Market.  Test Systems operating loss for the fourth quarter of 2013 was $0.9 million, compared with $1.5 million in the same period last year.The operating loss for the first twelve months of 2013 was $3.8 million compared with $5.0 million in the same twelve-month period last year.  Test Systems Orders and Backlog  Bookings during the fourth quarter and full year of 2013 were $1.1 million and $12.9 million, respectively, compared with bookings of $0.7 million and $6.6 million in the fourth quarter and full year of 2012, respectively.Backlog at the end of the fourth quarter of 2013 was $7.1 million.  Balance Sheet  Cash was $54.6 million at the end of 2013, funded debt was $200.3 million resulting in net debt of $145.7 million.  Capital expenditures during the fourth quarter and full year of 2013 were $2.0 million and $6.9 million, respectively, compared with $6.2 million and $16.7 million for the same periods in 2012, respectively.  Outlook  On December 31, 2013, consolidated backlog was $214.2 million. Approximately $204.1 million of this backlog is expected to ship in 2014.  The Company expects 2014 sales to be in the range of $585 million to $640 million which includes approximately $100 million to $120 million for the previously announced planned acquisition of the Test business from EADS North America.Astronics expects that approximately $475 million to $505 million of forecasted 2014 revenue will be from its Aerospace segment, while $110 million to $135 million of the forecasted revenue will be from its Test Systems segment.  The Company expects capital spending in 2014 to be in the range of $33 million to $37 million, including approximately $21 million for the acquisition and renovation of a new facility in Portland, OR. This range does not include an estimate for capital spending for the EADS North America Test business. The Company expects to expense the majority of the remaining $2.6 million fair value inventory step up associated with the 2013 acquisitions in the first quarter of 2014.The Company expects 2014 consolidated E&D expenses to be in the range of $65 million to $69 million, including $14 million to $16 million from the 2013 acquisitions, but excluding E&D expenses for the EADS Test business.In 2014, excluding the EADS Test business, depreciation and amortization expense is expected to be approximately $18 million compared with $11 million in 2013.  Mr. Gundermann concluded, "We have very high expectations for 2014, with sales expected to increase more than 70% over 2013.Our first quarter will likely see sales of $130 to $140 million, depending on the timing of our announced acquisition of the EADS Test and Services business, which we hope to close by the end of February 2014.Overall, our markets and customer activity remain robust, and we believe the foundation we established in 2013 and prior has set the stage for a fantastic 2014."  Fourth Quarter and Full Year 2013 Webcast and Conference Call  The Company will host a teleconference today at 11:00 a.m. ET. During the teleconference, Peter J. Gundermann, President and CEO, and David C. Burney, Executive Vice President and CFO, will review the financial and operating results for the period and discuss Astronics' corporate strategy and outlook.A question-and-answer session will follow.  The Astronics conference call can be accessed by calling (201) 689-8562. The listen-only audio webcast can be monitored at www.astronics.com.To listen to the archived call, dial (858) 384-5517 and enter conference ID number 13574445. The telephonic replay will be available from 2:00 p.m. ET on the day of the call through Thursday, February 20, 2014. A transcript will also be posted to the Company's Web site, once available.  ABOUT ASTRONICS CORPORATION  Astronics Corporation (Nasdaq:ATRO) is a leader in advanced, high-performance electrical power & motion, lighting & safety, specialized avionics, structure products and automated test systems for the global aerospace and defense industries. Astronics' strategy is to develop and maintain positions of technical leadership in its chosen aerospace and defense markets, to leverage those positions to grow the amount of content and volume of product it sells to those markets and to selectively acquire businesses with similar technical capabilities that could benefit from our leadership position and strategic direction. Astronics Corporation, and its wholly-owned subsidiaries, Astronics AeroSat Corporation, Astronics Advanced Electronic Systems Corp., Ballard Technology, Inc., DME Corporation, Luminescent Systems Inc., Max-Viz, Inc., PECO, Inc. and PGA Electronic S.A, have a reputation for high-quality designs, exceptional responsiveness, strong brand recognition and best-in-class manufacturing practices.The Company routinely posts news and other important information on its Web site at www.astronics.com.  For more information on Astronics and its products, visit its website at www.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" or other similar expressions.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 include the state of the aerospace and defense industries, the market acceptance of newly developed products, internal production capabilities, the timing of orders received, the status of customer certification processes, the demand for and market acceptance of new or existing aircraft which contain the Company's products, customer preferences, 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.  FINANCIAL TABLES FOLLOW  ASTRONICS CORPORATION CONSOLIDATED INCOME STATEMENT DATA (Unaudited, $ in thousands except per share data)                             Three Months Ended        Year Ended                           12/31/2013   12/31/2012   12/31/2013   12/31/2012 Sales                      $105,456   $67,420    $339,937   $266,446 Cost of products sold      80,283      49,869      252,079     197,004 Gross profit               25,173      17,551      87,858      69,442 Gross margin               23.9%        26.0%        25.8%        26.1%                                                                Selling, general and       14,262      9,622       45,553      36,817 administrative SG&A % of Sales            13.5%        14.3%        13.4%        13.8% Income from operations     10,911      7,929       42,305      32,625 Operating margin           10.3%        11.8%        12.4%        12.2%                                                                Interest expense, net      2,009       239         4,094       1,042 Income before tax         8,902       7,690       38,211      31,583 Income tax expense         2,513       2,035       10,945      9,709 Net Income                 $6,389     $5,655     $27,266    $21,874 Net income % of Sales      6.1%         8.4%         8.0%         8.2%                                                                                                                               *Basicearnings per share: $0.36      $0.33      $1.56      $1.28 *Diluted earnings per      $0.34      $0.31      $1.49      $1.20 share:                                                                *Weighted average diluted shares outstanding (in     18,629      18,254      18,359      18,157 thousands)                                                                Capital Expenditures       $2,035     $6,150     $6,868     $16,720 Depreciation and           $4,512     $1,950     $11,059    $6,905 Amortization                                                                *All share quantities and per share data reported for 2013 have been restated to reflect the impact of the twenty percent Class B stock distribution to shareholders of record on October 10, 2013.                                                                 ASTRONICS CORPORATION CONSOLIDATED BALANCE SHEET DATA (in thousands)                                           12/31/2013  12/31/2012                                           (Unaudited)  ASSETS                                                 Cash and cash equivalents                  $54,635   $7,380 Accounts receivable                        60,942     45,473 Inventories                                85,269     48,624 Other current assets                       5,061      1,566 Deferred taxes - current                   5,291      4,967 Property, plant and equipment, net         70,900     53,537 Deferred taxes - long-term                 --        9,019 Other long-term assets                     5,474      2,977 Intangible assets, net                     102,701    16,523 Goodwill                                   100,998    21,923 Total Assets                               $491,271  $211,989                                                       LIABILITIES AND SHAREHOLDERS' EQUITY                   Current maturities of long term debt       $12,279   $9,268 Accounts payable and accrued expenses      72,958     38,700 Long-term debt                             188,041    20,715 Other liabilities                          22,254     18,172 Deferred taxes - long-term                 24,230     -- Shareholders' equity                       171,509    125,134 Total Liabilities and Shareholders' Equity $491,271  $211,989                                                        ASTRONICS CORPORATION SEGMENT DATA (Unaudited, $ in thousands)                              Three Months Ended    Year Ended                             12/31/2013 12/31/2012 12/31/2013 12/31/2012 Sales                                                       Aerospace                    102,660   64,743    330,530   254,955 Test Systems                 2,896     2,677     10,103    11,491 Less Inter-segment           (100)     --       (696)     -- Total Sales                  105,456   67,420    339,937   266,446                                                            Operating Profitand Margins                                Aerospace                    14,088    10,779    55,200    44,137                             13.7%      16.6%      16.7%      17.3% Test Systems                 (876)     (1,460)   (3,756)   (4,985)                             (30.2)%    (54.5)%    (37.2)%    (43.4)% Total Operating Profit       13,212    9,319     51,444    39,152                             12.5%      13.8%      15.1%      14.7%                                                            Interest Expense             2,009     239       4,094     1,042 Corporate Expenses andOther 2,301     1,390     9,139     6,527 Income Before Taxes          8,902     7,690     38,211    31,583                                                             ASTRONICS CORPORATION SALES BY MARKET (Unaudited, $ in thousands)               Three Months Ended           Year Ended                                   12/31/2013 12/31/2012 %      12/31/2013 12/31/2012 % change 2013                                     change                                YTD                                                                     Aerospace                                                            Segment Commercial    75,918    45,884    65.5%  237,725   179,105   32.7%    70% Transport Military      15,270    8,697     75.6%  48,669    36,510    33.3%    14% Business Jet  7,448     7,607     (2.1)% 29,784    29,379    1.4%     9% Other         4,024     2,555     57.5%  14,352    9,961     44.1%    4% Aerospace     102,660   64,743    58.6%  330,530   254,955   29.6%    97% Total                                                                     Test Systems                                                         Segment Military      2,796     2,677     4.4%   9,407     11,491    (18.1)%  3%                                                                     Total         105,456   67,420    56.4%  339,937   266,446   27.6%    100%                                                                      ASTRONICS CORPORATION SALES BY PRODUCT (Unaudited, $ in thousands)                Three Months Ended           Year Ended                                   12/31/2013 12/31/2012 %      12/31/2013 12/31/2012 %      2013                                      change                       change  YTD                                                                     Aerospace                                                            Segment Electrical     54,428    42,003    29.6%  188,221   160,136   17.5%   55% Power & Motion Lighting &     35,015    15,076    132.3% 102,233   69,597    46.9%   30% Safety Avionics       5,180     5,109     1.4%   18,733    15,261    22.8%   6% Structures     3,530     --       100%   6,331     --       100%    2% Other          4,507     2,555     76.4%  15,012    9,961     50.7%   4% Aerospace      102,660   64,743    58.6%  330,530   254,955   29.6%   97% Total                                                                     Test Systems                                                         Segment Military       2,796     2,677     4.4%   9,407     11,491    (18.1)% 3%                                                                     Total          105,456   67,420    56.4%  339,937   266,446   27.6%   100%                                                                      ASTRONICS CORPORATION ORDER AND BACKLOG TREND (Unaudited, $ in thousands)                   Q1           Q2           Q3          Q4          Twelve                 2013         2013         2013        2013        Months                 3/30/2013    6/29/2013    9/28/2013   12/31/2013  12/31/2013 Sales                                                           Aerospace        $71,669    $68,676    $87,525   $ 102,660  $ 330,530 Test Systems     2,298       2,157       2,156      2,796      9,407 Total Sales      $73,967    $70,833    $89,681   $ 105,456  $ 339,937                                                                Bookings                                                        Aerospace        $75,390    $65,714    $95,852   $ 107,633  $ 344,589 Test Systems     3,092       620         8,066      1,127      12,905 Total Bookings   $78,482    $66,334    $ 103,918  $ 108,760  $ 357,494                                                                Backlog*                                                        Aerospace        $ 114,636   $ 111,674   $ 159,468  $ 207,101  N/A Test Systems     4,359       2,822       8,731      7,062      N/A Total Backlog    $ 118,995   $ 114,496   $ 168,199  $ 214,163  N/A                                                                Book:Bill Ratio                                                 Aerospace        1.05        0.96        1.10       1.05       1.04 Test Systems     1.35        0.29        3.74       0.40       1.37 Total Book:Bill  1.06        0.94        1.16       1.03       1.05                                                                * During the third quarter, acquisitions added backlog of approximately $39.5 million for the Aerospace segment During the fourth quarter, acquisitions added backlog of approximately $42.6 million for the Aerospace segment.  CONTACT: Company:          David C. Burney, Chief Financial Officer          Phone: (716) 805-1599, ext. 159          Email: david.burney@astronics.com                   Investor Relations:          Deborah K. Pawlowski, Kei Advisors LLC          Phone: (716) 843-3908          Email: dpawlowski@keiadvisors.com  Astronics Corporation logo