Astronics Corporation Reports 2015 First Quarter Sales of $161.6 Million and Net Income of $10.7 Million
- 2015 first quarter diluted earnings per share was $0.47 vs. $0.33 in 2014 first quarter
- First quarter Aerospace segment sales, bookings and backlog reached new records of $142.4 million, $141.1 million and $234.0 million, respectively
- Consolidated organic sales grew 9.9%, organic Aerospace segment sales were up 10.9%
EAST AURORA, N.Y., May 12, 2015 (GLOBE NEWSWIRE) -- Astronics Corporation (Nasdaq:ATRO), a leading supplier of products to the global aerospace, defense, electronics and semiconductor industries, today reported financial results for the first three months ended April 4, 2015.
First Quarter 2015 Results
Peter Gundermann, CEO of Astronics, said "Our first quarter was largely as anticipated. Performance in our Aerospace segment was strong and steady, while our Test Systems segment dealt with an adverse combination of product mix and delivery schedules. We expect Test shipments to improve dramatically in the coming quarters, particularly in the third quarter, resulting once again in new records. All in all, we view our first quarter results as a solid start to the year."
Consolidated sales for the first quarter of 2015 increased 14.7% to $161.6 million compared with $141.0 million for the same period last year. First quarter 2014 sales included four weeks of activity for Astronics Test Systems, Inc. ("ATS"), which was acquired on February 28, 2014. The 2015 first quarter included incremental sales of $6.6 million from Armstrong Aerospace, Inc. ("Armstrong"), acquired on January 14, 2015, while organic sales increased $14.0 million, or 9.9% to $155.0 million. Aerospace segment sales increased $19.9 million to $142.4 million and Test Systems segment sales increased $0.7 million to $19.3 million.
Consolidated gross margin was 24.8% compared with 21.3% in the first quarter of 2014. The expanded margin primarily was due to $8.7 million related to inventory step-up expense in the first quarter of 2014, compared with $0.6 million in the first quarter of 2015. Engineering and development ("E&D") costs were $22.2 million, which included an incremental $1.9 million for ATS and $1.3 million for Armstrong. E&D costs in the prior year's first quarter were $17.2 million.
Selling, general and administrative ("SG&A") expenses were $22.6 million, or 14.0% of sales, compared with $16.4 million, or 11.6% of sales, in the same period last year. The increase was due primarily to the incremental SG&A costs of ATS and Armstrong, which added $3.1 million to SG&A in the first quarter of 2015, including $0.8 million of amortization expense for acquired intangible assets of those businesses. Additionally, higher SG&A expense reflects increased headcount and compensation costs to support growth.
Diluted earnings per share for the 2015 first quarter were $0.47 compared with $0.33 in the same period last year.
Aerospace Segment Review
Aerospace First Quarter 2015 Results
Aerospace segment sales increased by $19.9 million, or 16.3%, when compared with the prior year's first quarter to $142.4 million. Organic sales grew 10.9%, or $13.3 million, and sales from Armstrong added $6.6 million.
Sales to the Commercial Transport market increased $20.9 million, of which $6.6 million was related to the acquisition of Armstrong, primarily comprised of Systems Certification sales. The remaining increase was mostly higher organic sales of Lighting & Safety, Avionics and Electrical Power & Motion products. Organic Lighting and Safety product sales to the Commercial Transport market increased by $5.4 million. Organic sales of Avionics products to the Commercial Transport market increased by $5.0 million. Organic sales of Electrical Power & Motion products to the Commercial Transport market increased approximately $3.5 million.
Sales to the Business Jet market decreased $1.8 million when compared with last year's first quarter, due to lower organic sales of avionics and lighting products to this market.
Aerospace operating profit for the first quarter of 2015 was $23.4 million, or 16.4% of sales, compared with $17.5 million, or 14.3% of sales, in the same period last year. Approximately $0.6 million in operating profit was related to Armstrong, which was acquired in January 2015. Armstrong inventory step-up expense was $0.6 in the first quarter of 2015. Operating profit in the first quarter of 2014 was impacted by $2.4 million associated with inventory step-up, primarily related to AeroSat and PGA, which were acquired in the fourth quarter of 2013. Operating leverage gained on volume for the organic business was partially offset by approximately $1.9 million of higher organic E&D costs. Aerospace SG&A expense increased $2.6 million in the first quarter of 2015 as compared with 2014. Incremental SG&A from Armstrong was $1.2 million, including $0.4 million of purchased intangible asset amortization expense for acquired intangible assets.
Test Systems Segment Review
Test Systems First Quarter 2015 Results
2014 results reflect only four weeks of sales and costs for ATS, which was acquired on February 28, 2014. Sales in the 2015 first quarter increased $0.7 million to $19.3 million compared with sales of $18.6 million for the same period in 2014. The 2015 sales level is reflective of owning ATS for a full quarter. Sales to the Commercial Electronics market decreased compared with the same period in 2014 as ATS completed the delivery of units with its primary customer in the Commercial Electronics market during 2014. Current year deliveries to this customer are expected to be concentrated in the second and third quarters. The decrease in the Commercial Electronics market was more than offset by increased sales to the Military market, primarily resulting from the inclusion of ATS for a full quarter in 2015 compared with only four weeks in 2014.
Operating loss was $2.2 million compared with an operating loss of $1.7 million in last year's first quarter. The 2015 first quarter reflects operating expenses of ATS for a full quarter, as compared with only four weeks of operating expenses in the prior year first quarter. Additionally, the 2014 first quarter reflects inventory step-up costs of $6.3 million that reduced normal operating margins for that period.
Expectations for consolidated sales in 2015 are unchanged at a range of $680 million to $740 million, including the January 2015 addition of Armstrong. Approximately $550 million to $580 million of forecasted 2015 revenue is expected from the Aerospace segment, while approximately $130 million to $160 million of the forecasted revenue is expected from the Test Systems segment.
Consolidated backlog at April 4, 2015 was $378.5 million, of which approximately $314.1 million is expected to ship in 2015.
Capital equipment spending in 2015 is expected to be in the range of $20 million to $27 million. E&D costs are estimated to be in the range of $75 million to $80 million.
Mr. Gundermann commented, "We are maintaining our original 2015 revenue forecast of $680 to $740 million. Our Test Systems segment is expected to have strong results in our second and third quarters as we deliver on the major contract announced late last year. As is typical, our consolidated fourth quarter will be dependent upon the level of bookings we achieve over the next six months. We remain pleased with our range of market positions and expect continued success as the year unfolds."
ABOUT ASTRONICS CORPORATION
Astronics Corporation (Nasdaq:ATRO) is a leading supplier of products to the global aerospace, defense, electronics and semiconductor industries. Our products and services include advanced, high-performance electrical power generation & distribution systems, lighting & safety systems, avionics products, aircraft structures, engineering design and systems certification and automated test systems. Astronics' strategy is to increase its value by developing technologies and capabilities, either internally or through acquisition, and using those capabilities to provide innovative solutions to our targeted markets and other markets where our technology can be beneficial. Astronics Corporation, through its wholly-owned subsidiaries, has 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 website 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, defense, electronics and semiconductor industries, the market acceptance of newly developed products, internal production capabilities, the timing of orders received, the status of customer certification processes and delivery schedules, the demand for and market acceptance of new or existing aircraft which contain the Company's products, the need for new and advanced test and simulation equipment, 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.
CONTACT: For more information contact:
Company: David C. Burney, Chief Financial Officer
Phone: (716) 805-1599, ext. 159
Investor Relations: Deborah K. Pawlowski, Kei Advisors LLC
Phone: (716) 843-3908