Astronics (ATRO) 15th Annual Midwest IDEAS Investor Conference summary

Company overview and market position

• Operates in two segments: aerospace (about 90% of volume) and test systems (about 10%).

• Commercial aerospace accounts for 64% of revenue, with significant exposure to this market.

• In-flight entertainment and connectivity products represent roughly half of sales, with leading market share in in-seat power (90-95%).

• Major customers include both Boeing and Airbus, with products installed on a wide range of aircraft.

• Broad product line enables partnerships with major IFE and connectivity companies.

Recent performance and recovery

• Revenues dropped from $780M in 2019 to $450M in 2021 due to the pandemic, but have rebounded with 28% growth in 2022 and 20% in 2023.

• Bookings have exceeded sales for the last four quarters, supporting strong backlog.

• Expecting mid-teens revenue growth in the current year, returning to 2019 revenue levels within the next two quarters.

• Margin profile is improving, with contribution margin on incremental sales above 40%.

• Adjusted EBITDA reached $20M in Q2, with a target to reach mid to upper teens as a percentage of sales.

Strategic initiatives and growth opportunities

• Won new programs during the pandemic, including a $250M IDIQ Army radio test contract over 3-5 years.

• Significant growth potential in narrow-body aircraft retrofits for in-seat power, as 70% of the global fleet lacks this feature.

• Developing flight-critical electrical power systems for small aircraft and major military programs like the Bell V-280 FLRAA.

• Engaged in eVTOL electrical systems, positioning for future electric aircraft markets.

• Test systems segment expected to benefit from recent Army contract win.