Astronics (ATRO) Q4 2013 earnings summary

Executive summary

• 2013 sales rose 27.6% to $339.9M, driven by $39.5M from acquisitions and $34.0M of organic growth; net income reached $27.3M.

• Aerospace growth and 2014 expectations for ATS-led expansion shaped the outlook, while Test Systems continued to face weaker military program demand.

Financial highlights

• Sales were $339.9M versus $266.4M in 2012; gross profit was $87.9M versus $69.4M.

• Income from operations was $42.3M versus $32.6M; net income was $27.3M versus $21.9M.

• Diluted EPS was $1.49 versus $1.20; basic EPS was $1.56 versus $1.28.

• Adjusted for $5.5M of acquired-inventory fair-value step-up expense, 2013 cost of products sold also reflected higher engineering costs; warranty and inventory obsolescence expenses fell $2.9M.

• Operating cash flow was $49.5M versus $24.2M; cash at year-end was $54.6M versus $7.4M.

Outlook and guidance

• 2014 consolidated sales guidance was $585M–$640M, including ATS; backlog of $207.1M was expected to ship, with ~$204.1M expected in 2014.

• 2014 Aerospace sales were expected at $475M–$505M; Test Systems sales at ~$110M–$135M following ATS.

• 2014 capital equipment spending was forecast at $33M–$37M, including ~$21M for the Oregon facility; engineering and development costs were estimated at $65M–$69M, excluding ATS.

• ATS sales were expected to total ~$100M in 2014 across defense and commercial industries.