Astronics (ATRO) Q4 2017 earnings summary

Executive summary

• FY17 sales were $624.5M, down 1.4% YoY, as weak early demand in in-flight entertainment and semiconductor testing was partly offset by a strong second-half booking rebound.

• Second-half bookings exceeded shipments by more than 30%; year-end backlog reached a record $393.7M, supporting a projected 2018 recovery.

• Lower sales and continued investment pressured profitability; results also included a $16.2M goodwill impairment charge tied to Armstrong.

Financial highlights

• Revenue was $624.5M vs. $633.1M in 2016; gross profit was $137.1M vs. $159.5M.

• Operating income was $30.4M vs. $73.1M; net income was $19.7M vs. $48.4M.

• Diluted EPS was $0.67 vs. $1.61; reported results included the $16.2M goodwill impairment charge.

• Operating cash flow was $37.8M vs. $48.9M; cash used in investing was $129.6M, primarily for acquisitions and capital expenditures.

Outlook and guidance

• FY18 sales guidance was $745M–$815M; midpoint outlook implied approximately 25% growth, including Telefonix PDT, with both segments expected to improve.

• Aerospace sales guidance was $630M–$680M; Test Systems guidance was $115M–$135M.

• Of $393.7M year-end backlog, $346.7M was expected to ship in 2018; segment estimates were $271.4M Aerospace and $75.3M Test Systems.

• FY18 capital equipment spending was forecast at $24M–$28M; engineering and development spending at $110M–$115M.