Astronics (ATRO) Q4 2018 earnings summary

Executive summary

• Record 2018 sales of $803.3M, up 28.6% YoY; organic sales rose 15.0%, with $84.8M of acquired sales. Net income reached $46.8M and diluted EPS $1.41.

• Stronger demand lifted both segments; operating results were constrained by losses at challenged Aerospace operations, which management expected to improve in 2019.

Financial highlights

• Sales rose to $803.3M from $624.5M; gross profit was $180.7M and gross margin 22.5%, versus 22.0% in 2017.

• Operating income was $63.7M, up from $32.1M; operating margin improved to 7.9% from 5.1%.

• Net income increased to $46.8M from $19.7M; diluted EPS was $1.41 versus $0.58 in 2017.

• Cash from operations rose 45% to $54.9M; long-term debt declined nearly $37M to $232.1M.

Outlook and guidance

• FY2019 sales guidance: $760M–$805M; midpoint implies 8% organic growth excluding 2018 semiconductor sales.

• Aerospace sales expected at $710M–$745M, with midpoint growth of about 8%; Test Systems guidance is $50M–$60M, midpoint up 14% excluding the divested business.

• 2019 effective tax rate expected at 18%–22%, excluding the semiconductor sale gain; capital equipment spending forecast at $22M–$28M.

• Backlog was $403M excluding the divested semiconductor business; $306M Aerospace and $46M Test Systems backlog expected to ship in 2019.