Astronics (ATRO) Q4 2019 earnings summary

Executive summary

• 2019 sales fell to $772.7M from $803.3M, largely reflecting the semiconductor test divestiture; excluding that business, adjusted sales rose 6.1%.

• Net income was $52.0M, including the semiconductor sale gain; adjusted net income was $29.6M after specified adjustments for the divestiture, legal reserve, antenna restructuring and equity investment impairment.

Financial highlights

• Sales were $772.7M; gross profit was $156.1M, operating income $1.7M and net income $52.0M, compared with $803.3M, $180.7M, $63.7M and $46.8M, respectively, in 2018.

• Diluted EPS was $1.60 versus $1.41 in 2018; 2019 results included an $80.1M pretax semiconductor sale gain, partly offset by a $1.3M Airfield Lighting sale loss.

• Operating cash flow was $42.7M, down from $54.9M; investing activities provided $64.6M, primarily reflecting $103.8M of semiconductor sale proceeds.

Outlook and guidance

• 2020 Q1 sales were expected at $155M–$165M, with Aerospace contributing about 90%; the quarter was expected to be the lightest, followed by strengthening results through the year.

• Full-year sales guidance was temporarily withdrawn amid the 737 MAX grounding and production pause; the potential COVID-19 impact on airline demand, spending and supply chains was uncertain.

• 2020 effective tax rate was expected at 18%–22%; capital equipment spending at $22M–$25M and depreciation and amortization at $33M–$35M.

• Year-end backlog was $359.6M; $300.9M was expected to convert to 2020 revenue, including $249.6M in Aerospace and $51.4M in Test Systems.