Astronics (ATRO) Sidoti Small-Cap Virtual Investor Conference summary

Leadership transition and company overview

• CFO Dave Burney is retiring, with Nancy Hedges set to succeed him in January.

• The company has a market cap just under $600 million and about 35-36 million shares outstanding.

• Aerospace is the dominant segment, accounting for about 90% of business; test systems make up the rest.

• Commercial aerospace is the largest funding source, typically 65-70% of volume.

• The company experienced a significant sales drop during the pandemic but is now recovering.

Business segments and strategic thrusts

• In-flight entertainment and connectivity (IFEC) is nearly half of business, with about 90% market share in in-seat power.

• Lighting represents 20-25% of business, with products in commercial, business, and military aircraft.

• Flight-critical electrical power focuses on advanced electronic circuit breakers and high-reliability starter generators.

• The test business, about $80 million, is pursuing new initiatives in transit and radio testing.

• The company is involved in major programs like the US Army’s FLRAA, with significant content per aircraft.

Financial performance and outlook

• Recovery is underway, with improving margins and strong bookings; backlog exceeds $600 million, mostly deliverable within 12 months.

• Adjusted EBITDA for Q3 reached 13.3% ($27 million), trending toward high-teens margin targets.

• A recent $165 million convertible note offering improved liquidity and reduced interest expense.

• Operating leverage remains strong, with 40% incremental margin on revenue growth.

• Long-term contracts are being repriced to address inflation, with margin improvements expected in 2025 and beyond.