Astronics (NASDAQ:ATRO)
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Astronics Corporation (NASDAQ: ATRO), a leading manufacturer of
advanced, high-performance lighting, electronics and electrical power
systems for the global aerospace industry, reported its financial
results for the 2006 fourth quarter and year which ended December 31,
2006. The financial statements for 2005 and the first three quarters of
2006 have been restated as previously announced on March 6, 2007.
The impact of the restatement on the 2005 income statement as originally
reported was to reduce sales and net income by $1.0 million and $0.4
million respectively. The impact of the restatement on the 2006 first
quarter was to increase sales as originally reported by $0.3 million and
increase net income as originally reported by $0.1 million. The impact
on the second quarter was to decrease sales as originally reported by
$0.2 million and decrease net income as originally reported by $0.1
million, and the impact on the third quarter was to decreases sales as
originally reported by $0.8 million and decrease net income as
originally reported by $0.3 million.
Net income for the fourth quarter of 2006 was $0.8 million compared with
net income of $1.0 million in the fourth quarter of 2005. On a per
diluted share basis, earnings were $0.10 for the fourth quarter of 2006
compared with $0.12 in the same period the prior year. For 2006, net
income increased to $5.7 million or $0.69 per diluted share, compared
with $2.2 million or $0.28 per diluted share for 2005.
Sales for the fourth quarter of 2006 were $28.9 million, up 43% from
$20.2 million in the fourth quarter of 2005. Sales to the commercial
transport market, which were up $8.3 million, or 98%, combined with an
increase in sales to the business jet market of $2.8 million, or 80%,
more than offset a $2.4 million decline in military sales. Sequentially,
sales in the fourth quarter increased $1.2 million from sales in the
third quarter reflecting increased demand from the commercial transport
market.
Gross margin for the quarter was 17.1%, down from 20.3% in the fourth
quarter of 2005, and down from 22% in the third quarter of 2006. The
lower margin was primarily a result of product mix, increased
engineering and development costs and more costly low level production
rates for new programs that recently entered production.
Selling, general and administrative (SG&A) expenses were $3.7 million,
up from $2.6 million in the same period the prior year. However, as a
percentage of sales, SG&A for the quarter remained unchanged at 12.6%.
Operating profit was $1.3 million in the fourth quarter of 2006 compared
with $1.6 million in the same period the prior year.
Full Year Review
For the full 2006 fiscal year, sales were $110.8 million, a 49% increase
from $74.3 million in 2005. Sales to the commercial transport market
more than doubled for the full year to $61.3 million compared with sales
of $30.2 million in 2005, comprising 55% of total sales for the year.
Sales to the business jet market increased 49% for the full year to
$22.9 million while military sales declined slightly to $25.3 million
from $27.5 million in 2005.
Gross margin in 2006 was 21.0%, up 1 percentage point over gross margin
of 20.0% in 2005. Operating leverage from higher sales volume was
somewhat offset by a $2.0 million increase of engineering and design
costs, related to product development, to $10.9 million compared with
$8.9 million in 2005.
On an absolute basis, SG&A for the full 2006 year increased $3.3 million
to $13.6 million but declined as a percentage of sales to 12.3% in 2006
compared with 13.8% in the prior year. The increase in SG&A costs was
attributable to increases in compensation cost, costs related to
compliance with Sarbanes – Oxley Section 404
and the adoption of SFAS 123R for stock based compensation expense.
These higher expenses were more than offset by sales growing at a faster
pace than SG&A spending.
Peter J. Gundermann, President and CEO of Astronics Corp., commented, “The
Company’s performance in 2006 was the
strongest in our history. Demand was strong across our product lines,
but clearly our strongest growth came from our cabin electronics
products that have been well received by airlines around the world. We
believe our strong performance in 2006 has set the stage for an even
better year in 2007.”
Liquidity
Cash and cash equivalents were $222 thousand at December 31, 2006, a
decrease from $4.5 million at December 31, 2005 and $645 thousand at
September 30, 2006. Higher capital expenditures for capacity expansion
and increased investment in working capital components, primarily
inventory and receivables associated with increasing sales growth, have
decreased cash reserves.
Capital expenditures for the fourth quarter of 2006 were $3.1 million
compared with $733 thousand in the fourth quarter of 2005. For the full
year, capital expenditures were $5.4 million compared with $2.5 million
in the prior year. In order to accommodate growth, the Company’s
East Aurora, New York facility is being expanded, adding approximately
57,000 square feet to the existing 68,000 square foot facility.
Construction began in the third quarter of 2006 and is expected to be
completed during the second quarter of 2007. The company is also
doubling the size of its Redmond, Washington facility, which is rented
from a private owner.
Outlook
Bookings for the 2006 fourth quarter of $40.4 million were up from
bookings of $37.9 million in the fourth quarter of 2005 and up
sequentially from $26 million in the third quarter of 2006. At the end
of the fourth quarter 2006, backlog was at a record $99.5 million.
Mr. Gundermann added, “We performed well in
2006, from both a sales and a profitability perspective. As we move into
2007, we continue to be optimistic about the numerous opportunities we
see in the market. Most major aircraft manufacturers are projecting
strong production rate increases in 2007, airlines worldwide continue to
pursue fleet modernization and upgrade initiatives, and exciting new
aircraft are being developed for the future. It adds up to a market
which affords Astronics a strong array of opportunities, and we expect
to do well in the coming year.”
Mr. Gundermann concluded, “Many of the
development programs we have been involved in continue to progress, and
some are now moving into production. While the product ramp up for these
programs can be unpredictable, we continue to plan conservatively and
expect to see progress. As a result of strong market conditions, our new
aircraft platform successes, and the higher content we are supplying to
new aircraft, we anticipate revenue to be in the range of $135 million
to $140 million in 2007.”
Fourth Quarter and 2006 Webcast and
Conference Call
The Company will host a teleconference at 11 a.m. ET today. During the
teleconference, Peter J. Gundermann, President and CEO, and David C.
Burney, Vice President and CFO, will review the financial and operating
results for the period and discuss Astronics’
corporate strategy and outlook. A question-and-answer session will
follow.
The Astronics conference call can be accessed the following ways:
The live webcast can be found at http://www.astronics.com.
Participants should go to the website 10 - 15 minutes prior to the
scheduled conference in order to register and download any necessary
audio software.
The teleconference can be accessed by dialing (973) 935-2970
approximately 5 - 10 minutes prior to the call.
To listen to the archived call:
The archived webcast will be at http://www.astronics.com.
A transcript will also be posted once available.
A replay can also be heard by calling (973) 341-3080, and entering the
pin number, 8540003. The telephonic replay will be available from 2
p.m. ET the day of the call through 11:59 p.m. ET March 20, 2007.
ABOUT ASTRONICS CORPORATION
Astronics Corporation is a leading manufacturer of advanced,
high-performance lighting and electrical power distribution systems for
the global aerospace industry. Its strategy is to expand the value and
content it provides to various aircraft platforms through product
development and acquisition. Astronics Corporation, and its wholly-owned
subsidiaries Astronics Advanced Electronic Systems Corp. and Luminescent
Systems Inc., have a reputation for high quality designs, exceptional
responsiveness, strong brand recognition and best-in-class manufacturing
practices.
For more information on Astronics and its products, visit its
website at www.Astronics.com.
Safe Harbor Statement
This press release contains forward-looking statements as defined by the
Securities Exchange Act of 1934. One can identify these forward-looking
statements by the use of the words “expect,”
“anticipate,” “plan,”
“may,” “will,”
“estimate” or
other similar expression. Because such statements apply to future
events, they are subject to risks and uncertainties that could cause the
actual results to differ materially from those contemplated by the
statements. Important factors that could cause actual results to differ
materially include the state of the aerospace industry, the market
acceptance of newly developed products, the ability to cross sell
products and expand markets, internal production capabilities, the
timing of orders received, the status of customer certification
processes, the demand for and market acceptance of new or existing
aircraft which contain the Company’s
products, such as the Airbus A380; the Eclipse 500; the Air Canada’s
CRJ705, A320, and several configurations of B767; Cessna single engine
aircraft; Cessna Mustang; Hawker Horizon; the V22 Osprey; Lockheed
Martin F-35 JSF; China Eastern Airlines Corp. Limited’s
upgrade of 15 Airbus A330-300’s and five
Airbus A330-200’s; Air China Limited’s
upgrades of 20 Airbus A330-200’s; and F-22
Raptor; customer preferences, and other factors which are described in
filings by Astronics with the Securities and Exchange Commission. The
Company assumes no obligation to update forward-looking information in
this press release whether to reflect changed assumptions, the
occurrence of unanticipated events or changes in future operating
results, financial conditions or prospects, or otherwise.
ASTRONICS CORPORATION
CONSOLIDATED INCOME STATEMENT
DATA
(unaudited)
(in thousands except per share data)
Three months ended
Twelve months ended
12/31/2006
12/31/2005
(Restated)
12/31/2006
12/31/2005
(Restated)
Sales
$
28,920
$
20,233
$
110,767
$
74,354
Cost of products sold
23,969
16,116
87,519
59,484
Gross margin
17.1%
20.3%
21.0%
20.0%
Selling general and administrative
3,651
2,554
13,582
10,246
Income from operations
1,300
1,563
9,666
4,624
Operating margin
4.5%
7.7%
8.7%
6.2%
Interest expense, net
246
216
896
735
Other (income) expense
50
(265)
11
(278)
Income (loss) before tax
1,004
1,612
8,759
4,167
Income taxes
197
635
3,023
1,930
Net Income
$
807
$
977
$
5,736
$
2,237
Basic earnings per share:
$
0.10
$
0.13
$
0.72
$
0.28
Diluted earnings per share:
$
0.10
$
0.12
$
0.69
$
0.28
Weighted average diluted shares outstanding
8,446
8,136
8,269
8,038
Capital Expenditures
$
3,100
$
733
$
5,400
$
2,498
Depreciation and Amortization
$
969
$
331
$
2,929
$
2,373
ASTRONICS CORPORATION
CONSOLIDATED BALANCE SHEET DATA
(unaudited)
(in thousands)
12/31/2006
12/31/2005
(Restated)
ASSETS:
Cash and cash equivalents
$
222
$
4,473
Accounts receivable
17,165
12,635
Inventories
31,570
19,381
Other current assets
2,699
1,615
Property, plant and equipment, net
23,436
20,461
Other assets
7,446
7,874
Total Assets
$
82,538
$
66,439
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current maturities of long term debt
$
923
$
914
Note payable
8,100
7,000
Accounts payable and accrued expenses
25,196
16,841
Long-term debt
9,426
10,304
Other liabilities
7,545
5,962
Shareholders' equity
31,348
25,418
Total liabilities and shareholders' equity
$
82,538
$
66,439
ASTRONICS CORPORATION
SALES BY MARKET
($, in thousands)
Three Months Ended
Twelve Months Ended
12/31/2006
12/31/2005
(Restated)
% change
12/31/2006
12/31/2005
(Restated)
% change
2006 YTD %
Military
$
5,614
$
8,038
-30%
$
25,338
$
27,538
-8%
23%
Commercial Transport
16,846
8,505
98%
61,293
30,244
103%
55%
Business Jet
6,262
3,488
80%
22,931
15,402
49%
21%
Other
198
202
-2%
1,205
1,170
3%
1%
Total
$
28,920
$
20,233
43%
$
110,767
$
74,354
49%
100%
ASTRONICS CORPORATION
SALES BY PRODUCT
($, in thousands)
Three Months Ended
Twelve Months Ended
12/31/2006
12/31/2005(Restated)
% change
12/31/2006
12/31/2005
(Restated)
% change
2006 YTD %
Cockpit Lighting
$
7,041
$
6,821
3%
$
30,623
$
28,417
8%
28%
Cabin Electronics
13,120
3,865
239%
45,778
15,626
193%
41%
Airframe Power
4,614
3,782
22%
16,934
11,972
41%
15%
External Lighting
1,821
3,257
-44%
7,672
9,890
-22%
7%
Cabin Lighting
2,126
2,306
-8%
8,555
7,279
18%
8%
Other
198
202
-2%
1,205
1,170
3%
1%
Total
$
28,920
$
20,233
43%
$
110,767
$
74,354
49%
100%
ASTRONICS CORPORATION
ORDER AND BACKLOG TREND
($, in thousands)
2005
2006
Q1 2005
Q2 2005
Q3 2005
Q4 2005
Twelve Months
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Twelve Months
4/2/05
7/2/05
10/1/05
(Restated)
12/31/05
(Restated)
12/31/05
(Restated)
4/1/06
(Restated)
7/1/06
(Restated)
9/30/06
(Restated)
12/31/06
12/31/06
Sales
$
15,656
$
18,839
$
19,626
$
20,233
$
74,354
$
25,263
$
28,832
$
27,752
$
28,920
$
110,767
Bookings
$
14,868
$
23,564
$
20,176
$
37,946
$
96,554
$
23,850
$
23,929
$
25,985
$
40,411
$
114,175
Backlog
$
72,292
$
77,856
$
78,406
$
96,119
$
96,119
$
94,706
$
89,803
$
88,036
$
99,527
$
99,527
Book:Bill
0.95
1.25
1.03
1.88
1.30
0.94
0.83
0.94
1.40
1.03
ASTRONICS CORPORATION
CONSOLIDATED INCOME STATEMENT
DATA AS RESTATED
(unaudited)
(in thousands except per share data)
Three months ended
9/30/2006
7/1/2006
4/1/2006
(Restated)
(Restated)
(Restated)
Sales
$
27,752
$
28,832
$
25,263
Cost of products sold
21,633
22,066
19,851
Gross margin
22.0%
23.5%
21.4%
Selling general and administrative
3,469
3,443
3,019
Income from operations
2,650
3,323
2,393
Operating margin
9.5%
11.5%
9.5%
Interest expense, net
232
219
199
Other (income) expense
(5)
(22)
(12)
Income (loss) before tax
2,423
3,126
2,206
Income taxes
775
1,163
888
Net Income
$
1,648
$
1,963
$
1,318
Basic earnings per share:
$
0.21
$
0.25
$
0.17
Diluted earnings per share:
$
0.20
$
0.24
$
0.16
Weighted average diluted shares outstanding
8,264
8,223
8,143
Capital Expenditures
$
693
$
962
$
645
Depreciation and Amortization
$
701
$
636
$
623