Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume”“presume,” “assume” and “assume,”other words and terms of similar meaning, including their negative counterparts, are forward-looking statements.statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. TheseForward-looking statements are subject to several factors, risks and uncertainties that may cause actual results to differ materially from those that we expected, including but not limited to:

While we believe that the forward-looking statements in this report are reasonable, these statements are not guarantees of future performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual results to differ materially from the expected results described in the forward-looking statements. Certain of these factors, risks and uncertainties are discussed in the sections of this report entitledin Item 1A, “Risk Factors”Factors,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” NewAll written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the U.S. Securities and Exchange Commission and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

The important factors discussed above may not contain all of the factors that are important to you. In addition, new factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. WeThe forward-looking statements included in this report are made only as of the date hereof and are based on our current expectations. Except as required by applicable law, we disclaim any obligation to update or revise the forward-looking statements made in this report.report as a result of new information, future events or otherwise.

Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense and other mission-criticalelectronics industries. Our products and services include advanced, high-performance electrical power generation, distribution and seat motion systems, lighting and safety systems, avionics products, systems and certification, aircraft structures and automated test systems.

We have principal operations in the United States (“U.S.”), Canada, France and England, as well as engineering offices in the Ukraine and India. Our operation in Ukraine is a small engineering office and we have not experienced any significant disruption in staffing or services as a result of the Ukrainian and Russian conflict.

In December 2019,September 2021, the Company was awarded a novel straingrant of coronavirusup to $14.7 million from the U.S. Department of Transportation (“COVID-19”USDOT”) surfacedunder the Aviation Manufacturing Jobs Protection Program (“AMJP”). The Company received $7.3 million and $7.4 million under the grant in Wuhan, China,2022 and has since spread to other countries, including2021, respectively. The grant benefit was recognized ratably over the United States. In March 2020, the World Health Organization characterized COVID-19six-month performance period as a pandemic. The pandemic has resultedreduction to Cost of Products Sold in governments aroundproportion to the world implementing stringent measurescompensation expense that the award was intended to help controldefray. During the spreadyears ended December 31, 2022 and 2021, the Company recognized $6.0 million and $8.7 million of the virus, including quarantines, “shelter in place”award, respectively.

For additional details regarding government subsidies and “stay at home” orders, travel restrictions, business curtailmentsgrants, and other measures. As a result, global demand for travel declined at a rapid pace and has remained depressed. The exact timing and pace of a recovery is indeterminable as certain markets have reopened, some of which have since experienced a resurgence of COVID-19 cases, while others, particularly international markets, remain closed or are enforcing extended quarantines.

On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems segment. The business was not core to the future of the Test Systems segment. The total proceeds of the divestiture amountedincluded two elements of contingent purchase consideration (“earnout”). In the fourth quarter of 2021, the Company agreed to $103.8an earnout payment of $10.7 million for the calendar 2020 earnout, which was recorded in 2021 as a separate line item below operating loss and was received by the Company in early January 2022. In March 2022, the Company agreed with the earnout calculation for the calendar 2021 earnout in the amount of $11.3 million. The Company recorded a pre-taxthe gain onand received the sale of $80.1 millionpayment in the first quarter of 2019.2022. In March 2023, the Company agreed with the final earnout calculation for the calendar 2022 earnout in the amount of $3.4 million. The Company recorded income tax expense relating to the gain of $19.7 million.

On July 12, 2019,October 6, 2021, the Company sold intellectual propertyone of its Aerospace buildings for $9.2 million. Net cash proceeds were approximately $8.8 million and certain assets associated with its Airfield Lighting product line for $1.0a gain on sale of approximately $5.0 million in cash.was recorded. The Airfield Lighting product line, part ofoperation has been integrated into another facility.

In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment was not core tofiled for bankruptcy under Chapter 11. As a result, the business and represented less than 1% of revenue. The Company recorded a pre-tax loss on the salefull reserve of approximately $1.3 million.$7.5 million for outstanding accounts receivable and $3.6 million for dedicated inventory. The associated assets existed prior to 2023.

Our Aerospace segment designs and manufactures products for the global aerospace industry. Product lines include lighting and safety systems, electrical power generation, distribution and motionsseat motion systems, aircraft structures, avionics products, systems certification, and other products. Our Aerospace customers are the airframe manufacturers (“OEM”) that build aircraft for the commercial transport, military and general aviation markets, suppliers to those OEM’s,OEMs, aircraft operators such as airlines, suppliers to the aircraft operators, and branches of the U.S. Department of Defense. During 2020,2023, this segment’s sales were divided 64%72% to the commercial transport market, 16%10% to the military aircraft market, 14%13% to the business jetgeneral aviation market and 6%5% to other markets. As a result of the COVID-19 pandemic and its adverse impact on air travel worldwide, the commercial aerospace industry has been significantly disrupted. The significant adverse impact of the COVID-19 pandemic on the commercial transport market channels has led to this market comprising a lower percentage of our net sales in fiscal 2020 than typical. Most of this segment’s sales are a result of contracts or purchase orders received from customers, placed on a day-to-day basis or for single year procurements rather than long-term multi-year contract commitments. On occasion, the Company does receive contractual commitments or blanket purchase orders from our customers covering multiple-year deliveries of hardware to our customers.

Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as training and simulation devices for both commercial and military applications. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEM'sOEMs and prime government contractors for both electronics and military products. The nature of our Test Systems business is such that it pursues large, often multi-year, projects.

Sales by segment, geographic region, major customer and foreign operations are provided in Note 20 ofin Item 8, Financial Statements and Supplementary Data, inof this report.

We have a significant concentration of business with twoone major customers; Panasonic Avionics Corporation (“Panasonic”) andcustomer, The Boeing Company (“Boeing”). Sales to PanasonicBoeing accounted for 11.1%11.0% of sales in 2020, 13.0%2023, 11.0% of sales in 2019,2022, and 14.4%10.0% of sales in 2018.2021. Sales to Boeing accounted for 9.5% of salesare primarily in 2020, 13.6% of sales in 2019, and 14.3% of sales in 2018.the Aerospace segment.

Our strategy is to increase our value by developing technologies and capabilities either internally or through acquisition, and use those capabilities to provide innovative solutions to the aerospace and defense and otherour targeted markets where our technology can be beneficial.

Liquidity is discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Liquidity and Capital Resources section of this report.

We experience considerable competition in the market sectors we serve, principally with respect to product performance and price, from various competitors, many of which are substantially larger and have greater resources.resources than we do. Success in the markets we serve depends upon product innovation, customer support, responsiveness and cost management. We continue to invest in developing the technologies and engineering support critical to competing in our markets.

All U.S. government contracts, including subcontracts where the U.S. government is the ultimate customer, may be subject to termination at the election of the government. Our revenue stream relies on military spending. Approximately 16%12% of our 2023 consolidated sales were made to U.S. government-related markets.

The FAA regulates the militarymanufacture, repair and operation of all aircraft and military testaircraft parts operated in the United States. Its regulations are designed to ensure that all aircraft and aviation equipment are continuously maintained in proper condition to ensure safe operation of the aircraft. Similar rules apply in other countries. All aircraft must be maintained under a continuous condition monitoring program and must periodically undergo thorough inspection and maintenance. The inspection, maintenance and repair procedures for the various types of aircraft and equipment are prescribed by regulatory authorities and can be performed only by certified repair facilities utilizing certified technicians. Certification and conformance is required

prior to installation of a part on an aircraft. Our operations may in the future be subject to new and more stringent regulatory requirements. In that regard, we closely monitor the FAA and industry trade groups in an attempt to understand how possible future regulations might impact us. Our businesses which sell products directly to the U.S. Government or for use in systems markets combined.delivered to the U.S. Government can be subject to various laws and regulations governing pricing and other factors.

Materials, supplies and components are purchased from numerous sources. We believe that the loss of any one source, although potentially disruptive in the short-term, would not materially affect our operations in the long-term.

Our business is typically not seasonal.

At December 31, 2020,2023, our consolidated backlog was $283.4$592.3 million. At December 31, 2019,2022, our backlog was $359.6$571.4 million. The decreaseincrease in backlog is attributable to the adverse impact that the COVID-19 pandemic has had on customerdriven primarily by recovering demand particularlyfrom our commercial aerospacetransport and business jetgeneral aviation customers, domestically and internationally. The uncertainty of the duration of the pandemic and its impact on the aerospace industry is expected to continue to inhibit sales order backlog growth in the commercial OEM and commercial aftermarket channels untilwith increased OEM build rates increase and increased spending by commercial airlines increase spending on fleet improvements.

Backlog in the Aerospace segment was $191.1$517.2 million at December 31, 2020,2023, of which $162.8$474.5 million is expected to be recognized as revenue in 2021.2024. Backlog in the Test Systems segment was $92.3$75.0 million at December 31, 2020.2023. The Test Systems segment expects to recognize $52.1 million of this backlog as revenue $54.1 million of backlog in 2021.2024.

We have a number of patents. While the aggregate protection of these patents is of value, our only material business that is dependent upon the protection afforded by these patents is our cabin power distribution products. Our patents and patent applications relate to electroluminescence, instrument panels, cord reels and handsets, and a broad patent covering the cabin power distribution technology. We regard our expertise and techniques as proprietary and rely upon trade secret laws and contractual arrangements to protect our rights. We have trademark protection in our major markets.

We are engaged in a variety of engineering and design activities as well as basic researchResearch and development activities directedcosts are expensed as incurred and include salaries, benefits, consulting, material costs and depreciation. Research and development expenses amounted to the substantial improvement or new application of our existing technologies.$53.5 million in 2023, $48.3 million in 2022 and $43.3 million in 2021. These costs are expensed when incurred and included in costCost of products sold. Research, development and engineering costs amounted to approximately $86.8 million in 2020, $108.9 million in 2019 and $114.3 million in 2018.

As of December 31, 2020,2023, we employed approximately 2,2002,500 employees, of whom approximately 1,8002,000 were employed in the United States and approximately 400500 were employed outside of the United States. We have approximately 60 hourly140 non-exempt production employees at PECO who are subject to collective bargaining agreements. We also leverage temporary workers to provide flexibility for our business and manufacturing needs.

We greatly value our employees and recognize that, without them, the Company would not have achieved the success it has accomplished since inception. We strive to provide a positive, supportive work culture with a clear global vision and a collaborative work style. We strongly believe that a focus on learning and supporting career development can lead to success. With low attrition and high referral rates, Astronics Corporation regularly earns “best employer” awards.

As it relates to customers, investors, suppliers and partners, our Company is dedicated to conducting business with integrity and responsibility for the greater good. We promote honest and ethical conduct, compliance with applicable government regulations and accountability by all of its directors, officers and employees.

When considering an acquisition or partnership, we embed questions specific to human capital management within our due diligence approach. These questions are in the areas of culture, equal employment opportunity, compliance with governing bodies, ethics, as well as employee benefits. We ask these in an effort to ensure that the acquisition candidate is a positive cultural fit and to minimize any risk when assessing the acquisition candidate.

In addition, our Corporate Governance Guidelines outline expectations that the Board establish and promote policies that encourage a positive, supportive work culture. The Board recognizes that culture is critical to the long-term success of Astronics and our strategy.

We believe that future success largely depends upon our continued ability to attract and retain highly skilled employees. We provide employees with competitive salaries and bonuses, opportunities for equity ownership, development programs that enable continued learning and growth and a robust employment package that promotes well-being across all aspects of their lives, including;

The lifeblood of any organization is its employee base. We rely on our individual subsidiaries to regularly gather employee feedback, using the method each subsidiary believes is most appropriate. In some instances that feedback is obtained through “Town Hall” formats; in other instances, it is obtained through surveys. We also expect our managers to solicit and, where applicable, use employee feedback to improve its business practices and working environment. We are proud to have received numerous awards, recognizing both product quality as well as the ability to provide an excellent work environment.

Much of our success is rooted in the diversity of our teams and our commitment to inclusion. We believeThe Company believes that diversity and inclusion is critical for the attraction and retention of top talent. We employtalent, and employs policies and procedures to recruit women and minority talent as well as policies to ensure pay equality. Astronics has an Equal Employment Opportunity Policy whereby we committhe Company commits to providing equal employment opportunity and affirmative action plans for all qualified employees and applicants.applicants without regard to race, color, sex, sexual orientation, gender identity, religion, national origin, disability, veteran status, age, marital status, pregnancy, genetic information or other legally protected status.

Astronics is committed to the safety of our customers and our employees. Each Astronics operation maintains environmental, health and safety policies and practices that seek to promote the operation of its businesses in a manner that is protective of the health and safety of the public and its employees, particularly in the response to the global COVID-19 pandemic. We have implemented actions to maintain the health of our employees including social distancing measures, the use of masks, restricting visitors and unnecessary travel, and working from home whenever possible.employees.

Our operations offer several health and welfare programs to employees to promote fitness and wellness and to encourage preventative healthcare. In addition, our employees are offered a confidential employee assistance program that provides professional counseling to employees and their family members. Also, many of our operations offer green space for employees to use during their breaks.

We file our financial information and other materials as electronically required with the U.S. Securities and Exchange Commission (“SEC”). These materials can be accessed electronically via the Internet at www.sec.gov. Such materials and other information about the Company areWe also make available free of charge through our website at www.astronics.com.www.astronics.com our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the SEC. The information contained on our website is not incorporated by reference in this annual report on Form 10-K and should not be considered a part of this report.

In our Aerospace segment, demand by the business jetgeneral aviation markets for our products is dependent upon several factors, including capital investment, product innovations, economic growth and wealth creation and technology upgrades. In addition, the commercial airline industry is highly cyclical with significant downturns in the past and sensitive to such things as fuel price increases, labor disputes, global economic conditions, availability of capital to fund new aircraft purchasespurchase and upgrades of existing aircraft and passenger demand, all of which have been significantly impacted by the ongoing COVID-19 pandemic.demand. A change in any of these factors could result in a further reduction in the amount of air travel and the ability of airlines to invest in new aircraft or to upgrade existing aircraft. Therefore, our business is directly affected by economic factors and other trends that affect our customers in the commercial aerospace industry. These factors would reduce orders for new aircraft and would likely reduce airlines’ spending for cabin upgrades for which we supply

products, thus reducing our sales and profits. A reduction in air travel may also result in our commercial airline customers being unable to pay our invoices on a timely basis or not at all.

We are a supplier on various new aircraft programs just entering or expected to begin production in the future. As with any new program, there is risk as to whether the aircraft or program will be successful and accepted by the market. As is customary for our business, we purchase inventory and invest in specific capital equipment to support our production requirements generally based on delivery schedules provided by our customer. If a program or aircraft is not successful, we may have to write-off all or a part of the inventory, accounts receivable and capital equipment related to the program. A write-off of these assets could result in a significant reduction of earnings and cause covenant violations relating to our debt agreements. This could result in our being unable to borrow additional funds under our bank credit facility or being obliged to refinance or renegotiate the terms of our bank indebtedness.

In our Test Systems segment, the market for our products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. In any one reporting period, a single customer or several customers may contribute an even larger percentage of our consolidated sales. In addition, our ability to increase sales will depend, in part, on our ability to obtain orders from current or new significant customers. The opportunities to obtain orders from these customers may be limited, which may impair our ability to grow sales. We expect that sales of our Test Systems products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

We believe that the principal points of competition in our markets are product quality, price, design and engineering capabilities, product development, conformity to customer specifications, quality of support after the sale, timeliness of delivery and effectiveness of the distribution organization. Maintaining and improving our competitive position will require continued investment in manufacturing, engineering, quality standards, marketing, customer service and support and our distribution networks. If we do not maintain, or are otherwise unable to maintain, sufficient resources to make these investments, or are not successful in maintaining our competitive position, our business operations and financial performance will suffer.

potential for substantial civil and criminal fines and penalties. These fines and penalties could be imposed for failing to follow procurement integrity and bidding rules, employing improper billing practices or otherwise failing to follow cost accounting standards, receiving or paying kickbacks or filing false claims. We have been, and expect to continue to be, subjected to audits and investigations by government agencies. The failure to comply with the terms of our government contracts could harm our business reputation.reputation, which could significantly reduce our sales and earnings. It could also result in our suspension or debarment from future government contracts.contracts, which would adversely affect our business, financial condition, results of operations, and cash flows.

In addition, any acquisition, once successfully integrated, could negatively impact our financial performance if it does not perform as planned, does not increase earnings, or does not prove otherwise to be beneficial to us.

The threats we face vary from attacks common to most industries, such as ransomware attacks to disable critical infrastructure and extort companies for ransom payments, to more advanced and persistent, highly organized adversaries, including nation states, which target us and other defense contractors because we protect sensitive information. If we are unable to protect sensitive information, our customers or governmental authorities could question the adequacy of our threat mitigation and detection processes and procedures, and depending on the severity of the incident, our customers’ data, our employees’ data, our intellectual property, and other third-party data (such as subcontractors, suppliers and vendors) could be compromised. As a consequence of their persistence, sophistication and volume, we may not be successful in defending against all such attacks. Due to the evolving nature of these security threats, the impact of any future incident cannot be predicted.

Although we work cooperatively with our customers, suppliers, and subcontractors to seek to minimize the impact of cyber threats, other security threats or business disruptions, we must rely on the safeguards put in place by these entities, which may affect the security of our information. These entities have varying levels of cybersecurity expertise and safeguards and their relationships with U.S. government contractors, such as Astronics, may increase the likelihood that they are targeted by the same cyber threats we face.

Additionally, our credit facilityABL Revolving Credit Facility and Term Loan Facility also containscontain a number of restrictive covenants that impose significant operating and financial restrictions on the Company and our subsidiaries and may limit our ability to engage in acts that maywe believe to be in our long-term best interests. The credit facility includesABL Revolving Credit Facility and Term Loan Facility include covenants restricting, among other things, the ability of the Company toand our subsidiaries to:

growth rates and terminal values. Certain of these assumptions, particularly the discount rate, are based on market conditions and are outside of our control. Changes in these assumptions could affect our future earnings and equity.

Additionally, pension obligations and the related costs are determined using actual results and actuarial valuations that involve several assumptions. The most critical assumption is the discount rate. Other assumptions include mortality, salary increasesand bonus levels and retirement age. The discount rate assumptions are based on current market conditions and are outside of our control. Changes in these assumptions could affect our future earnings and equity.

Refer to Note 19 of our consolidated financial statementsConsolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for discussion on this and other legal proceedings. Other than these proceedings, we are not party to any significant pending legal proceedings that management believes will result in a material adverse effect on our results of operations or financial condition.

In addition, the stock market in general, and the market prices for companies in the aerospace and defense industry in particular, have experienced significant price and volume fluctuations that often have been unrelated to the operating performance of the companies affected by these fluctuations. These broad market fluctuations may adversely affect the market price of our

On December 31, 2020,2023, we own or lease 1.31.1 million square feet of space, distributed by segment as follows:

We have principal operations in the U.S., Canada, France and the UK, as well as engineering offices in the Ukraine and India.

Upon the expiration of our current leases, we believe that we will be able to either secure renewal terms or enter into leases for or purchases of alternative locations at market terms. We believe that our properties have been adequately maintained and are generally in good condition.

Currently, we are involved in legal proceedings relating to allegations of patent infringement and, based on rulings to date, we have concluded that losses related to certain of these proceedings are probable. For a discussion of contingencies related to legal proceedings, see Note 19 to our consolidated financial statementsConsolidated Financial Statements in Item 8.8, Financial Statements and Supplementary Data, of this report.

The table below sets forth the range of prices for the Company’s Common Stock is traded on the NASDAQ NationalNasdaq Global Select Market System, for each quarterly period duringunder the last two years.symbol “ATRO”. The approximate number of shareholders of record as of February 18, 2021,26, 2024, was 724717 for Common Stock and 1,9821,878 for Class B Stock.

The Company has not paid any cash dividends in the three-year period ended December 31, 2020.2023. The Company has no plans to pay cash dividends in the future as it plans to retain all cash from operations as a source of capital to service debt and finance working capital and growth in the business.

(1) On February 24, 2016,September 17, 2019, the Company’s Board of Directors authorized thean additional share repurchase program. This program authorizes repurchases of up to $50 million of common stock, which allowed the Company to purchase shares of its common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions. The Company repurchased approximately 1,675,000 shares and has completed that program in 2017. On December 12, 2017, the Company’s Board of Directors authorized an additional repurchase of up to $50 million. No shares were repurchased in 2018. The Company repurchased approximately 1,823,000 shares and completed that program in the third quarter of 2019. On September 17, 2019, the Company’s Board of Directors authorized an additional repurchase of up to $50 million.stock. Cumulative repurchases under this plan were approximately 310,000 shares at a cost of $8.5 million before the 10b5-1 plan associated with the share repurchase program was terminated on February 3, 2020.

The following graph and table shows the performance ofcompares the Company’s annual percentage change in cumulative total return on common stock comparedshares over the past five years with the cumulative total return of companies comprising the S&P 500 Index — Total Return and the NASDAQ USComposite Index. This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2018, and Foreign Companies for athat dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment made December 31, 2015:at one-year intervals for the fiscal years shown.

Astronics Corporation, through its subsidiaries, is a leading supplier of advanced technologies and products to the global aerospace and defense industries. Our products and other mission-critical industries.services include advanced, high-performance electrical power generation and distribution systems, seat motion solutions, lighting and safety systems, avionics products, aircraft structures, systems certification, and automated test systems.

We have two reportable segments, Aerospace and Test Systems. Our Aerospace segment has principal operating facilities in the United States, Canada and France. Our Test Systems segment has principal operating facilities in the United States and the United Kingdom. We have engineering offices in the Ukraine and India.

Our Aerospace segment designs and manufactures products for the global aerospace industry. Product lines include lighting and safety systems, electrical power generation, distribution and seat motionsmotion systems, aircraft structures, avionics products, systems certification, and other products. Our primary Aerospace customers are the airframe manufacturers (“OEM”) that build aircraft for the commercial transport, military and general aviation markets, suppliers to those OEM’s,OEMs, aircraft operators such as airlines, suppliers to the aircraft operators, and branches of the U.S. Department of Defense.Defense (“USDOD”). Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense communications and mass transit industries as well as training and simulation devices for both commercial and military applications. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEM'sOEMs and prime government contractors for both electronics and military products.

Our strategy is to increase our value by developing technologies and capabilities, either internally or through acquisition, and using those capabilities to provide innovative solutions to our targeted markets where our technology can be beneficial.

Important factors affecting our growth and profitability are the ongoing impacts of the COVID-19 pandemic and the timing and extent of recovery (as discussed more fully below), the rate at which new aircraft are produced, government funding and timing of awards of military programs, our ability to have our products designed into new aircraft, and the rates at which aircraft owners, including commercial airlines, refurbish or install upgrades to their aircraft.aircraft and supply chain and labor market pressures. New aircraft build rates and aircraft owners spending on upgrades and refurbishments is cyclical and dependent on the strength of the global economy. Once one of our products is designed into a new aircraft, the spare parts business associated thereto is also frequently retained by the Company. Future growth and profitability of the testTest Systems business is dependent on developing and procuring new and follow-on business. The nature of our Test Systems business is such that it pursues large, often multi-year, projects. There can be significant periods of time between orders in this business, which may result in large fluctuations of sales and profit levels and backlog from period to period. Test Systems segment customers include the Department of Defense,USDOD, prime contractors to the Department of Defense,USDOD, mass transit operators and prime contractors to mass transit operators.

Each of the markets that we serve presents opportunities that we expect will provide growth for the Company over the long-term. We continue to look for opportunities in all of our markets to capitalize on our core competencies to expand our existing business and to grow through strategic acquisitions.

Challenges whichThe main challenges that we continue to face us include varying levels of supply chain pressures from the ongoingresidual impacts of the COVID-19 pandemic, material availability and its continued impact on the aerospace industrycost increases, labor availability and cost, and improving shareholder value through increasing profitability. Increasing profitability is dependent on many things, primarily sales growth, both acquired and organic, and the Company’s ability to pass cost increases along to customers and control operating expenses, and to identify means of creating improved productivity. Sales are driven by increased build rates for existing aircraft, market acceptance and economic success of new aircraft and our products, continued government funding of defense programs, the Company’s ability to obtain production contracts for parts we currently supply or have been selected to design and develop for new aircraft platforms and continually identifying and winning new business for our Test Systems segment.

Reduced aircraft build rates driven by a weak economy, aircraft groundings, tight credit markets, reduced air passenger travel, and an increasing supply of used aircraft on the market would likely result in reduced demand for our products, which will result in lower profits. Reduction of defense spending may result in fewer opportunities for us to compete, which could result in lower profits in the future. Many of our newer development programs are based on new and unproven technology and at the same time we are challenged to develop the technology on a schedule that is consistent with specific programs. Delays in delivery schedules and incremental costs resulting from supply chain and labor rate pressures have in the past resulted, and could in the future also result in, lower profits. We will continue to address these challenges by working to improve operating efficiencies and focusing on executing on the growth opportunities currently in front of us.

demandOur ABL Revolving Credit Facility and Term Loan Facility each subject us to various financial and other affirmative and negative covenants with which we must comply on an ongoing or periodic basis. These include financial covenants pertaining to minimum trailing four-quarter EBITDA requirements, minimum liquidity requirements, minimum fixed charge coverage ratio requirements, and excess cash flow repayment provisions. An unexpected decline in our revenues or operating income, including occurring as a result of events beyond our control, could cause us to violate our financial covenants. Our ability to satisfy the tight financial covenants in our ABL Revolving Credit Facility and Term Loan Facility is expected to be challenging in 2024 and is an item that our management team continues to closely monitor. While the Company expects to remain in compliance with the required financial covenants for all market channels,the duration of the agreements, any unexpected negative impacts to our business, including as a result of additional supply chain pressures, the timing of customer orders, and our ability to meet customer delivery schedules, or labor availability and cost pressures, could result in lower revenues and reduced financial profits, and, as a result thereof, our inability to satisfy the financial covenants in our ABL Revolving Credit Facility and Term Loan Facility.

See Part I, Item 1A, Risk Factors, for an additional discussion of risks associated with commercial transport (both OEMour potential inability to satisfy the financial and aftermarket channels) beingrestrictive covenants set forth in the most adversely impacted dueABL Revolving Credit Facility and Term Loan Facility.

In September 2021, the Company was awarded a grant of up to $14.7 million from the U.S. Department of Transportation (“USDOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”). The Company received $7.3 million and $7.4 million under the grant in 2022 and 2021, respectively. The grant benefit was recognized ratably over the six-month performance period as a reduction to Cost of Products Sold in proportion to the pandemic'scompensation expense that the award is intended to defray. During the years ended December 31, 2022 and 2021, the Company recognized $6.0 million and $8.7 million of the award, respectively.

We are monitoring the ongoing conflict between Russia and Ukraine and the related export controls and financial and economic sanctions imposed on certain industry sectors, including the aviation sector, and parties in Russia by the U.S., the U.K., the European Union and others. Although the conflict has not resulted in a direct material adverse impact on air travel worldwide.our business to date, the implications of the Russia and Ukraine conflict in the short-term and long-term are difficult to predict at this time. Factors such as increased energy costs, the availability of certain raw materials for aircraft manufacturers, embargoes on flights from Russian airlines, sanctions on Russian companies, and the stability of Ukrainian customers could impact the global economy and aviation sector.

In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment filed for bankruptcy under Chapter 11. As a result, the Company executed restructuring activities in the formrecorded a full reserve of workforce reduction, primarily in the second quarter of 2020,$7.5 million for outstanding accounts receivable and a $3.6 million reserve against dedicated inventory. The associated assets existed prior to better align capacity with expected demand. Restructuring charges of $4.9 million in severance expense associated primarily with the Aerospace segment was recorded in the year ended December 31, 2020.

On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems segment. The businesstransaction included two elements of contingent earnouts. In the fourth quarter of 2021, the Company agreed to an earnout payment of $10.7 million for the calendar 2020 earnout, which was not core torecorded in 2021 as a separate line item below operating loss and was received by the future ofCompany in early January 2022. In March 2022, the Test Systems segment. The total cash proceeds received uponCompany agreed with the divestiture amounted to $103.8earnout calculation for the calendar 2021 earnout for $11.3 million. The Company recorded a pre-taxthe gain onand received the sale of $80.1 millionpayment in the first quarter of 2019.2022. In March 2023, the Company agreed with the final earnout calculation for the calendar 2022 earnout for $3.4 million. The Company recorded income tax expense relating to the gain of $19.7 million.

On July 12, 2019,October 6, 2021, the Company sold intellectual propertyone of its Aerospace buildings for $9.2 million. Net cash proceeds were approximately $8.8 million and certain assets associated with its Airfield Lighting product line for $1.0 million in cash. The Airfield Lighting product line, part of the Aerospace segment, was not core to the business and represented less than 1% of revenue. The Company recorded a pre-tax lossgain on the sale of approximately $1.3 million.

The commercial transport market is our largest end market with sales driven by new aircraft production and aftermarket airline retrofit programs. In the commercial transport market, while many of our key long-term fundamentals remain intact, we continue to see residual, though improving, near-term market pressure due to COVID-19. Despite solid progress on the vaccine front, 2021 will remain very challenging for our commercial transport products witheffects of certain supply chain challenges. We have experienced improvement expected beginning in the second half of 2021throughout 2023 driven by the return toincreased production rate of the 737 MAX and an expectation of improved activity with our airline customers. Aircraft build rates are expected to continue to improve modestly during 20212024 and 2025 from current levels as production of the 737 MAX picks up,and A-320 is expected to increase, and the aftermarket is expected to strengthen over the course of

the year as aircraft utilization and load factors increase. On the other hand, wide-bodyInternational travel utilizing primarily widebody aircraft is close to pre-pandemic levels and we believe widebody aircraft production rates and usage are expectedwill continue to remain depressed throughout 2021 and possibly for several years due to low international travel demand caused by the pandemic.directionally match air traffic volumes.

Sales to the commercial transport market include sales of lighting and safety systems, electrical power generation, distribution and motionsseat motion systems, aircraft structures, avionics products and systems certification, and other products.certification. Sales to this market totaled approximately $262.6$432.2 million or 52.3%62.8% of our consolidated sales in 2020. As a result of the COVID-19 pandemic and its adverse impact on air travel worldwide, the commercial aerospace industry has been significantly disrupted. The significant impact of the COVID-19 pandemic on the commercial transport market channels has led to this market comprising a lower percentage of our net sales in fiscal 2020 than typical. When the commercial transport industry recovers from the disruption caused by the COVID-19 pandemic, we would expect commercial transport market sales to account for a percentage of net sales that is relatively in line with our historical results prior to the COVID-19 pandemic.2023.

Maintaining and growing sales to the commercial transport market will depend not only on continued market recovery from the impacts of the COVID-19 pandemic,post-pandemic, but also on airlines’ capital spending budgets for cabin upgrades as well as the purchase of new aircraft by global airlines. This spending by the airlines is impacted by their profits, cash flow and available financing as well as competitive pressures between the airlines to improve the travel experience for their passengers. We expect that new aircraft will be equipped with more passenger and aircraft connectivity and in-seat power than previous generation aircraft which drives demand for our avionics and power products. This market has historically experienced strong growth from airlines installing in-seat passenger power systems on their existing and newly delivered aircraft. Although the 737 MAX was re-certified in the United States in November 2020 and in Europe in January 2021, and that the demand for the aircraft in the long-term has not changed, further delays in regulatory approval of the Boeing 737 MAX in one or more jurisdictions could substantially decrease sales to this market in the near or long term which could have a material adverse effect on our business, financial condition, results of operations and cash flows. The 737 MAX situation affected us not only because it has been our largest production program, but also because the grounding reduced capacity in the world’s airline fleets, challenging our aftermarket business. Our ability to maintain and grow sales to this market depends on our ability to maintain our technological advantages over our competitors and maintain our relationships with major in-flight entertainment suppliers and global airlines.

Sales to the military aerospace market include sales of lighting &and safety products, avionics products, electrical power &and seat motion products and structures products. Sales to this market totaled approximately 13.5%8.9% of our consolidated sales and amounted to $67.9$61.6 million in 2020.2023.

The military market is dependent on governmental funding which can change from year to year. Risks are that overall spending may be reduced in the future, specific programs may be eliminated or that we fail to win new business through the competitive bid process. Astronics does not have significant reliance on any one program such that cancellation of a particular program will cause material financial loss. We believe that we will continue to have opportunities similar to past years regardingwith respect to this market.

The business jetSales to the general aviation market has also been impacted by the pandemic with new aircraft build rates significantly lower than the previous year. Mostconsist mostly of our sales in this market are line-fit products driven by aircraft build rates although there are some aftermarket sales as well. We expect somehave seen notable improvement in the second half of 2021 movingcurrent year and expect that to continue into 20222024 as build rates are expected to improve.increase post-pandemic.

Sales to the business jetgeneral aviation market include sales of lighting &and safety products, avionics products, and electrical power &and seat motion products. Sales to this market totaled approximately 12.0%11.7% of our consolidated sales in 20202023 and amounted to $60.4$80.8 million.

Sales to the business jetgeneral aviation market are driven by our ship set content on new aircraft and build rates of new aircraft. Business jetGeneral aviation OEM build rates are impacted by global wealth creation and corporate profitability. We continue to see opportunities on new

OurSales by our Test Systems segment accounted for approximately 16.8%12.2% of our consolidated sales in 20202023 and amounted to $84.6$84.4 million. This segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as training and simulation devices for both commercial and military applications. Sales to the aerospace &and defense market were approximately $81.1$48.2 million in 2020.2023. Sales to the semiconductormass transit market were approximately $3.5$18.9 million and sales to other markets were $17.3 million in 2023.

Sales to the military and mass transit markets are subject to fluctuations resulting from residual warranty revenue followingchanges in governmental spending, elimination of certain programs, or failure to win new business through the Company’s divestiturecompetitive bid process. Consistent with the Aerospace segment, the Test Systems segment does not significantly rely on any one program such that cancellation of its semiconductor test business on February 13, 2019. No further semiconductor revenues are expected beyond 2020.a particular program will cause material financial loss, and we believe that we will continue to have opportunities similar to past years regarding this market.

Our financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles. The preparation of the Company’s financial statements requires management to make estimates, assumptions and judgments that affect the amounts reported. These estimates, assumptions and judgments are affected by management’s application of accounting policies, which are discussed in the Notes to Consolidated Financial Statements, Note 1 ofin Item 8, Financial Statements and Supplementary Data, of this report. The critical accounting policies have been reviewed with the Audit Committee of our Board of Directors.

Revenue is recognizedAstronics recognizes revenue when or as, the Companyit transfers control of a promised productsgood or servicesservice to a customer in an amount that reflects the consideration the Companyit expects to be entitledreceive in exchange for transferring those productsthe good or services. Sales shown on the Company's Consolidated Statements of Operations are from contracts with customers.

We utilize the cost-to-cost method as a measure of progress toward satisfying ourfor performance obligations. Incurred costobligations that are satisfied over time as we believe this input method best represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. ContractUnder the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs include labor, material and overhead.

See Note 2 to the contract period.Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for a further description of revenue recognition under ASC 606.

Our goodwill is the result of the excess of purchase price over net assets acquired from acquisitions. AsWe had approximately $58.2 million of goodwill as of December 31, 2020, we had approximately $58.3 million of goodwill. As of December 31, 2019, we had approximately $145.0 million of goodwill.2023 and 2022.

We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. The Test Systems operating segment is its own reporting unit while the other reporting units are one level below our Aerospace operating segment.

Companies may perform a qualitative assessment as the initial step in the annual goodwill impairment testing process for all or selected reporting units under certain circumstances. Companies are also allowed to bypass the qualitative analysis and perform a quantitative analysis if desired. Economic uncertainties and the length of time from the calculation of a baseline fair value are factors that we would consider in determining whether to perform a quantitative test. The Company tests goodwill at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Quantitative testing first requires a comparison of the fair value of each reporting unit to the carrying value. We use the discounted cash flow method to estimate the fair value of each of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected sales growth rates, operating profit margins and cash flows, the terminal growth rate and the discount rate. Management projects sales growth rates, operating margins and cash flows based on each reporting unit’s current business, expected developments and operational strategies. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and anythe impairment loss must be measured. Goodwill impairment

A discussion by segment can be found at “Segment Results of Operations and Outlook”Operations” in this MD&A.

Consolidated sales were down $270.1up $154.3 million, or 28.8%, to $502.6$689.2 million compared to the prior year. Aerospace sales were down $274.6 million.increased $143.6 million, or 31.1%, driven by increased demand across our range of aerospace product lines. Test System sales increased $4.5 million.$10.7 million, due primarily to the reversal of a $5.8 million deferred revenue liability assumed with an acquisition and associated with a customer program which is no longer expected to occur, and higher radio test product revenue.

Consolidated costCost of products sold decreased $210.8Products Sold in 2023 was $568.4 million, to $405.7 million in 2020 from $616.6compared with $463.4 million in the prior year. The decreaseincrease was primarily due to lower saleshigher volume in 2020 due to the combination of the impacts of the COVID-19 pandemic on aerospace markets and the continued 737 MAX grounding. The Company rapidly adjusted to the changed environment by aggressively adjusting its cost structure to changed demand, initiating workforce reduction activities and cost conservation activities including suspension of certain benefit programs and wage adjustments and reduction or elimination of discretionary spending. The lower volume and the impact of these measures resulted inas well a significant reduction in cost of products sold in 2020 compared with the prior year. Consolidated cost of products sold in 2019 included charges recorded for tariff expense of $5.9$3.6 million and $15.4 million of chargesinventory reserve charge associated with the restructuringbankruptcy of a customer and impairment charges$1.4 million in non-cash stock bonuses reinstated in the current year. The prior-year period benefited from the AMJP Program grant which provided a $6.0 million offset to Cost of our AeroSat antenna business which required classification within costProducts Sold. Research and development expenses increased $5.2 million due to higher innovation spend. Margins remained under pressure in the year because of products sold.inflation and supply chain workarounds. We are passing on increased costs where we can although it will take time to be reflected in sales. We are expecting continued improvement in pricing as well as stabilization in certain input costs as we advance into 2024.

Selling, generalGeneral and administrativeAdministrative (“SG&A”) expenses were $110.5$127.5 million in 2023 compared with $143.4$101.6 million in the prior-year period primarily due to increased wages and benefits, an accounts receivable reserve charge of $7.5 million associated with the bankruptcy of a customer, a net increase of $7.9 million in litigation-related legal expenses and reserve adjustments, and a $2.8 million increase of incentive compensation expenses recorded in SG&A. The prior-year period reflects $2.6 million in expense related to a customer accommodation dispute and a lease termination settlement.

In 2023, the Company recognized a final earnout of $3.4 million for the 2019 sale of its semiconductor test business, compared with $11.3 million recognized in the prior year period. The decreaseyear. Other Income in 2020 was due to2023 included $1.8 million associated with the cost conservation activities referred to above, though these savings were partially offset by associated severance chargesreversal of $5.3 million. The prior year period included charges for a long-term patent dispute of

Interest expense of $2.4 million.

Consolidated net loss was $115.8$26.4 million, or $(3.76)$0.80 per diluted share, compared with net incomeloss of $52.0$35.7 million, or $1.60$1.11 per diluted share, in the prior year. The after-tax impact of the impairment loss in 2020

Our effective tax rates for 2020, 20192023 and 20182022 were (3.0)(0.4)%, 23.8% and 10.5%(20.0)%, respectively. OurIn the past, research and development costs were deducted as incurred. However, beginning with the 2022 tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in those jurisdictions, which we expectyear, these costs are required to be fairly consistentcapitalized for tax purposes and amortized over 5 years. While this would typically result in the near term. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. Our tax rate is also affected by the recognitioncreation of valuation allowances againstan associated deferred tax assets if, based onasset, due to our cumulative three-year pre-tax loss, a valuation allowance was applied against the available evidence, it is not more likely than not (defined as a likelihood of more than 50%) that all or a portion of such assets will not be realized.deferred tax asset. In addition to state income taxes, the following items had the most significant impact on the difference between our statutory U.S. federal income tax rate (21% in 2020, 20192023 and 2018)2022) and our effective tax rate:

As previously discussed, weOur business continues to face risks related to outbreaksvarying levels of infectious diseases, includingsupply chain pressures from the ongoingresidual impacts of the COVID-19 pandemic. The challenges posed by the COVID-19 pandemic on the global economy, and more profoundly on the aerospace industry, increased significantly as 2020 progressed, and are expected to continue into 2021. COVID-19Domestic air travel has caused disruption and volatility in the global capital markets, and has authored an economic slowdown. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. Although our operations have been deemed essential and we follow the COVID-19 guidelinesrecovered from the Centers for Disease Control (“CDC”) concerning the health and safetyimpact of our personnel, these measures have resulted in attenuating activity and, in some cases, required temporary closures of certain of our facilities, among other impacts. The duration of these measures is unknown, may be extended and additional measures may be imposed.

See Part I, Item 1A, Risk Factors, for an additional discussion of risk related to managesupply chain disruptions.

For a comparison of our results of operations for the Company to generate cash in 2021, which will be used to reduce debt.

Operating profit (loss), as presented below, is sales less cost of products sold and other operating expenses, excluding interest expense, other corporate expenses and other non-operating sales and expenses. Cost of products sold and other operating expenses are directly attributableidentifiable to the respective segment. Operating profit (loss) is reconciled to earningsloss before income taxes in Note 20 of Item 8, Financial Statements and Supplementary Data, of this report.

We do not have material off-balance sheet arrangements that have or are reasonably likely to have a material future effect on our results of operations or financial condition.

The following table representsFor further information on our contractual obligations and other commitments as of December 31, 2020:

Our cash flow from operations, and available borrowing capacity, and proceeds under our ATM Program (as defined below) are expected to provide us with the financial resources needed to run our operations and reinvest in our business.business for at least the next 12 months.

Our ability to maintain sufficient liquidity is highly dependent upon achieving expected operating results. Failure to achieve expected operating results could have a material adverse effect on our liquidity, our ability to obtain financing or access our existing financing, and our operations in the future.

Cash provided byused for operating activities was $37.3totaled $24.0 million in 20202023, as compared with $42.7$28.3 million cash used for operating activities in 2019. The decrease of $5.4 million in 2020 was primarily due to lower net income adjusted for non-cash expenses and income in 20202022. Cash flow from operating activities improved compared with 2019, due2022 primarily related to the impacts of the COVID-19 pandemic onimprovement in our business,financial results, coupled with accounts receivable and inventory using less cash as supply chain challenges have improved, partially offset by a changeincreased outflows related to accounts payable. The $3.4 million and $11.3 million earnouts in net operating assets, driven largely by receivable collections.

Our cash flows from operations are primarily dependent on our net incomeloss adjusted for non-cash expenses and income and the timing of collections of receivables, level of inventory levels and payments to suppliers and employees. Sales and operating results of our Aerospace segment are influenced by the impact in 2020 of the COVID-19 pandemic on the aerospace industry, in particular, build rates of new aircraft, which are subject to general economic conditions, airline passenger travel and spending for government and military programs. Our Test Systems segment sales depends in part on capital expenditures of the aerospace &and defense industry which, in turn, depend on current and future demand for those products. A reduction in demand for our customers’ products would adversely affect our operating results and cash flows. We maintain a revolving credit facility to fund our short and long-term capital requirements including working capital, acquisitions and share repurchase efforts.

Cash used for investing activities in 20202023 was $5.8$4.1 million primarily the result of purchases of property, plant and equipment (“PP&E”) of $7.5compared to $14.4 million partially offset by proceeds from sales of PP&E.

Future requirements for PP&E depend on numerous factors, including expansion of existing product lines and introduction of new products. Management believes that our cash flow from operations and current borrowing arrangements will provide for these capital expenditures. We expect to continue to evaluate acquisition opportunities in the future.

Cash provided by financing activities totaled $25.4 million for 2023, as compared with cash used for financing activities of $1.4 million for 2022. The Company's FifthCompany received proceeds from our at-the-market equity offering program (the “ATM Program”) of $21.3 million in 2023. Additionally, the Company made net borrowings under our credit facilities of $8.5 million in 2023 compared with net repayments of $1.0 million in 2022, partially offset by an increase in costs associated with amending and refinancing our credit facilities.

The Company amended the existing revolving credit facility on January 19, 2023 by entering into the Sixth Amended and Restated Credit Agreement (the “Agreement”“ABL Revolving Credit Facility”) provided for a $500 million. The ABL Revolving Credit Facility set the maximum aggregate amount that the Company can borrow under the revolving credit line at $115 million, with the optionborrowings subject to increase the linea borrowing base determined primarily by up to $150 million.certain domestic inventory and accounts receivable. The maturity date of the loansborrowings under the AgreementABL Revolving Credit Facility is February 16, 2023. The maximum leverage ratioJanuary 19, 2026. Under the terms of funded debt to Adjusted EBITDA (as defined in the Agreement) was 3.75 to 1, increasing to 4.50 to 1 for up to four fiscal quarters followingABL Revolving Credit Facility, the closing of an acquisition permitted under the Agreement, subject to limitations. The Company paidpays interest on the unpaid principal amount of the facility at a rate equal to one-, three- or six-month LIBORSOFR (which is required to be at least 1.00%) plus between 1.00% and 1.50% based upon the Company’s leverage ratio.2.25% to 2.75%. The Company also paidmust pay a quarterly commitment fee tounder the LendersABL Revolving Credit Facility in an amount equal to between 0.10% and 0.20%0.25% or 0.375% based on the undrawn portion of the credit facility, based upon the Company’s leverage ratio.average excess availability.

The COVID-19 pandemic has significantly impacted the global economy, and particularly the aerospace industry, resulting in reduced expectations of the Company’s future operating results. As a result,On June 28, 2023, the Company was projected to exceed itsamended the ABL Revolving Credit Facility, temporarily increasing the maximum leverage ratio in the fourth quarter of 2020. Accordingly, on May 4, 2020,aggregate amount that the Company executed an amendment to the Agreement (the “Amended Facility”), which reducedcan borrow under the revolving credit line by $5 million from $500$115 million to $375$120 million until October 31, 2023, at which time the limit was to return to $115 million. The Amended Facility suspendsOn October 31, 2023, the applicationCompany executed a second amendment to extend the temporary limit of $120 million until January 31, 2024 at which time the limit returned to $115 million. Under the provisions of the maximumABL Revolving Credit Facility, the Company has a cash dominion arrangement with the lead banking institution whereby eligible daily cash receipts are contractually utilized to pay down outstanding borrowings and any ending cash balances subject to the dominion arrangement collateralize the outstanding borrowings under the ABL Revolving Credit Facility. Eligible cash receipts that have not yet been applied to outstanding debt balances are classified as restricted cash in the accompanying Consolidated Balance Sheets. The Company is also required to maintain minimum liquidity of $20 million through the date of delivery of the compliance certificate for the quarter ended March 31, 2024, and $10 million thereafter. On December 31, 2023, there was $87.0 million outstanding on the ABL Revolving Credit Facility and there remained $32.7 million available, net leverage ratio up throughof outstanding letters of credit (though subject to the minimum liquidity requirement).

The Company also entered into a $90 million asset-based Term Loan Facility on January 19, 2023. The Term Loan Facility is secured primarily by fixed assets, real estate and includingintellectual property. The maturity date of the Term Loan Facility is the earlier of the stated maturity date of the ABL Revolving Credit Facility or January 19, 2027, if the ABL Revolving Credit Facility is extended beyond that date. The Company pays interest under the Term Loan Facility at a rate equal to SOFR (which is required to be at least 2.50%) plus 8.75%. The Company must pay a commitment fee under the Term Loan Facility of 5% of the total aggregate commitment, or $4.5 million, $1.8 million of which was paid on the closing date, $1.8 million of which was paid on June 19, 2023 and $0.9 million of which is due in the second quarter of 2021 (the “suspension period”). The maximum net leverage ratio will be 6.00 to 12024.

Amortization of the principal under the Term Loan Facility began in April with a monthly amortization rate of 0.292% of the outstanding term loan principal balance for the thirdperiod April 1, 2023 through June 1, 2023, increasing to 0.542% per month for the period July 1, 2023 through September 1, 2023 and 0.833% monthly thereafter. Total scheduled principal payments of $9.0 million are payable in 2024 and as such, have been classified as current in the accompanying Consolidated Balance Sheets as of December 31, 2023. The interest rate on current maturities of long-term debt is variable at SOFR plus 8.75%, and was 14.2% at December 31, 2023. The remaining balance of $76.5 million as of December 31, 2023, is recorded as long-term in the accompanying Consolidated Balance Sheets.

Pursuant to the ABL Revolving Credit Facility and the Term Loan Facility, the Company was required to comply with a minimum trailing four quarter Adjusted EBITDA, as defined in the ABL Revolving Credit Facility and Term Loan Facility Agreements, of 2021, 5.50 to 1 for$51.7 million in the Company’s fourth quarter of 2021, 4.502023, increasing to 1 for$57.6 million in the first quarter of 2022, and return to 3.75 to 1 for each quarter thereafter.

additional indebtedness, share repurchases and dividend payments, and a limitation on capital expenditures. The Company was in compliance with its financialdebt covenants atunder the ABL Revolving Credit Facility and Term Loan Facility as of and for the year ended December 31, 2020. During2023. The Company was in compliance with debt covenants under the suspension period,ABL Revolving Credit Facility and Term Loan Facility as of and for the year ended December 31, 2023.

The Company will payincurred $8.8 million in incremental debt issuance costs related to the new facilities, allocated between the ABL Revolving Credit Facility and the Term Loan Facility. All costs are amortized to interest expense over the term of the respective agreement. Unamortized deferred debt issuance costs associated with the ABL Revolving Credit Facility ($2.0 million as of December 31, 2023) are recorded within Other Assets and those associated with the Term Loan Facility ($4.3 million as of December 31, 2023) are recorded as a reduction of the carrying value of the debt on the unpaid principal amount of the Amended Facility at a rate equal to one-, three- or six-month LIBOR (which shall be at least 1.00%) plus 2.25%. The Company will also pay a commitment fee to the lenders in an amount equal to 0.35% on the undrawn portion of the Amended Facility. After the suspension period, the Company will pay interest on the unpaid principal amount of the Amended Facility at a rate equal to one-, three- or six-month LIBOR (which shall be at least 1.00%) plus between 1.00% to 2.25% based upon the Company’s leverage ratio. The Company will also pay a commitment fee to the lenders in an amount equal to 0.10% to 0.35% on the undrawn portion of the Amended Facility, based upon the Company’s leverage ratio. The Amended Facility provided for the payment of a consent fee of 15 basis points of the commitment for each consenting lender.Consolidated Balance Sheets.

In the event of voluntary or involuntary bankruptcy of the Company or any subsidiary, all unpaid principal and other amounts owing under the Amended Facilitycredit facilities automatically become due and payable. Other events of default, such as failure to make payments as they become due and breach of financial and other covenants, change of control, judgments over a certain amount, and cross default under other material debt agreements, and a going concern qualification for any reason other than loan maturity date give the agent the option to declare all such amounts immediately due and payable.

During the year ended December 31, 2023, the Company sold 1,334,228 shares of our common stock under the ATM Program, generating aggregate net proceeds of $21.3 million after deducting related expenses. The Company’s cash needsCompany currently is obligated to use the net proceeds from any sale of shares of common stock pursuant to the ATM Program to pay down the outstanding principal amount of, and any unpaid interest on, the ABL Revolving Credit Facility. However, any principal amount paid down on our ABL Revolving Credit Facility using the proceeds of the ATM Program will be, subject to compliance with the requirements and conditions set forth in the ABL Revolving Credit Facility, available to be reborrowed by the Company and used for, among other items, working capital and general corporate purposes. If the outstanding principal amount balance of the ABL Revolving Credit Facility has been reduced to zero, then the Company intends to use the net proceeds of the ATM Program for general corporate purposes. As of December 31, 2023, the Company had remaining capacity under the ATM Program to sell shares of common stock having an aggregate offering price up to approximately $8.2 million.

Cash on hand at the end of the year was $11.3 million. Net debt service, capital equipment, and acquisition opportunities during 2021 is expected to be met bywas $161.2 million, compared with $150.2 million at the end of 2022.

The Company expects its cash flow from operations will provide sufficient cash flows from operationsto fund operations. However, the Company may also evaluate various actions and alternatives to enhance its profitability and cash balancesgeneration from operating activities, which could include manufacturing efficiency initiatives, cost-reduction measures, working with vendors and if necessary, utilizationsuppliers to reduce lead times and expedite shipment of critical components, and working with customers to expedite receivable collections. The Company may also utilize available capacity under the revolvingABL Revolving Credit Facility and sales proceeds from the ATM Program.

Refer to Note 8 of our Consolidated Financial Statements in Item 8, Financial Statement and Supplementary Data, of this report for additional information regarding our credit facility.

Management believes that it should retain the capital generated from operating activities for investment in advancing technologies, acquisitions and debt retirement. Accordingly, there are no plans to institute a cash dividend program.

Information regarding certain relationships and related transactions is incorporated herein by reference to the information included in the Company’s 20212024 Proxy Statement which will be filed with the CommissionSEC within 120 days after the end of the Company’s 20202023 fiscal year.

See Note 1 of the consolidated financial statements atConsolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report.

The Company has limited exposure to fluctuation in foreign currency exchange rates to U.S. dollar, primarily in Canadian dollars and Euros currency. Approximately 90% of the Company’s consolidated sales are transacted in U.S. dollars. Net assets held in or measured in Canadian dollars amounted to $27.0$11.1 million at December 31, 2020.2023. A 10% change in the value of the U.S. dollar versus the Canadian dollar would have had a $1.0 millionan immaterial impact to 20202023 net income.loss. Net assets held in or measured in Euros amounted to $32.3$24.8 million at December 31, 2020.2023. A 10% change in the value of the U.S. dollar versus the Euros would have had a $0.4 millionan immaterial impact to 20202023 net income.loss.

Risk due to fluctuation in interest rates is a function of the Company’s floating rate debt obligations, which total approximately $173.0$172.5 million atas of December 31, 2020.2023. A change of 1% in interest rates of all variable rate debt would impact annual net incomeloss by approximately $1.7 million, before income taxes.

To the Shareholders and the Board of Directors of Astronics Corporation

We have audited the accompanying consolidated balance sheets of Astronics Corporation (the Company) as of December 31, 20202023 and 2019,2022, the related consolidated statements of operations, comprehensive (loss) income, shareholders'loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2020,2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2)(collectively (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20202023 and 2019,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020,2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sCompany’s internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 20214, 2024 expressed an unqualified opinion thereon.

These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20202023 based upon the framework in Internal Control – Integrated Framework originally issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting is effective as of December 31, 2020.2023.

Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statementsConsolidated Financial Statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting.

To the Shareholders and the Board of Directors of Astronics Corporation

We have audited Astronics Corporation’s internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Astronics Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20202023 and 2019,2022, the related consolidated statements of operations, comprehensive (loss) income,loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2020,2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated March 1, 20214, 2024 expressed an unqualified opinion thereon.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.