ATRO - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and Welcome to the Astronics Corporation Second Quarter 2019 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations. Thank you, you may begin.

Deborah Pawlowski

morning, good and Christine, everyone. Thanks, time We Astronics. your in and appreciate your interest today

Joining Gundermann, are and call me the on Pete our Financial Dave Chief President Officer. Burney, CEO; and

of earlier this If a the copy our You them can morning. results, website, should released second at not, have www.astronics.com. quarter we which XXXX find of on you financial

the as what and statements formal filed that documents as the results some sec.gov. forward-looking make to differ me first factors on discussion with Securities in well that to Let as may other are mention These with actual These Commission. or other and and website as risks found here release today. we you're provided that Q&A as events future be is uncertainties and materially during during could documents cause apply well well and likely the our session. factors These aware, can risks subject from statements other are as to Exchange earnings stated the uncertainties

call, be During will financial We non-GAAP measures. also some discuss these will our in believe evaluating useful we performance. today's

results should in in isolation for additional consider accordance the information You the substitute with presentation this or not of GAAP. prepared

in non-GAAP to of reconciliations provided have We that comparable the GAAP accompany measures measures tables release. today's

let me Pete to begin. over that, turn With to it Peter?

Peter Gundermann

Thank you, Debbie, and good for tuning morning, our call. everybody. into Thanks

the forecast off the summary revised numbers, take Q&A, we're our balance we'll income and on sheet. the about start back a second year, for the our close quarter then of with pry we'll the topline the in usual. seeing then that with the I'll statement usual, market. the on for as and some it as developments agenda, Dave Our and And half of both through talk and will

actually, up quarter sold The year the well course, quarter. adjustment, adjusted than sales I'm test assuming be. it about It quarter. our was here, of our X.X%. but where with So compared we to first semiconductor lighter was last the first some expected knowledge Revenue we, to summary a It of in business.

that current assumption the are numbers effects the listening semiconductor of both as the you're But comparable adjusted make business, periods. we and from good the clear through. to is the try the to call. test from most to of be that So about periods are that we numbers, today I'll talking excluding -- that go going

from when sequentially, segments revenue the So both revenue was we last $XXX quarter million. and adjusted to million, X% from a second contributed first had very about down, is It the a quarter, $XXX strong up year's growth. of

the are volume the to the For to contributing. the million, from year, pressure second adjusted put lower on our again, $XXX margins. the both first segments XX% did sales quarter up quarter The

at quarter second of well for net the sales, last to adjusted income X.X%. year from down but Our X.X% similar was first quarter's

facing, and so is, some time was detail, months. major to For numbers. our strong the our I issues seeing are more pretty we're year, what and numbers that unfortunately. the is is for One cost, our net influencing adjusted Dave thought see income double I'd tariff on going go far, in continue influencing that perspective we first six last through but the to year the X.X%, it

in quarter, were $X the they through second year-to-date The months, million, come our tariff charges X million. $X.X

Test some faced strong pretty segment. in cost, In second the quarter, our restructuring especially also, we

we forward, loss those will in talked of we businesses X beginning that $X.X $X quite an the semiconductor our As the struggling collective that after businesses. of in stragglers X the third adjusted recent the quarter to In quarter, well XXXX. that annual million operating that above or periods the to million cost face in the quarter, million $X We've million, was $X.X a basis restructuring, for total second current expect, million, lace test. $X around somewhere segment bad charge The on businesses, bit that had the Test such quarter line quarters is The restructuring is about a going resolution. breakeven, have getting both X forward in to some approaching CCC we won't news unexpected this to and have near Both X by get that very feel, about of afterwards. are neighborhood news. there Armstrong. or news the X A on those in plan of talking predicted. path, breakeven and we this some and good sight and here a have is at year-end, And -- these strong them resolution case of is to X good in context we predictable

and from earliest. that ambitions one, and team one of system, orbit, the until lost. went cost in that to third expect critical our AeroSat, very don't standpoint basically, quarter. in we to and end And the developed. performance back hold, is year we connectivity market And business a capacity Realistically, deciding on nature be tail-mount turn partners been the step a for couple that the suitable the jet had sales of that's both a of in put system, resulted has, the has of at happen used replacement had The the the towards when failed a which with make are out our a up in to taking setback satellites, can

breakeven are of to So we forward. going are loss the what complicated. with this the we we're AeroSat on Of satellite the the later significantly, in Basically, hold that Group, network program for figure tail-mount system XX% out options path going our drove use till million on delay the and we with get is, this that the for year expected. the $X.X it. towards not get And AeroSat path collective did

to originally everybody seen a thought we've Additionally, we're days. and indefinitely, we than the is April then It's that be the of XX rates of the July. go on clear be and the now, going XX of We continued we're of production that, lump, to back the the in programs XXX at industry hope some as goal year. started till we the in, kind it expected. rate to to at say production starting, go the the market, the will of in including become around year year. about that going well which for towards on XX, XX slides towards up down favorite end appears topic the And XX we would June with end lower But it's longer reduced MAX, then these quarter up of the

that direct on get customers other We $XX,XXX to have goes Boeing the the about through XX to $XX,XXX and another on airplane.

now, as million $XX it the in about right the the drop a we year. understand comes estimates, to And so the drop cumulative revenue over of production course

relatively a quarters we've level that we compared quarter. last quarters, in or had be our a all on strong to what recent were maybe, X To some years. to us, very With have surprise for $XXX million, the seen quarter shouldn't for extent X this because bookings low that's up that, the leading

and But essentially, So airlines take are in just is all for the sales in MAX with the the upgrades. the that tight are, what to aircraft evidence tight means very action. maybe, was some down that upgrades IFE there it IFEC capacity capacity, about. are industry, general, reluctant of break grounding, our their much has And airline

obviously, any MAX that So want they on in MAX have situation programs everybody is we've some airlines an evolving point, this clearly scenario. And what the that we, MAX resolved. But of to the seen the that until delay is don't beyond some else evidence industry. are dependent, has information their situation particularly at

to begin to comments, color overall some summary on my to Dave it of turn I'll are numbers. it those over the turn the the So through quarter. follow of --

David Burney

Thanks, Pete. Okay.

sales the As But trailing still an quarter expected, were light quarter adjusted up quarter the OEM and from we second of the up that across increase broad-based driven test from periods, last with second semiconductor year. year. both when quarter, the quarter. second higher or heading most the $X.X you segment million about product retrofit this sales airline The by X.X% into in with year's of was build compared basis XXXX Aerospace compared rates, content the sales exclude, quarter, increased the were business programs. first lines, in on X.X% first the divested

in Test driven decrease XX% increase XX% primarily, down to year's were $X.X weakest XX%, excluding hardware. volume by was the segment & semiconductor In-Seat Power broadly up million that driven lighting strong, strong IFEC offset comparable A&D second Power multiple Lighting business, was Increase in products, & In were quarter an $XX.X divested sales the partially million Safety of sales or due million the from the to or XXXX. our compared coming to strong, of quarter, PSU up or lower from $XX.X from customers. with that X%, test prior was Avionics by Electrical particular, $XX.X also million quarter, sales. increase by point sales, Motion all sales. in

sales our margins. semiconductor business, $X.X margins, last or semiconductor excluding or with for on year. of XXXX $X.X quarter's, adjusted of compared $X.X million of the income On this year Adjusted divestment calculates primarily, $XXX.X which $XX.X the the activity million sales from adjustment decreased to due income Going million million for operating XXXX, consolidated income from periods, and consolidated the accounted million from million to test X.X%, our second operating operations, X.X% of both $XXX.X $XX.X million million, and respectively. $XX.X or

million, the basis quarter an included: told X.X%. about tariff reserve this $X.X margin. of and consolidated reduction or $X.X million of the margins affecting operating consolidated been Still about workforce inventory $X.X these points would stalking of cost roughly Absent cost $X.X charges, have margins. million year million, all of Items XXX

other the from this tariffs, Several but moving of our the not suppliers quickly. our to of year. the doesn't supply work suppliers to the continues run, impacts; production it to tariffs, long we actively but happen tariffs. process our countries, will In or are China relocating reduce expect able impact reduce to happen Regarding chain to the management of low-cost with

and cost million we the into of the this year, tariff year, a in $XX said, ballpark saw going we're anticipating second million this X.X to As quarter quarter. have be in up we we're tariffs was cables China. importing some really with from of in which cadence which on the we components depends saw year, and from first our of what the electrical Timing the

affected So affecting these inventory the in Lower quarter. I lower to spoke on unfavorable $X.X factors was the the about X.X% have We factors, margins the a operating Aerospace the quarter with versus last impact segment. business million factors Aerospace been slightly million looking the reserve. of a about XXXX restructuring operating our Also a somewhat sales quarter. of mix margin that would quarterly. with the in larger antenna in margins initiated Absent mix, effort the talked about XX.X%. Aerospace of and we second were operations. tariffs sales XX% Two factors. The several during $X.X to operating margins attributable segment

operations restructuring, we the the that headway quarter, fixed restructuring of XX third will With about annual making to quarter. We're with those in our than quarter X -- in AeroSat the as by $X.X $X of loss. The problem the minimal, and for more regarding totaled The we'll were Pete million. mentioned, XX% costs during cost see the losses expect businesses. accounting we million, X the begin benefits for

through those satellite As move to as there alternatives X before, the will waiting to situation struggle those X. we mentioned said we're with move getting think reasons and longer we evolve Pete about our and bit expect will but of still is a we year. the for breakeven, we for the we're year AeroSat goals the this failure, had X

over begin Additionally, XX will newly the and CSC months of so. leased aspects synergies Itasca begin once business process facility will or in a certain additional occupies from the into we that This Armstrong provide the complete, savings Waukegan. we next is -- co-locating

had out the the Test of roughly, of segment XXXX an quarter loss the adjusted about operating million the operated Adjusting test impact of an quarter. business, at, would compared Test segment have second in million. with semiconductor the $X Systems. $X.X loss estimated On operating for breakeven

business. result million a However, to sale quarter. resized in The as the we million about related the test resizing to of of in quarter expect savings the ended third we million organization $X severance which $X or after included Test will the -- million charge charge that to see segment, a $X X annual semiconductor in

and business July, a $X be be, $XXX that had will our our deal sell in to related goodwill quarter, a EBITDA, gain the balance a to of removal we adjusted the The translates we result we noncore place charge a and at if This on covenant on outstanding, market the relating flexibility will of about a at of in working million, debt quarter, sale airfield to to balance in gives On noncash do in million you signed levered of $X.X end based million, expect, a Proceeds was strong. sheet about the of the buyback about are the of plan shares X.Xx capital sheet. that business. business. our to long-term In purposes deployment. the have multiple balance roughly, Including predetermined third continues gain, us that filed quantities Semiconductor plan $XX At prices. for repurchase we million exclude lighting which second a for the the sheet. of debt deal X.Xx to great primarily, EBITDA. to We on share XXbX

purchase any the the disclose shares not during the have We details of and quarter. did we plan not

Aerospace deployment segments. be both and continues addition the repurchase M&A to in plan, In Test capital focus for opportunities an to share our

I think, concludes comments. my Pete, that

Peter Gundermann

Okay.

for rest Aerospace year, year, goes are our cumulative Aerospace year. forecast of the XXXX, little in up in down $XXX press $XXX sales million saw to $XXX Last a release actually at our particular, the now to we you million came sales expectations, million. predicted we to the be the for that bit. the adjusting Turning Test in in is

range that of represent of $XX million midpoint growth. the about would So

million Test is be to million. $XX million. now it $XX predicted was year, Last without Semiconductor, to $XX

our come So smaller represents Communication to that's company Technologies' our operating Texas, out with new they the Freedom that Part growth market those people and tack technical continue is nice growth. in operate quarter. of we Freedom facility bought that acquisition, expect on addition we a from organization and and forward. of going pretty that that to capabilities will substantial that a our reach,

Last would business. total for happy adjusted So our we're million. million. $XXX year forecast did between to the That of $XXX we Semiconductor, somewhere sales as to excluding have and million around Freedom part be bring year, $XXX the

assume the X% quarter, out earlier comments, year, move my the much midpoint business believe drop pretty in well-positioned range of for lighter this We'd explains if in our and months. to tail-mount, the of booking second new even XXX, further the just you in that So nice on based some growth. reductions, million over obviously, $XX market. the X our expectations the very is we're performance next very We the antennas

count -- to to the of fleet For do nice And XXX satellites the it'll their and more can be on going what be they're what somehow when long-term, airlines when -- going what gets It'll and resolved. be kind it forward. reliably have, dodge nice going develop meteorites. nice meteors they're will we can

of think I the questions. for comments. prepared to that's Christine, I'd like up end it our open

Operator

Instructions]. [Operator

Our line the with from CJS Securities. of comes Jon question first Tanwanteng

Jonathan Tanwanteng

the the first you're businesses you within over X income into on next update the an there issues operating can of loss the Pete, from the quarters, given provide couple satellite XXXX? and expecting

Peter Gundermann

think moving particular. said, announcement, that as our I in a second I AeroSat, which seriously, in would, previously and if the kind assumptions of to here quarterly $X with $X.X certain respect in It's X in we could. was -- to I the we're in we little I and million revenue bit go now, at expected on quarter obviously, are That the third be million quarter. question. of out based AeroSat, combined last

give The I you where we breakeven in I'll the not think, onwards. here other as down move point business get practical of an X, it's worthy towards to purposes. current X there. we're quarter think, to going I discussion, update But essentially, for struggling to the we're

going there be AeroSat, get away be if I short don't to I was in it you're other to if a and you think that's and opportunity the need to obviously, said figure And better, operating are out. going at quarter. we're to than AeroSat the worse whole also costs I of XX% managed, cumulative be trying to two flush to are to don't million -- point. want to void that, think assess there's that that any term. And know it's null this lot what responsible the don't the loss trying And this $X.X we you

this as soon But that's we're can. balancing the do. that, at updates we as we best can provid we'll and So point

Jonathan Tanwanteng

But achieve in year. the a by Okay. cost reduce AeroSat $X to that? to cost expecting you're is million what But

Peter Gundermann

Well, some and of volume taken that level certain an you a volume, the got for big organization has staffed hits.

the challenge. So that's

Jonathan Tanwanteng

for there? in like, what core But on Okay. going and And the margin, the that? the last have the just a What Got higher incurred. were down, later gave they significantly. tariffs. is color they this Aerospace tax think XX% sales I mentioned, was a on reason it. else looks mix Dave you X It businesses charters this obviously, quarter, and quarter, problem little stepped you

Peter Gundermann

didn't, material It's to to assume And get I Aerospace prepare breakeven, tariffs the X mostly reallocate in reserves we those driven But all of back were don't number, which actually, and by me. struggling are you have if volume. the businesses. front of comparable and that businesses

think that in neighborhood, think kind they're XX%. the but of not I XX%, get XX%, same up I you in

Jonathan Tanwanteng

Okay. Got It.

of the base As XX% QX? forward going use you rate, given as go size rest that of into to XX% of be the that the to year, same volumes should the the we aren't

Peter Gundermann

that's Well, problem. the

with that current think reformulated with and situation. has AeroSat in our big AeroSat, the -- is I to the being do plan assumption

David Burney

subtract look not out of half the nearly of expected the John. the were the if run quarter. first sales, you it's guidance see we in the our where at you last year. Yes, for And first midpoint for the year, rate the can And half

Jonathan Tanwanteng

acquisitions from rest you any did the just then color And Great. for year? Okay. the accretion the of that on the

David Burney

the of short-term it amortization I for intangibles. impact. the We'll minor will have have a some think cost early usual

typically, the of a growing income. It's to do run has I that, significant over to been contribute I on teens. last couple a EBITDA. it years. expect EBITDA that's to to positively GAAP So has have an had don't And impact business upper rate, mid- it expect

Jonathan Tanwanteng

that right? believe an or Is I absolute margin? level margin,

David Burney

hear what said. I you didn't

Jonathan Tanwanteng

margin is prediction the right? on basis, midterm That

David Burney

percentage. Yes, EBITDA?

Operator

Our next question Canaccord Herbert Genuity. comes with from the line of Ken

Kenneth Herbert

and $X Or start of million sort fourth to go the third Pete you I Dave, expected $X.X sort quarter? from in about to ask wanted that as see we ramp any benefit restructuring. Do it, just first to does have of call quarter? million to this

David Burney

made moves, seeing all third adjustments Yes. to We related the moves most second should believe, of the I immediately were largely the quarter. in the the it quarter. severance and start of Most -- in

So in the were people there, or quarter, we terminated second that involved cost the and were the incurred retired.

Kenneth Herbert

likes So of while AeroSat all restructuring is, identified is, least sound with exception essentially, complete? you've down, the as activity, at

David Burney

I Itasca Yes. in mentioned co-locate mean the except, of -- I up we're some the to to Waukegan. that's business starting

We going do. area. from a of move yet our that's are probably to That's we take be that'll help all see of that But out those businesses any some seen of haven't that the the process that. months synergies synergies to located XX a going in expect to slow to get to be Chicago

Kenneth Herbert

cautious But seeing be else we should to about? outlook? market thinking maybe, that, there. okay. like any it as product legacy clearly And your That's wide-bodies market, platforms having that for contributing capacity else is of sounds Okay, Or constraints or in the in-flight anything maybe, impact dynamics your connectivity anything on of -- entertainment modification other sort around pushes, Pete, are an you in on the MAX that just line, the work to that the comments or helpful. right, on some some

Peter Gundermann

X quarter. but booking a And these out to make Ken, market all had it. technically for kinds I of happening. much overplaying right to comments, too don't I'm things great the want don't quarters up this place, of -- because quarters, really cautious I always about we a they're And little dynamic X, It's

and orbit bit quarter there. to work, the of systems, a narrow-body forth. satellite little world and the or the certain now the And up here of the I being does the yielding aircraft cautious to is content, away X in an And on constructs some make. systems and roll probably KU, then is Ka-based those to in these how industry so So has constellations, be trend kind and want trend there with There yet, that type every Connectivity is the XXXX of are how all there's and is Systems, to and and XXX they are dynamics extent the about in not play, not at low-earth a extremely from day. punches wound But we kind so impact. air. level, down CPAC market,

a that don't situation comment And And have have installation. the sudden type about capacity usually aftermarket been Airlines The shrinks, dependent they or their it where have, I XXX is, aware to thought have do affluence kind of a don't have a declines situations, of all progress the Max couple if they makes to. is they to pushed that because IFE of higher want that reason they brought fleet-wide expecting are a a you in they that generally, become an bit when when we of shrinks, is the off. then of XX the capacity service, think of It's in little out installation. quantities would last their take aero have planes sense of when

wish see, dynamic up goes, that grounded. could don't of a in the kind be it we and obviously, what I XX The it stay not I until customers. other and know we longer sense going And recently. do more something -- did is to was touch to we we until be conversation with do. this an We than recently how wait long that But Max all, had up not our and knew had the influencer. So

Kenneth Herbert

if Okay. helpful. very on And No, could I just AeroSat. that's finally

on watch get of for track? Or satellite think of sort the anything specifically, end a the As milestones signed now of terms how you we next in year, about of we sort poster should look of in highlight we next to should could, terms what at, the out capacity? of business between key the -- and the back key that maybe, couple the obviously,

Peter Gundermann

mean one a Yes. from our -- you got Intelsat a partners, was satellite again, beyond bit as here. a the incremental region and who's flies America business tail-mount Direct know, in really satellites. pretty Inetlsat. I scope, their one, important Atlantic, owns and the is to it's our perspective, a Satcom -- in-question the over Intelsat and satellite. kind big they mean And problem the unfortunately. are I this And little pretty was on, The otherwise was was an add kind of going and our of North initiative a critical on over have it what and from that relative

So they've got got satellites that to the can of some too. figure have out and in offload work they they that other orbit

this Our have price-wise been and that give competitive sense to need our at we that us or able the is they point, market. technically on system make not willing to the would capacity

an and But right somebody we do say a initiatives don't to can I and know quickly, just more something spent a news this them. than got satellite anyway, And I've story we or to this not which move -- but planning -- otherwise moving there. underway, They've you have isn't to at observer. either a are have anything involve satellite. that of may like news. satellite, you all go some Satcom on about we're offload obviously, got long when [indiscernible] you And a were bunch kind means things money speak for do short, all borrowing may we those And capacity And We've understand satellites is or to of up unless lot very and from they But time break you it you Intelsat point, a that, it. can't the new told as it depends, traffic we'll interested else of yet. can the has put I satellite we I and Direct. other

Operator

from Our Michael comes with next question the Ciarmoli line of SunTrust.

Michael Ciarmoli

I bridge, took you on on $XX talked Peter, to million being AeroSat $XX Aerospace. quarter, $XX the from And just million about think last out million. revenue you down

contemplated a $XX rate. You presumably MAX month the million at run per

million out that out you to reduction? took $XX called other were So the that what that million the $XX Assuming last bridges you quarter.

Peter Gundermann

we quarter, negatives we And -- felt the last quarter, we as left the was. move offsetting enough that saw had didn't Well, right, of it we at the last reductions some the range. we but positives need to you're

this they're quarter, into -- get closed I we mean be X So the or of kind -- up thought now, of MAX production clearer first account as with than months MAX as taking plan situation would original comes when we would less X the quarter to as of we the be year-end, and back MAX. its of actually, coming out direction. got give million systems. million million in then order that a to we we've or or We've million moving -- got $XX across million another of you business. $XX antenna to But And line $XX rough magnitude, coming XXX basically, of $XX related fit. of other about got programs $X out the

growth But things. of Obviously, the the actually, right, over XXXX it's midpoint set year. it's to to range, our of I moving have kind a for X% it's a of capacity and The our relative to is have disappointing about. year our revised we still good news nonsemiconductor talking it's -- if hit might linked the numbers. been expectation the that be of adjusted which Some of most we issues original a of broad-based

reset. we potential at So business and we're think disappointed pretty too. with the got time, the good the on same But still we've momentum

Michael Ciarmoli

mean what you Safran per be furnished $XX million what have kind -- or ordering weakness. a just channel of of purchased other inventory I in I'm just to guess any would getting those guys Do line of I'm or sense a had idea United would at mentioned fit, mean the time mean trying down, you the Technologies all be the Boeing airline? equipment buyer about get but Got XXX I in seen on is it. were some guys of from with I that the bookings presumably call the we've been that assuming you suppliers suppliers out Panasonic? rate the at I month. interiors,

I and weakness don't color So mean potential even is can guys know channel you I look provide in there taking any what there. Copa. I have at if you and the who think were know, connectivity the you should lot United, -- if certainly full MAXs, have headwinds. power mean been in had I Air Canada, on that the revenue bookings would there airlines don't a

Peter Gundermann

that's if big really type highly don't not our We is of Yes. pretty Most certain a modular, think airplanes. dedicated of to headwind. a that, hardware

sell is So example, a a ours or have a of be buy if long or they're can customer -- XXX. time. or whatever XX things a a could of fitted lot -- a been a we XX that people XX to on on the XX really United A them also and go it, an or for good that

So I airplanes. XXX-specific a distribution bit, more building the Boeing they'd they are hardware thought airplanes have. fleet aftermarket to think busy don't our don't summer and lot in a have whole the -- because just And sales sales channel airlines. of there's are start for I I think hedging as travels -- waiting the to little airlines they that of maybe

that want put right on So why something now. to buy they don't

get a going a to when that happens be is a day. more addressed. it's there reestablished, looking released to we'll lag I But think the gets XX once while of and I we're I expect to that. lot be inventory that will built-up find But driven out. think don't by would big things that terrible rush there's forward

Michael Ciarmoli

forget... it. then And just Got before I

Peter Gundermann

doesn't. ask to Dave just anything had was to that. to going if He he add I No.

Michael Ciarmoli

you talk to the passing Can in I the -- just of one, from that Director, of How your that then way. rights. of think XX% evolving get and voting shares about is about, your mean, -- those situation? How Or guess last are Board Chairman of I'll think shares convert just because are thinking you out sold, Keane. I situation with estate Kevin and Board, you into A he the I when guys managing Yes, B stronger that shares planning, rights. the voting B owns the they I lose

on that holder? what's that So -- happening his any estate color large and with

Peter Gundermann

are. anything I anything obviously for expect as And have happen, respects. miss a to company damaging wouldn't loved He their to really any don't decision. does speak can't It's or too. perspective the I No, terribly intentions what family I on many his them but and Kevin we -- in rash family that.

Operator

Our George the next from of question comes Godfrey CL with King. line

George Godfrey

One you next business, you out loss. inventory charge, the for operating over operating $X $X.X million, right is of is is two that back I two XX% about questions. about quarter think is, loss assume? to operating Just AeroSat's million, the the loss said that If a the

Peter Gundermann

we would out. what assuming business, figure anything do don't to the That and a that's we're different of baseline be part trying assumption to

George Godfrey

of next What you to earlier is it. the... be the Got said, the capacity issue wouldn't then, you Pete, resolved year. end satellite expect any than And

Peter Gundermann

End of George. this year,

George Godfrey

calendared could we If and into conservative this less this resolved of more that likely Or a something type or a -- XXXX? extend is Yes. gets XXXX took optimistic a thing?

Peter Gundermann

I can at process the the gun years, blocks, frustrating the And around starting off. been the a actually, here waiting good an horn question. it resolved, start. a we X.X go were off. for as this false already. been And That's imagine. with sure I incredibly And X think you and it's to We've go it's we've one hope then we got to years, was did been gun in been it's now, probably that, provider satellite

everybody So got in and blocks then happen. thing this back the

tempt I it don't be absolutely hope by want little to we'd I will a way -- it's right Two either. ago, wait in years that I till that no XXXX, spot wouldn't the dream So saying now sure there's fate, but not.

Operator

Sullivan question comes the with of next Our from Global. Seaport line Josh

Joshua Sullivan

external coverage question on assets has better AeroSat a I on there impact might hold Just the -- are to where guys when understand much right pursue satellite over that that kind changes the AeroSat be I investment you following opportunity you're just to [indiscernible] suited endure thinking But more the and going How up here. while is now. of the you in portfolio. understand an point

Peter Gundermann

yes. have this opportunities that really Well, number we could been it's of business to answer meaningful of an we would been that a to of with the collectively set that It's question. and we bordering still seeing I have a road, been kind guess have I opportunities that, exist. amazing where circumstances us good way, company. the very be it led It's are. and But remarkably, tough pursuits a

sure business. sell or your is in question it's them. now if the to situation, we it's could that we current the way not question are pursue should isn't what saleable I'm and don't the to question is there And sure pursue, -- we that whether I'm I best So And right was, opportunities -- not the - frankly.

I cost-effective it think bit little don't to cost obviously, forward? a right do path opportunities of of have a going we're, past. the the maintaining to we But in efforts we issue, underway we moving like, it's your efficient see what And that think to know and when to a same what some how more execute committed the us that try we don't front near-term we best is necessarily, in which kind it's, situation over and to in our question of or the manner. some I best figure organize ourselves out ourselves opportunities we do of do gets have look exact exactly. manage picture,

Joshua Sullivan

Wi-Fi piloting And about the Or might you That's opportunity? market on that that how fit Can Astronics where talk helpful. develop? free into here. Delta then might some

Peter Gundermann

Yes.

underway. for you long-term our, of who world couple a don't interesting of and influential initiatives Delta, those a know, has the for airline a of obviously, entire So customer major

basically, with them is we're involved system of type a of customized heavily other And any of -- a is And needs. lot IFE on system components One system. same more effort. IFE kind than much to, this needs homegrown the that develop them IFE of

access. in the in to closer somewhere Wi-Fi, would and airplane, that and you are XX% what kind hotels standpoint X% rate have particular And a happens world. experiment specifically, through of the expect might loading question take expect like the board. where Josh, on they customers is running, from technical else you want or to XX% roof. that a just centers running somewhere everywhere in they And free they're Internet as -- it be being there basically, Instead conference to an on XX%, to Your the would issue when there I restaurants range, that XX% was it passengers any the of to to and is probably their free go allow of it's to trial to, the system

and shouldn't big they service, to be perspective, don't did. actually charge days that Wi-Fi, And hotels and these that free. an of at time a expected the for From it's these -- to for have to last airplane pay example, taught for is fewer it because they Astronics, expected places are one deal kind fewer because they're one is pay people being for this of kind our days of where

and be Now log or to challenge and getting to technically average have an of much march out a bedroom a in relatively -- airplanes that better though or the But those X well should they lower able to to on the that think the competitive on continues, like airplanes, or big put in their can handle airplane on decides do systems going XX% if handle if offer, or where the systems not Wi-Fi X to that's of as on connectivity A is think about. person have a this ever. in wired of X last this take do they more than been for to XX% connectivity if are current there able capacity else of connected just lot as starts aware Delta is rates. they the is pressure years, put to take cost towards it's going us, And rates of higher something They everybody even want new that similar. increase are kind expect would airplanes. we lot something airplanes they happening,

move. this we to expect So a would major be propelling

connected this connected even watching and it and airplanes closely. that upgraded very We're are become not connected, now substantially. in have to that test airplanes, So that those will are will obviously involved

Operator

Dougherty line Our Richard from of Company. the Ryan with & next question comes

Richard Ryan

questions two other or have occurred, you key did in on were of perform of in outlook? couple QX, how on And the A that deliveries it I to breakeven they the businesses. sight August. QX? better CCC, stay supposed over Armstrong giving you Did kind line Have for that in is was just of range? in some July profitable think their

Peter Gundermann

close both enough Neither them but this are forward. it's at of whole a discussion not going of them profitable of But worthy that are they're of point. -- lot

I think I'd the way it. that's paraphrase

As going going said, X the have the to up, absorbed Armstrong And Waukegan in to Chicago we year. mostly next in organization in area, we're CSC, two. the down Dave be the is facilities over

of the to is better driving a positive. that increasingly of expected in through cost in to been progress pretty that news be, Amazon a series later in has are there lot but that is now, the the that'll been July, which to continues little pretty loss. look increase of I make years, which complete, good program, operation. It the driving set think, its developments a confident, big moved overruns frustration kind the be able a bit that, for a helpful of estimates some actually about a And what's offs correct that So lot on late demand continues turns X.X for November, get that the kind organization VVIP of to to been last an is buy the we'll CCC the September. without You're out by of time, same airplanes picture At business. in is in for -- August, has development that

of to the is is this XXXX health with we at superior the there, And close. XX are levels think modify, AXXX, normal to market's normal we're returning health. going available program technically the more a because other out time of in market And excluded there, when come returning is the capability a airplanes here AXXXneo there levels at side the the getting XXX but to point, part of to Max is

these are years. world maybe countries are the tensions of were there despite the airplanes couple world, then And from. today such last buying in individuals various more customers airplanes to around the certain the situation So comfortable choose geopolitical for around wealthy more they that is over

once is some positive. program that's hard again, think we're something to developed, combination for others have going to competitively, the match. So And this we going we be pretty to get

this further almost year year. hip sales second expect at for into year, will little good next double a the we last We the shooting [indiscernible] going heavily it's [indiscernible] combination. from expect half, a So to bit, expect, the versus such, drive but and weighted bookings And as we

it's positive a reasonably So picture.

Richard Ryan

you Great. your that there? expectations one the increase still what's have book? that. visibility that on is in-house? already needed business driving the And Is Or business One To last cash. on some at

David Burney

in for A year the of Yes. see shaping of the increase included acquisition the of up the there now. And of the halfway part the through where refining kind just Freedom, guidance. some we're of balance year. And further backlog is -- sales the we

Peter Gundermann

Was your cash? questions specific to

Richard Ryan

Cash.

Peter Gundermann

Oh, Sorry.

Okay.

Operator

is from CJS Securities. follow-up a question with Jon question Tanwanteng next Our

Jonathan Tanwanteng

of are for the Just me. . What expectations tariff you rest a year? the one quick for

David Burney

think at year we though. but our is take a Well, we quarter what what I raw second a be it'll models, the if saw was quarter. quarter, in of a -- -- of internal we higher I Like the materials could It overall change million said, from we're quarter about million think we quarter. the about late, $X.X was still bit still $X.X into first be bunch imported could built looking little a China, for delivery but it each

Jonathan Tanwanteng

out past the week come in the the all Whitehouse tweets contemplate or that that from round of Does so? Okay. have

David Burney

We our forecast tweet-by-tweet -- a update on basis. don't upgrade

Peter Gundermann

should think though. I we

David Burney

think will of we us, outside say rate, for to as stay I can to we and I we relocate reductions their the some are run, in facilities when of the our in see things suppliers able XX% into tariff the some next year, if China. at get But long cost will countries tariffs the source this

Jonathan Tanwanteng

Okay, great. Thank you.

Or expenses Just the use how run we Is right corporate going follow-up, quarter-on-quarter. about one rate more were that? one forward? that should think to lower

David Burney

Yes.

first a I would use. if that's what run blended quarter rate, take second think you and I quarter

Operator

to reached over like the turn question-and-answer of end management to session. now would floor back closing We I the comments. for the have

Peter Gundermann

results. and for We your forward issues have your good work to drama better today, year time attention. Thanks Thanks Bye. these this look as a of day. through get for and some the

Operator

this gentlemen, today's teleconference. conclude and Ladies does

You have a time. your participation, may and disconnect day. this Thank wonderful you your lines at for

Astronics (ATRO) 5 Aug 192019 Q2 Earnings call transcript