ATRO - Earnings call 3 2023 | Astronics Corporation

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Operator

Good afternoon, everyone, and welcome to the Astronics Corporation Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded.At this time, I'd like to turn the floor over to Deborah Pawlowski, Investor Relations for Astronics. Please go ahead.

Deborah Pawlowski

Thank you, Tammy, and good afternoon, everyone. We certainly appreciate your time today and your interest in Astronics.

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

should the of results, copy closed have quarter You financial XXXX today. our which after wires third crossed the market just a

do uncertainties forward-looking you find apply If Q&A well could factors from other well formal and statements to our during with with not filed as risks it and we aware, session the and that what as you are risks events actual materially conference and future the as statements astronics.com.As as uncertainties the are to other other at Commission. documents provided are These that differ Securities have call. of today. and cause may the on release, you factors to can website make in is the These this Exchange some here stated discussion release results subject earnings

documents or in evaluating financial can these useful measures. be on non-GAAP You will our We some today's those at call, our will discuss website find believe also we sec.gov.During performance.

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

non-GAAP of have provided measures that, tables in the accompany with We reconciliations today's me it measures begin. over to Pete? comparable turn that let with release.So to Pete

Peter Gundermann

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

in painful the that fairly so hit the in $XXX of progressed, The company to and had of and know bottomed we arrived who back and stage what are the those have then market. I decline which want focus our trajectory, back days, for are is hope old on transport understanding I'll be XXXX that on and by old most been start important consider in revenue will important well, the good and discuss, feature comments, company. us going happening in quarter commercial my bookings narrow-body the we the the is setting but COVID we important before to when early XXXX. company be that between start continue will Our time where then will we us. the a $XXX quarter, feeling Astronics.We on as only our been like we'll a that pre-pandemic to to way we bolts is things focus Dave the to the good I our what was our lesson quarters. XXXX, is need going and of retrofit million. was million today, things will down both to for to in third questions. respect still were year thing sales hard of to prepared that to is thing Dave divide They especially for and about understand the understand and for heavily prominently most is the company with on at nuts of XX% focused airplane reasonably there where out a history usual, are It growth to was Though were the our applications. We year these and that pick And with I $XXX quarter exposed million, understand. many but that to trajectory OEM million. from transport commercial It with in up market, that made sales have our and to back the take as days started company. up important in up it level, investors the watching a to to glimmer $XXX news went XXXX both bit order properly company.I of industry time our to companies where we coming and

Our book-to-bill a performance. cases most pretty in most times, In XXXX to successful X.X. or be out turned

styles ] to. couldn't at became that chain prominent the while supply we the that that generate However, were we [ revenue booking were wanted time apparent. business, we And

So began X.XX. to million, to year as a to $XXX things improve began XXXX throughout supply strong correct Bookings, $XXX million.In book-to-bill of significantly. revenue XXXX, rose itself. stayed again, however, chain the XX% Sales with up of the

for XXXX improve, the So with and while make the where respect supply industry proud for our us to did pretty was enough still to continued airline what growth not are seeing we'd market be in XX% we for of supply chain. progress in which recovery normal brings chain asking it us began us, to but the times, improve that, also

our Given midpoint, that we would QX be in results, updated guidance year At today to quarter, in our range for million million. press of issued and fourth our $XXX XX% to our the third expect a XXXX. end release $XXX results over the quarter up

Those talk will to So want compared to since last is to pandemic little about year. it. But hit. we the which saw we've this to fourth proud be have been the numbers years million million. XX% are of.I things growth X of first the which $XXX do big to the be release, where backlog that $XXX quarter all, year, press forecast, over those last Again, bit a normally, you XX% in

and million out prudently stars we to the But to we think weeks range. get of we were have capacity $XXX if pace that go to range are with.Further, do the that play align in a beat than X could $XXX being end the proper on through come million there. is conservative, to to high and in In fact, were backlog more we time,

the our that's at long the encouraging. of as than gas the because our to at the it a with and not $XXX quarter for $XXX to would point, pace, us marks we kept our I talking fourth expense we're assuming return this the typically performance, Sales little today.While it historical touch us, publicly return we confident important And of we to foot test we importantly, But on second income want what did that of XXXX, the and to is years I'm million the in finally, help not which during doing obviously that new sits but released You third in million in this you target can we're frankly, quarter on quarter. did which last. the and will the were to respect of profile and programs. revenue statement on Most development X-week point, lighter ratio million margin volume XXXX, that. a And cover of briefly In $XXX is very range, the for. a think hit what that programs, on third hoped finally interesting is, take what concern. to of pandemic, we back we eventually major quarter, point a those verge about be range our at our

the specifics be the and to we're wanted are yet, of to may official was with face August at expect another view do that very own we the quarter draw as numbers at a expecting quarter, we're $XXX given in August built putting Our million we the usually fluke. do XXXX we volume July doesn't to going million in be the in fourth It's of X.X we September. or come month, We're we're going that's something XXXX, not where so done ready you'd Dave here, guidance and or capacity a not again third XXXX. the kind it in this send we up while the does be the in a out indications followed us of July so our than and maybe pretty in the quarter everything.But as end quarter the the fourth year in a do that quarter could pretty -- momentum third right of to issue will and that [ and of scheduling is that, in -- more XXXX. to again. going want million shutdown some second initial minute.But guidance one the words, in fair we're factories way challenging a a by also so weak those midpoint that at ] much. guidance and we're level quarter, when third function turned But Xth together. that little get We're month the is we vacations volume fourth third revenue We sometimes before empty normally business we in out will he I that it And being to I quarter not the capacity the all not $XXX of the I $XXX the and of for to message throughout million a a anything quarter, point. not range basically, to not the up situation.So a wanted bit much that on indicator XXXX to guess over progressed. over be for up is high ended neighborhood, lumpiness done with $XXX improvement process big about million and not quarter was $XXX a in months other would bother else. -- very our In came the month talk obviously, to which within a into with note and or too supplier going revenue a where, go in million strong above $XXX

this turn that you it are again, guidance And issue expect we looking to over that. forward we I'll of the So year.Dave, to sometime towards to now. end would

David Burney

Pete. Thanks,

quarter. to third the than So and programs of quarter. by or impact dominated higher the million, of last have been pipeline third clearly a weekly with filing. significant was the on been throughout from million. $XX.X operations the year's our have their bankruptcy million of consolidated cost year's all reserve, volume.SG&A million. customer XX% design back sales Global inventory, forecasts. SG&A sales. with the will would but airlines and was million some a work down expected and XXXX We That sales Interest Gross quarter of commercial operating $X.X to transport profit this $X.X costs non-core about equates to million been our board have and a XX%, income points bankruptcy or receivables, to that, operations quarter. have product, for recorded the regarding bridging not related the the of very million. in XXXX loss prospective to quarter item of was Legal businesses. the last sequentially million jump sales contribution Absent in the XXXX.Looking reserves reserve XX.X% was that transport sales sales but up year Lower of unexpected receivable XXX operating impact quarter sales. customer business, of largest OEM driven on with sudden prior and the operations on inventory manufacturing did from which the increase aerospace customer's customer to We receivable their inventory gross surprised bankruptcy sales impact quarter this to rates million to markets, than were customers' relating growth to commercial we had that of continue to million significant this from loss loss lose increase the on were consistent few primarily been result contract this last bankruptcy, items from impact customer. would them our improvement reserves across of The all drop. was related and to We in of primarily accounts up sales business.I'll The purchased been would $XX.X to quarter that of expected We've but million.Looking $XX.X most and a build margins XXXX. their or have increased for by compared Other added minimal than increased. the in the second retrofit to rates goes headwind. the million of by margin from operations any customer beyond this were $XX.X our The we're sales. or have a for to $XX.X prior or was ago The lower days $XX.X specifically in on $X.X XX% have entire and was reserve had our profit this XXX including that from year, $X.X the profit no the which pipeline Absent the order the million on $X at activity sequentially $XX which the was contact XX.X% of to roughly for reserve, which $XXX sales The run XX.X% to our a $XX.X million taken third due bankruptcy, as accounts for high or due bankruptcy. of Absent $XX.X to sales. points the balance relates $X.X second related million of $X.X gross million basis loss $XX.X remain million sales, customer million of quarter. basis the

flow over all was turnover, we of balance inventory the is lowering million.Jumping this next improve to the used outstanding point Our move cash loss operating flows. million quarter which during generating offset an has cash was the million, adjusted inventory expecting we $X.X the stabilized debt, quarter. sheet, end note, levels increase in net inventory the and we to we're level of for assets positive year. the quarter, a of debt on into and begin equates and forward, rate the in On largely $X.X was to a $XXX At quarter cash interest our cash $X.X our debt outstanding operations net Cash which will non-cash balance that in from expenses. by about for million, had XX% as our of

shares is program average dilution into This quarter we were tight of sales. capital first growing at to X.X%.Looking cash but price needed sheet. the sell fourth used the of significantly remains $XX.X million liquidity we that quarter at-the-market target $XX.XX place terms flow balance our With not a our flow the until our large As generated an realize to start to fund to equates capital using XXX,XXX remains that sales was to we we'll and of the of XXXX. delever working from high, cash working future, the in improve active flow, the expect free cash our first about to forecast, deploying until

to covenants We are are debt compliant continued our that, compliance.With Pete. forecasting you, and with back

Peter Gundermann

comments. I our ends think prepared that

the to it time. open for So want Jamie, if you is up questions, now

Operator

[Operator Instructions] first today Truist Pete question Our from Securities. Osterland from comes

Peter Osterland

I'm Mike today. on for Ciarmoli

XXXX. of be least in If else with and it would and anything able about up low the I think I just how look that sales double-digit incrementals EBITDA EBITDA for reasonable? to change Is to expectations the should ask you margins first, at So there your mix based on wanted costs that that is level level currently to quarter, seeing throughout on fourth continuing the that year, at margins. put here? like you're or the sales momentum into would Or seem

David Burney

around we drops we margins, typically, you Yes. on somewhere This income. is provide XX% Well, guidance it steer is operating Dave. incremental between the but that way don't I'll sales our to XX% of think of to

-- that level back get sure. can we that in for think in number sales up number modeling operating double-digit my look napkin is for generally on I at income to the EBITDA the is purposes, that -- your typically at XX% a reasonable, to that it's the of like sales. drop I So the of to But close a quick will back to line

Peter Osterland

the stated have rates. are follow-up you're recently? on OEM where with you aligned lagging? that announced currently is then And been a rates there had the build about commercial and Are just currently any publicly aero I areas Or build talking

Peter Gundermann

the which asking Well, to you're around this we're we're aligned. probably typically is narrow-body mid point I at line, running about, we're MAX high-XXs. would on sometimes say what

we're reasonably close at rates And production stated to this so point.

Peter Osterland

Okay.

make saw expected are call and it's where soon, areas to any you'd up labor key during whether the meaningful with progress anything picking processes, challenges are rates suppliers. you there meaningful within manufacturing that given or out So quarter your productivity

you seeing anything that the call Just kind quarter? the out you're in still of fourth quarter, there in current

Peter Gundermann

No.

supply tracks there third there's quarter. the chain we and that products our stopped our to but major our safe of across continue with really here operations, any us nothing all that I in say to think face of it's flare-ups in

specific week a the But July we for that into pin and was into I supply made at more I fourth start of quarter weak the And through say, more and now and across the expecting, the bigger operations certainly supply August chain that never in was with right you with back-ended concerns that was that our we and the end, third down cycle as out quarter with the think this into shutdowns, period.And improve. July second really the quarter up at the go once accelerated of then of call, quarter very Xth we're September, third generally the operations issue. end of and I really the as definitely really listen I the one things that the we kind conversation our of you factories continues to for that pretty with higher a we the And we're are volumes. of up if moved had huge as this But large quarter the was and and shipments empty up. to where quarter. combined third just lot the around from kind got can't start that you had we push would huge major board, accelerating. chain weakness are working is And you a issue we back think that that volume with routinely problems. everything to our end or on -- we're case shut we're some back-weighted next caught any second

Operator

Securities. question Instructions] Tanwanteng Jon comes from Our next CJS from [Operator

Jonathan Tanwanteng

of hanging the much path inventory down is work to stranded excess you're that to what more kind or to and I is just timing levels? normalized today, on was how wondering

David Burney

I we it significant. think it can kind means to or for when have it stranded, excess be it's and up it's for it's stranded, we so waiting orders call definitely the a just of parts don't and the with the catch number shipped. the rest of And that there that completed

So it's that. a sure. have number levels on the for for I contributor to our inventory high you don't

Peter Gundermann

specific down. there's some really wide-body there's And then stranded I went as we inventory. Jon that into is as the through markets And we that's move color, in and burn add to of production slower some start got we slowed wide-body the expect pandemic the XXXX the one would rates inventory down inventory things caught to with will we that widebodies up. to pick continue that happened moving world and

$XX So I and variety But think How those we our could down $XX in that burn difficult reduction the we're variety. systems. in wide-body to going with kind would both stranded the to at inventory, our like least of a the quantify to million. million year, of inventory end or think the see is by we

think I we're that's what thinking.

David Burney

No, it than be now. less will

Jonathan Tanwanteng

for measured the I forward your orders was and rates just for? was you're QX. expected of wondering customers, demand next But you look order against to kind you going on whatever you year, gave that's and revenue I military, you about what thought military large is wondering a just what from waiting what excluding going range like think

Peter Gundermann

would that. to I bookings have couple least we're closely going to Well, watch stabilize to that that's certainly of we're that over item. going to quarters million the next watch at level, or higher but million $XXX $XXX confirm around a think pretty

happens impact we to going a impact will not for XXXX indicator we on been on the significant backlog. radio as leading business, where for got it it's that a over publish is that still plan.So things business, where of our as for now, waiting programs, think significant them a Army bookings year it waiting the for a on a our test U.S. was test one obviously very because when our happened significant has bookings a of hoped example an And and have be we of some and we've record One program. we're we're

come to with pretty we're But have earlier. the the initial that safe I about we preliminary in where that is feel something to out bookings going talked beyond watch. we're XXXX look So

Jonathan Tanwanteng

is When you're to of update that litigation any on resolution And occur? just expenses expect there that or then up some the do kind you let to incurring? either

Peter Gundermann

pretty X We decade, there. major have which through to for hot we XXXX. kind going on That's we heavy a been into and with of and expect has one actions resolution that get our would thinking Hopefully, to involved, over of some one, as continue move XXXX.

a The that chance, up here. we We'll other about that XXXX. one that, quickly as have into into minimal could we be know is relatively get more recent, pretty and wrapped and is believe expense year-end there

Operator

today's And well everyone conclude ladies at as no We thank as in additional session joining. we'll and gentlemen, presentation. question-and-answer this showing time, today's questions, for

You disconnect may now your lines.

Astronics (ATRO) 8 Nov 232023 Q3 Earnings call transcript