ASTRONICS CORP

Previous wording

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 motion systems, inflight entertainment and connectivity products, 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 OEMs, aircraft operators such as airlines, suppliers to the aircraft operators, and branches of the U.S. Department of Defense (“USDOD”). Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense and mass transit industries. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEMs and prime government contractors for both electronics and military products.

Current wording

Our Aerospace segment designs and manufactures products for the global aerospace and defense industry. Product lines include lighting and safety systems, electrical power generation, distribution and seat motion systems, inflight entertainment and connectivity products, 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 OEMs, aircraft operators such as airlines, suppliers to the aircraft operators, and branches of the U.S. Department of 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. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEMs and prime government contractors for both electronics and military products.

Previous wording

On October 22, 2025, the Company entered into the $300.0 million senior secured Revolving Credit Facility. The Revolving Credit Facility replaced the Company’s ABL Revolving Credit Facility which was terminated on October 22, 2025. The Revolving Credit Facility subjects 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 a total leverage ratio, a consolidated interest coverage ratio, and a secured net debt leverage ratio requirement. 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.

Current wording

On October 22, 2025, the Company entered into the $300.0 million senior secured Revolving Credit Facility. The Revolving Credit Facility replaced the Company’s ABL Revolving Credit Facility which was terminated. The Revolving Credit Facility subjects 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 a total leverage ratio, a consolidated interest coverage ratio, and a secured net debt leverage ratio requirement. 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.

Previous wording

On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court decision, the U.S. Administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, which was subsequently struck down on May 7, 2026 by the U.S. Court of International Trade. As of the filing date, it remains uncertain what impact these decisions will have on our future financial results, including the process and availability of obtaining refunds of amounts previously paid for the IEEPA tariffs or any fluctuations of the level of replacement tariffs imposed or the addition of any new tariffs through other means.

Current wording

On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court decision, the U.S. Administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, which was subsequently struck down on May 7, 2026 by the U.S. Court of International Trade. Refunds of previously paid tariffs represent gain contingencies under ASC 450-30. Consistent with this guidance, the Company recognizes such refunds as a reduction of Cost of Products Sold in the period in which the gain is realized or realizable, generally when cash is received. Refunds that have been approved but not yet received, or that remain subject to appeal, further agency action, or other contingencies, are not recognized until realization criteria are met.

Previous wording

Consolidated net income of $0.67 per diluted share improved from $0.26 per diluted share in the prior-year period from stronger operating profit, lower interest expense and lower tax.

Current wording

Consolidated net income of $0.75 per diluted share improved from $0.03 per diluted share in the prior-year period from stronger operating profit.

Previous wording

Bookings of $290.4 million in the quarter resulted in a book-to-bill ratio of 1.26:1. For the trailing twelve months, bookings totaled $935.1 million and the book-to-bill ratio was 1.05:1. Backlog at the end of the quarter was $734.3 million.

Current wording

Bookings of $306.2 million in the quarter resulted in a book-to-bill ratio of 1.18:1. For the trailing twelve months, bookings totaled $1.06 billion and the book-to-bill ratio was 1.13:1. Backlog at the end of the quarter was $780.6 million.

Previous wording

Growth in sales was driven by the Aerospace segment’s continued strength in demand primarily from the Commercial Transport market. Aerospace sales increased $22.4 million, or 11.7%, while Test Systems sales grew $2.2 million, or 15.4%. In the prior year, first quarter consolidated sales and gross profit was negatively impacted by a $1.9 million revision of estimated costs to complete a long-term mass transit contract in the Test Systems segment.

Current wording

Growth in sales was driven by the Aerospace segment’s continued strength in demand primarily from the Commercial Transport market, including $10.5 million from the acquisition of BMA. Aerospace sales increased $66.1 million, or 17.2%, while Test Systems sales grew $13.9 million, or 54.1%. In the prior year, year-to-date consolidated sales were negatively impacted by $8.3 million, resulting from revisions of estimated costs to complete certain long-term mass transit contracts in the Test Systems segment.

Previous wording

Consolidated cost of products sold in the first quarter of 2026 was $155.5 million, compared with $145.1 million in the same prior-year period primarily attributable to higher volume and a $1.7 million increase in tariff expenses.

Current wording

Consolidated cost of products sold in the first half of 2026 was $328.5 million, compared with $296.9 million in the same prior-year period primarily attributable to higher volume. The prior year included a $5.8 million charge related to Aerospace simplification initiatives.

Previous wording

SG&A decreased $0.8 million. Litigation-related expenses were down $1.2 million and the prior-year period included a $6.2 million reserve adjustment to the damage award relating to the patent infringement dispute in the UK. Appeals to the UK damage award are scheduled to be heard in July 2026. These decreases were mostly offset by higher wages and benefits, higher incentive-based compensation expenses driven by increased profitability, and the incremental expenses related with the acquired BMA business. R&D was up $1.0 million reflecting the timing of projects.

Current wording

SG&A decreased $1.8 million. Litigation-related expenses were down $2.1 million and the prior-year period included $9.7 million reserve adjustment relating to the patent infringement dispute in the UK. These decreases were mostly offset by higher wages and benefits, higher incentive-based compensation expenses driven by increased profitability, and the incremental expenses related with the acquired BMA business. R&D was up $0.3 million reflecting the timing of projects.

Previous wording

Interest expense was down $0.8 million, or 25.8%, on lower rates following the September 2025 refinancing activities. Tax benefit in the quarter was $0.8 million compared with a tax expense of $0.6 million in the prior-year period, mostly as a result of a $2.7 million discrete adjustment for the expected benefit of a stock-based compensation deduction along with a valuation allowance reversal associated with an expected net operating loss deduction and with research and development costs that are expected to be expensed for tax purposes in the current year under the One Big Beautiful Bill Act. Tax expense in the prior year was partially offset by a $1.1 million discrete adjustment to reverse certain federal and state deferred tax liabilities.

Current wording

Interest expense was down $1.6 million, or 25.3%, on lower rates following the September 2025 refinancing activities. Tax expense in the first half of 2026 was $2.0 million compared with tax expense of $1.2 million in the prior-year period, mostly as a result of a $2.7 million discrete adjustment for the expected benefit of a stock-based compensation deduction along with a partial valuation allowance reversal associated with an expected net operating loss deduction and with research and development costs that are expected to be expensed for tax purposes in the current year under the One Big Beautiful Bill Act. Tax expense in the prior year was partially offset by a $1.1 million discrete adjustment to reverse certain federal and state deferred tax liabilities.

Previous wording

Aerospace bookings were $264.4 million for a book-to-bill ratio of 1.24:1. Backlog for the Aerospace segment was $651.4 million at quarter end.

Current wording

Aerospace bookings were $243.1 million for a book-to-bill ratio of 1.02:1. Backlog for the Aerospace segment was $657.2 million at quarter end.

Previous wording

Aerospace segment sales of $213.8 million increased $22.4 million, or 11.7%. Sales in the Commercial Transport market increased $18.9 million, or 13.7%. Growth was primarily related to increased demand for seat motion and lighting and safety products. General Aviation sales increased $6.2 million, or 40.7%, to $21.4 million due to higher inflight entertainment & connectivity (“IFEC”) product sales to the VVIP market. Military Aircraft sales remained consistent with the prior-year period. Other sales decreased $2.9 million as the Company has wound down its non-core contract manufacturing arrangements.

Current wording

Aerospace segment sales of $451.1 million increased $66.1 million, or 17.2%. Sales in the Commercial Transport market increased $50.3 million, or 17.8%. Growth was primarily related to increased demand for seat motion and IFEC products. General Aviation sales increased $15.4 million, or 45.9%, to $49.1 million due to higher IFEC product sales to the VVIP market. Military Aircraft sales increased $3.4 million with the prior-year period. Other sales decreased $3.1 million as the Company has wound down its non-core contract manufacturing arrangements.

Previous wording

Aerospace segment operating profit of $35.3 million, or 16.5% of sales, improved over the prior-year period reflecting the leverage gained on higher volume, improving production efficiencies, a $2.8 million catch-up of profit on the MV-75 program based on revised program estimates, and a $7.0 million decrease in litigation-related expenses and legal reserve adjustments related to the UK patent dispute previously discussed.

Current wording

Aerospace segment operating profit of $83.6 million, or 18.5% of sales, improved over the prior-year period reflecting the leverage gained on higher volume, improving production efficiencies, a $2.8 million catch-up of profit on the MV-75 FLRAA program based on revised program estimates, a $11.6 million decrease in litigation-related expenses and legal reserve adjustments related to the UK patent dispute previously discussed, and the absence of a $6.5 million charge for simplification initiatives in the prior-year period.

Previous wording

Test Systems segment sales of $16.8 million were up $2.2 million from the comparator quarter in 2025. Segment sales in the prior-year period were negatively impacted by $1.9 million revision of estimated costs to complete a certain long-term mass transit Test contract reducing revenue recognized in the period.

Current wording

Test Systems segment sales of $22.7 million were up $11.6 million from the comparator quarter in 2025. Segment sales in the prior-year period were negatively impacted by a $6.4 million revision of estimated costs to complete certain long-term mass transit contracts reducing revenue recognized in the period.

Previous wording

Bookings for the Test Systems segment in the quarter were $26.1 million. The book-to-bill ratio was 1.55:1 for the quarter. Backlog for the Test Systems segment was $83.0 million at quarter end.

Current wording

Bookings for the Test Systems segment in the quarter were $63.1 million. The book-to-bill ratio was 2.78:1 for the quarter. Backlog for the Test Systems segment was $123.3 million at quarter end.

Previous wording

Test Systems segment operating profit was $0.4 million, compared with an operating loss of $2.2 million in the first quarter of 2025. Test Systems profitability, while improving, continues to be negatively affected by mix and under absorption of fixed costs at current volume levels.

Current wording

Test Systems segment operating profit was $1.0 million, compared with an operating loss of $8.9 million in the first half of 2025. Test Systems profitability, while improving, continues to be negatively affected by mix and under absorption of fixed costs at current volume levels. In the prior-year period, the revisions to the estimated costs to complete had a $8.8 million detrimental impact to operating income.

Previous wording

Cash provided by operating activities totaled $10.6 million for the first three months of 2026, as compared with $20.6 million cash provided by operating activities during the same period in 2025. Cash flow from operating activities decreased compared with the same period of 2025 reflecting higher cash earnings offset by higher working capital requirements, including higher inventory levels to support anticipated revenue growth in the coming quarters.

Current wording

Cash provided by operating activities totaled $40.7 million for the first six months of 2026, as compared with $13.0 million cash provided by operating activities during the same period in 2025. Cash flow from operating activities increased compared with the same period of 2025 reflecting higher cash earnings offset by higher working capital requirements, including higher inventory levels to support anticipated revenue growth in the coming quarters. Cash provided by operating activities in the prior-year period included $21.6 million in payments related to the UK patent dispute and $12.8 million in net income tax payments.

Previous wording

Cash used for investing activities was $11.2 million for the first three months of 2026 compared with $2.1 million in cash used for investing activities in the same period of 2025 reflecting elevated capital expenditures for necessary catch-up investments on previously deferred spending as well as the consolidation of operations and capacity improvement in a new Seattle facility.

Current wording

Cash used for investing activities was $16.9 million for the first six months of 2026 compared with $6.7 million in cash used for investing activities in the same period of 2025 reflecting elevated capital expenditures for necessary catch-up investments on previously deferred spending as well as the consolidation of operations and capacity improvement in a new Seattle facility.

Previous wording

Cash used for financing activities totaled $5.5 million for the first three months of 2026, as compared with cash used for financing activities of $11.4 million during the same prior-year period. The Company made net payments of $8.9 million on its ABL facility in the prior-year period.

Current wording

Cash used for financing activities totaled $32.7 million for the first six months of 2026, as compared with cash used for financing activities of $12.5 million during the same prior-year period. The Company made net payments on long-term debt of $25.0 million compared to $10.0 million in the prior-year period.

Previous wording

Cash on hand at the end of the quarter was $11.9 million. Net debt was $331.1 million, compared with $324.8 million at the end of 2025.

Current wording

Cash on hand at the end of the quarter was $9.0 million. Net debt was $309.0 million, compared with $324.8 million at the end of 2025.

Previous wording

On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $30.0 million. During the three months ended April 4, 2026, and March 29, 2025, the Company did not sell any shares of its common stock under the ATM Program. As of April 4, 2026, 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.

Current wording

On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $30.0 million. During the three and six months ended July 4, 2026, and June 28, 2025, the Company did not sell any shares of its common stock under the ATM Program. As of July 4, 2026, 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.

Previous wording

The Company’s backlog on April 4, 2026 was $734.3 million compared with $674.5 million on December 31, 2025 and $673.0 million on March 29, 2025.

Current wording

The Company’s backlog on July 4, 2026 was $780.6 million compared with $674.5 million on December 31, 2025 and $645.4 million on June 28, 2025.

Previous wording

Although the majority of our sales, expenses, and cash flows are transacted in U.S. dollars, we have exposure to changes in foreign currency exchange rates related primarily to the Euro and the Canadian dollar. The Company believes that the impact of changes in foreign currency exchange rates on its business and financial results for the three months ended April 4, 2026 was not significant.

Current wording

Although the majority of our sales, expenses, and cash flows are transacted in U.S. dollars, we have exposure to changes in foreign currency exchange rates related primarily to the Euro and the Canadian dollar. The Company believes that the impact of changes in foreign currency exchange rates on its business and financial results for the three and six months ended July 4, 2026 was not significant.

Previous wording

The future impacts of U.S. trade policies, treaties, and tariffs and their residual effects, including economic uncertainty, inflationary environment, and disruption within the global supply chain, and aerospace industry, on our business remain uncertain. As we cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and various other countries, what products may be subject to such actions, what actions may be taken by the other countries in retaliation, and what actions we may be able to take to address and mitigate such tariffs, the ultimate financial impact on our results cannot be reasonably estimated but could be material. The impact of tariffs on its business and financial results for the three months ended April 4, 2026 was approximately $2.5 million.

Current wording

The future impacts of U.S. trade policies, treaties, and tariffs and their residual effects, including economic uncertainty, inflationary environment, and disruption within the global supply chain, and aerospace industry, on our business remain uncertain. As we cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and various other countries, what products may be subject to such actions, what actions may be taken by the other countries in retaliation, and what actions we may be able to take to address and mitigate such tariffs, the ultimate financial impact on our results cannot be reasonably estimated but could be material. The impact of tariffs on its business and financial results for the three and six months ended July 4, 2026 was approximately $0.7 million and $3.2 million, respectively, net of $2.0 million of IEEPA tariff refunds.