ASTRONICS CORP Q3 FY2024 earnings call

• Dave Burney to retire as CFO in early 2025 after 29 years; Nancy Hedges to succeed him in January. - Third quarter sales up 25% YOY, adjusted net income $12.2 million ($0.35/share), adjusted EBITDA $27 million (13% of sales). - Aerospace segment sales up 25% QOQ and 19% YOY, adjusted operating margin 14.2% in the quarter. - Supply chain improving, input cost pressures subsiding, workforce efficiency improving, pricing adjustments taking effect, backlog at $612 million entering Q4. - Adjustments in Q3: $7 million expense from refinance, eVTOL segment has standard architecture products, $3.5 million warranty reserve for electrical power system.

Aerospace segment represented about 88% of the business. Operating income for Aerospace improved by nearly $22 million primarily due to higher sales volume and improved productivity. Adjusted operating profit was $25.3 million in the quarter compared to $5 million in the prior year period, with adjusted operating margin improving 10.7 points. The Test segment was near breakeven in the quarter, primarily due to lower legal fees but affected by less favorable sales mix and under absorption of fixed costs.

• Expect Q4 sales in range of $190 million to $210 million, bringing 2024 year-end sales to $777 million to $797 million (14.2% YOY growth). - 2025 plan anticipates solid growth and continued margin improvement, sales forecast to be released in December or January.

• Legal battle in the UK regarding patent infringement on in-seat power product line, with potential damages up to $105 million, but patents involved are expired. - Impact of Boeing strike on Q4 sales, with uncertainty in ramp-up schedule.

Q: Quantify Boeing impact monthly and run rate in 2025 A: Uncertainty on exact rates, but inventory burn down and slow start expected, with direct shipments to Boeing at lower rate Q: Impact of lower ship rate on margins A: Still profitable, not materially affecting margins Q: Inventory and cash flow in Q4 A: Strong cash flow expected, net debt improving Q: IFE power opportunity with Southwest A: Involved with Southwest's cabin refreshes, new USB type C power architecture is part of their offerings Q: Legal battle damages and competition A: Patents expired, not restricting business, financial strength provides options, not a major crisis