Astronics Corporation Q2 FY2025 earnings call

• Aerospace segment saw record sales, driven by commercial transport and military sales. • Test segment had a $6.4 million adjustment due to program review, and $6.2 million restructuring charges from exiting noncore product lines. • Acquired Envoy Aerospace, an ODA, which is expected to be a competitive differentiator. • Tariff impact of $15 million to $20 million, with mitigation efforts planned. • Facility consolidations and capacity expansion projects in progress.

Aerospace segment delivered quarterly sales of $193.6 million, a 9.4% year-over-year increase. Commercial Transport sales drove growth, up 13%, and Military sales increased 11%. Test segment had sales of $11.1 million, with an adjusted operating loss of $6.7 million due to EAC adjustments. Aerospace segment contributed significantly to overall revenue, while Test segment was impacted by program reviews and adjustments.

• Increased 2025 revenue guidance to $840 million to $860 million, up from previous range. • Expect second half of 2025 to be stronger, with third quarter marginally up and fourth quarter more substantial. • Aerospace business to benefit from industry tailwinds like increasing passenger traffic and aircraft utilization. • Test business expected to improve due to strong bookings and EAC adjustments.

• Tariff impacts, with potential cost increases and uncertainty in mitigation. • Delays in U.S. Army radio test program due to DoD requirements. • Market flux in LEO technology, with uncertainty in customer adoption of competing technologies.

Q: Talk about the magnitude and drivers of aerospace momentum and Test business.

A: Aerospace driven by production rates, pricing increases, and industry tailwinds. Test business has strong bookings but faces delay in U.S. Army program.

Q: Margin expectations, including tariffs and Aerospace margins.

A: Tariffs uncertain, but Aerospace margins improved and expected to hold, with pricing increases helping.

Q: Strategic actions for Test segment.

A: No immediate plans for broad strategic alternatives, focusing on improving Test business performance first.