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Astronics Corporation (Nasdaq: ATRO) (“Astronics” or the “Company”), a leading supplier of advanced technologies and products to the global aerospace, defense and other mission critical industries, today reported financial results for the three and twelve months ended December 31, 2020.
Peter J. Gundermann, President and Chief Executive Officer, commented, “Even while the commercial aerospace industry continues to be challenged, there was some good news in the quarter.
- We had sequential improvement in Aerospace bookings.
- We were cash positive in the quarter, generating $5.8 million in cash from operations reflecting the impact of our restructuring efforts.
- We had strong Test bookings driven by the transit test order from Stadler Rail for the Metro Atlanta Rapid Transit Authority (MARTA).
- The 737 MAX was recertified to fly in the U.S. in late December, which is important as the MAX was our biggest OEM production program before the pandemic.
Perhaps the best news from the quarter was the initial approval of multiple effective COVID-19 vaccines, which we expect will result in increased demand for air travel later in 2021. To this end, we are seeing positive signs that demand is picking up in our aerospace business, though conditions currently remain depressed. In the meantime, we are carefully managing our cost structure, pursuing new opportunities and advancing development programs for our customers.”
Fourth Quarter and 2020 Summary and Review of Demand by Major Markets
Fourth quarter revenue was $114.8 million, down 42.1% from the comparator period of 2019, but up 7.8% sequentially from the third quarter. The Company incurred a pre-tax loss of $7.5 million. The Company’s net loss of $20.0 million included a $14.1 million non-cash tax expense reflecting a reserve recorded against its deferred tax assets. Adjusted EBITDA was $2.9 million, or 2.5% of sales, up $3.0 million sequentially from the third quarter of 2020.
Revenue in 2020 was $502.6 million, down 35% compared with 2019 as a direct result of the global pandemic. Net loss for the year was $115.8 million while Adjusted EBITDA was $28.8 million as the Company rapidly adjusted to the new environment by aggressively adjusting its cost structure to changes in demand.
The Company evaluates three revenue streams to monitor demand and analyze the impact of the pandemic to its business. These are (1) the commercial aircraft market, which includes OEM line fit and airline aftermarket business, (2) defense and other government markets, and (3) general aviation.
- Commercial aerospace has been heavily impacted by the pandemic and was about $263 million of 2020 revenue, or 52% of total revenue, down nearly 50%. Aircraft build rates are expected to improve modestly during 2021 from current levels as production of the 737 MAX picks up. The aftermarket is expected to strengthen over the course of the year as aircraft utilization and load factors increase.
- Defense and government markets, which were about 30% of 2020 revenue, have remained relatively strong through the pandemic, totaling approximately $149 million. This includes our military aircraft programs and the majority of our Test business.
- General aviation demand contracted about 11% to approximately $60 million, or 12% of revenue. Most of our general aviation revenue is line fit driven by the manufacture of new aircraft, although there is some amount of aftermarket business as well. New build rates for business jet aircraft are expected to improve in 2021 from current levels.
- Other revenue was $27 million in 2020, about 5% of revenue, and was up about 10% over 2019.
Peter J. Gundermann stated, “We are glad to put 2020 behind us. The pandemic hit our core aerospace business hard early in the year, but our team demonstrated resilience and flexibility in the midst of very trying times. We enacted protocols to protect our employees and dramatically reduced our cost structure.
Though we continue to be heavily impacted by difficult conditions in the commercial aerospace industry, we are prepared for the recovery and look forward to improved market conditions as the vaccines take hold and demand returns to our industry.”
Fourth Quarter 2020 Results (compared with the prior-year period, unless noted otherwise)
Consolidated sales were down $83.6 million compared with the fourth quarter of 2019. Aerospace sales were down $80.3 million. Test System sales decreased $3.3 million.
Consolidated operating loss was $5.5 million, compared with operating loss of $36.9 million in the prior year period. The loss in 2020 was due to low volume related to the continued pause of production of the 737 MAX and the impacts of the COVID-19 pandemic on the global aerospace industry. Operating loss in the prior year’s fourth quarter were impacted by an increase to the legal reserve of $17.9 million for a
long-outstanding patent dispute and $28.8 million of impairment and restructuring charges related to the refocusing of our antenna business.
Income tax expense in the fourth quarter reflects a $14.1 million non-cash valuation allowance against federal deferred tax assets.
Bookings were $116.0 million, for a book-to-bill ratio of 1.01:1. Backlog at the end of the quarter was $283.4 million. Approximately $216.9 million of backlog is expected to ship in 2021.
Full results can be found here EX991 2020.12.31-PR (mcusercontent.com)
This press release was prepared and distributed by Astronics Corporation.