Astronics Corporation (ATRO) Bundle
Understanding Astronics Corporation (ATRO) Revenue Streams
Understanding Astronics Corporation’s Revenue Streams
The company reported consolidated sales of $586.9 million for the nine months ended September 28, 2024, compared to $493.9 million in the same period of 2023, marking an increase of 18.8%.
Breakdown of Primary Revenue Sources
Revenue is primarily derived from two segments: Aerospace and Test Systems. The following table illustrates the sales figures for each segment:
| Segment | Sales (2024) | Sales (2023) | Percentage Change |
|---|---|---|---|
| Aerospace | $518.1 million | $436.1 million | 18.8% |
| Test Systems | $68.8 million | $57.8 million | 18.9% |
| Total Consolidated Sales | $586.9 million | $493.9 million | 18.8% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the nine months ended September 28, 2024, was 18.8%, reflecting the company's recovery and increased demand in both segments.
Contribution of Different Business Segments to Overall Revenue
The Aerospace segment contributed 88.3% of total revenue, while the Test Systems segment accounted for 11.7%. This indicates a strong reliance on Aerospace sales, which were driven by increased airline spending and demand for inflight entertainment systems.
The following table provides a detailed breakdown of the Aerospace segment's sales by market:
| Market | Sales (2024) | Sales (2023) |
|---|---|---|
| Commercial Transport | $383.7 million | $308.0 million |
| Military Aircraft | $63.5 million | $44.3 million |
| General Aviation | $56.6 million | $60.7 million |
| Other | $14.3 million | $23.1 million |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Commercial Transport sales increased by $75.7 million, or 24.6%, driven by higher demand.
- Military Aircraft sales rose by $19.2 million, or 43.3%, due to advancements in military programs.
- General Aviation sales decreased by $4.0 million, or 6.6%, attributed to lower sales of antennas and VIP services.
- Overall backlog as of September 28, 2024, was $611.9 million, compared to $586.6 million at the end of 2023.
A Deep Dive into Astronics Corporation (ATRO) Profitability
Profitability Metrics
In assessing the profitability of the company, we will explore key metrics such as gross profit, operating profit, and net profit margins, alongside their trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 28, 2024, the company reported:
| Metric | Value (in thousands) |
|---|---|
| Sales | $586,886 |
| Cost of Products Sold | $468,598 |
| Gross Profit | $118,288 |
| Gross Margin | 20.2% |
| Selling, General and Administrative Expenses | $100,698 |
| Operating Income (Loss) | $17,590 |
| Net Loss | ($13,383) |
| Loss Per Share (Diluted) | ($0.38) |
In comparison, for the same period in 2023, the company had:
| Metric | Value (in thousands) |
|---|---|
| Sales | $493,914 |
| Cost of Products Sold | $413,091 |
| Gross Profit | $80,823 |
| Gross Margin | 16.4% |
| Selling, General and Administrative Expenses | $95,276 |
| Operating Income (Loss) | ($14,453) |
| Net Loss | ($33,397) |
| Loss Per Share (Diluted) | ($1.02) |
Trends in Profitability Over Time
The gross profit margin has improved from 16.4% in 2023 to 20.2% in 2024, reflecting better cost management and increased sales volume. The operating margin also shifted from a loss in 2023 to a positive value in 2024, showcasing enhanced operational efficiency.
Comparison of Profitability Ratios with Industry Averages
Industry averages for the aerospace and defense sector typically hover around:
- Gross Margin: 15% - 20%
- Operating Margin: 5% - 10%
- Net Profit Margin: 1% - 5%
In this context, the company's gross margin of 20.2% and operating margin of 3.0% (calculated as operating income over sales) are competitive, indicating a solid position relative to industry peers.
Analysis of Operational Efficiency
The company’s gross margin has shown a positive trend, increasing from 16.4% in 2023 to 20.2% in 2024. This improvement is attributed to:
- Increased sales volume leading to better absorption of fixed costs.
- Enhanced efficiency in production processes.
- Effective cost management strategies, evidenced by a modest increase in SG&A expenses from $95.3 million to $100.7 million despite higher sales.
Operational efficiency is further reflected in the reduction of the net loss from ($33.4 million) in 2023 to ($13.4 million) in 2024, highlighting progress in overall profitability and financial health.
Conclusion
This section has provided a detailed examination of the company’s profitability metrics, showcasing improvements and competitive positioning within the industry. The trends indicate a more favorable financial outlook, driven by strategic operational efficiencies and increased sales performance.
Debt vs. Equity: How Astronics Corporation (ATRO) Finances Its Growth
Debt vs. Equity: How Astronics Corporation Finances Its Growth
Debt Levels: As of September 28, 2024, the company reported total debt of $174.6 million, which includes both long-term and short-term debt. The long-term debt consists of a $55 million Term Loan Facility and $126 million outstanding on the ABL Revolving Credit Facility.
Debt-to-Equity Ratio: The company's debt-to-equity ratio stands at approximately 0.70, calculated using total liabilities of $402.4 million and total shareholders' equity of $249.2 million. This ratio is below the industry average, which typically ranges from 0.8 to 1.5 for companies in the aerospace and defense sector.
Recent Debt Issuances: The company entered into a $55 million Term Loan Facility on July 11, 2024, with a maturity date of July 11, 2027. The interest rate is set at SOFR plus a term SOFR adjustment of 0.10% per annum. Additionally, the company incurred $5.9 million in incremental debt issuance costs during the first nine months of 2024.
Credit Ratings: As of the latest reports, the company maintains a credit rating that reflects its ability to service debt, though specific ratings were not disclosed in the available documents.
Balance Between Debt Financing and Equity Funding: The company has utilized an at-the-market (ATM) equity offering program, raising $13.6 million in net proceeds. This reflects a strategy to balance its financing needs between debt and equity, aiming to enhance liquidity while managing leverage levels effectively.
| Debt Type | Amount ($ million) | Interest Rate | Maturity Date |
|---|---|---|---|
| Term Loan Facility | 55.0 | SOFR + 0.10% + margin | July 11, 2027 |
| ABL Revolving Credit Facility | 126.0 | SOFR + margin (2.50% to 3.00%) | July 11, 2027 |
The following table summarizes the company's financial position as of September 28, 2024:
| Financial Metric | Value ($ million) |
|---|---|
| Total Assets | 508.5 |
| Total Liabilities | 402.4 |
| Total Shareholders' Equity | 249.2 |
| Net Debt | 174.6 |
Assessing Astronics Corporation (ATRO) Liquidity
Assessing Astronics Corporation's Liquidity
Current and Quick Ratios
The current ratio for Astronics Corporation as of September 28, 2024, is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $424,181,000 | $150,036,000 | 2.83 |
This indicates a strong liquidity position, as the company has $2.83 in current assets for every $1 in current liabilities.
The quick ratio, which excludes inventories from current assets, is calculated as:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $219,229,000 | $150,036,000 | 1.46 |
A quick ratio of 1.46 suggests that the company can cover its short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, stands at:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $424,181,000 | $150,036,000 | $274,145,000 |
This positive working capital trend points to a robust operational capacity to meet short-term obligations.
Cash Flow Statements Overview
For the first nine months of 2024, the cash flow from operating activities totaled:
| Cash Flow from Operating Activities | Cash Flow from Investing Activities | Cash Flow from Financing Activities |
|---|---|---|
| $4,149,000 | ($5,244,000) | ($3,908,000) |
Comparatively, the cash flow from operating activities in the same period of 2023 was a negative ($22,276,000), indicating a significant improvement in cash generation from operations.
Potential Liquidity Concerns or Strengths
As of September 28, 2024, cash and cash equivalents were reported at:
| Cash and Cash Equivalents |
|---|
| $5,177,000 |
This amount reflects a slight increase from $4,756,000 at the end of 2023.
Net debt stands at $178,423,000, showing a manageable level of debt relative to cash flows. The company has a borrowing capacity of up to $200,000,000 under its ABL Revolving Credit Facility, with $70,900,000 available as of September 28, 2024.
Overall, Astronics Corporation displays a solid liquidity position with effective cash flow management and sufficient working capital to navigate operational challenges.
Is Astronics Corporation (ATRO) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is crucial for investors to determine whether a stock is overvalued or undervalued. In this section, we will analyze the key valuation metrics for the company, focusing on the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Valuation Ratios
- P/E Ratio: As of September 28, 2024, the P/E ratio stands at -10.4, reflecting the company's net loss of $13.4 million or $0.38 per diluted share.
- P/B Ratio: The price-to-book ratio is calculated using total assets of $651.6 million and total liabilities of $402.4 million, resulting in a book value of $249.2 million. With a current stock price of $3.65, the P/B ratio is approximately 0.15.
- EV/EBITDA Ratio: The enterprise value (EV) is estimated at $300.6 million based on market capitalization and debt levels. With an EBITDA of $37.2 million over the last twelve months, the EV/EBITDA ratio is approximately 8.06.
Stock Price Trends
Over the last 12 months, the stock price has shown volatility, with a high of $6.50 and a low of $2.90. As of the latest data, the stock is trading at $3.65, indicating a -43% decrease from its high.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, hence the dividend yield is 0%. Given the recent net losses, the payout ratio is not applicable.
Analyst Consensus
According to recent analyst ratings, the consensus is a Hold. Analysts have cited the challenges in achieving profitability as a significant factor in their ratings.
| Metric | Value |
|---|---|
| P/E Ratio | -10.4 |
| P/B Ratio | 0.15 |
| EV/EBITDA Ratio | 8.06 |
| 12-Month High | $6.50 |
| 12-Month Low | $2.90 |
| Current Stock Price | $3.65 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Astronics Corporation (ATRO)
Key Risks Facing Astronics Corporation
The financial health of the company is influenced by various internal and external risk factors that can significantly impact its operations and profitability.
Industry Competition
In the aerospace and defense sectors, the company faces intense competition from other manufacturers and suppliers. This competitive landscape can lead to price pressures and reduced market share. As of September 28, 2024, the company's total backlog was $611.9 million, reflecting its competitive position in securing contracts despite these challenges.
Regulatory Changes
The company is subject to various regulations governing the aerospace industry, including safety and environmental standards. Changes in these regulations can lead to increased compliance costs. The effective tax rate for the company was reported at (58.5)% for the third quarter of 2024, influenced by regulatory requirements related to tax treatments of research and development costs.
Market Conditions
Fluctuations in market demand, particularly in commercial transport and military aircraft sectors, can impact sales. For instance, sales in the aerospace segment increased by 18.8% to $518.1 million in 2024, driven by higher airline spending. However, macroeconomic factors such as inflation and geopolitical tensions can negatively affect these trends.
Operational Risks
Operational risks include the potential for production delays and supply chain disruptions. Recent earnings reports highlighted a $3.5 million atypical warranty reserve related to a new product launch that requires field modifications. Additionally, the company recorded a full reserve of $0.8 million for outstanding receivables due to a customer bankruptcy.
Financial Risks
The company's financial health is also at risk due to its debt obligations. As of September 28, 2024, total liabilities stood at $402.4 million, with long-term debt amounting to $178.4 million. The company has a minimum fixed charge coverage ratio of 1.10 to 1.00 under its credit facilities, and any failure to meet this requirement could lead to significant financial consequences.
Strategic Risks
Strategic risks involve the company's ability to adapt to changing market conditions and technological advancements. The company has initiated restructuring initiatives, including a voluntary separation program expected to provide annualized savings of approximately $2 million. This indicates a proactive approach to aligning operational capabilities with revenue expectations.
| Risk Type | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition in aerospace and defense sectors | Potential price pressures and loss of market share |
| Regulatory Changes | Compliance with safety and environmental standards | Increased compliance costs, effective tax rate of (58.5)% |
| Market Conditions | Fluctuations in demand for aerospace products | Sales increased to $518.1 million, but macroeconomic risks persist |
| Operational Risks | Production delays and supply chain disruptions | Warranty reserves of $3.5 million; customer bankruptcy reserves of $0.8 million |
| Financial Risks | Debt obligations and liquidity concerns | Total liabilities of $402.4 million; long-term debt of $178.4 million |
| Strategic Risks | Adapting to market and technology changes | Restructuring initiatives expected to save $2 million annually |
Overall, the company must navigate these risk factors carefully to maintain its financial health and operational effectiveness in the competitive aerospace market.
Future Growth Prospects for Astronics Corporation (ATRO)
Growth Opportunities
Future growth prospects for the company are driven by several key factors, including product innovations, market expansions, and strategic initiatives.
Key Growth Drivers
- Product Innovations: The company has focused on enhancing its offerings, particularly in the Aerospace segment. Notably, sales in the Commercial Transport category increased by 24.9%, amounting to $133.9 million in the third quarter of 2024, compared to $101.7 million in the same period of 2023.
- Market Expansions: The company has seen significant growth in Military Aircraft sales, which rose by 30.0% to $21.7 million.
- Acquisitions: The company is actively pursuing strategic partnerships and potential acquisitions to enhance its market presence and product offerings.
Future Revenue Growth Projections
The company anticipates recognizing approximately $519.8 million of its outstanding performance obligations as revenue over the next twelve months, with total backlog standing at $611.9 million.
Earnings Estimates
For the nine months ended September 28, 2024, the company reported consolidated sales of $586.9 million, up from $493.9 million in the prior year, reflecting an increase of 18.8%.
Strategic Initiatives or Partnerships
In October 2024, the company implemented restructuring initiatives expected to yield annualized savings of approximately $2 million, beginning in the first quarter of 2025.
Competitive Advantages
The company benefits from a strong backlog, which is key for future growth. The backlog at the end of September 2024 was $611.9 million, compared to $586.6 million on December 31, 2023. Additionally, the company has maintained a gross margin of 20.2% for the nine months ending September 28, 2024.
| Metric | 2024 (YTD) | 2023 (YTD) | Change (%) |
|---|---|---|---|
| Consolidated Sales | $586.9 million | $493.9 million | +18.8% |
| Commercial Transport Sales | $383.7 million | $308.0 million | +24.6% |
| Military Aircraft Sales | $63.5 million | $44.3 million | +43.3% |
| Total Backlog | $611.9 million | $586.6 million | +4.6% |
| Gross Margin | 20.2% | 16.4% | +3.8% |
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Updated on 16 Nov 2024
Resources:
- Astronics Corporation (ATRO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Astronics Corporation (ATRO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Astronics Corporation (ATRO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.