Business Wire | Jul 31, 2020 06:30AM EDT

Astronics Corporation Reports 2020 Second Quarter Financial Results

Jul. 31, 2020

EAST AURORA, N.Y.--(BUSINESS WIRE)--Jul. 31, 2020--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 six months ended June 27, 2020. Financial results reflect the divestiture of the Test Systems' semiconductor business on February 13, 2019, and the acquisitions of Freedom Communications Technologies ("Freedom"), acquired in July 2019, and the primary operating subsidiaries of Diagnosys Test Systems Limited ("Diagnosys"), acquired in October 2019 (collectively, the "Acquired Businesses").

Second Quarter Summary

Second quarter revenue was $123.7 million with a net loss of $23.6 million. Contributing to the loss was a $12.6 million write-down of goodwill, which resulted from a reduced outlook in the Aerospace segment, specifically within the PECO reporting unit, and $4.9 million in restructuring-related severance charges. Adjusted EBITDA* in the second quarter was $9.2 million, or 7.4% of sales. Cash flow from operations was a positive $18.3 million.

Peter J. Gundermann, the Company's President and CEO, said, "The second quarter saw the full force of the COVID-19 pandemic's effect on the commercial aircraft industry, which is the market in which we typically generate two-thirds of our revenue. We adjusted by implementing comprehensive cost controls across the business and rightsizing our operation for the path forward. We are positioning the Company to endure the pandemic and emerge on the other side as a better, stronger company."

The Company continues to review its business prospects with its broad range of customers and partners to assess potential outcomes of demand for its products. The defense and government business appears strong, but aircraft build rates for business jets and commercial transports are being reduced. The airline aftermarket has weakened also, but not as much as the Company first expected. Given these market conditions, the Company believes that total revenue for 2020 could possibly be 35% lower than 2019.

To address market conditions, the Company implemented a significant downsizing exercise during the second quarter to align with reduced demand. As part of this downsizing, the Company ended the second quarter with its employee count reduced by 20% to about 2,300 and recorded restructuring-related severance charges of $4.9 million.

In addition to the restructuring, the Company has significantly reduced operating costs with the goal of staying cash-positive and maintaining positive adjusted EBITDA. In the second quarter, the Company had adjusted EBITDA of $9.2 million, or 7.4% of sales.

In terms of liquidity, the Company amended its lending facility with its banks during the quarter, such that its maximum leverage covenant was temporarily suspended through the second quarter of 2021, replaced by an interest coverage covenant and a minimum liquidity covenant. During the quarter, the Company generated cash from operations of $18.3 million.

Peter J. Gundermann stated, "We have taken significant action to adjust to the evolving environment. Our team has responded very effectively to the situation and our operations continue to perform well given the challenging conditions. The situation is far from settled, but if our revenue in 2020 were to decline to $500 million to $525 million, the changes we have made should allow us to stay cash positive for the year and produce adjusted EBITDA levels of 5% to 9% of sales."

Analysis of Impact on Demand by Markets

The Company continues to monitor demand from three revenue streams to analyze the potential impact of the pandemic to its business. The three revenue streams are (1) new airplane production and OE demand, (2) the aftermarket for commercial transport aircraft, and (3) defense and other government markets.

An estimated 55% of sales in 2019, or about $425 million, was driven by the production of new airplanes in the commercial transport and business jet markets. For Astronics, the commercial transport market is the more significant of the two. Major manufacturers in both markets have revised their production plans downward given the pandemic, typically on the order of 35% to 45%, which is somewhat more than initial reductions announced earlier in the COVID-19 crisis. This number is significantly complicated by the 737 MAX, which was one of the Company's largest production programs in 2019 and remains grounded.

Another 25% of sales in 2019, or $195 million, was to the aftermarket for commercial transport aircraft. These sales were primarily for inflight entertainment/connectivity and passenger power systems ("IFE") that were sold to airlines and aircraft leasing companies. This market is holding up better than initially anticipated. The current run rate has been about 50% of last year's demand level.

Approximately 20% of Astronics' revenue in 2019, or $145 million, was to the defense or other government markets. This was comprised of the majority of the Test business and certain military aircraft programs. Demand in these end markets has not been affected by the pandemic and instead shows relative strength.

Additionally, Astronics has initiated efforts to develop new revenue streams that are technically attractive and complementary to existing engineering and manufacturing skill sets. These initiatives are expected to contribute up to $20 million in revenue in the second half of 2020.

Evaluating the demand from these revenue streams, and considering first half actual results, Astronics expects a significant decline in 2020 sales, perhaps to the range of $500 million to $525 million.

Mr. Gundermann noted, "The pandemic's influence on our commercial and business jet aerospace market has been severe and is still playing out. We are in constant contact with our business partners and are learning more every day. We are committed to staying flexible and adjusting as necessary to take advantage of the opportunities we see. We know the pandemic will continue to impact our markets for some time, and our challenge is to optimize our results in the face of it."

Liquidity and Financing

On May 4, 2020, the Company executed an amended credit agreement that suspended its maximum leverage coverage covenant effective with the second quarter of 2020 through the second quarter of 2021 and will reinstitute a leverage covenant beginning in the third quarter of 2021 of 6.0 to 1.0, which declines by 50 basis points in the fourth quarter. Temporary covenants through the second quarter of 2021 include a minimum liquidity requirement of cash plus the unused revolving credit facility of $180 million and a minimum interest coverage ratio of 1.75x measured quarterly, with an exception for the first quarter of 2021 for which the interest coverage ratio is 1.5x. Under the amended agreement, Astronics has mandatory repayments if Astronics' cash level exceeds $100 million. The revolving credit facility was reduced to $375 million from $500 million. Additionally, there are temporary limits on share repurchases and acquisitions.

The Company believes that its revised lending agreement, along with the actions it has taken, positions it well to operate through the COVID-19 pandemic and its economic impacts.

Year-to-date cash flow from operations totaled $41.5 million with $18.3 million generated in the second quarter. Operating cash flows were used to reduce long-term debt by $15 million during 2020. The Company was compliant with its debt covenants as of the end of the second quarter.

Second Quarter Results

Three Months Ended Six Months Ended

($ in June 27, June 29, % Change June 27, June 29, % Changethousands) 2020 2019 2020 2019



Sales $ 123,694 $ 189,098 (34.6) % $ 281,278 $ 397,272 (29.2) %

(Loss)Income $ (18,679) $ 10,573 (276.7) % $ (86,235) $ 33,454 (357.8) %from Operations

Operating (15.1) % 5.6 % (30.7) % 8.4 % Margin %

Net Gainon Sale of $ - $ - $ - $ 80,133 Business

Net (Loss) $ (23,579) $ 6,726 (450.6) % $ (90,542) $ 84,872 (206.7) %Income

Net (Loss) (19.1) % 3.6 % (32.2) % 21.4 % Income %

*Adjusted $ 9,157 $ 21,122 (56.6) % $ 25,920 $ 53,057 (51.1) %EBITDA

*Adjusted 7.4 % 11.2 % 9.2 % 13.4 % EBITDA

Margin %

*Adjusted EBITDA is a Non-GAAP Performance Measure. Please see the attached table for a reconciliation of adjusted EBITDA to GAAP net income.

Second Quarter 2020 Results (compared with the prior-year period, unless noted otherwise)

Consolidated sales were down $65.4 million compared with the second quarter of 2019. Aerospace sales were down $71.7 million. Test System sales increased $6.3 million. The Acquired Businesses contributed $2.5 million in sales in the second quarter of 2020.

Consolidated operating loss was $18.7 million, reflecting non-cash goodwill impairment charges of $12.6 million in the Aerospace segment, restructuring-related severance charges of $4.9 million, and lower sales volumes compared with the prior-year period. Impairment charges were recognized in the reported quarter due to reduced expectations of future operating results resulting from continued delays in the recertification of the 737 MAX and the impacts of the COVID-19 pandemic on the global economy and, particularly, the aerospace industry.

Consolidated net loss was $23.6 million, or $(0.77) per diluted share, compared with net income of $6.7 million, or $0.20 per diluted share in the prior year. The impact of the impairment loss was $(0.41) per diluted share.

Consolidated adjusted EBITDA was $9.2 million, or 7.4% of consolidated sales, compared with $21.1 million, or 11.2% of consolidated sales, in the prior-year period. Adjusted EBITDA margin was negatively impacted in the 2020 second quarter by lower sales volume and the operating leverage lost from that decline.

Bookings were $61.5 million, for a book-to-bill ratio, excluding the semiconductor business, of 0.50:1. Backlog at the end of the quarter was $307.2 million. Approximately $178.3 million, or 58%, of backlog is expected to ship in the remainder of 2020.

Year-to-date 2020 Results (compared with the prior-year period, unless noted otherwise)

Consolidated sales were down $116.0 million compared with the first half of 2019. Aerospace sales were down $119.1 million. Test System sales increased $3.2 million. The Acquired Businesses contributed $6.0 million in sales in the first half of 2020.

Consolidated operating loss was $86.2 million reflecting non-cash impairment charges of $87.0 million in the Aerospace segment, restructuring-related severance charges of $5.4 million, and lower sales volumes compared with the prior-year period. Impairment charges were recognized in the current year due to reduced expectations of future operating results due to the COVID-19 pandemic, which has significantly impacted the global economy, and particularly the aerospace industry. During the first quarter, the Company recognized full impairments of the goodwill of Astronics Connectivity Systems and Certification ("CSC"), PGA and Custom Control Concepts ("CCC") reporting units, and a partial impairment of the goodwill of the PECO reporting unit. During the second quarter of 2020, an additional partial impairment of the PECO reporting unit was recorded.

Consolidated net loss was $90.5 million, or $(2.94) per diluted share, compared with net income of $84.9 million, or $2.56 per diluted share in the prior year. The after-tax impact of the impairment loss was $81.4 million, or $(2.64) per diluted share.

Consolidated adjusted EBITDA was $25.9 million, or 9.2% of consolidated sales, compared with $53.1 million, or 13.4% of consolidated sales, in the prior-year period. Adjusted EBITDA margin was negatively impacted in 2020 by lower sales volume and the operating leverage lost from that decline.

Aerospace Segment Review(refer to sales by market and segment data in accompanying tables)

Aerospace Second Quarter 2020 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales decreased $71.7 million, or 41.1%, to $102.6 million. Sales were negatively affected by the continued grounding of the 737 MAX and the OEM's decision to reduce production rates, along with the spread of the COVID-19 virus throughout the second quarter.

Aerospace segment operating loss was $17.1 million compared with operating profit of $14.4 million the same period last year. Aerospace operating profit was impacted by goodwill impairment charges of $12.6 million and restructuring-related severance charges of $4.6 million, as previously discussed. Operating leverage lost on reduced sales also significantly impacted operating results.

Aerospace bookings in the second quarter of 2020 were $43.3 million, for a book-to-bill ratio of 0.42:1. Backlog was $226.4 million at the end of the second quarter of 2020.

Aerospace Year-to-date 2020 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales decreased $119.1 million, or 32.8%, to $243.6 million. Sales were negatively affected by the continued grounding of the 737 MAX and the OEM's decision to reduce production rates, along with the spread of the COVID-19 virus beginning in the later part of the first quarter.

Aerospace segment operating loss was $80.2 million compared with operating profit of $40.2 million the same period last year. Aerospace operating profit was impacted by impairment charges of $87.0 million, of which $86.3 million was related to goodwill, as previously discussed. Restructuring-related severance charges of $5.1 million and leverage lost on reduced sales also significantly impacted operating results.

Test Systems Segment Review(refer to sales by market and segment data in accompanying tables)

Test Systems Second Quarter 2020 Results (compared with the prior-year period, unless noted otherwise)

Test Segment sales were $21.1 million, up $6.3 million compared with the prior-year period. The Acquired Businesses contributed $2.5 million in sales in the second quarter of 2020.

Test Systems operating profit was $2.6 million, or 12.4% of sales, compared with an essentially breakeven second quarter in 2019. Operating profit for the second quarter of 2019 was impacted by restructuring-related severance charges of $2.0 million.

Bookings for the Test Systems segment in the quarter were $18.2 million, for a book-to-bill ratio, excluding semiconductor activity, of 0.91:1 for the quarter. Backlog was $80.8 million at the end of the second quarter of 2020.

Mr. Gundermann commented, "The bright spot for the quarter was our Test business. Revenue grew 43% for this segment in the quarter and it achieved operating margin of 12.4%. Organic growth for the business was 26%. The business is pursuing a significant number of opportunities which should propel the business to continued high performance."

Test Systems Year-to-date 2020 Results (compared with the prior-year period, unless noted otherwise)

Test Segment sales were $37.6 million, up $3.2 million compared with the prior-year period. The Acquired Businesses contributed $6.0 million in sales in the first half of 2020, while Semiconductor sales decreased $2.8 million.

Test Systems operating profit was $3.3 million, or 8.9% of sales, compared with operating profit of $2.1 million in the prior-year period. Operating profit in the prior year period was impacted by restructuring-related severance charges of $2.0 million.

2020 Outlook

As discussed above, the Company believes that, given its assumptions on the economic impacts of COVID-19 on its revenue streams in its Aerospace business, consolidated revenue could be in the range of $500 million to $525 million. Given the fluidity of the situation with the pandemic and local, state, and national government responses, other outcomes, both positive and negative, are very possible. Management believes it has structured the Company to be cash positive at this level, with adjusted EBITDA margins in the range of 5% to 9%.

Capital expenditures for 2020 are expected to be approximately $8 million, reduced from initial plans of $20 million to $25 million for the year. The reduction reflects the change in tooling and equipment capacity requirements for certain programs that were either postponed or cancelled, as well as the deferral or cancellation of discretionary investments.

Mr. Gundermann commented, "Our environment has changed dramatically since the beginning of March and we have taken a comprehensive set of actions in response. We know things will continue to evolve and we will keep diligent watch, ready to make additional adjustments and changes as necessary. Our team has demonstrated an impressive discipline and willingness to act in the face of the pandemic, and we are well positioned to survive and thrive into the future."

Second Quarter 2020 Webcast and Conference Call

The Company will host a teleconference today at 11:00 a.m. ET. During the teleconference, management will review the financial and operating results for the period and discuss Astronics' corporate strategy and outlook. A question-and-answer session will follow.

The Astronics conference call can be accessed by calling 201.493.6784. The listen-only audio webcast can be monitored at www.astronics.com. To listen to the archived call, dial 412.317.6671 and enter replay pin number 13705863. The telephonic replay will be available from 2:00 p.m. on the day of the call through Friday, August 7, 2020. A transcript of the call will also be posted to the Company's Web site once available.

About Astronics Corporation

Astronics Corporation (Nasdaq: ATRO) serves the world's aerospace, defense, and other mission critical industries with proven, innovative technology solutions. Astronics works side-by-side with customers, integrating its array of power, connectivity, lighting, structures, interiors, and test technologies to solve complex challenges. For over 50 years, Astronics has delivered creative, customer-focused solutions with exceptional responsiveness. Today, global airframe manufacturers, airlines, military branches, completion centers, and Fortune 500 companies rely on the collaborative spirit and innovation of Astronics. The Company's strategy is to increase its value by developing technologies and capabilities that provide innovative solutions to its targeted markets.

For more information on Astronics and its products, visit its Web site at www.astronics.com.

Safe Harbor Statement

This news release contains forward-looking statements as defined by the Securities Exchange Act of 1934. One can identify these forward-looking statements by the use of the words "expect," "anticipate," "plan," "may," "will," "estimate" or other similar expressions and include all statements with regard to the impact of COVID-19 on the Company and its future, achieving cash positive or neutral in 2020, expectations of demand by customers and markets, and EBITDA margins. Because such statements apply to future events, they are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the statements. Important factors that could cause actual results to differ materially from what may be stated here include the impact of the global outbreak of COVID-19 and governmental and other actions taken in response, trend in growth with passenger power and connectivity on airplanes, the state of the aerospace and defense industries, the market acceptance of newly developed products, internal production capabilities, the timing of orders received, the status of customer certification processes and delivery schedules, the demand for and market acceptance of new or existing aircraft which contain the Company's products, the need for new and advanced test and simulation equipment, customer preferences and relationships, and other factors which are described in filings by Astronics with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information in this news release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

FINANCIAL TABLES FOLLOW

ASTRONICS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS DATA

(Unaudited, $ in thousands except per share data)



Three Months Ended Six Months Ended

6/27/2020 6/29/2019 6/27/2020 6/29/2019

Sales $ 123,694 $ 189,098 $ 281,278 $ 397,272

Cost of products sold 96,861 148,735 218,726 304,832

Gross profit 26,833 40,363 62,552 92,440

Gross margin 21.7 % 21.3 % 22.2 % 23.3 %



Selling, general and 32,904 29,790 61,771 58,986 administrative

SG&A % of sales 26.6 % 15.8 % 22.0 % 14.8 %

Impairment loss^1 12,608 - 87,016 -

(Loss) Income from (18,679) 10,573 (86,235) 33,454 operations

Operating margin (15.1) % 5.6 % (30.7) % 8.4 %



Gain on sale of business - - - 80,133

Other expense, net of other 3,789 518 4,177 733 income^2

Interest expense, net 1,983 1,225 3,316 3,029

(Loss) Income before tax (24,451) 8,830 (93,728) 109,825

Income tax (benefit) expense (872) 2,104 (3,186) 24,953

Net (loss) income $ (23,579) $ 6,726 $ (90,542) $ 84,872

Net (loss) income % of sales (19.1) % 3.6 % (32.2) % 21.4 %





*Basic earnings per share: $ (0.77) $ 0.21 $ (2.94) $ 2.60

*Diluted earnings per share: $ (0.77) $ 0.20 $ (2.94) $ 2.56



*Weighted average dilutedshares

outstanding (in thousands) 30,756 33,175 30,784 33,193



Capital expenditures $ 1,112 $ 3,443 $ 3,905 $ 6,917

Depreciation and $ 8,081 $ 7,904 $ 16,052 $ 15,980 amortization

1 Impairment loss primarily represents the goodwill impairment charges incurred in the Aerospace segment. Full impairment charges totaling $73.7 million were recorded in Q1 2020 for goodwill associated to the CSC, PGA and CCC reporting units and a partial goodwill impairment was recorded at the PECO reporting unit. An additional partial goodwill impairment of $12.6 million was recorded at the PECO reporting unit in Q2 2020.

2 Other expense, net of other income, is primarily comprised of equity investment impairment and loss for the three and six months ended June 27, 2020.

ASTRONICS CORPORATION

SEGMENT DATA

(Unaudited, $ in thousands)



Three Months Ended Six Months Ended

6/27/2020 6/29/2019 6/27/2020 6/29/2019

Sales

Aerospace $ 102,597 $ 174,292 $ 243,734 $ 362,793

Less inter-segment (24) (5) (91) (5)

Total Aerospace 102,573 174,287 243,643 362,788



Test Systems 21,432 14,925 37,985 34,649

Less inter-segment (311) (114) (350) (165)

Total Test Systems 21,121 14,811 37,635 34,484

Total consolidated sales 123,694 189,098 281,278 397,272



Segment operating (loss) profit and margins

Aerospace (17,090) 14,392 (80,235) 40,160

(16.7) % 8.3 % (32.9) % 11.1 %

Test Systems 2,612 (94) 3,334 2,091

12.4 % (0.6) % 8.9 % 6.1 %

Total segment operating (14,478) 14,298 (76,901) 42,251 (loss) profit



Gain on sale of business - - - 80,133

Interest expense 1,983 1,225 3,316 3,029

Corporate expenses and 7,990 4,243 13,511 9,530 other

(Loss) Income before taxes $ (24,451) $ 8,830 $ (93,728) $ 109,825

Reconciliation to Non-GAAP Performance Measures

In addition to reporting net income, a U.S. generally accepted accounting principle ("GAAP") measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, restructuring charges and gains or losses associated with the sale of businesses), which is a non-GAAP measure. The Company's management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, restructuring charges and gains or losses associated with the sale of businesses, which is not commensurate with the core activities of the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

ASTRONICS CORPORATION

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited, $ in thousands)



Consolidated

Three Months Ended Six Months Ended

6/27/2020 6/29/2019 6/27/2020 6/29/2019

Net (loss) income $ (23,579) $ 6,726 $ (90,542) $ 84,872

Add back (deduct):

Interest expense 1,983 1,225 3,316 3,029

Income tax (benefit) (872) 2,104 (3,186) 24,953 expense

Depreciation and 8,081 7,904 16,052 15,980 amortization expense

Equity-based 1,103 952 2,806 2,145 compensation expense

Goodwill and other 12,608 - 87,016 - asset impairments

Restructuring-related 4,890 2,211 5,408 2,211 severance charges

Legal reserve,settlements and 1,450 - 1,450 - recoveries

Equity investment loss 3,493 - 3,600 -

Gain on sale of - - - (80,133) business

Adjusted EBITDA $ 9,157 $ 21,122 $ 25,920 $ 53,057



Sales $ 123,694 $ 189,098 $ 281,278 $ 397,272

Adjusted EBITDA margin 7.4 % 11.2 % 9.2 % 13.4 %

ASTRONICS CORPORATION

CONSOLIDATED BALANCE SHEET DATA

($ in thousands)

(unaudited)

6/27/2020 12/31/2019

ASSETS

Cash and cash equivalents $ 46,639 $ 31,906

Accounts receivable and uncompleted contracts 102,659 147,998

Inventories 156,584 145,787

Other current assets 20,734 15,853

Assets held for sale - 1,537

Property, plant and equipment, net 109,381 112,499

Other long-term assets 45,441 54,873

Intangible assets, net 118,648 127,293

Goodwill 58,440 144,970

Total assets $ 658,526 $ 782,716



LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt $ 224 $ 224

Accounts payable and accrued expenses 85,154 89,056

Customer advances and deferred revenue 27,120 31,360

Long-term debt 173,000 188,000

Other liabilities 80,669 85,219

Shareholders' equity 292,359 388,857

Total liabilities and shareholders' equity $ 658,526 $ 782,716

ASTRONICS CORPORATION

CONSOLIDATED CASH FLOWS DATA

Six Months Ended

(Unaudited, $ in thousands) 6/27/2020 6/29/2019

Cash flows from operating activities:

Net (loss) income $ (90,542) $ 84,872

Adjustments to reconcile net (loss) income to cashprovided by operating activities, excluding the effects of divestitures:

Depreciation and amortization 16,052 15,980

Provisions for non-cash losses on inventory and 3,297 4,429 receivables

Equity-based compensation expense 2,806 2,145

Deferred tax expense (benefit) 1,190 (3,371)

Non-cash severance expense 4,669 377

Operating lease amortization expense 2,236 1,978

Non-cash litigation provision 1,450 -

Gain on sale of business, before taxes - (80,133)

Equity investment other than temporary impairment 3,493 -

Impairment loss 87,016 -

Other 4,459 (1,715)

Cash flows from changes in operating assets and liabilities, excluding the effects of divestitures:

Accounts receivable 43,417 5,266

Inventories (12,778) (11,276)

Accounts payable (446) (7,685)

Accrued expenses (12,473) (9,518)

Other current assets and liabilities (1,983) (975)

Customer advanced payments and deferred revenue (4,221) (1,234)

Income taxes (3,667) 9,181

Operating lease liabilities (2,222) (1,785)

Supplemental retirement and other liabilities (204) 2,520

Cash provided by operating activities 41,549 9,056

Cash flows from investing activities:

Proceeds on sale of business - 103,793

Capital expenditures (3,905) (6,917)

Proceeds on sale of assets 1,600 -

Cash (used for) provided by investing activities (2,305) 96,876

Cash flows from financing activities:

Proceeds from long-term debt 150,000 27,000

Payments for long-term debt (165,000) (132,053)

Purchase of outstanding shares for treasury (7,732) -

Stock options activities 34 416

Finance lease principal payments (939) (834)

Other (360) -

Cash used for financing activities (23,997) (105,471)

Effect of exchange rates on cash (514) 23

Increase in cash and cash equivalents 14,733 484

Cash and cash equivalents at beginning of period 31,906 16,622

Cash and cash equivalents at end of period $ 46,639 $ 17,106

ASTRONICS CORPORATION

SALES BY MARKET

(Unaudited, $ in thousands)



Three Months Ended Six Months Ended

6/27/2020 6/29/2019 % Change 6/27/2020 6/29/2019 % Change % of Sales

Aerospace Segment

Commercial $ 67,548 $ 129,731 (47.9) % $ 170,323 $ 271,509 (37.3) % 60.5 %Transport

Military 14,052 19,545 (28.1) % 32,165 40,498 (20.6) % 11.4 %

Business Jet 15,542 17,286 (10.1) % 30,548 37,123 (17.7) % 10.9 %

Other 5,431 7,725 (29.7) % 10,607 13,658 (22.3) % 3.8 %

Aerospace Total 102,573 174,287 (41.1) % 243,643 362,788 (32.8) % 86.6 %



Test SystemsSegment excluding 19,933 12,569 58.6 % 34,813 28,888 20.5 % 12.4 %Semiconductor

Total salesexcluding 122,506 186,856 (34.4) % 278,456 391,676 (28.9) % 99.0 %Semiconductor

Test-Semiconductor 1,188 2,242 (47.0) % 2,822 5,596 (49.6) % 1.0 %



Total Sales $ 123,694 $ 189,098 (34.6) % $ 281,278 $ 397,272 (29.2) %

SALES BY PRODUCT LINE

(Unaudited, $ in thousands)



Three Months Ended Six Months Ended

6/27/2020 6/29/2019 % Change 6/27/2020 6/29/2019 % Change % of Sales

Aerospace Segment

Electrical Power & $ 46,563 $ 84,042 (44.6) % $ 116,019 $ 176,579 (34.3) % 41.2 %Motion

Lighting & Safety 27,731 46,770 (40.7) % 65,653 95,375 (31.2) % 23.3 %

Avionics 19,134 25,682 (25.5) % 41,277 59,543 (30.7) % 14.7 %

Systems 1,660 4,048 (59.0) % 4,991 5,666 (11.9) % 1.8 %Certification

Structures 2,054 6,020 (65.9) % 5,096 11,967 (57.4) % 1.8 %

Other 5,431 7,725 (29.7) % 10,607 13,658 (22.3) % 3.8 %

Aerospace Total 102,573 174,287 (41.1) % 243,643 362,788 (32.8) % 86.6 %



Test SystemsSegment excluding 19,933 12,569 58.6 % 34,813 28,888 20.5 % 12.4 %Semiconductor

Total salesexcluding 122,506 186,856 (34.4) % 278,456 391,676 (28.9) % 99.0 %Semiconductor

Test-Semiconductor 1,188 2,242 (47.0) % 2,822 5,596 (49.6) % 1.0 %



Total Sales $ 123,694 $ 189,098 (34.6) % $ 281,278 $ 397,272 (29.2) %

ASTRONICS CORPORATION

ORDER AND BACKLOG TREND

(Unaudited, $ in thousands)

Trailing Q3 2019 Q4 2019 Q1 2020 Q2 2020 Twelve Months

9/28/2019 12/31/2019 3/28/2020 6/27/2020 6/27/2020

Sales

Aerospace $ 157,702 $ 172,119 $ 141,070 $ 102,573 $ 573,464

Test Systems 17,097 24,416 14,880 19,933 76,326 (excluding Semi)

Sales (excluding 174,799 196,535 155,950 122,506 649,790Semi)

Test-Semiconductor 2,219 1,877 1,634 1,188 6,918

Total Sales $ 177,018 $ 198,412 $ 157,584 $ 123,694 $ 656,708



Bookings

Aerospace $ 155,336 $ 139,649 $ 150,989 $ 43,264 $ 489,238

Test Systems 20,892 16,393 16,386 18,230 71,901 (excluding Semi)

Bookings (excluding 176,228 156,042 167,375 61,494 561,139Semi)

Test-Semiconductor 330 158 4 - 492

Total Bookings $ 176,558 $ 156,200 $ 167,379 $ 61,494 $ 561,631



Backlog^ 1

Aerospace $ 308,224 $ 275,754 $ 285,673 $ 226,364

Test Systems 65,939 80,358 81,864 80,161 (excluding Semi)

Backlog (excluding 374,163 356,112 367,537 306,525 Semi)

Test-Semiconductor 5,198 3,479 1,849 661

Total Backlog $ 379,361 $ 359,591 $ 369,386 $ 307,186 N/A



Book:Bill Ratio^ 2

Aerospace 0.98 0.81 1.07 0.42 0.85

Test Systems excl. 1.22 0.67 1.10 0.91 0.94Semi

Total Book:Bill 1.01 0.79 1.07 0.50 0.86excl. Semi



^1 Test Systems backlog of approximately $0.1 million was added in the thirdquarter of 2019 above related to the acquisition of FCT. Test Systems backlogof approximately $22.4 million was added in the fourth quarter of 2019 aboverelated to the acquisition of Diagnosys.

^2 Calculations of Test Systems and Total Book:Bill excludes the totalsemiconductor business, which does include residual warranty backlog that isexpected to be recognized.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200731005122/en/

CONTACT: Company: David C. Burney, Chief Financial Officer Phone: (716) 805-1599, ext. 159 Email: david.burney@astronics.com Investor Relations: Deborah K. Pawlowski, Kei Advisors LLC Phone: (716) 843-3908 Email: dpawlowski@keiadvisors.com