Astronics Corporation (Nasdaq: ATRO), a leading provider of advanced technologies for aerospace, defense, and other mission-critical sectors, released its financial results for the three and nine months ending September 28, 2024.
Peter J. Gundermann, Chairman, President, and CEO, stated, “We had a strong third quarter operationally, with revenue at the high end of our expectations, increasing 25% from the same period last year. Adjusted EBITDA reached $27.1 million for the quarter and $91 million over the past twelve months. Our operating margins improved, driven by both higher volumes and our ongoing profitability initiatives. In our Aerospace segment, adjusted operating margin stood at 14.2%. While we are pleased with this progress toward our operational goals, the quarter’s results also reflect expenses related to our July refinancing, a customer bankruptcy, and a warranty reserve. Overall, it was another positive step forward in our recovery from recent disruptions.
Astronics Corporation reported a significant improvement in gross profit for the third quarter of 2024, rising by $22.1 million to reach $42.7 million, or 21.0% of sales. Adjusted gross profit was even higher at $47.2 million, or 23.2% of sales. However, gross profit was impacted by several unusual items: a $3.5 million warranty reserve related to a new product launch that required a field modification, and a $0.9 million inventory reserve due to an Aerospace customer’s bankruptcy. In the same period last year, a separate customer bankruptcy resulted in a $3.6 million inventory write-down.
Selling, general, and administrative expenses (SG&A) for the third quarter included $1.3 million in reserves for receivables and fixed asset impairment related to the recent Aerospace customer bankruptcy, compared to a $7.5 million reserve for outstanding receivables from a different bankruptcy in the prior year.
Despite these impacts, consolidated operating income rose by $22.9 million to $8.4 million, or 4.1% of sales, compared with an operating loss of $14.5 million in Q3 2023. Adjusted operating income for Q3 2024 was $19.6 million, or 9.6% of sales, benefiting from increased sales volume but partially offset by $4.5 million in resumed incentive programs, $1.9 million in legal expenses, and a $3.2 million increase in inventory reserves.
Other expenses for the quarter included a $3.2 million call premium on the previous term loan and a $3.8 million write-off of deferred financing costs, totaling $7.0 million, recorded as a Loss on Extinguishment of Debt. Additionally, tax expense was $6.6 million, primarily from a valuation allowance applied against deferred tax assets for R&D costs, which are now capitalized for tax purposes.
Consolidated net loss for Q3 2024 was $11.7 million, or $0.34 per diluted share, an improvement from the prior-year net loss of $17.0 million, or $0.51 per share. Adjusted net income was $12.2 million, or $0.35 per diluted share. Adjusted EBITDA rose to $27.1 million, or 13.3% of consolidated sales, up from $8.8 million, or 5.4% of sales, in Q3 2023, mainly due to increased profitability on higher sales.