Astronics Corporation Reports Strong Fourth Quarter Finish to 2025

Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “We made excellent progress in 2025 and ended the year with a strong fourth quarter. Robust demand across our aerospace markets drove record sales in the quarter. In addition, the acquisition of BMA advanced our market leadership position in seat actuation and other motion systems for aircraft. Our growth is translating well to stronger profitability. Operating margin expanded nicely on higher volumes and was supported as well by pricing initiatives, operating efficiencies and favorable mix. We also generated strong cash flow from operations of $27.6 million in the quarter. We ended 2025 with record backlog, better operating efficiencies, lower cost debt and a solid liquidity position, all of which positions us well for the opportunities we see in 2026.”

Fourth Quarter Results

Fourth Quarter 2025 Results (compared with the prior-year period, unless noted otherwise)

Growth in sales was driven by continued strength in demand for the Aerospace segment primarily from the Commercial Transport market. Aerospace sales increased $31.0 million, or 16.5%, and Test Systems sales increased $0.5 million.

Gross profit increased $17.8 million to $80.0 million, or 33.3% of sales, a 350 basis point expansion over gross margin of 29.8% in the comparator quarter. Margin expansion was driven by higher volume, favorable mix, pricing actions including some true up pricing recovery, improved productivity, and the benefit of Test Systems’ restructuring initiatives. This more than offset a $2.9 million increase in tariff expense.

In the fourth quarter of 2025, selling, general and administrative expenses (“SG&A”) decreased $7.3 million primarily from a $9.0 million reduction in legal reserves and litigation-related expenses, somewhat offset by SG&A associated with the acquired BMA business and higher legal and accounting expenses related to the acquisition. R&D was $1.4 million lower reflecting the timing of projects.

Higher gross profit and reduced SG&A resulted in operating margin of 14.8% compared with 4.3% in the prior-year period. Adjusted operating margin² expanded 450 basis points.

Interest expense was down $0.8 million, or 18.5%, on lower rates following 2025 refinancing activities. The fourth quarter included $0.6 million in expense related to the write-off of deferred financing fees related to two exiting revolving credit facility lenders, classified within interest expense.

Tax expense in the quarter was $2.6 million compared with $3.4 million in the prior-year period, mostly because of a valuation allowance reversal associated with research and development costs that are expected to be expensed for tax purposes in the current year under the One Big Beautiful Bill Act.

Consolidated net income of $0.78 per diluted share improved from a net loss of $0.08 per diluted share in the prior-year period due to stronger operating profit and lower interest expense. Adjusted diluted earnings per share² increased $0.29 per diluted share, or 62.5%, to $0.75 per diluted share. Adjusted EBITDA² increased 44.8% to $45.7 million, and adjusted EBITDA margin² expanded 390 basis points to 19.0% of consolidated sales.

Bookings were up 31.3% to $257.2 million in the quarter. For the year, bookings grew 14.4% to $924.4 million with a book-to-bill ratio of 1.07:1. Backlog at the end of the quarter was $674.5 million, the highest recorded in Company’s history.

Aerospace Segment Review (compared with the prior-year period, unless noted otherwise)

Record Aerospace segment sales of $219.6 million were up $31.0 million, or 16.5%. Sales in the Commercial Transport market grew $26.1 million, or 18.5%. Growth was primarily related to increased demand by airlines for cabin power, seat motion, lighting and safety and system certification products and services, partially offset by lower demand for avionics products. Military Aircraft sales increased $3.6 million, or 14.5%, to $28.0 million, driven by pricing initiatives, increased demand for lighting and safety products, and continued progress on MV-75 engineering efforts. General Aviation sales were up $4.6 million, or 26.0%, to $22.3 million due to higher inflight entertainment & connectivity (“IFEC”) product sales to the VVIP market. Other sales were down $3.2 million as the Company has wound down its non-core contract manufacturing arrangements.

Aerospace segment operating profit of $41.7 million, or 19.0% of sales, measurably improved over the prior-year period reflecting the leverage gained on higher volume, favorable mix, pricing initiatives, and improving production efficiencies. The quarter also benefitted from a $9.3 million decrease in litigation-related reserves and expenses. Adjusted Aerospace operating profit² increased 44.1% to $43.6 million, or 19.8% of sales, a 380-basis point expansion over the comparator quarter.

Aerospace bookings were up 30.1% to $237.3 million for a book-to-bill ratio of 1.08:1. Backlog for the Aerospace segment was $600.8 million at the end of 2025 which was an 11.8% increase over backlog at the end of 2024 and a 5.0% increase over the trailing third quarter.

Mr. Gundermann commented, “Our Aerospace business had a strong fourth quarter with record sales that led to a 19.0% operating margin, surpassing our near-term margin target and a testament to its potential. In addition to higher volume, profitability benefitted from a favorable mix within our VVIP market as well as with some recovery related to pricing initiatives. We have very strong tailwinds supporting our Aerospace business that we believe will continue to drive strong results in 2026 and beyond.”

Test Systems Segment Review (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $20.5 million, up $0.5 million from the comparator quarter in 2024.

Test Systems segment operating profit was $1.1 million compared with slightly below break-even in the fourth quarter of 2024. The comparator quarter included $1.4 million in expenses related to simplification and restructuring activities which contributed to the profit improvement at this sales level. Test Systems continued to be negatively affected by mix and under absorption of fixed costs at current volume levels.

Bookings for the Test Systems segment in the quarter were $19.9 million, for a book-to-bill ratio of 0.97:1 for the quarter. Backlog was $73.7 million at the end of 2025.

Mr. Gundermann commented, “Our Test business generated operating profit on relatively low sales, which demonstrates the significant cost-cutting initiatives we have implemented across the business. We expect its level of profitability will meaningfully improve once production for the U.S. Army radio test program begins. At this time, we believe we will receive production orders for that program early in the second quarter or soon thereafter.”

Balance Sheet and Liquidity

Cash provided by operations in the fourth quarter of 2025 was $27.6 million, reflecting higher cash earnings, offset by higher working capital requirements associated with increased order volume. Capital expenditures in the quarter were $11.8 million and $31.7 million for the full year. Elevated capital expenditures in 2025 reflect the investments made on previously deferred spending as well as the consolidation of operations in a new Seattle facility.

Long-term debt, net of cash, increased $168.2 million to $324.8 million at the end of 2025 compared with $156.6 million. Debt was higher due to the refinancing actions that resulted in the repurchase of 80% of the $165 million 5.5% convertible bonds. The refinancing was accomplished through the issue of $225 million of 0% convertible bonds and included the purchase of a capped call.

On October 22, 2025, the Company entered into a new $300 million senior secured, cash flow-based revolving credit facility (the “New Revolver”) which matures in October 2030. The New Revolver includes a $100 million accordion feature which can be incrementally expanded if maximum leverage requirements are met.

The Company had available liquidity of $230.9 million including $18.2 million in cash at the end of 2025.

2026 Outlook

The Company expects 2026 revenue to be approximately $950 million to $990 million. The midpoint of this range would be a 13% increase over 2025 sales. The Company expects first quarter revenue to be approximately $220 million to $230 million, up 9% at the midpoint of the range over the prior-year period.

Backlog at December 31, 2025 was a record $674.5 million, of which approximately 79% is expected to be recognized as revenue over the next twelve months. Planned capital expenditures in 2026 are expected to be in the range of $40 million to $50 million and include the remaining costs associated with the Seattle operation consolidation. In addition, the Company plans to invest approximately $14 million to $18 million in 2026 for the implementation of a global enterprise resource planning system. The investment will be reported as a cash outflow from operations, rather than as a capital expenditure.

Mr. Gundermann concluded, “We expect 2026 will be another very strong year with double digit growth, weighted slightly toward the second half. Our future is very bright. We have a long runway of opportunities on which to execute and are very excited about 2026 and beyond. We are also striving to consistently deliver high-teens operating margins for the consolidated business which should be realizable with the expected improvement with the Test business. In all, we expect we will continue to create more value for our customers, shareholders and the Astronics team.”

Fourth Quarter 2025 Webcast and Conference Call

The Company will host a teleconference today at 4:45 p.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 investors.astronics.com. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13758335. The telephonic replay will be available from 8:00 p.m. on the day of the call through Tuesday, March 10, 2026. The webcast replay can be accessed via the investor relations section of the Company’s website where a transcript will also be posted 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.

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,” “feeling” or other similar expressions and include all statements with regard to the Company’s 2026 and first quarter revenue outlook, the amount of revenue in the second half of 2026, the ability to deliver high-teens operating margins for the consolidated business, the amount of capital expenditures for 2026 as well as the amount of investment in an ERP system, the amount of backlog to be recognized as revenue over the next twelve months, the strength and length of time associated with tailwinds for the Aerospace segment, the timing of the receipt of production orders for U.S. Army radio test set program and the level of profitability contribution from the Test segment with its onset, the amount of opportunities available to be executed, the ability to achieve high-teen operating margins on a consolidated basis consistently, and statements regarding the strategy of the Company and its outlook. Forward-looking statements also include all statements related to achieving any revenue or profitability expectations, expectations of continued growth, the level of liquidity, the level of cash generation, the level of demand by customers and markets and the amount of expected capital expenditures. 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 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 impact of regulatory activity and public scrutiny on production rates of a major U.S. aircraft manufacturer, the need for new and advanced test equipment, customer preferences and relationships, the effectiveness of the Company’s supply chain, and other factors which are described in filings by Astronics with the Securities and Exchange Commission. Except as required by applicable law, 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.

Use of Non-GAAP Financial Metrics and Additional Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Astronics provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. Astronics management uses these measures for reviewing the financial results of Astronics for budget planning purposes and for making operational and financial decisions. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, help investors evaluate Astronics core operating and financial performance and business trends consistent with how management evaluates such performance and trends.

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