Astronics Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter sales increased 28.5% year-over-year to a record $271.7 million; nine-month sales grew 22.5% to $762.3 million.
• Record operating income was $54.0 million (19.9% of sales) for the quarter, up 134.1% from the prior year; nine-month operating income was $121.7 million, up 197.1%.
• Adjusted operating income was $51.0 million (18.8% margin) for the quarter, up 96.6% year-over-year; nine-month adjusted operating income was $123.8 million, up 85.2%.
• Net income was $52.2 million ($1.08 diluted EPS) for the quarter, compared to a net loss of $11.1 million ($0.26 diluted EPS) in the prior year; nine-month net income was $112.8 million ($2.36 diluted EPS) versus a loss of $0.3 million.
• Gross profit increased 45.7% to $94.0 million; gross margin expanded 410 basis points to 34.6% for the quarter and 500 basis points to 33.6% for the nine months.
• Adjusted EBITDA was $59.3 million (21.8% margin) for the quarter, up 81.4% year-over-year; nine-month adjusted EBITDA was $148.8 million, up 67.4%.
• Cash from operations was $25.8 million in the quarter; nine-month cash provided by operating activities was $66.6 million.
• Long-term debt decreased $49.7 million to $284.8 million at quarter-end; available liquidity was $278.0 million ($14.2 million cash plus $263.8 million revolver availability).

Guidance and Future Outlook:

• Maintained 2026 revenue guidance of $1.02 billion to $1.04 billion, representing 19.5% growth at the midpoint over 2025.
• Fourth quarter 2026 sales are expected to be between $255 million and $275 million.
• Preliminary outlook for 2027 suggests another year of strong double-digit growth.
• Approximately 83% of the $780.0 million backlog is expected to convert to revenue over the next twelve months.
• Planned capital expenditures for 2026 are expected to range from $25 million to $30 million.
• Future IEEPA tariff refunds are estimated to range from $5 million to $6 million, though timing is unconfirmed.

Business Segments and Product Lines:

• Aerospace Segment: Sales reached $245.5 million (up 27.4%), driven by Commercial Transport (+28.8%), General Aviation (+51.7%), and Military Aircraft (+5.3%).
  • Operating margin was 23.4% (adjusted margin 22.5%), a 720 basis point improvement year-over-year.
  • Bookings were $258.3 million (book-to-bill 1.05); backlog reached a record $670.0 million.
  • Key product growth included Inflight Entertainment & Connectivity (IFEC), seat motion, lighting, and safety products.
• Test Systems Segment: Sales were $26.2 million (up 40.0%), driven by the U.S. Army's TS-4549/T Radio Test program.
  • Operating profit was $3.9 million compared to near break-even in the prior year.
  • Bookings were $12.8 million (book-to-bill 0.49); backlog was $109.9 million.
  • The TS-4549/T program is expected to reach full rate production in the first quarter of 2027.
• Product Line Growth: Seat Motion sales surged 112.3% to $24.9 million; Flight Critical Electrical Power grew 24.9% to $20.9 million.

Market and Competitive Landscape:

• Aerospace bookings have exceeded 1:1 for five consecutive quarters.
• Trailing twelve-month bookings totaled $1.12 billion with a book-to-bill ratio of 1.12:1.
• Commercial Transport market growth was primarily related to increased demand for IFEC, seat motion, lighting, and safety products.
• General Aviation sales growth was driven by higher IFEC product sales.

Risks and Challenges:

• Working capital increased due to higher receivables and increased inventory levels to support anticipated 2027 revenue growth.
• Test Systems segment revenue was partially offset by a $2.2 million revision of estimated costs to complete certain long-term mass transit contracts.
• Forward-looking statements are subject to risks including commercial aircraft build rates, market acceptance of new products, supply chain effectiveness, and regulatory activity.

Management Commentary and Tone:

• CEO Peter J. Gundermann described the quarter as "strong" with record sales and operating income, citing disciplined operational execution and strong demand.
• Management noted that bookings were solid following a prior quarter with large program awards and expects momentum to continue into the fourth quarter.
• The CEO highlighted the Aerospace business trajectory as "very pleased," citing record backlog and broad-based growth.
• Management expressed confidence in the Test Systems business positioning for a strong 2027 as the TS-4549/T program advances.

Other Key Points:

• The financial results include the acquisition of Bühler Motor Aviation ("BMA") on October 13, 2025.
• A favorable outcome in a UK patent infringement appeal resulted in a refund of approximately $4.4 million in damages and legal fees.
• The Company received a $1.0 million favorable settlement from an unrelated matter.
• $1.9 million in tariff refunds contributed to gross profit growth and margin expansion.
• Capital expenditures of $4.2 million in the quarter and $21.1 million year-to-date reflect catch-up investments and consolidation of operations in a new Seattle facility.
• Interest expense decreased 37.1% to $1.8 million due to lower debt balances and reduced rates following September 2025 refinancing.
• The Company reorganized its product line structure in the first quarter of 2026, recasting prior-year sales data for comparability.