Astronics Corporation

Greetings and welcome to the Astronics Corporation fourth quarter fiscal year 2024 financial results. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone wants to require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Craig Mihalik of Investor Relations for Astronics. Please go ahead.

Thank you, and good afternoon, everyone. We certainly appreciate your time today and your interest in Astronics. On the call with me here today is Pete Gunderman, our Chairman, President, and CEO, and Nancy Hedges, our Chief Financial Officer. You should have a copy of our fourth quarter and full year 2024 results, which cross the wires after the markets closed today. If you do not have the release, you can find it on our website at Astronics.com. As you are aware, we may make forward-looking statements during the formal discussion and the Q&A session of this conference call. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents filed with the Securities and Exchange Commission. You can find these documents on our website or at scc.gov. During today's call, we'll also discuss some non-GAAP measures, which we believe will be useful and evaluated in our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release. So with that, let me turn it over to Pete to begin. Pete.

Thank you, Craig, and good afternoon, everybody. Welcome to the call. We feel our fourth quarter was a very strong close to 2024, which was a year of significant progress for the company. I'll talk first about the quarter, then about the year. Nancy will go through some specifics of the financials, and then we'll turn our attention to a preview of 2025. Operationally, the fourth quarter was a very good quarter for Astronix. Sales came in at $208.5 million, the high end of our forecasted range, once again. It was just short of our all-time high, which was way back in the third quarter of 2018, and we achieved this in spite of the Boeing strike, which essentially shut down our biggest program at our biggest customer. The volume was made possible by the continued improvement in our supply chain and operating efficiencies in our operations. Higher volume had a very positive impact on our margins, So progress was masked by some unusual factors or adjustments. I'll come back to them in a minute. Until then, I will speak to adjusted numbers as described in the press release. Headlines were adjusted operating income of 11.4% for the quarter up from 5.9% last year. Adjusted net income was 8.1% up from 3.3% last year. Adjusted EBITDA was $31.5 million, or 15.1% of sales. The positive margins led to positive cash from operations of $26.4 million in the quarter. It was our first seriously positive cash quarter since before the pandemic. Our aerospace segment was the driver of the results. Sales of 188.5 million was an all-time high, up 11.7% for the quarter. Commercial aero and military aircraft continued to drive the results. Adjusted operating margin for our aerospace segment was 16% for the quarter, up from 10.2% last year. Obviously, there were some significant adjustments in the quarter. A couple of them were true-ups. of situations that were initially covered in our third quarter release. A low-end bankruptcy true-up of $1 million and a warranty reserve for a field replacement program of a business jet came in for another 1.7 million. So 2.7 million total for those two. We had another restructuring charge in our test business of 1.4 million But the big adjustments had to do with an important step forward in our patent infringement dispute in the UK. We had legal expenses of 6.1 million in the quarter, largely for a damages trial that took place in October. We had refinance expenses of 3.2 million for some steps that we took. to protect against the potential of a negative ruling in that damages trial. And then we increased our legal settlement reserve by 4.8 million, which sounds like a loss, but was actually a significant victory for us. Those who have been following us closely know that there was a range of possible outcomes from that ruling. the actual outcome was very much in favor of our position compared to what it possibly could have been if it had gone the other way. But still, the award was 4.8 million higher than our accruals going into the hearing. So that shows up on our income statement in the fourth quarter. The quarter provided a strong close to the year. which, as I said, was a year of significant recovery for the company. Sales grew to $795 million, up 15.4% over 2023. We've averaged over 20% growth over the last three-year period. Adjusted operating income was 7.7%, up from 2.1% in 2023, and adjusted EBITDA was 12.1% for the year, up from 8.1%. in 2023 finally demand continues to be strong q4 backing bookings were 196 million a book to bill of 0.94 we figure the boeing strike hurt our bookings by about 10 million in each of the third quarter and the fourth quarter still we ended the year with a backlog of 599 million I'm not going to spend a whole lot of time talking on the issues that are driving our results, tailwinds you might refer to them as, but it's worth mentioning our supply chain continues to improve and perform better and better. Our workforce is getting more efficient and more accustomed to their responsibilities. We talked a while ago about how a significant portion of our workforce has been with us for less than three years, like 45%. Input cost pressures continue to subside, pricing adjustments are taking hold, and demand continues to be strong. All in all, a lot of tailwinds as we exit 2024 and go into 2025. Now I'll turn it over to Nancy.