Astronics Corporation

Greetings and welcome to the Astronics Corporation first quarter fiscal year 2025 financial results conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Deborah Pulaski, Investor Relations for Astronics Corporation. Please go ahead, Deb.

Thanks, Kevin, and good afternoon, everyone. We certainly appreciate your time today and your interest in astronomy. On the call with me here, I have Pete Gunderman, our Chairman and President CEO, and Nancy Hedges, our Chief Financial Officer. You should have a copy of our first quarter results, which crossed the wires after the market closed today. And if you don't have that release, you can find it on our website at astronics.com. As you are aware, we may make some 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 Securities and Exchange Commission. You can find those documents on our website or at sec.gov. During today's call, we'll also discuss some non-GAAP measures, which we believe will be useful in evaluating our performance. We should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release. With that, let me turn it over to Pete to begin. Peter?

Thank you, Debbie. Hello, everybody, and welcome to the call. I'm going to open the presentation with my comments on the first quarter, which we feel was a very strong start to the year. And Nancy will follow up with some specifics on our financials. Then we'll turn our attention to expectations going forward for the remainder of the year. As I said, the first quarter was a very strong start to 2025. Revenue of $206 million was at the high end of our range or just beyond and up 11% year over year. The revenue level drove solid improvement on margins with adjusted net income of $17 million up from $2 million last year. and adjusted EBITDA of $30.7 million up from $17.6 million last year. Adjusted EBITDA was about 15% of sales and similar to the fourth quarter from last year. On a rolling 12-month basis, adjusted EBITDA, as we calculate it, has been $110 million. This is up from $67 million for the previous 12-month period and $16 million for the 12-month period before that. So we've made some pretty solid progress. In addition, first quarter bookings were really strong at $280 million, which yields a book-to-bill of 1.36%. That bookings total was a new record for the company, which left us with a backlog at quarter end of 673 million, also a new all-time record. The bookings included a significant order of 57 million for the next phase of our FLARA development effort. We remain very engaged in that program and are doing whatever we can to help ensure its success. We expect total development Billings of approximately $90 million by the time it is all done, and we continue to believe that the program will be a significant driver for our company's long-term future. It's worth noting that even if one backs out the FLARA order from Q1 bookings, we still would have had a booked bill of $1.08, a strong result no matter how one looks at it. Apart from the FLERA order, our first quarter was fairly routine operationally, much like the fourth quarter of last year was. The improvement in our performance has not been driven by one-time events or significant adjustments, but rather the steady operational improvement across the business, including our supply chain primarily and also the increased efficiency of our workforce. together with certain operational improvements we have implemented in recent periods. The rather routine nature of this acceleration gives us confidence in the quality of our results and our expectations for the future. As for segments, our first quarter results were clearly driven by our aerospace segment, which is performing at a very high level. New records were set in the quarter for revenue, bookings, and backlog. Revenue of $191 million was up 17% year over year. Bookings of $268 million were the first time ever above $200 million. And backlog of $614 was up $66 million over our previous high. Margins are encouraging also with adjusted operating profit in the aerospace segment of 16.2%. Our test business, on the other hand, had a lackluster quarter and sales of only 14.6 million and an adjusted operating loss of 2.2 million. Results were hurt by an EAC adjustment on a long-term development contract of 1.9 million. Bookings were thin at 12 million, leaving backlog at 59 million. There is some good news in the test segment in that the cost changes we have recently implemented in business are showing results, even at the reduced volume. And our long-awaited radio test program for the U.S. Army remains on track for a volume start in the fourth quarter. But the goodness at test is undermined by the operational challenges we have seen and the result in the EAC growth. And we're doing a deep dive currently to understand the challenges. and strive for some improvements on a related note we have a few areas in our aero business that are also challenged and we are taking a close look at these situations also there are always weak spots that accompany our size And we are optimistic that the margin improvement we have seen overall has plenty more room to run if we can get some improvement out of the challenged parts of our business. We'll talk more on this topic generally in future calls. Now I'll turn it over to Nancy for some details on our financials in the first quarter.