Astronics (NASDAQ:ATRO) executives used a presentation at the 28th Annual NEDM Growth Conference to outline the company’s market exposure, product strategy, recent acquisitions, and financing activity, while also providing preliminary fourth-quarter expectations and discussing drivers of demand in commercial aerospace.
Business mix and end-market exposure
Chairman, President and CEO Peter Gundermann said the company reports in two segments, with Aerospace representing the vast majority of revenue and Test representing a smaller portion that is “consistently about 10%.” By end market, Gundermann said Astronics is “about 70%” exposed to commercial aerospace, with roughly 21% coming from government sources (typically defense) and about 10% tied to general aviation.
Core product areas: connectivity, lighting, and electrical power
Gundermann described Astronics’ strategy around three major product areas within Aerospace. He said roughly half of sales are tied to in-flight entertainment and connectivity, including onboard power, file servers, wireless access points, and hardware supporting satellite or air-to-ground connectivity. He said Astronics works with entertainment system providers as well as connectivity companies and airlines, citing relationships with “200, 250 airlines around the world.”
Gundermann also emphasized the product refresh cycle in cabin electronics, contrasting long aircraft lifecycles with the shorter upgrade cadence for consumer technology. He said in-flight entertainment and connectivity systems typically have a five-to-seven-year lifecycle versus a 25-to-30-year aircraft life, creating recurring retrofit opportunities. He said about half of the in-flight entertainment/connectivity business is retrofit or aftermarket and half is line-fit.
In lighting, Gundermann said Astronics provides systems across the cockpit, exterior, and cabin, and described the business as primarily tied to aircraft production rates, with limited spares and aftermarket content.
He said the smallest portion of the strategic mix is “flight-critical electrical power,” including starter-generators, power conditioning units, and electronic circuit breakers. Gundermann highlighted the company’s use of electronic circuit breakers—described as “little computers” monitoring circuits—as a key differentiator for improved fault resolution, emergency planning, and weight reduction. He said Astronics focuses on “small aircraft,” with programs initially centered on business jets.
Program opportunities: FLRAA and emerging aircraft categories
Gundermann repeatedly pointed to the company’s position on the U.S. Army’s Future Long Range Assault Aircraft (FLRAA) program, the V-280 tiltrotor being developed by Bell (a Textron company) as a replacement for the Black Hawk. He said Astronics is providing the “entire electrical distribution system” and described expected content as “north of $1 million an aircraft once production starts.”
He also discussed adjacent opportunities in military drones—specifically larger “Collaborative Combat Aircraft” or “Loyal Wingman” platforms—arguing the company’s electrical power systems are well-suited because they can be remotely managed. In addition, Gundermann said Astronics is involved with multiple electric aircraft development programs and has developed a “commercial off-the-shelf capability” that several programs are designing into their aircraft, while stressing the company is not “betting the company” on that market.
Test segment: transit work and a delayed U.S. Army program
Gundermann said the Test segment includes transit-related programs and radio test activities. He cited a “$30 million program” for the New York City Transit Authority and another program with Atlanta’s MARTA system.
On radio testing, he described a major U.S. Army initiative, code-named “TS-4549/T,” as the Army’s next-generation test platform for managing its radio families. He said Astronics has a “$215 million IDIQ” and is in early phases, expecting a production go-ahead toward the end of the first quarter. Gundermann said a government shutdown delayed the expected start by roughly “60-90 days.”
He said management views the Test business as operating at roughly $75 million to $80 million of revenue with positive EBITDA in the “low mid-single digits,” and expects the Army production phase could add approximately $25 million to $35 million (and “$40 million maybe in high production years”) of “very profitable” sales.
Financial update: Q4 revenue range, backlog, leverage, and refinancing
CFO Nancy Hedges said the company expects fourth-quarter revenue to be approximately $236 million to $239 million, and expects Q4 bookings of about $257 million, including contributions from a recent acquisition. She said bookings can be “lumpy” quarter to quarter, but noted book-to-bill has been above one over the past five years.
Hedges said supply chain disruptions in recent years pushed customers toward longer lead-time ordering, and that as conditions normalize the company is seeing lead times return to typical levels. She said preliminary year-end backlog is $669 million, which she characterized as elevated compared to pre-pandemic norms, when the company produced roughly $800 million of revenue from about $400 million of backlog. Hedges said the order book and backlog support the company’s outlook for 2026 revenue of $950 million to $990 million.
Discussing third-quarter performance, Hedges said gross margin was 30.5%, with Aerospace at about 31% and Test at about 21.6%. Operating profit was about $26 million, and she cited incremental operating leverage of roughly 40% to 50%. She said Aerospace leverage has been supported by volume growth, pricing actions, and labor efficiency, while Test has been improving following cost reductions and is operating at or near break-even at current revenue levels. Hedges also said litigation expenses were down significantly in the quarter.
Hedges said adjusted net income rose about $7 million to $19.4 million, or $0.49 per diluted share, reflecting stronger profitability and lower interest expense of about $3 million. Adjusted EBITDA increased about 21% to $32.7 million, or 15.5% of sales, which she said is a level not seen since before the pandemic. She added that tariffs are a headwind, but the company believes it can “largely mitigate that effect over time.”
On cash flow, Hedges reported $47 million of cash from operations in the first nine months of the year, with $34 million in the third quarter. Free cash flow for the first nine months was $27 million. She said 2025 capital expenditures were expected to be $40 million to $50 million due to a Seattle facility consolidation and expansion project, with elevated spending expected to carry into 2026, while still anticipating free cash flow to be positive for 2025.
Hedges also detailed capital structure changes, including a refinancing of convertible debt. She said the company issued $225 million of 0% interest convertible bonds, used alongside an $85 million revolver draw and $11 million of cash on hand to repurchase about $132 million principal—roughly 80%—of its 5.5% convertible notes. She said the refinancing reduced interest cost and eliminated 5.8 million shares of potential dilution tied to the repurchased notes. The new bonds mature in January 2031, have a $54.87 conversion price, and are paired with a capped call that effectively raises the dilution threshold to $83.41.
Separately, Hedges said the company transitioned after the third quarter from a $220 million asset-based revolver to a $300 million cash-flow revolver priced at SOFR plus two, which she said is less administratively burdensome and adds liquidity. She reported available liquidity of $169 million as of early November, including revolver availability and cash.
In a brief Q&A, Gundermann said rising production rates at Boeing and Airbus are a “major tailwind.” He cited Boeing’s progress on 737 production, expectations for increases in 787 output, and anticipated certification and entry into service for the 777X around late 2026 or 2027. He also said Airbus A320 production is in the “low 50s” per month with an aim toward 70, and A350 output is also expected to rise from mid-single digits to low double digits.
About Astronics (NASDAQ:ATRO)
Astronics Corporation (NASDAQ: ATRO) is a global leader in the design and manufacture of advanced technologies primarily for the aerospace, defense and semiconductor industries. Headquartered in East Aurora, New York, the company was founded in 1968 and has grown through a combination of internal development and strategic acquisitions. Astronics operates multiple business units focused on power conversion, distribution and control; cabin electronics and connectivity; aircraft lighting and safety solutions; and automated test systems.
The company’s aerospace products include onboard power generation and management systems, in-flight entertainment and connectivity hardware, LED and fluorescent lighting for aircraft cabins and cockpits, and safety equipment such as escape slide power units.
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