Executive Summary

Q4 2024 delivered near-record sales of $208.5M, strong adjusted profitability (Adjusted EBITDA $31.5M; 15.1%), and record Aerospace revenue of $188.5M, while GAAP EPS was negative due to refinancing costs, litigation accruals, and tax valuation allowance .
2025 revenue guidance was maintained at $820M–$860M; Q1 2025 sales guided to $190M–$205M; planned 2025 capex uplift to $35M–$40M to support consolidation and growth .
Backlog ended at a record $599M; bookings were $196M in Q4 (book-to-bill 0.94x), with demand robust in Commercial Transport and Military Aircraft; Test Systems remains in restructuring ahead of the U.S. Army radio test program ramp in late 2025 .
The UK damages ruling of ~$11.9M in the long-running IP case was materially below worst-case claims; management framed it as favorable and clarified expected payment timing and appeal path, reducing a legal overhang on the stock narrative .
Liquidity strengthened post convert; net debt fell to ~$157M; annual interest expense expected to decline by ~$5.6M, supporting margin trajectory and optionality (e.g., cash-based settlement of converts, potential buybacks or acquisitions) .

What Went Well and What Went Wrong

What Went Well

Record Aerospace segment revenue ($188.5M, +11.7% YoY) and adjusted operating margin of 16.0%, driven by cabin power and IFEC demand in Commercial Transport and strength in Military Aircraft (FLRAA progress) .
Adjusted profitability expanded: adjusted operating margin rose to 11.4%; adjusted EBITDA reached $31.5M (15.1%), on higher volumes and improved operating efficiencies; cash from operations was $26.4M, the strongest since pre-pandemic .
Management tone highlighted tailwinds: “supply chain continues to improve… workforce is getting more efficient… pricing adjustments are taking hold… demand continues to be strong” .

What Went Wrong

GAAP net loss (-$2.8M; -$0.08 diluted EPS) driven by loss on extinguishment of debt ($3.2M), elevated litigation/legal costs (~$6.1M), and a $3.4M tax valuation allowance; Test Systems posted near break-even on GAAP .
Warranty reserve true-up ($1.7M) and customer bankruptcy charge (~$0.8M) pressured GAAP gross and operating results; Boeing strike and production cadence impacted certain lighting & safety shipments and bookings timing .
Test Systems revenue declined to $20.0M (-$6.6M YoY); restructuring severance ($1.4M) weighed on segment results; management expects a weak H1 2025 ahead of the Army radio test production ramp in H2 2025/H1 2026 .

Financial Results

Consolidated P&L and Profitability (USD, $M unless noted)

Metric	Q2 2024	Q3 2024	Q4 2024
Sales	$198.1	$203.7	$208.5
Gross Margin %	20.9%	21.0%	24.0%
Operating Margin %	3.8%	4.1%	4.3%
Net Income (Loss)	$1.5	$(11.7)	$(2.8)
Diluted EPS ($)	$0.04	$(0.34)	$(0.08)
Adjusted EBITDA	$20.2	$27.1	$31.5
Adjusted EBITDA Margin %	10.2%	13.3%	15.1%
Adjusted Diluted EPS ($)	N/A	$0.35	$0.48

Notes: Q4 GAAP results include loss on extinguishment of debt ($3.2M), litigation-related legal expenses (~$6.1M), and tax valuation allowance ($3.4M) .

Segment Breakdown

Metric	Q2 2024	Q3 2024	Q4 2024
Aerospace Sales ($M)	$176.9	$177.6	$188.5
Test Systems Sales ($M)	$21.2	$26.1	$20.0
Aerospace Operating Profit ($M)	$19.3	$14.3	$16.8
Test Systems Operating Profit (Loss) ($M)	$(5.3)	$(0.0)	$(0.0)
Aerospace Adjusted Operating Margin %	10.9%	14.2%	16.0%
Test Systems Adjusted Operating Margin %	N/A	0.6%	7.3%

KPIs and Order Trends

KPI	Q2 2024	Q3 2024	Q4 2024
Total Bookings ($M)	$219.0	$189.2	$195.9
Total Backlog ($M)	$633.4	$611.9	$599.2
Total Book-to-Bill	1.11x	0.93x	0.94x
Cash from Operations (Quarter) ($M)	N/A	$8.5	$26.4
Net Debt ($M)	$174.0 (end Q2)	$174.6 (end Q3)	$156.6 (end FY)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$820M–$860M (initiated Jan-10)	$820M–$860M (maintained)	Maintained
Sales	Q1 2025	N/A	$190M–$205M	New
Capital Expenditure	FY 2025	N/A	$35M–$40M	New
Revenue	FY 2024	$780M–$800M (raised Aug-1)	$777M–$797M (revised Nov-6)	Lowered due to Boeing strike

Management also highlighted expected annual interest expense reduction of ~$5.6M post refinancing/convert, supporting profitability in 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Supply chain & workforce efficiency	Improving global supply chain; 43% of workforce <3 years; pricing taking hold	Continued improvements; multiple tailwinds cited (supply chain, input costs, pricing, demand)	Improving
Boeing 737 production/strike	Boeing maintained supplier rates; inventory burn expected; forecast inferred	Assumption of 25/month (first 8 months) then 30/month; rescheduling of orders; cadence strengthening; 2–3 months of inventory in Seattle	Recovery underway, upside potential
Litigation (UK/Lufthansa; DE/FR)	UK damages hearing pending; reserves set; multi-jurisdiction status	UK ruling ~$11.9M; favorable vs claims; payment H1 2025; appeals likely; patents expired; DE damages may conclude ~2026; FR appeal pending	Clarity improved; residual hearings/appeal
Test Systems & Army radio program (TS‑4549/T)	Awarded; $7.2M recognized; LRIP in 2024; full-rate timing mid-2025 to early 2026	Restructuring savings $4–$5M/yr starting Q1 2025; weak H1 2025; volume production expected late 2025/2026	Transitional; ramp expected late 2025/2026
Retrofit demand & IFEC/power	Strong retrofit/line-fit demand; USB‑C architecture success incl. Southwest	Retrofit demand strong; “eternal quest” for consumer tech updates; replacing product due to tech changes	Robust
Tariffs/macro	—	Supply chain less dependent on China; potential tariff impacts manageable; Canada shipments contractual pass-through; fluid environment	Watch item
Capex & facility consolidation	FY24 capex $17–$22M; targeted equipment spend	FY25 capex $35–$40M; consolidation and capacity expansion; level-loaded cadence	Stepping up in 2025

Management Commentary

“Sales came in at $208.5 million… just short of our all-time high… achieved this in spite of the Boeing strike… adjusted EBITDA was $31.5 million or 15.1% of sales… first seriously positive cash quarter since before the pandemic.” — Peter Gundermann .
“Profitability continues to strengthen… adjusted operating margin for the fourth quarter was 11.4%… interest savings… ~$5.6 million annual reduction… intention to minimize dilution by net share settling the Notes whenever possible.” — Nancy Hedges .
“UK… decision came down… requiring Astronics to pay damages of $11.8 million. We consider this a very favorable ruling… patents expired years ago and do not restrict the business of our company today.” — Peter Gundermann .

Q&A Highlights

Litigation exposure: Management views UK outcome as favorable vs plaintiff claims; France could be 0 if appeal sustains invalidation; Germany damages proceedings likely in 2026; appeals may “slow-roll” other cases .
Capex in 2025: Level-loaded; driven by facility consolidation and catching up on deferred maintenance; $35M–$40M with $15M–$18M for expansion build-out net of tenant allowances .
Boeing cadence: Rescheduled orders vs new orders; deliveries cadence strengthening; inventory in system implies Astronics’ turn-on will trail Boeing’s production rate .
Tariffs: Supply chain less dependent on China value-add; Canada shipments often contractual pass-through; fluid policy environment .
Retrofit market: Strong demand due to OEM challenges and tech refresh cycles; Astronics benefits from continuous upgrades (e.g., IFEC, in-seat power) .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 2024, but the data was unavailable due to provider request limits during retrieval. As a result, beats/misses versus Wall Street consensus cannot be formally assessed in this recap. Values retrieved from S&P Global were unavailable at time of request [GetEstimates error].
Operationally, Q4 sales landed at the high end of internal guidance ($208.5M vs $190M–$210M), and adjusted diluted EPS rose to $0.48, up from $0.35 in Q3, with adjusted operating margin expansion to 11.4% .

Key Takeaways for Investors

Aerospace engine remains strong: record segment sales and mid-teens adjusted margins underscore operating leverage; Commercial Transport demand for power and IFEC is a durable driver .
GAAP-to-non-GAAP bridge matters: litigation, refinancing, warranty, and tax adjustments masked core margin strength; watch adjusted operating and EBITDA trends as cleaner signals .
Legal overhang reduced: UK damages at ~$11.9M and favorable framing vs claims, with patents expired and business unaffected; remaining hearings/appeals are process, not structural impediments .
2025 setup: Guidance maintained ($820M–$860M), liquidity improved, interest expense expected to decline; capex up to support consolidation/capacity — a near-term drag but medium-term enabler .
Test Systems transition: restructuring savings begin Q1 2025; full benefit contingent on Army 4549/T entering volume production late 2025/2026; H1 2025 likely soft .
Boeing cadence an upside lever: management’s forecast embeds conservative 737 monthly rates; stronger production could provide incremental revenue/margin upside in 2H 2025 .
Trading lens: near-term catalysts include backlog conversion, Boeing production normalization, litigation clarity, and improved cash generation; medium-term thesis hinges on sustained Aerospace margin expansion and Test Systems ramp .

ASTRONICS CORP (ATRO)·Q4 2024 Earnings Summary