Astronics Corporation — FY2021 Form 10-K
Reporting period: Year ended December 31, 2021. This is an annual filing; selected fourth-quarter results are also disclosed. Astronics supplies aerospace, defense and other mission-critical markets through its Aerospace and Test Systems segments. FY2021 remained affected by COVID-19 and supply-chain constraints.
Financial performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Sales | $444.9 million | $502.6 million |
| Gross profit / gross margin | $65.4 million / 14.7% | $96.8 million / 19.3% |
| Operating loss / margin | $28.7 million / 6.4% | $100.7 million / 20.0% |
| Net loss | $25.6 million | $115.8 million |
| Diluted loss per share | $0.82 | $3.76 |
| Cash from operating activities | $(5.5) million | $37.3 million |
| Capital expenditures | $6.0 million | $7.5 million |
| Cash and cash equivalents at year-end | $29.8 million | $40.4 million |
| Long-term debt at year-end | $163.0 million | $173.0 million |
| Working capital | $221.2 million | $223.2 million |
FY2021 results included an $8.7 million benefit from the U.S. Aviation Manufacturing Jobs Protection Program (AMJP), a $5.0 million facility-sale gain, and a $10.7 million gain from a divestiture earnout. These items partly offset an $8.4 million accrual related to the Lufthansa dispute and higher warranty expense. There was no goodwill impairment in 2021; 2020 included $87.0 million of impairment charges.
Segments and comparison with prior year
- Aerospace: Sales declined 12.6% to $365.2 million; operating loss improved to $8.6 million from $89.8 million. Commercial transport sales fell 23.1% to $202.0 million. Military sales increased 3.5% to $70.3 million.
- Test Systems: Sales declined to $79.7 million from $84.6 million. The segment recorded a $3.8 million operating loss, versus $5.5 million operating profit in 2020, reflecting COVID-related delays, low volume and $3.3 million in legal fees.
- Backlog: Consolidated backlog rose to $415.7 million from $283.4 million. Management expected about $339.9 million to be recognized as 2022 revenue.
- Fourth quarter: Sales were $116.1 million versus $114.8 million. Net income was $1.6 million, compared with a $20.0 million loss in Q4 2020; reported Q4 results included the facility gain, earnout gain, AMJP benefit and legal accrual.
Liquidity, outlook and key risks
Operating cash flow was negative despite year-end working capital of $221.2 million; management attributed the cash-flow decline partly to lower earnings and increases in receivables and inventory. At December 31, $163.0 million was drawn under the revolving facility, with $210.9 million available subject to covenant terms. The company reported covenant compliance at year-end.
Management forecast FY2022 revenue of $550 million to $600 million, with a stronger ramp expected in the second half. It anticipated $15 million to $20 million of capital spending, cash generation to reduce debt, and sufficient liquidity under its projections. These expectations were subject to supply-chain and labor disruption, pandemic recovery and customer demand.
On March 1, 2022, after year-end, Astronics amended its credit facility: the revolving commitment was reduced from $375 million to $225 million and maturity extended to May 30, 2023. The amended terms use SOFR, impose a $35 million minimum-liquidity requirement and temporarily restrict dividends, acquisitions and share repurchases. The company said it intended to refinance in the coming months.
Key risks include uncertain commercial-aircraft recovery, component shortages and higher costs, labor availability, reliance on major customers and government funding, variable-rate debt and refinancing needs. Boeing represented 10.0% of FY2021 sales; Panasonic was below 10%.
Lufthansa litigation remains material: the filing reports a $17.3 million non-current liability for German claims and a $7.3 million estimated UK damages liability, plus a $1.0 million current liability for UK legal-cost reimbursement. Further damages may arise, and the French appeal remained pending. A separate Teradyne patent and copyright case had no accrual because loss was not considered probable or estimable.
Important facts for investors to verify
- Whether the $550 million–$600 million FY2022 revenue outlook was achieved, particularly given supply-chain and labor constraints.
- Backlog conversion, cancellation or delay exposure, and the expected timing of Aerospace and Test Systems orders.
- Operating cash flow, inventory and receivables trends, debt reduction, covenant compliance and refinancing progress before the May 2023 maturity.
- Ultimate Lufthansa damages and legal costs, including potential outcomes in the UK, Germany and France.
- How much reported performance depended on grants, asset-sale proceeds and divestiture earnouts; the $11.2 million 2021 earnout was subject to review and expected in 2022.
- The company reported unqualified audit opinions and effective internal control over financial reporting as of year-end.