• Sales for the quarter were $131.4 million, up 18% over prior-year period
• Operating loss was $14.3 million, including $4.6 million in atypical costs, a portion of which is expected to be recovered in the fourth quarter
• Bookings totaled $184.2 million, up 20% over prior-year period; achieved book-to-bill ratio of 1.40
• Backlog increased 32% from year end 2021 to a record $547.1 million; Aerospace backlog reached a record $464.3 million

Astronics Corporation (Nasdaq: ATRO) (“Astronics” or the “Company”), a leading supplier of advanced technologies and products to the global aerospace, defense and other mission critical industries, today reported financial results for the three and nine months ended October 1, 2022.

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Peter J. Gundermann, Chairman, President and Chief Executive Officer, commented, “Our third quarter sales of $131 million were our highest since the pandemic took hold in early 2020, significantly exceeding average quarterly revenue of $118 million in our previous four quarters. It was a lower sales level than we anticipated, however, due to customer programs that were rescheduled and certain supply chain challenges. Still, we expect to see a steeper ramp in the fourth quarter as the supply chain stabilizes and program schedules are locked down.”

“Demand stayed strong through the quarter, with consolidated bookings of $184 million. Our cumulative bookings for the last four quarters were $686 million, easily exceeding shipments during that same period of $493 million. We ended the third quarter with another record backlog which supports the step change increase in sales we expect for the last quarter of 2022.”

He added, “Margins were under pressure in the quarter because of inflation and supply chain challenges that are widespread these days, as well as from significant legal and customer accommodation expenses of $4 million, part of which we expect to recover. Last year’s third quarter had the benefit of the Aviation Manufacturing Jobs Protection Program. We are passing on increased material, labor, and logistics costs where we can, but our ability to respond in the short term is limited. Encouragingly, we have some evidence that our supply chain is beginning to loosen up, giving us confidence that execution in the near future should get easier than it has been in the recent past.”

Third Quarter Results

*Adjusted EBITDA is a Non-GAAP Performance Measure. Please see the attached table for a reconciliation of adjusted EBITDA to GAAP net income.

Third Quarter 2022 Results (compared with the prior-year period, unless noted otherwise)

Consolidated sales were up $19.6 million from the third quarter of 2021. Aerospace sales were up $16.4 million, or 17.1%, while Test System sales increased $3.2 million.

Consolidated operating loss was $14.3 million, compared with operating loss of $4.5 million in the prior-year period. Higher operating loss was the result of material and labor inflation, addressing supply chain constraints to meet customer requirements and the lag in price increases implemented where possible to offset higher costs and product mix. Third quarter 2022 operating loss also reflects $4.6 million related to the settlement of a litigation claim, a customer accommodation dispute, and a lease termination settlement. The Company expects to be indemnified by other parties for approximately $1.5 million related to the settlement of the litigation claim and will record the gain as an offset to SG&A when received, likely in the fourth quarter of 2022. The prior-year period benefited by a $1.1 million offset to cost of products sold from the Aviation Manufacturing Jobs Protection (“AMJP”) Program grant.

Tax benefit in the quarter was $2.4 million primarily due to changes in the year-to-date and forecasted loss before income taxes.

Consolidated net loss was $14.9 million, or $0.46 per diluted share, compared with net loss of $7.2 million, or $0.23 per diluted share, in the prior year.

Consolidated adjusted EBITDA decreased to a loss of $0.8 million, or 0.6% of consolidated sales, compared with adjusted EBITDA of $2.8 million, or 2.5% of consolidated sales, in the prior-year period.

Bookings were $184.2 million in the quarter resulting in a book-to-bill ratio of 1.40:1. Backlog at the end of the quarter reached another record of $547.1 million for the fourth consecutive quarter.

Aerospace Segment Review (refer to sales by market and segment data in accompanying tables)

Aerospace Third Quarter 2022 Results (compared with the prior-year period, unless noted otherwise)

Aerospace segment sales increased $16.4 million, or 17.1%, to $112.2 million. Commercial aerospace sales increased 36.2%, or $20.8 million, and drove the improvement. Sales to this market were $78.4 million compared with $57.5 million in the third quarter of 2021. Improving domestic airline travel that is driving higher fleet utilization and increased narrowbody production rates drove demand for Astronics’ products.

General Aviation sales increased $2.6 million, or 21.8%, to $14.8 million due in part to higher demand in the business jet market for antenna systems and enhanced vision system products. The Company expects the strong end user demand in the business jet industry to drive higher OEM production rates in the near future, resulting in further increases in demand for its products.

Military Aircraft sales decreased $4.6 million, or 27.0%, to $12.5 million. The prior-year period benefited from incremental non-recurring engineering revenue associated with development programs and higher sales of avionics products.

Other revenue decreased $2.5 million to $6.6 million driven by decreased contract manufacturing programs.

Aerospace segment operating loss was $6.9 million compared with operating profit of $1.9 million for the same period last year. Higher operating losses were driven by inflationary impacts on input costs and inefficiencies associated with production execution due to supply chain constraints that restricted shipment volume, as well as the settlement of a litigation claim and a customer accommodation dispute that resulted in $4.1 million of expense during the quarter. We expect to be indemnified by other parties for approximately $1.5 million related to the litigation claim and will record that gain when such proceeds are received, likely in the fourth quarter.

Aerospace bookings in the third quarter of 2022 were $165.7 million for a book-to-bill ratio of 1.48:1. Bookings were up 32% sequentially, and up 16% over the comparator quarter of 2021, continuing the strong trend of improvement since the pandemic took hold. Backlog for the Aerospace segment was a record $464.3 million at the end of the third quarter of 2022.

Test Systems Segment Review (refer to sales by market and segment data in accompanying tables)

Test Systems Third Quarter 2022 Results (compared with the prior-year period, unless noted otherwise)

Test Systems segment sales were $19.3 million, up $3.2 million compared with the prior-year period driven by higher defense revenue.

Test Systems segment operating loss was $2.3 million compared with operating loss of $2.2 million in the third quarter of 2021. Continued lower volume has driven operating losses in the third quarters of 2022 and 2021. Operating loss in 2022 also included $0.5 million in lease termination settlement costs.

Bookings for the Test Systems segment in the quarter were $18.4 million, for a book-to-bill ratio of 0.96:1 for the quarter. Backlog was $82.8 million at the end of the third quarter of 2022.

Mr. Gundermann noted, “Our Test business achieved a big win during the quarter when we were down-selected by the U.S. Army as the winner of a major radio test competition. A directed procurement is underway to finalize the terms of a contract, a process that is expected to be completed soon. Preliminarily, the Company expects the program could generate sales of $150 million to $200 million in the coming years.”

Liquidity and Financing

Cash on hand at the end of the quarter was $2.6 million and capital expenditures in the quarter were $1.8 million. Net debt was up to $156.4 million, compared with $133.2 million at the end of 2021.

As of November 11, 2022, the Company had approximately $8.0 million in cash and $25.0 million of total liquidity.

On October 21, 2022, the Company entered into an amended revolving credit facility with its bank group, under which the lenders waived their rights against the Company arising from the Company’s failure to comply with the maximum net leverage ratio and minimum liquidity covenants, each as of September 30, 2022. The Amendment increased the maximum aggregate amount that the Company can borrow under the facility from $170 million to $180 million as of October 21, 2022, which brought the maximum aggregate amount available for borrowing by the Company back to the level to which it had been from September 12, 2022 to October 10, 2022. The maximum aggregate amount available for borrowing by the Company would decrease back to $170 million on November 21, 2022. Furthermore, the amendment required the Company to maintain minimum liquidity of at least $15 million as of November 21, 2022 and at least $35 million as of November 30, 2022 and the end of any month thereafter. Under the provisions of the amendment, the inclusion of any “going concern” language in the Company’s financial statements would constitute an event of default.

On November 14, 2022, the Company entered into an amended and extended revolving credit facility with its bank group. The purpose of the amendment was to extend the scheduled expiration of the agreement from August 31, 2023 to November 30, 2023, giving the Company more time to complete the refinancing of its revolving credit facility, which it expects to have complete in the coming weeks. The maximum net leverage ratio is waived for the duration of the facility. The maximum commitment is set at $180 million, with a reduction to $170 million at December 21, 2022. The Company will be required to maintain minimum liquidity of $10 million as of November 30, 2022 and December 31, 2022, and $15 million at the end of any month thereafter. The Amended Facility requires the Company to comply with a minimum trailing twelve month EBITDA covenant, set at $15 million as of December 31, 2022 and March 31, 2023, and $25 million in each quarter thereafter. We expect to remain in compliance with these covenants for the duration of the agreement.

Mr. David C. Burney, “Our refinancing process has taken much longer than expected given delays with property appraisals as well as the many elements of the structure. This extension enables us to continue the process and we expect to complete a new lending structure before year end.”

2022 and 2023 Outlook

Mr. Gundermann commented, “Increasing sales is critical to satisfying our customers’ demand, and improving financial results. Revenue has been starting to ramp and we believe it will accelerate as we move forward. As previously reported, we are expecting sales of $140 million to $150 million in the fourth quarter of 2022, an increase of 10%, or $14 million, at the midpoint over the trailing third quarter. This would result in estimated 2022 sales to be up approximately 17% from last year’s revenue of $445 million. While disappointed with the lower sales level for the year than we had previously anticipated, we remain very encouraged with the demand for our products, our position in the industry and the significant opportunities in which we are engaged.”

He continued, “Our initial look at 2023 suggests sales of $640 million to $680 million. This expectation is supported by cumulative bookings of $686 million over the last four quarters and our record backlog of $547 million. Our supply chain has been a challenge during the last year, but we now see clear signs of improvement and anticipate continued recovery over the course of 2023.”

Planned capital expenditures for 2022 are expected to be approximately $9 million to $10 million.

Third Quarter 2022 Webcast and Conference Call

The Company will host a teleconference today at 4:45 p.m. ET. During the teleconference, management will review the financial and operating results for the period and discuss Astronics’ corporate strategy and outlook. A question-and-answer session will follow.

The Astronics conference call can be accessed by calling (201) 493-6784. The listen-only audio webcast can be monitored at investors.astronics.com. To listen to the archived call, dial

(412) 317-6671 and enter replay pin number 13734416. The telephonic replay will be available from 7:45 p.m. on the day of the call through Tuesday, November 29, 2022. A transcript of the call will also be posted to the Company’s Web site once available.

About Astronics Corporation

Astronics Corporation (Nasdaq: ATRO) serves the world’s aerospace, defense, and other mission critical industries with proven, innovative technology solutions. Astronics works side-by-side with customers, integrating its array of power, connectivity, lighting, structures, interiors, and test technologies to solve complex challenges. For over 50 years, Astronics has delivered creative, customer-focused solutions with exceptional responsiveness. Today, global airframe manufacturers, airlines, military branches, completion centers, and Fortune 500 companies rely on the collaborative spirit and innovation of Astronics. The Company’s strategy is to increase its value by developing technologies and capabilities that provide innovative solutions to its targeted markets.

Safe Harbor Statement

This news release contains forward-looking statements as defined by the Securities Exchange Act of 1934. One can identify these forward-looking statements by the use of the words “expect,” “anticipate,” “plan,” “may,” “will,” “estimate” or other similar expressions and include all statements with regard to the impact of COVID-19 on the Company and its future, reaching any revenue or Adjusted EBITDA margin expectations, being in compliance with credit agreement covenants and executing a revised credit agreement, expected revenue from recently announced programs, the recovery of the commercial aerospace and test systems markets, expected program awards for the Test segment, and the outcome of demand streams or expectations of demand by customers and markets. Because such statements apply to future events, they are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the statements. Important factors that could cause actual results to differ materially from what may be stated here include the continued global impact of COVID-19 and related governmental and other actions taken in response, trend in growth with passenger power and connectivity on airplanes, the state of the aerospace and defense industries, the market acceptance of newly developed products, internal production capabilities, the timing of orders received, the status of customer certification processes and delivery schedules, the demand for and market acceptance of new or existing aircraft which contain the Company’s products, the need for new and advanced test and simulation equipment, customer preferences and relationships, and other factors which are described in filings by Astronics with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information in this news release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

FINANCIAL TABLES FOLLOW

¹ Includes fair value adjustment of contingent consideration liabilities, which was a $2.2 million benefit in the nine months ended October 2, 2021.

² Excludes $1.4 million of capital expenditures in accounts payable at October 1, 2022.

¹ Includes fair value adjustment of contingent consideration liabilities, which was a $2.2 million benefit in the nine months ended October 2, 2021.

Reconciliation to Non-GAAP Performance Measures

In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, we present Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, restructuring charges, gains or losses associated with the sale of businesses and grant benefits recorded related to the AMJP program), which is a non-GAAP measure. The Company’s management believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, equity-based compensation expense, goodwill, intangible and long-lived asset impairment charges, equity investment income or loss, legal reserves, settlements and recoveries, customer accommodation settlements, lease termination settlements, restructuring charges, fair value adjustments to the valuation of contingent consideration liabilities, gains or losses associated with the sale of businesses and grant benefits recorded related to the AMJP program, which is not commensurate with the core activities of the reporting period in which it is included. As such, the Company uses Adjusted EBITDA as a measure of performance when evaluating its business and as a basis for planning and forecasting. Adjusted EBITDA is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. Adjusted EBITDA, as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

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