Profits up by 5% at Astronics, but no growth seen for 2010
Astronics Corp.’s third-quarter profits grew by 5 percent, easily topping analysts’ forecasts, but the East Aurora maker of aircraft lighting and electronics systems isn’t expecting any growth next year.
“It’s been a challenging year,” said Peter J. Gundermann, Astronics’ president and chief executive officer. “We’ve managed to show growth, even in the current environment.”
But all of that growth is due to Astronics’ acquisition of DME Corp., the aviation test and simulation equipment maker that it acquired at the end of January. Without DME, Astronics’ third-quarter sales would have dropped by 15 percent, rather than the 20 percent gain that it reported with the acquisition.
Gundermann said Thursday that he doesn’t see Astronics’ markets getting any better next year, predicting that sales in 2010 will be right around the $190 million to $195 million that it expects in revenues this year, or possibly slightly lower.
“We think the range is basically where we are today, maybe down a little bit,” Gundermann said in a conference call.
Astronics’ third-quarter profits were aided by lower costs on test system contracts that are nearing completion — an adjustment that added $1.3 million to the company’s sales.
Astronics’ profits rose to $2.5 million, or 23 cents per share, from $2.4 million, or 22 cents per share, a year earlier. Sales rose by 20 percent to $48.6 million, from $40.4 million, with all of that increase coming from the $14.1 million in revenues that came with the DME acquisition.
Excluding that acquisition, Astronics’ sales from its existing business slid by 15 percent to $34.5 million as its commercial transport and business jet markets weakened.
The earnings were better than the 15 cents per share that analysts had been expecting.
In addition, Astronics booked 43 percent more orders during the third quarter than it did a year ago, with bookings rising to $44 million, their highest level since spring 2008, from $31 million a year earlier.
Astronics also narrowed its revenue forecast for this year, trimming the top end of its prediction by $5 million to $190 million to $195 million.
In the third quarter, Astronics’ aerospace sales of $39 million were down by 4 percent, even with the DME acquisition. Without DME, Astronics’ aerospace sales were off by 15 percent at $34.5 million.
Astronics’ sales to commercial airlines were down by 14 percent as airlines cut spending on projects to install in-seat power systems, as well as in-flight entertainment systems. Military sales grew by 22 percent, partly because of strong sales of power-control units for the Tomahawk cruise missile. Business jet sales dropped by 30 percent as the recession took a heavy toll on that market.
DME’s test systems business added $9.6 million in sales.
While DME has bolstered Astronics’ sales this year, even as the aviation markets have been battered by the recession, Gundermann said the acquisition has not packed the punch he expected.
Part of that is due to the recession, and part is because DME failed to win a major Marine Corps contract for a ground radio maintenance and test system that it had been counting on. Astronics has filed a protest to the federal government over the contract decision.
“Certainly that acquisition hasn’t gone exactly as we’d anticipated,” Gundermann said. “The market has gone soft, and we didn’t win a couple of projects we thought we’d win.”
But Gundermann also said he still believes that the DME deal will pay off. “It’s a fundamentally good company. It’s got fundamentally good technology. It’s got fundamentally good prospects,” he said. “I’m not terribly concerned about it.”
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