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Higher engineering and development costs, coupled with an increase in warranty and inventory costs, caused Astronics third-quarter profits to slide by 26 percent, falling short of analyst forecasts, the East Aurora aircraft electronics and lighting manufacturer said today.

The increased costs offset a 22 percent jump in Astronics’ sales, which were slightly stronger than analysts were expecting, fueled almost entirely by a 33 percent jump in revenues from its cabin electronics products and its acquisition of an avionics product line late last year.

Astronics’ profitability was hurt by a 35 percent jump in its engineering and development expenses, along with a $1 million increase in its warranty and inventory reserves, which reduced the company’s profit margins by a full percentage point.

Even so, Astronics chief executive Peter Gundermann said he remains optimistic about the company’s prospects, even with the current uncertainty about U.S. defense spending. The company said it expects sales to range between $267 million and $275 million this year, which would be an 18 percent increase from $229 million last year.

The company’s profits slid to $4.9 million, or 33 cents per share, from $6.7 million, or 45 cents per share, a year ago. While operating profits from its aerospace business grew by 7 percent to $10.6 million, losses from its long-struggling test systems business worsened by more than a third to $1.1 million.

Astronics’ sales rose to $68.9 million from $56.4 million, with all of the growth coming from its cabin electronics products that let airline passengers plug their laptops and other electronic devices into their seats, along with its Ballard Technology acquisition, which contributed $4 million in revenues during the quarter.

That improvement offset a 13 percent drop in Astronics’ airframe power revenues and a 27 percent decline in airfield lighting product sales.

Sales at the company’s test systems business in Florida, which has struggled to find enough business to cover its costs after missing out on key military contracts Astronics executives had expected to win, rose 8 percent to $3.1 million.

The company’s backlog of orders inched up to $115.6 million at the end of September from $114.2 million at the end of June and 5 percent better than the $110.2 million Astronics had a year ago. About $67 million of the backlog is expected to ship by the end of this year.

email: drobinson@buffnews.com