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    ATRO
    Earnings call· Jun 2026(Q2 FY26)

    ASTRONICS Q2 FY26 earnings call ATRO

    Aug 11, 2026 Source

    Executive summary

    Astronics Q2 FY26 — Record Revenue, Bookings, and Operating Profit

    Astronics delivered a very strong second quarter, achieving record revenue, bookings, and operating profit, driven by robust market demand and strategic margin improvement initiatives. The company is leveraging increased volume, effective pricing actions, improved organizational efficiency, and portfolio simplification to drive profitability. With significant momentum, Astronics is raising its full-year revenue guidance and expects to cross the $1 billion threshold for the first time, while actively managing ongoing patent disputes and preparing for future growth opportunities in emerging aircraft markets.

    Highlights

    5

    • Record revenue of $260 million, up 27% year-over-year.

    • Record bookings of $306 million, an all-time high.

    • Record Aerospace backlog of $657.2 million.

    • Adjusted EBITDA margin reached 19.8%, a modern-day high.

    • Operating income was a record $40.5 million or 15.6% of sales.

    Concerns

    3

    • The GEO market is experiencing short-term pain, impacting an approximately $60 million annualized business.

    • Approximately 1/4 of long-term contracts still await repricing over the next 12-18 months.

    • Test Systems segment profitability was impacted by $4.1 million of 0-margin revenue related to raw material purchases.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year revenue
    $1.02 billion to $1.04 billion
    high materiality
    High
    R&D expense
    $10 million to $12 million
    low materiality
    Medium
    Full-year CapEx
    $40 million to $45 million
    medium materiality
    High
    Q3 sales
    $265 million to $275 million
    medium materiality
    High
    Q4 revenue rate
    improve modestly from Q3
    low materiality
    Medium
    Future IEEPA tariff refunds
    $6 million to $8 million
    low materiality
    Medium
    Additional tax valuation allowance release
    $40 million to $50 million
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Aerospace
    Achieved record sales with growth across commercial transport, military aircraft, and general aviation markets. Operating profit improved significantly due to higher volume, production efficiencies, a $2 million tariff refund, lower litigation expense, and absence of current year simplification charges. Adjusted operating margin was 21.4%.
    In-flight entertainment and connectivity sales: $126 million (+19%)Planning and Safety sales: $59.2 million (+5.5%)Flight critical electrical power sales: $23.7 million (+49.4%)Heat Motion sales: $22.2 million (+$12 million)
    		$237.3 million22.6%—20.3% of sales
    Test Systems
    Sales increased significantly from the prior year, which included a $6.4 million reduction due to revisions to estimated costs on mass transit contracts. Current quarter profitability was impacted by $4.1 million of 0-margin revenue from raw material purchases for U.S. Army and Marine Corps radio test programs, with margins expected to improve as production ramps.
    		$22.7 million$11.6 million—$600,000

    Operational metrics

    30
    Adjusted EBITDA margin
    19.8%up 340 bps QoQ
    Q2 FY26

    Reached a modern-day high.

    Average quarterly bookings
    $100 million to $150 million
    pandemic height

    Average bookings during the height of the pandemic.

    Sequential quarterly bookings
    $306 millionsequential progression
    Q2 FY26

    Culminating in an all-time high in Q2 FY26.

    MV-75 FLRAA development booking
    $27 millionfollow-on
    Q2 FY26

    For FLRAA MV-75 development work, expected to be the largest military program for the company.

    U.S. Army 4549 program order
    $45 million
    Q2 FY26

    Production go-ahead for the radio test program, covering deliveries over the next 18 months.

    U.S. Army 4549 program order duration
    approx. 1 year
    future

    The $44 million order should last about a year of effort once in full run rate production.

    Employee turnover rate
    about halfvs pandemic
    current

    Improved stability of the workforce leading to increased effectiveness and competence.

    Production sites consolidated
    7
    recent years

    Part of structural simplification and portfolio shaping efforts.

    IEEPA tariff refund
    $2 million
    Q2 FY26

    Recognized during the quarter, partially offsetting ongoing tariff run rate.

    Ongoing tariff run rate
    $3 million to $4 million
    per quarter

    Prior to any mitigation, at current volumes.

    R&D expense
    $10.9 milliondown modestly
    Q2 FY26

    Expected to run roughly $10 million to $12 million per quarter.

    SG&A expense
    $35.6 milliondown $900,000 YoY
    Q2 FY26

    Lower litigation-related expense offset by higher wages, benefits, incentive compensation, and BMA acquisition expenses.

    Adjusted operating income
    $43.2 million
    Q2 FY26

    Reflects strong performance.

    Adjusted operating margin
    16.6%up 7.7% YoY
    Q2 FY26

    Significant expansion compared to prior year.

    Operating income increase
    $13.2 millionsequentially
    Q2 FY26

    Increase over Q1 FY26, driven by $29 million increase in revenue.

    Revenue increase
    $29 millionsequentially
    Q2 FY26

    Increase over Q1 FY26, driving operating income growth.

    Interest expense decline
    $800,00024.7% YoY
    Q2 FY26

    Reflects lower interest rates following September 2025 refinancing activities.

    Tax expense
    $2.8 million
    Q2 FY26

    Reflects benefit of partial reversal of valuation allowance and expensing of R&D costs.

    Adjusted net income
    $32.6 million
    Q2 FY26

    Strong performance dropped through to the bottom line.

    Adjusted diluted EPS
    $0.70
    Q2 FY26

    Weighted average share count reflects 20% Class B stock distribution.

    Adjusted EBITDA
    $51.5 millionmore than double YoY
    Q2 FY26

    Up 36% or $13.6 million over trailing first quarter.

    Aerospace bookings
    $243.1 million
    Q2 FY26

    Contributed to a book-to-bill ratio of 1.02 for the segment.

    Test Systems bookings
    $63.1 million
    Q2 FY26

    Contributed to a book-to-bill ratio of 2.78 for the segment, including the $44.7 million Army order.

    Capital expenditures
    $5.7 million
    Q2 FY26

    Ongoing catch-up investments and capacity improvements, including Seattle facility consolidation.

    Long-term debt
    $310.3 milliondecreased $24.1 million
    Q2 FY26 end

    Debt reduction is a capital priority.

    Available liquidity
    $253.2 million
    Q2 FY26 end

    Provides financial flexibility.

    ERP incremental operating expense
    $700,000
    H1 FY26

    Related to global ERP implementation.

    ERP capitalized costs
    $4 million
    H1 FY26

    Related to global ERP implementation, found on cash flow statement under cloud computing implementation costs.

    MV-75 FLRAA program revenue
    $35 million
    FY26

    Expected revenue from the program in 2026 with the finalization of engineering contracts.

    GEO business size
    $60 million
    annualized

    Part of the business experiencing short-term pain due to LEO transition.

    Industry KPIs

    4
    MetricValueDetails
    Book to bill ratio—
    Total company backlog$780.5 millionUSD
    Defense program awards—
    Program segment backlog—

    Orderbook & backlog

    2
    Aerospace backlog$657.2 millionQ2 FY26 end
    Test Systems backlog$123.3 millionQ2 FY26 end

    Deals & partnerships

    2
    BMAAcquisition of a smaller operation, part of a private company in Germany, with good technology and customer relationships.

    Acquired last October (Q4 FY25). Integration involves adapting to U.S. GAAP and working with the French operation (PGA). Less profitable than other aerospace business, focus on improving margins.

    BellDevelopment work for the FLRAA MV-75 program, the U.S. Army's planned replacement for the Black Hawk helicopter.$27 million

    The MV-75 is expected to be the largest military program for Astronics. Management has a constructive working relationship with Bell.

    Capital programs

    1
    Seattle facility consolidationunderway$40 million to $45 million
    Period spend: $5.7 million
    Spent to date: $16.9 million YTD

    Benefit: capacity improvements

    Part of necessary catch-up investments in the business. Full year CapEx guidance includes this program.

    Risks & headwinds

    5
    GEO market disruptionshort-term

    approximately $60 million annualized business

    Mitigation: Optimistic about LEO opportunities offsetting the pain.

    Long-term contract repricingnext 12 to 18 months

    approximately 1/4 of long-term contracts

    Mitigation: Ongoing renegotiation efforts; 75-80% of major price adjustments already completed.

    Test Systems 0-margin revenueQ2 FY26

    $4.1 million of 0-margin revenue

    Mitigation: Profitability expected to improve as production progresses for the U.S. Army radio test programs.

    Lufthansa Technik patent disputeongoing, potential conclusion in some jurisdictions by year-end

    Ongoing legal costs and uncertainty

    Mitigation: Won in the U.S., favorable U.K. ruling, awaiting French appeal. Management is optimistic about potential conclusions.

    MV-75 FLRAA fundingbeyond September 30

    Potential funding concerns for prime contractor

    Mitigation: Astronics has orders and works closely with Bell; management has no specific knowledge beyond public information but feels good about their portion of the program.

    What to watch in Q3 FY26

    5

    Test Systems Segment Margin Improvement

    By Q4 exit
    CurrentQ2 profitability impacted by $4.1M 0-margin revenue
    TargetMargins approaching Aerospace levels (20%+ adjusted EBITDA)

    Why it matters

    Significant profitability driver for the Test segment, which has been underperforming.

    Once we're in full rate production, we are expecting that the margin profile in our Test business should start to approach what we routinely get out of our aerospace business, maybe not up at the 20% EBITDA level, but pretty close.

    Q&A highlights

    8

    What surprised management in the quarter regarding end markets, customers, or segments?

    Management stated there were no real surprises, noting a consistent trend of beating internal forecasts and anticipating the large bookings. The general strength in the industry and the virtuous cycle of increasing volume driving higher margins were expected.

    “I don't know if there were any real surprises. We went in with a certain forecast. And actually, what has become kind of routine is we beat our internal forecast.”

    asked by Jackson Schroeder · answered by Peter Gundermann

    2 min read5 chapters

    Detailed Narrative

    01

    Margin Improvement Levers

    Astronics attributes its significant margin expansion to four key levers. Firstly, strong market demand, evidenced by record bookings, leads to higher shipments and improved overhead absorption. Secondly, strategic pricing actions, including repricing long-term contracts and pricing to value for shorter-term business, have benefited overall profitability. Thirdly, improved organizational efficiency stems from reduced employee turnover, leading to a more experienced and effective workforce. Finally, structural simplification, involving the consolidation of 7 production sites and discontinuation of certain product lines, helps focus on core product lines and customers.

    02

    Key Bookings Highlights

    The quarter saw two significant bookings: a $27 million order for FLRAA MV-75 development work, a follow-on to a $57 million order from 2025, with expectations for another order in early 2027 to complete the engineering phase. Additionally, a long-awaited $45 million production order for the U.S. Army radio test program (4549/T) was received, covering deliveries over the next 18 months, with similar annual orders expected for 4-5 years under an IDIQ award from 2024.

    03

    B Share Distribution

    Astronics executed a 20% distribution of B shares to all shareholders of record on June 29, following an announcement on June 1. This action was intended to reward shareholders and encourage long-term interest in the company. B shares, convertible to common stock, have been a part of the capital structure since the early 1980s, and this distribution aimed to replenish and rebalance the share count to historical norms, consistent with approximately 20 prior share distributions over the years.

    04

    Lufthansa Technik Patent Dispute Update

    The company provided an update on its long-running patent dispute with Lufthansa Technik, which has spanned U.S., U.K., France, and Germany since 2010. Astronics won in the U.S., and the matter is closed there. A recent U.K. Court of Appeals ruling altered the original ruling favorably, with a final appeal to the U.K. Supreme Court possible but uncertain. An appeal in France regarding a lower court's invalidation of the patent is scheduled for October, while Germany awaits. The company is optimistic about potential conclusions in some jurisdictions by year-end.

    05

    ERP Implementation and Tax Valuation Allowance

    Astronics continues its global ERP implementation, incurring approximately $700,000 in incremental operating expense and capitalizing $4 million in costs during the first half of FY26. The company also recognized a partial reversal of its tax valuation allowance in Q2 FY26 and is evaluating a potential additional release of $40 million to $50 million in Q3 and Q4 FY26, contingent on future taxable income.

    AI-generated summary of the company’s earnings call. Not investment advice.