Astronics Posts Record Q3: Sales Up 28.5%, Operating Income Doubles

Astronics (NASDAQ:ATRO) grew third-quarter revenue 28.5% year over year to a record $271.7 million, and operating income doubled to $54 million — a 19.9% margin — as aerospace demand and an Army radio test program did the heavy lifting. Adjusted operating income came in at $51 million, or 18.8% of sales, helped by higher volume and better productivity in both segments.

Chairman, President and CEO Peter Gundermann said the company's growth drivers remained intact: rising aircraft production, inflight entertainment and connectivity demand, premium seating, and the ramp of the Army test program. He added that higher sales volume, contract repricing and improved efficiency fed the stronger margins. The bottom line tells the same story: net income reached $52.2 million, or $1.08 per diluted share, versus a net loss of $11.1 million, or $0.26 a share, a year earlier.

How big were the aerospace records?

Aerospace revenue rose 27.4% to a record $245.5 million. CFO Nancy Hedges broke it down on the call:

• Commercial transport sales: up 29%
• General aviation sales: up 52%
• Military aircraft sales: up 5%
• Inflight entertainment and connectivity: up 24% to $131 million
• Seat motion sales: more than doubled to $24.9 million, including a $6.4 million contribution from BMA, the German company Astronics acquired in October 2024

Segment operating profit jumped to $57.6 million from $31.2 million. Two one-off items helped: $1.9 million in tariff refunds and roughly $4.4 million tied to a favorable U.K. patent appeal. Strip those out, and adjusted aerospace operating profit still climbed 71.5% to $55.1 million.

Backlog keeps building. Aerospace backlog hit a record $670 million, up from $657 million at the end of the second quarter; companywide backlog stood at $780 million, roughly flat. Demand isn't fading.

What lifted Test Systems?

Test Systems revenue rose 40% to $26.2 million — the segment's best quarter since 2019. The Army 4549/T radio test program contributed $5.3 million, partly offset by a $2.2 million revenue reduction from a cost-estimate revision on certain long-term mass transit contracts.

The segment earned $3.9 million in operating profit versus roughly break-even a year earlier. Gundermann credited, in part, cost cuts made over the past year. Hedges said to expect similar Army program revenue in the fourth quarter, subject to suppliers keeping pace, with roughly $9 million to $10 million per quarter at full production — a rate Gundermann expects in early 2027.

Where do margins and the balance sheet stand?

Adjusted net income rose to $38.9 million, or $0.81 per diluted share, from $19.4 million, or $0.41, a year ago. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) surged more than 81% to $59.3 million, with the margin expanding to 21.8% from 15.5%. Note: the prior-year quarter's net loss included a $32.6 million hit from a partial repurchase of convertible notes.

Cash discipline showed up too:

• Operating cash flow: $25.8 million
• Long-term debt: down $25.5 million from Q2, to $284.8 million
• Available liquidity: $278 million
• Full-year capex forecast: cut to $25–30 million from $40–45 million

Hedges said the capex cut reflects project timing, not a retreat from growth investments.

What happens next?

Astronics held its 2026 revenue guidance of $1.02 billion to $1.04 billion, implying fourth-quarter revenue of $255–275 million. Gundermann said the midpoint would mark a small dip from the record third quarter because of customer scheduling — not a change in the business.

No formal 2027 guidance yet, but Gundermann expects growth "well north of 10%," and Hedges called a roughly 40% margin on incremental sales a realistic 2027 expectation.

Risks? Gundermann said Astronics hasn't seen significant backlog stretches or customer deferrals, but it's watching longer lead times and price increases on some electronic components. The MV-75 program has been rescheduled: Hedges now expects about $35 million in MV-75 revenue for 2026, and Gundermann pegged 2027 at roughly the same rate while Astronics awaits direction from Bell.

The takeaway: record sales, doubled operating income, falling debt, and a double-digit 2027 growth expectation — with component costs and program timing the things to watch.