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ATRO Astronics

Participants
Deborah K. Pawlowski IR, Kei Advisors LLC
Peter J. Gundermann President and CEO
David C. Burney EVP and CFO
Ken Herbert Canaccord Genuity
Jonathan Tanwanteng CJS Securities
George J. Godfrey C.L. King & Associates
Richard Ryan Dougherty & Company
Mike Wallace White Pine Capital
Call transcript
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Operator

Greetings and welcome to the Astronics Corporation Fourth Quarter and Full year 2017 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Deborah Pawlowski, Investor Relations for Astronics Corporation.

Deborah K. Pawlowski

good and Dana, you, evening everyone. Thank appreciate in Astronics. certainly your time interest your and evening this We

On with Chief the to and prepared well, CEO, is the and our to questions. remarks, and Gundermann, call going open some Dave me Dave today then will Burney, comments through we'll take our go Financial make Pete Peter Officer. his are as President up it

release is that I should on crossed wire You the have astronics.com. ago it hand just at guess, Web-site news and available in our moments the

could As during you subject are of to where actual well materially with the the are are forward-looking aware, cause apply we may differ the that portion well the release as to factors make These by some and that risks we Q&A today. in this in Exchange to statements from statements events as the outlined earnings Company Securities teleconference. as as and These formal uncertainties results other presentation future as filed well during as are documents factors Commission.

sec.gov. these find at Web-site and at our can documents both You

So with turn that, Pete over call. the let to begin to me Peter? it

Peter J. Gundermann

good and thank for It's And and necessarily in I'd afternoon like everybody based appreciate schedules time. time to change not It in at first this and normal travel not things does other everybody. on we've adjustment tuning like kind our just we Debbie, flexibility. terms Thanks, your got situational of a represent on a policy on but that. our of going in part things

on some issues. talk and on and about and talk discussion as looks Dave people's today. it to to appreciate it with is as back I'll put XXXX. the And capitalization a us through over turn quarter we come will The to fourth sheet agenda results who XXXX I'll balance then usual So, flexibility. a post-mortem start

fourth where lot moving quarters the there was one wrapping of So, parts. quarter, a were up it of those

good. very good parts Some were of the

it the through bad. systematically. into We'll try hope move things as hit in quarter XXXX to of discussion. a In the really leaves That through in average. the substantial plus at one per and quarter, is XXXX, parts good little quarter this the going Some of bad a three were think emphasize had pretty $XXX to us bit But that but fourth $XXX highest or I that was our the we them revenue million I that's million. end, by the first Revenue quarters a we varied of minus around amount. shape was

delays in at million some the bit time quarter but move fourth customer stretching, better. could our don't in $XX $XXX out get into delays. had of did plan XXXX. or been revenues that the of significant things delays Those million to number but qualification lost they a it to shows due a things or slipped business quarter represent So, award have fourth We of probably the quite and XXXX same

had Our quarter year, fourth revenues that is, substantially of QX $XXX of in revenue quarter we also million million. of last was comparator when above of XXXX $XXX the our

So tune acquired CCC, million we the company the also that's to early December, acquisition, days in in of the revenue at from from of about the revenue We million end compared about which we And for very approximately benefited quarter, comparator Telefonix made in the the growth the XX%. XXXX. $X.X year benefited to of our $X.X of quarter. we from in

the organic X%. of and comparative growth You we ended about period over subtract acquired with that up growth out

years X% second million, Looking XXXX XXXX our record set ago was revenues of from segments the distance couple our when sales at quarter, $XXX shouting fourth of million, $XXX within quarter all-time for million. of of shy we of in Aerospace the the actually just which were $XXX in and up fourth had quarter sales a

are of We to fourth each sales our bottom of $XX in $XX.X comparative Test to had for fourth record. a line quarters, our a our The the $XX.X from the results, about up XX%, from quarter, or of substantially that million. million and substantially three million and sales in however, a going shy That's quarter. $X.X when million for year, $X.X not were segment, million up up first three net So showing in of positive sales, over just where negative ran quarter, average fourth quarter the in the an from average of of X.X% Test we XXXX. XXXX, we loss sales, first that $XX.X last XXXX of we up great. so XX% quarters the compared the of were million down were of first X.X% in period

result against charge per January. was announced goodwill Our which earnings few million far in a a diluted $XX press half biggest we release XXXX XXXX, per ends quarter The impairment results first loss ago acquisition our which in made share a previously contributor by we a up in years of this early share. of to Armstrong in $X.XX the

discuss contributing headcount situation bit. The more with in other our do to these margin days our and our thing levels, which a staffing to has I'll little

of But fourth XX% our record the best They first acquisitions. million $XXX bookings. in were of by above and the strong quarter $XX.X ever fourth the million, quarter or to development time new $XXX which sales. at a engineering That and were Our the part were far million. our been includes very we've is million, expenses $XXX

so And a continued increases throughout levels. of string steady book-to-bill a shipment a by it XXXX. So XX% it was a of X.X-to-X, amount, record our above substantial

right can page our quarter find or then and the $XXX $XXX we of then press release million, bookings you of and fourth table, $XXX million. If the column look million, right to $XXX you of the see, the first part from at last then looking had quarter you million,

at the year strength growth and backlog of in and a new that that million, $XXX sequentially record. the certainly pleased left of period the pretty So with again a end over with we're us XXXX,

of $X.XX the that people company to analysis our heavy And two and drop we feel things types in on XXXX. of we we or again looking the capable our production X.X% in $XX.X with, excluding per one than I Telefonix were levels. with started XXXX have generally still people, XXX down in XXXX more building we quantified sales, volume, been people $X.XX have XXXX. a of or XXXX, ended acquisition with million. important So, they a important that, the very a or XXXX, driven versus marginally we XX% XXXX, year from in over is those is across thing million when the which the staffing compare happened did margin XXXX a engineering impairment orientation. the with some one the were going level X.X% was to late we've that professional we XXX XXXX not reflection $XXX.X and in That's that is Company, think which guess were years, up that generally total We from $XXX found that charge came and is in staffing been of income Net substantially, the higher substantially and doing, business share you diluted million in decline $XX.X the or but last the down at summary, million revenue one of by

X.XX adding up without Bookings people in any the but $XXX XXX fourth impact the book-to-bill thing adding was definitely only ended of the has our being quarter So, the ahead short million, year. not on Again, revenue to in financial negative compared XX% XXXX bookings, really throughout whole in of X.X, a term. results good $XXX to so shipments of so a shipments. million our

goodwill revenues, I operating again X% were million in compared in all-time million in at ever, continued to quarter operating and course then in a XXXX, said page XXXX, segment. $XXX that strong new They last in news before, segments, the and the finally where X.X. of segment the a revenues bookings Aerospace consolidated the segment page the again fourth-quarter ended fourth just of by then largely record both shy a fourth million, segments, Aerospace also were being down million. our where million quarter $XXX our strong period million, had XX% were to But up our operating as very date, the $XXX book-to-bill press XXXX. million, of incurred sales, of $XXX strongest million were of or of which in of in about evident from our of release million, on Aerospace where with of X.X substantially the $XXX the good that of XXXX $XXX And X.X%, sequentially trend, quarter, at were at bookings Armstrong. quarter of segment. $X.X our of driven the record and is backlog loss strong $XXX of $XXX or But quarter Looking fourth in revenue Aerospace our totals then comparative $XXX profit and we the ending of we million, our a $XXX Aerospace and for million situation million, but again a for fourth our up bookings, the book-to-bill million, million bookings Year total by $XX in even $XX over $XXX we story X.X% profit

contributing were total total. and largely product XX.X%. to total line, of consolidated sales were way and or do, $XXX Electrical jet, the CCC military market, our and that's total, Motion of by XX% section, down the the down total Cutting Power PGA, by X.X%. on portion down-year revenues an $XXX both our Sales XX% aircraft major we business more revenues for offering. Very our story to X.X%. sales substantially and of rare our down up, up our And XX% the our actually that and with biggest important product X%, year, the accelerated product line at X.X% into that of for of million, sales million transport XX%. market. a up $XX other That's million Looking That's & our of having portion of were revenues commercial like million, transport, for year, have commercial into ended based our up, $XX VVIP about market to

was CCC of our and the in happened being the most up was of up X% Safety decade. year. Avionics making that's This was over by total. the acquisition Avionics, And categorized of $XXX up end will course Telefonix about line. again also our XXXX, and Lighting product XX% time XX% First total, of up product our line million, marginally then a X% PGA, helped over & in about

the three revenue for million Test was average XX% our were quarter. our to first quarter segment, fourth $XX in the on which Turning revenues up million, $XX quarters per

of million was $XX profit XX% XXXX were was was talk bookings in were the throughout XXXX. to the quarters to basically And year-to-date $XX into up the $XXX The Dave in went $XX XXXX, segment. up the of over bookings entry Systems sales sets and of think Test fourth of backlog $XX $X.X Revenue the million, to And quarter to in a XXXX couple $XX fourth. of where capitalization and for sales. Operating million fourth through versus XX% million sales first we and for the continues in of XXXX. us $X.X back X% million, X.X, profit quarter, from shipments in talk it million $XX I up. up in $X.X fourth to for then million $XX So, up book-to-bill down for we a about million well our million X.XX is complete I'll or operating X.X% million, see where year it million, our come of and which from strength. I'll or our year-end means $XX a and a book-to-bill million. $XX fourth That's bookings sheet or balance turn little $XX shipment string of million, here it Bookings our issues, million In X.X% shaping $XX again each, which above million, the our level. million increasing were quarter, year-to-date versus Test, $XX of

David C. Burney

Thanks we income a Pete. working to topics. I'm A on extended, going deployment, conversation couple few and on here and that that are and touch short capital of credit capital facility statement our amended then items new

for there. so up to borrowed So, our on outstanding on bringing the debt at for points and and At revolver, on $XXX a rate total our are million. Telefonix $XXX end grid business XXX basis X, were ratio X.X% our million the to a borrowings at that debt At expanded to level, able low basis. million X.X-to-X, it X.Xx points to XXX cash revolver X% increase million December in that our lower facility. to debt to X.XXx purposes about roughly at anywhere acquired year-end the adjusted that's on from and covenant the leverage maximum million five-year XXXX our the was than EBITDA. $XXX business we we $XXX now. on long-term working that that term borrowing we from took where to debt and up We the we current the still same level our or would requirements think of look adjusted very and new the at We extend borrowings is able interest bank At within and expiring forward to group the with facility up on the have Company leverage credit were were existing debt a XX.X we basis lower EBITDA, going our going pricing pricing of to time, digestable our to mean able market, our a we at amend $XXX were the previous we

in Turning backlog pushed for XXXX little sales that spoke particularly investment more that bit, capital, upcoming we'll the year has I the into capital the backlog deliver the as high sales in robust to a the build on that on side at forecast quarter expected driven earlier. remain of inventory. fourth working those up combination expect and levels we about year throughout our in to Pete working

our focus as authorization get acquire down authorized December. up EBITDA, first, million flow, market $XX work delevering then been; in delevering; remain get the it on positive December, million in put will authorization. buyback our and as remain on on the in growing our has to capital toward Regarding first, again business; $XX from the to generating and worth to to executing Astronics investing focus stock will $XX will of that Ideally, lastly, to place we deployment, a back was we did stock. then targeting we million there X.Xx Back cash

Regarding the were That's we a between XXXX our were as forecast for of million than and are $XX for in in that higher looking CapEx $XX million year, there planned CapEx. there Switching a that at number XXXX talking XXXX the about. rolled into forecast income have to business that accounting into the as few acquired coming we Telefonix worth and CapEx statement, well. for are issues projects

First rate. new is tax the

bill everybody in went at December. aware, place is end As new of tax the the

I XX% expecting it, Our methodologies. are on and revenue new Pete. had be built don't expect our we There rate not release expectation we some significant that is we all is are this our change the some a puts big At year. to were list, that is on our that revenue time, rules XXXX have our revenue going to and takes rules, into revenue tax expectation recognition forecast this disclosed a that That XX%. our into overall same influence in we will but new press and through my the in the recognition working recognition range of the in have

to, If switch you. you I'll back to want

Peter J. Gundermann

be early looking guidance So revised revenues. specifically, the with would that XX% XXXX release, million. are now million, for to on on that we of $XXX our range of at revenue $XXX for midpoint expectation, revenue over that consolidated forecast, January a an that which is $XXX kind and of issued press we about is XXth of The top line million XXXX and in sticking increase

year segment, in are think numbers million, the midpoint growth in $XXX capture $XXX $XXX end high confident bring $XXX up the business being dependent ended we XX% of reasonable and in enough In at achieving course up in putting could continue that the we the XX% we XXXX. of the over tell but end that in you hope $XXX are $XXX on from of of the low number These in our an suggests million, we coming year. to on we'll range the It million our possible pursuing, towards a the which out are suggesting million, that opportunities today's say pursue, I play our midpoint have especially up the Test segments, up side, ranges where also we million. we a almost here. been have to where the possible Test I in we we perspective to be our to wide these impact have early range range range, of a million putting some in of or end is kind we side of of will risk-reduced we where over are million $XXX results. we pursuits would at XXXX. on that moment of out that that it's to that ended pretty Aerospace Again, in Looking is would growth ranges always

talking that course. on, quarterly expect I each about in goes So, as releases certainly in our of we'll due time be

a is As going. we'd appropriate as for think opportunities is release for all press I have out special put And effort that's or I is my pursuing, remarks. prepared that allow, how necessary as

there. open we'll So, questions, up you to want Dana, it go if from for

Operator

the line [Operator your Canaccord. Instructions] Please question. Our Herbert question proceed of comes from with Ken first from

Ken Herbert

Aerospace Power to revenue XXXX, is the $XX the you out question million, can the of any provide that within million Electrical the that? just $XX slipped think I business more on quarter lot that Pete, so it and fourth is on of first majority just that the a said of of say you specifics or or fair into that

Peter J. Gundermann

Test Aerospace, is and but there anticipated that It could most Most quickly. that revenue our we was on fairly awards actually. also of over we place thought the were it recognize because slipped because some we business slipped had was business of all awards Aerospace

think kind it part So, them think thing that that probably in the intact of for are we $XX and expecting million the of programs things, execute are there five to there kind first approximately that still all to all we I number. most alive us of on the about is that size, equal are important half XXXX, of were six or but different got and

Ken Herbert

back maybe when Aerospace looks of been then, in margins the that a of like of How segment everything even that some be were else lowest they've the the quarter? impact Okay, Armstrong, add quite of in And Telefonix while. fourth should helpful. versus we and aware segment within I that that's was specifically, much the in CCC it

Peter J. Gundermann

of say would range are margins. it's a I things that driving

the can that I we have business strength you the As almost said don't things one true remarks, But the our and organization, is beefed we these on the people my and that in if side I expect, of have those of added have in but it business. prepared up really we know and Aerospace all weaknesses. is were

side staffing So, was went acquisition at XXXX in revenues very our CCC if of you acquisition Telefonix year-end, because which January to beginning people and business, the excluding the XXXX, end happened but levels look of of the our organization that including of of from the versus Aerospace kind our added XXXX XXX our we down.

also the some at were they made hurts specifically we those the accounting fourth margins about response that Telefonix, margins And positive results. in got. you you know a why but and comments asked obviously, that a to contributor the booking and to of purchase Dave, make want most all. for large our we very products don't going if reason the we part there, to that's investments think new is but So, our continue part are getting have is color that we quarter to I there hurt

David C. Burney

Sure.

of acquisition. this Telefonix. million stepped-up we expensed December, the about $XXX,XXX about on inventory go part of There left for stepped-up inventory cost is to as $X.X During

rate there of Additionally, early here the on in amortization period assets is is intangible the there pretty amortization intangibles. high a for

$X.X intangible that assets relating amortization in that to expectation will fact, XXXX. is be million our about In the of business

on for So, that in December an a month sales. on it in $X basis, million we slight Telefonix, business, was basis, the GAAP that loss EBITDA reported one on profitable

Ken Herbert

Okay.

almost it adjustments $X a Telefonix So the headwind year this and Aerospace in just margins that sounds got million like you from alone? accounting

David C. Burney

Yes, we on of we'll – most it and disclose see make. the that through you'll go year go and as we amortization disclosures that expense the through the

Ken Herbert

one hit do EBITDA, to we final target you Okay. here level And do you on pay when plan leverage question, or to as a should to how down just debt? Dave, you your X.Xx have the that quickly expect timeframe

David C. Burney

Not quickly during XXXX.

as to until working – to going pay about I throughout little late as of In of expect as we down, fourth into of we the will grow pay we get think the as I fact, able capital, our to year, the that be year grow, bit the not continue don't until deliveries debt are a third, models talked down with get much the the and year half I quarter, the we Test probably the to second maybe particularly business. the grow middle as receivables the

Ken Herbert

Okay, for the very much additional great. you detail. Thank

Operator

comes proceed question CJS the your next with Securities. Jon from Our question. from of Tanwanteng line Please

Jonathan Tanwanteng

of expectations How progress year? as your your about margins talk you Aerospace that kind of impacts profitability the at you Can through CCC?

Peter J. Gundermann

of the just but is we course facing the little that due lot yet, long-term quarter not unique we've we well, in talked they encouraged execute of business about investments I more Sure. niches. pretty whole the in thought by quarter pretty been try will. we a are for of I but staffing a reasons. think that company some of front book book they'd bit of business has very Revenues expect have pretty in and a terms we've guess And lighter in We additions to of are struggle were to optimistic. we made than and company, big couple a than by been a the we be some pretty CCC bit niches

far long-term lower been but there, what I end So, fine we going are expected. be it's of the we so think on to

Jonathan Tanwanteng

it. got Okay,

something the still to said case that you turning the or for Just to Do quarter what within in be or year to expected you back the it to profitable go just you and be QX profitable that a XXXX. on had like expect earnings that? is call, sometime

Peter J. Gundermann

That one change them. set of of we of really the I businesses will rules And are what a contracts existing can't inheriting would get you rules it in are to little hope one of revenue is prepare of a we year. to you bit stone the already, end about a revenue yourself kind do But so towards the how to new you kind things recognition with. revenue the of is represent the as recognition you for which you and business company, are there for them some where changes are different, bunch begin with understand can business have involved of as the is, book of with. business, stuck kind

that our developing working really are easily. make it, where but it's business that to of products for specific you take very sense with trying particularly in we customers have instances else you that definitely So, factor anywhere a some contracts way long-term through and can't

Jonathan Tanwanteng

Okay, it. got

Peter J. Gundermann

add to want to that. you if know don't anything I Dave,

David C. Burney

to biggest we volume say, and the and until expected to now the this market hindrance we we to lot it. as a CCC, of contributing but expected slow year, expect that it it gate company didn't VVIP acquired Yes, a earlier that of did through getting said going we not the profit. handful XXXX starting to we into was when at I I'd is thing, of expect come into it's for XXXX the not XXXX Pete right of But that toward say, wasn't slower getting what rebound be margins XXXX end knew agree than the with and out it this reasons. was a I'd little a

Jonathan Tanwanteng

that's made headcount back revenue there that that the that doing. or higher Aerospace that you've Okay, coming be hiring terms and a in about kind margin is fair. the there in of expenses added confident result all any the to adjustments mid-teens Are Pete, all And the you to been you of as are segment? need of increased getting you you've to people support talked

Peter J. Gundermann

in we bit us, grow a out ahead products. hasn't have pretty we the the product the business hoped, core the doing those we of think of are that the might way execute areas have of been roadmaps with if terms to in and I just I good things people have But challenges we faced smooth right as think I execute plan market. we'll timing we well. and think think we some It's and of think we as been development I on need in little our combined develop our we it

So, I point. think for to this don't higher I we're a way at profitability the just need most it's fine. our think we going cut where be cost situation to to part

Jonathan Tanwanteng

business fears production finally, semi And especially or to customer, space? any great. legacy demand your Okay, update sales lower on of test your with kind cuts regards given of in from the is new repeat programs what and kind of phone mobile

Peter J. Gundermann

side A lot of the is Test the bookings strength that we on have semi-related. shown

in as quarter about, of business of think most see the one year, with our X.X, can't at been have and of programs, that has talk Test terms that. And recent anyway the of know, look lot we you large you talk in a see of over than fourth but we driven followers our more pursue. know, the customer. about certainly semiconductor times more X.X, customers. has diversifying, of one as what book-to-bill year of course large the and it if the over in program course We And programs we So, driven to we can't we certainly by multiple

in things our as stated, whether come-in there much has to potential XXXX. when in at opportunities to of in timing a think the these quite going a us Test are time bit certainly it's exceed and big and help I I look my So, question to plan, view of

Jonathan Tanwanteng

on Great. Thank you quarter. very job much. the Nice

Operator

line with next of Ciarmoli your Mike Please from Our from question. SunTrust. question the comes proceed

Unidentified Analyst

Michael. It's actually [indiscernible] for

did go you it if you So, to made the of headcount, Aero. some in particularly we in mention investments the back was

I there headcount? any is of from going change of different programs addition with production this at kind guess are more the win of engineering, So, strategy to into looking type more you

Peter J. Gundermann

somebody performing are to we and that and those are products guess at we areas. of certainly same well I we diversifications, to also We on dethrone But and kind I'd for our investments pretty say feel new wait tell both and there. actually our you that on known for not don't continue proven want I'd on are things to time doing. we product have us make to the contributors at keisters in we that some some Aerospace, established business Test are sit looking

their the are So, can, things them talk itching about on we of about when time talk when kind now. based comes, scale can't to but we we and we these have to would

just areas question in. and that short it's be areas active known the Aerospace about before to some and So, new pretty Test, haven't both to talked product haven't your also established answer it's we or both is,

Unidentified Analyst

it. higher-margin lines, guess to look that? any to of would don't how you to those lower, the you have just would than expect, that, build that course be similar items or the wins that business I of or you mention but guess at programs product of Got something of or on perhaps would they I some legacy some

Peter J. Gundermann

changers with at I wouldn't guess as consider what elsewhere in do them them consistent at I I'd big in look game we to this that point. regard be business. our

Unidentified Analyst

you. Thank helpful. that's Okay,

is a bookings will? the little it us color specific customer, there color give it a customers, in if just certain On to more where or you from, Aero, you programmed coming it more on is bit little a to can is

Peter J. Gundermann

I and are of of three bit optimistic connectivity of guess in existing stronger very of in it's our all major initiatives safety are pretty evolving about and franchise kind our Certainly getting strategy think – guess We time on. goes communication. product the our quite jet business I and areas broad-based. community is strong, think particular power terms terms our in as well-positioned. And in I'd lighting a we say we

So, be kind coming array a used anything, just substantially where are to positive It's one we a view company as I seeing thing. compared wide out of years few to a are just of which as product. It's not not one pretty If customer. opportunities diversifying we in. back, we a

Unidentified Analyst

from resulting the pricing from on price me, guess one impact side I Okay. one last step-down? you from are any pressure seeing Aero

Peter J. Gundermann

question. markets. pressures. That's this good in price There always We these popular in very a days. compete competitive are It's industry

as because some Some we has and issue to competitive for areas we big some of would a and product I big that live a we quickly. not we simply supplier competitive technically extent guess Boeing big I and regard in in competitive particular, OEMs, pretty tell to us evolve but that as definitely the are been them, in and world not you aggressive are it's this an feel in it's that geographically it's

value customers is and for way we struggle. for better margins, our holding same to sometimes our think the So, we definitely time look that and at create our better are a protect own. and a But I

as doing as dire at view that we're well. this think we It's not with pretty I point. this alarm

Unidentified Analyst

so Thank you much. it. Got

Operator

line comes George next question. of King from proceed C.L. the Our Please Godfrey question from & your with Associates.

George J. Godfrey

in starting XX% look A the charge, at QX couple impairment headcount, and on mean margin. cost, theme, the that I X%, X%, if of questions. in and QX, To then I pricing Pete, now XX%, QX, XX% the I X% understand with if margin out out it's XXXX operating you in I around coming pick back that have of the up

So profit forward Astronics were the they still end or double-digit of the the margin two, going what are previously? And are by on for in margins then near-term next that theme, your sticking my question margins, achievable? year is, they peak

Peter J. Gundermann

have of we that expense we profile. successfully, at that a time change seen to range opportunities. parts control parts But evolve the of made some that acquisitions we've options happens and margin interest and Over sometimes we've long-term long-term as Company the dramatically we less and seen of managers period can evolve some some successfully,

to overall change strike that potential our margin to isn't a in it's you tell balance. a historically. would there substantial I try compared we what So, been

and is to those I George to it a across back areas. our product is But some have we've We challenge kind goal antenna need the the of our struggling other on, our to a VVIP challenging improve to market, in and that's business an do we've broad-based we that's areas I mean get line. been struggling, we to that you our got areas guess side tell need between, business couple fix. of in there way, goal been the I'd is with of got work

changed nothing that that impossible. make has So, would

George J. Godfrey

fair? go That's same revenue all million on $XX organic profitability. at. growth XXXX, Telefonix, versus Okay, the for the so year get have range, for the for I that and $XXX call midpoint midpoint I revenue to the the streams the to then still if the X.X% back wanted next million, And out it in revenue XX% about is at

Peter J. Gundermann

about Yes, right. that sounds

George J. Godfrey

Okay.

Peter J. Gundermann

of release. that months you've renamed mind course, but just seen we've a one, Telefonix, we in now got, with have that couple of which press Keeping

and in So expectation expectation of are a business. there your bit range there of yes, little our is numbers correct. parts other But basically a range

George J. Godfrey

an it, revenue it were one if or what the Okay. said programs didn't programs a give you is or forgive some products the detail, out? reasons I Can this, funding-related, pushed $XX And the pushed related? then, example platforms got out? product the Is performance those million little recall why of push-out, exact I me of why in perhaps just you was got on

Peter J. Gundermann

during which that would qualification we a that would. couldn't schedule-wise term, foreign progress, sale, it was a was with more like quarter been One fleet, did which a program that complicated. which in expected did not that's it was airplane, come the involved logistically, we had which into a sale, directly lot underway we right we a airplane ran little a program, which a an not guess was effort cost-plus but to complications we military that program again have little foreign were a in with billing but FMS another which got We progress, get FMS nothing bit thought had another makes always crosswise maybe a revenue I of get We in recognition, a rectified. customer the

range of a of kind it's So, issues that. like

George J. Godfrey

Understood.

Okay, thank you taking questions. for my

Operator

Our from of Dougherty Please your proceed Ryan from Company. comes next with & question the question. Dick line

Richard Ryan

how side, on military side? commercial between guidance XXXX, and Test breakout that rough Pete, see the do the the you the for

Peter J. Gundermann

and semi A&D? mean You

Richard Ryan

Yes.

Peter J. Gundermann

of Dave have it? a to front I that in and if question know don't come I'll I me. ask How about back if you

Richard Ryan

can concentration, what you customer sense Dave, for was a in quarter? that us Sure. the give

David C. Burney

into to I'll the second. it me. that were it room knew and I get bring with you going didn't a I me in ask

Richard Ryan

one? I Debbie ask Shall

Peter J. Gundermann

Debbie. works that for you. how See ask Yes,

David C. Burney

quarterly quarterly sales, One both one customer Aerospace. another our XX% our is and sales XX% of is of

Peter J. Gundermann

I'd question, Test side. we And coming two-thirds revenues our first of back in your XXXX expect the say Dick, to roughly to on semi be

Richard Ryan

Okay.

you mentioned programs. earlier think maybe I multiple

is customer the Now or anchor that other is that moving with customers? into

Peter J. Gundermann

anchor We continuing with the relationship certainly have a customer.

opportunity would with our And our I'd I of outperform be opportunities pretty have also the to multiple others. programs year. end real hope, guess have customers We say to multiple compelling with the by

got think I we chance of good a doing that.

Richard Ryan

Panasonic well, Okay. the jet what as with customer of jet. antenna business power side side, sides Panasonic and is you business seeing This them in from for but issues, those into How are cover antenna got on on the the business might also the power the your the in jet? and demand both you relationship on the

Peter J. Gundermann

has to customer and continues IFE side. in been important for Panasonic be certainly an us, the

expectation for that had and think expect the But them And think expect But some difficult forward. out and challenging. our for same was the part are are last company sorting things they they as expect rise evolutionary to little we, the I is we'd in suffering we wide-body them, we would can't it's that a do. are kind speak the past. sailing but issues in of world. like in year their of that the with bit, what they to range slowdown itself to compared occasion, the they've I market in I smooth kind a the have going going see I of like on most

little slow market with a and business, broader but so are a would way. antenna jet get some do done resources are it's continues We to a It on lot business than to tail-mounted there resources strong and bit hoping But we sometimes to believe to be to flying we we on pretty struggle. in of hope. We slog the it they have that longer continue airplanes a been a demand. On putting and work them bring putting are that far. it just things you is takes

Richard Ryan

itself the competitive of guy kind the world, certification entering struggle? or any Gogo's just maybe is it antenna or and issues Where the smart issues? from Are jet a there business coming is platform with

Peter J. Gundermann

trying say is are that this would certainly things up I would company kind it guess part much to lining are of and just as more market. this it's million with on resources lot to kind things focused characterize of it's and a we $XXX the one company point, going between go I to not get with lots they yet. of got there probably of a this competitors on together hasn't are competitive I trying at got are even to keep to going working they two bigger after where on, of and keep and but we're a on it, us

a into way. lined they and is the the a have experience, pretty introduce So, do proven want satisfied it's and issue And matter community and product having feel go specific any I everything absolutely out you can't same tell it and It's everything just don't of we something because perfectly. we getting not real approved where with to tight-knit customers there on up it. users a of

Richard Ryan

Sure.

with you updates share one jet, business last the one EPDS, for us? Sorry, can there any

Peter J. Gundermann

start we that Not our that been as programs more thinking some particularly working of and of to we become are developing than results. other the contributor XXXX more into get to and financial a we've will on, and that prominent

We investment made environment. end jet technology electronic have have in We the established We lot ourselves think technology. of people breaker as smaller circuit business it's I great for the a of that. the think largely in go-to

look proven jets, And a at developed turboprops gets full kind have not and without we helicopters the and us pretty range in of platform of is it. having that a the aircraft technology there good line. So,

valuable So, over to a time franchise. think going be I pretty it's

Richard Ryan

planes many just side? the how refresh me on you and the Can Sure. programs there helicopter different are

Peter J. Gundermann

three point. helicopters this have We at

their have We jets at substantial four early and I'd three of this point, say of or at end all lifecycle. two which turboprops the of kind probably

Richard Ryan

Okay, thank you.

Operator

question next the question. Our comes your of Please Herbert from proceed Canaccord. from Ken line with

Ken Herbert

of maybe growth as business, there? talk that the assume in restructuring and for have a couple just organic how the that quick get the Armstrong can made assumption some XXXX changes you outlook you Just about now here just you of real what part guidance and on business first, might there reflected for of of maybe growth as follow-ups;

Peter J. Gundermann

Sure.

going conservative essentially Armstrong we we and that but have to are combined remind as Telefonix operating PDT it taking this refer I a and forward. under umbrella look, CSC think pretty going to point and the take that to me from are everybody let opportunity we

I we on comes am taken forward, Armstrong the of is conservative pretty combination had there what that from expectation think encouraged broader I have its Armstrong clearly that but own. perhaps going market a that prospective growth than lower a reach is

that will optimistic. you early So, I'm relationships but those opportunities. market that a translate into into and that I additional I'm it, pretty It's of customer reach couple hoping tell would months

as So, be good more think story the but to a going talk evolves, write-off of it's intangibles. story we'll that I despite

that how know You works.

Ken Herbert

Yes.

Okay, quarter? in the thanks. And Dave, was what from cash operations

David C. Burney

it It have for on for $XX it the were We for $XX minute. to million year. can was the give the a year, don't mute about quarter. I year. for for you the I there million

Ken Herbert

you That's very Thank all I've much. got. great. Okay,

Operator

Associates. of from question. King & proceed George Godfrey with your C.L. question Please next comes Our line from the

George J. Godfrey

It's answered. you. Thank been already

Operator

of Please next White comes the line with Mike from Wallace Pine proceed Capital. from your question. Our question

Mike Wallace

think through XXXX? we It op should How sure margins as bottomed op we EBITDA looks QX. about move and like progression margin margins, op adjusted margin, here in

Peter J. Gundermann

one, You Mr. want to Dave? take that

David C. Burney

is operating growth it particular. margins sales will as our the business Yes, does, the growth organic and typically sales our in responds improve, that and to expectation well very increased

operating I us teens. the in income through up XXXX and where should recover were more start So, various think you volume that get the to businesses, as we into see definitely we push from see

Mike Wallace

the be of year? the there it end Could by

David C. Burney

so. Yes, I'd say

levels. operating in and grow and that planning people feel I income us of said, for think heads single-digit we business a or fair to reasons the Pete business this we the of at largely operate And added businesses have with. now we line, into the just the none a should business have we start are grow backlog good acquired to getting amount that are that of And and off with we're top have the the have. year we a fair going amortization pretty for that to to amount

going are to historically ago We were particular years extremely enjoyed bit I I get when when different high and right have margins a company been. in little think to where you recover – look we than at up think we four are of margins, and to we So, closer now. a where EBITDA three too those operating

as businesses We we'll what need and digesting them and have that acquired into improvement those see some be, businesses are that themselves those think and grow and to we expect I we margin to happens.

Mike Wallace

EBITDA through? margins, of they to depreciation margins because pull going will faster you're grow additional than that expense op the

David C. Burney

Yes.

Mike Wallace

would sort teens? up so, margins of EBITDA And be sort the low of margins op mid-teens and

David C. Burney

can we there, EBITDA margins, I get think the yes.

Mike Wallace

year-end XXXX? By

David C. Burney

the end You grow expecting, we we the I think that range can levels into the know, there. sales to if of get there, can that as get mid number we are particularly we

Mike Wallace

think that of you And how the engineers XXX Aerospace, about length cycle perhaps should we versus terms on of cycle? previous in in this this brought the or and cycle so

Peter J. Gundermann

that IFE debate that, in in more than That's the know. we kind of are by core we the are industry universe own world, I the connectivity the of the is connected think would the you world, growth world, in in not general. run say a as but cycles that in, I maybe big not we airplane industry that our markets the it's as a touched area

even up other go see about cycle differently for perspective to high a if working guess down things us see the really don't and here. is to we see be evidence – don't on backlogs cycle slow it, just I the what ground two and than of turning, the we've supplier's expected got evidence really, that we feel to not that, we will were So, as who are that's up, But people and rates there. production continue and but

Mike Wallace

have versus secular any how you much just your you of a Do component that component sense backlog that discussed? is cyclical a numbers, of in

Peter J. Gundermann

a I activity well there, transport, do aftermarket but I certainly where pursuits lot we the there and and that's have goes. things change, commercial opportunities I'd looking lot even guess of our pretty diversified. can We're but into and are some heavily to math we a think certainly of have

military the a a Strike side, I Joint And Worth to we production great jet talking some was are going very Fighter We recently I that earlier, business Fort mind. top have think I is around there the also be just building durable line. was of very on in and like franchise programs. the element comes and to established.

and a about within yet line can with aftermarket the think be diversified are with we healthy I balance. So, we as as OEM industry,

company industry but all like in to I phooey the So, talk a as to say way I'm right not positioned are we now. cycle, a about going the

Operator

Dougherty question with your next Company. Please from proceed is from question. Our Dick Ryan &

Richard Ryan

the comp what seeing do have Thanks then what for you the trends kind commercial quarter? connectivity you any airlines? maybe the the follow-up. Dave, the are stock-based is from broad on transport, of brochure And comments in in

Peter J. Gundermann

they of trying of Yes, are and and to kind decide for investments about where it, 'between' we observation much was talked lot there. of would XXXX to I think back that in have our I the we moment, made industry a go call I a sitting guess where from

has there power. forward. guess that as in we are you been product power feel evidence being the major which no we matter moving that are are take, airlines And arena and think and I need see direction I decisions historically our made primary some you

are actually of of in company areas why and we goes and for that one the the think not we why part desires are and we area a And reason to areas. we news But that into products reason of the unprecedented are our we because sets in building they variety got up. we Telefonix the contribute frontline, of can the that yet a and the of think that's are So, antenna makes the got many things the of customer's backlog not that's optimistic wide good the airline. complementary are of part that connectivity name-brand for is that XXXX, we variety an us is into we really a systems in

supporting are We guys. those

hopes good forward. we we for high and that and one space us going an been continue to have it's interesting So, one it's to think that's

happy evolving. how we think are things I with So, are

Richard Ryan

great. Okay,

David C. Burney

quarter So $XXX,XXX. for Dick, the was comp about the stock

Richard Ryan

guys. great. Thank you, Okay,

Operator

reached have question-and-answer and we back gentlemen, remarks. I over end Ladies the Peter closing for session and Gundermann to would like turn the the of to call

Peter J. Gundermann

No of the before, if Thanks good closing in to look the everybody first Bye. talking you, a and not for we quarter. at to remarks. Have tuning end evening. forward

Operator

today's That concludes teleconference.

your disconnect for time. may You lines you at Thank participation. your this