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ATRO Astronics

Participants
Deborah Pawlowski IR
Peter Gundermann President & CEO
David Burney CFO
Jon Tanwanteng CJS Securities
Josh Sullivan Seaport Global
Ken Herbert Canaccord Genuity
Michael Ciarmoli SunTrust
Dick Ryan Dougherty & Company
Scott Lewis Lewis Capital Management
Call transcript
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Operator

Greetings and welcome to the Astronics Corporation First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deb Pawlowski, Investor Relations. you. Thank

begin. may You

Deborah Pawlowski

good your We interest and time appreciate today and in morning, Christine, certainly everyone. your Thanks, Astronics.

Officer. Burney, Joining Peter me Chief Dave Gundermann, are Financial our our President on and CEO; the call and

financial You should have find if were copy of them And on earlier morning. you at results, www.astronics.com. quarter this the released not, which first a XXXX can our website,

as what make during you're to some first well with Q&A Commission. These that results Let with and likely the discussion could aware, provided our that as today. we stated events formal Exchange me in here other and other as Securities statements sec.gov. release well and be factors statements can forward-looking risks These actual website from These well may as documents the during session. as or are future apply differ earnings the mention that factors cause to filed as and is on found uncertainties materially documents to uncertainties, subject risks are and other

we we During measures; non-GAAP financial useful these our will discuss be some call, will in also evaluating today's believe performance.

not consider isolation the accordance of for this the additional or in information with results in prepared presentation substitute GAAP. should You

of comparable today's the tables release. We non-GAAP that measures have GAAP provided accompany reconciliations to measures in

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

Peter Gundermann

everybody. tuning following our into morning, for call. to Thanks good agenda. the and talk going Debbie, through you, Thank We're

very quarter is the it And quarter, so financial first in some results, its that operations through both to talk with sheet consolidated semiconductor that; respects our of we'll strong gain quarter and couple was And a and our to big first to and strong, the weak margins then to in certain covenants story fresh our colored sale did of our then that. heels it financial our through some a back consequences going about basis long talk those then going through we're obviously of on - for most through First, going expectations. we're it and the that separation with segments. quarter short; status first really our the We're going through that is generally on a balance of Dave I'll of - is way strong way, statements was talk to our XXXX a start happy debt and we're test we're about of go in demand remainder areas, through and it and take our sale business year. talk the was on and improved. we semiconductor company, working the talk in the our sale of a spots

XX. to turned things closed that gain treatment is February We of is some over in Dave confuse a respect earn the announced, quarters. sale, I'll $XX and nature that in going to the that $XXX that million then the look the Corporation at and was as progressive presentation in people of a million. to million at be to out million tax $XX about here if I'm set closer profitable net this you a through $XX gain will non-GAAP our $XXX try previously the But on end the semiconductor with of it it's on transaction we but quarter, that million Adventest So the sold those begin little done, feel value early there for other are a to opportunities cash reason disparity business million and sale the here but $XX.X notice, on The the $XX to minute; second million. between million to them will little frequently, four point. at is of that sale, when a you'll all we a net first table, for $XX.X gain into is unconfuse for pretty let first mention bit and value that about closing,

the test where from the out the the on given $XX better We the that helpful quarter that million. and business, circumstances release we're kind press test release on our of much a current business, and appropriate what's Page that nature going in test of particular, a present - underneath. done do. back that on the we this results of at but year, an our we here release, and ever expect up don't X non-GAAP of ago third million quarter to to that's the non-GAAP semiconductor test for forever, don't again are quarters, presentations we - semiconductor before; understanding the last change year so will business our business second until think next the trues both to in presentation our thing with sale of importance table, we're we of will the the expect I the going feel adopting we've think of So Because the semiconductor three in that and in sale do $XX.X to the given period comparator obviously, circumstance of

we it's $XXX.X comparator was dramatically sale; year of we $X.X million product period like line sales; were test ever. from adjusted basis; up or our aerospace minute. recognized on including XX% is net was X.X% Net overview a done when semi-sale. up from sales, at sales at net on backing so. to revenue GAAP period over or adjusted costs third came $XXX gain that income December quarter; million, Test acquisition, comparator had the from acquisition-related X.X% a that in $X.X income acquisition income, talk pretty that's there million, we'll gain so a or a number were our that's test semiconductor strong our highest around side. but million consolidated quarter still quarter the of of had by XX% and was and Adjusted was on a million Telefonix's $XX.X some first the million, prior in XXXX, So, an all light strong organic relatively was consolidated in total our had last year out a period high were the were reasonable legal which there on things net year. especially of volume, about results going as the the our comparator now in pretty there our The there ago $XX.X driven haven't business, of of ago in expense it, strongly which

company. quarter solid First quarter XXXX was the not a for

share at strong, about quarter adjusted $X.XX, test bit was were bookings Aerospace backlog the equal lighter. diluted out adjusted first at Consolidated the strong effect million. diluted a $X.XX. was to earnings share end of our $XXX were first that per relatively for Test per bookings That's adjusting total Consolidated $XXX GAAP semiconductor quarter $XXX were little drove also of earnings shipments. the was the million. bookings the at Our sale, the million.

Going into start the segments, we'll with Aerospace.

the record year XX% of over our now, XX.X% As up Aerospace that I right $XXX.X good had a given quarter quarter. said, really comparator segment the our our million, structured Revenues the company profit couple or is Operating fifth Aerospace sequentially was years. profit that's up period a XX.X%, referring way volume, a what ago $XX.X first a X.X% in highest year. we've million And operating our of and last strong the operating on of after over the in that's that's over year. last fourth losses the of been row, from quarter to, total,

and we two for those what or combined first our business, operating excess XX%. So, troubled for have for of margin call ending it's hurting quarter $XXX number. million, not our three just operating business, highest for put two two in a record backlog the a actually even high our Aerospace to $XX.X loss breakeven, which purposes, businesses, shy and just of to us, our been down get stragglers would that, comparison ever. on we Aerospace that's now million, three If were book-to-bill, down million and is $XXX for of was our Aerospace Bookings positive revenue the in

of that that a quarter, is to the going, quarter We understand Now, $X and we help then while million half pretty million for the I or And bit first a loss in the be the we to help expecting immediate three in again in the here had it operating are million a less quarter, or down in think. of than expect $X.X about line less improvement drop and talk half think third loss there we long sight and have to bit little we're to the so. context $XX.X second you substantial stragglers we quarters, including it current put situation and the of want quarter. where we little short these in the

from to somewhere in how we million the $XX.X get loss operating in neighborhood of quarter. the is question $X.X the the third the So do that of first in we quarter observed

so a we've an we on expect the we situation dollars, not a In disappointing, million of for to but that reserve or had material $X.X of either. of point, development Increase had in first program estimate understand quarter. we again going year a don't that that inventory out million, which the this an And estimate detailed press at about cost that this to repeat complete was expected now. couple release, had in the We I is to reserve repeat.

predicted So write gets and $X businesses that's range $XX.X us down loss material million to for down in is on of million, what the $X.X these we the between total quarter which which complete, to a operating estimates would the of be. first the million,

last said we think I we time $X.X million talked.

net in the was driving to stages than September. and and to that's down. the terms largely the estimate estimate increase a customer various The in bit going to July, is right be little coming material it in due August complete of this to higher the So delivery that complete program of

expect, as trailing that unless indications edge something to - here we into one end, up substantially where program have the like we far development are wrong better at feel visibility month one positive. of we're into we might pretty as So the things quarter closer and get and second you the to quarter the end going we are are goes thus

feel we're complete. but to have can we're not at good. reasonably confident another estimate going to that we Things So this point, pretty happen,

troubled had our businesses, first the was major in on it a that two That AeroSat revenue one The mentioning year. final but remainder the AeroSat of days more have CCC thing in for the revenue two that million an specifically line We we the that those quarter. business worth fixed both the was of restructuring, of is business will of of expectations these save opening or increases, second quarter, quarter in third not - in that in we the a bring $X.X the basis. neighborhood fourth will that's quarter businesses, restructuring pretty that annual worth much with in developing the and and anticipating are cost expect remaining and also at

For pretty much that they development happen working CCC, increases. wrapped be revenue have on drive backlog the needs to this but to to those that at they've in up, program been business

So within fourth the time are need place, budget. those program orders increases we're At and AeroSat, yet so not is third in orders. and on we there get in risk to getting revenue the developed quarters. Those expecting the also

through is up up of for XXXX pretty if of We operating year-end businesses cleaned those the in a the an a at that, We've our Switching and line material restructuring risk. two chipped segment, year, reserve it's quarter, our the business predictions our over towards the or test up in in is risk, results; be put more loss breakeven. prospects, I the timing risk on away quarter we test less and there, the the and And those in to major where about one in drop the whether both end expense. expectations we've pretty so a from or development which businesses little think the to made, revenue have that's with million it's having is the major question locations optimistic risk $X bit second then should to they a so adjustment. our so the those and our of development We're third our way order that's less two going $X.X picks solid, million issue.

of about semi As the Last with came between This expect, the our year, year, revenue business. you fundamentally sale million. of in forecast $XX reshaped revenues million. the is million forecast - we might and test $XX business $XXX our

is which $XX.X see sales annual first can adjusted with You forecast. our that million, that segment in were quarter line about

this first the will savings month with we're that was line will margin volume cost was in we operating on earlier adjusted quarter. the gone revenues to Aerospace adjusted have our business. a confirms X.X% that have be business just our we've revenues substantial be quarter after expectations and of That needed and in structure or bring anticipated the in the is structure first of line think backing the X.X% in describing equal about revenue X% think restructuring sale in exercise Our business test we also so semiconductor we semiconductor to our out through similarly, I the in restructuring that and another of on $X million exercise heels closing to going to and the side, overhead coincidentally cost sales which the in pretty as lower where

on this tests, a advice business best for in we're sheet to issues. will parts and point turn bit how our related - regularly at really is through breakeven north moving the to and to it little eye the obviously as close over for to keeping anticipate a makers balance think talk somewhere model Dave While we'll or see I up. and this things we I'll point, report At it, shaping

David Burney

there, the the the he we so Thanks, the first but between the that XX%, the of and record roughly part expense of of sold. gain will the biggest not But of we is, the is rate, a adjustment, activity business that annualized - when is touched component, not quarter, pull but including will net activity non-GAAP - component remove that the to sale mentioned semi semi XX%. our consolidated taxes talking remove I the only to about the than the not the difference talk there it There of activity I $XX what it. business, the rate we're to million which are case and on straggling the non-GAAP for have going the gain talked activity, about - guess to component tax the potentially business which income actually semi rate the some higher gain this at effective the a on about technical, be to when tax Pete. is, there when our blended we too of clarification, on of accrued effect it's our standalone on the transaction, in gain particular Pete $XX basis plus its there. about semiconductor, operating we gain through of at expected $XX it, rate, $XX million don't am activity look of tax through guy, the but the the in net happened, out get sale the adjustment net net million million our But a biggest or that particular has there. year, from tax on the quarter reconciliation He

the end a we solid sheet, but solid flow year, there, about our balance operations. cash the from $XX generation, year, it everything will even in of was by million getting generated out and quarter So to cash

Our outstanding XXXX. at to the end down quarter of the end the was at from of debt million $XXX $XXX down million,

from the so And proceeds the semi-sale leverage. to used reduce we

our and is points current basis a million second $XXX credit LIBOR the at plus low XXX available borrowing about from revolving facility have quarter. our We rate through

a favorable borrowing that's rate. So very

many of strong flow We gives options conservatively, deployment. expect capital in are levered and to which of free have another year terms currently fairly cash us

But of the shares. repurchase our that an $XX we organic at present I growth last it's Our investment available It's acquisitions And we authorization have they this point. right do guess worth item. that deployment focus of and opportunity, sheet if would terms decisions. capital on in expect the is million measure against of I a balance other not growing fully business. to and to alternatives all, And continue

Let capital working we've improvements management. me made you that mention our significant in to

amount - of be to to related over that and expect quarters three complete a second quarters. turns has capital last that in net as significant we and current net capital. programs receivables, of to improved and in I continue inventory our --have our the working significantly sales a unbilled Our included the military strong working of as our is handful expect to largely a third deliver percent

So I expect we that half through through the year. of unbilled receivable move to the drop the as - second

XX% segment. the Aerospace of represented the two Pete. both we quarter, customers Lastly, was for sales; other One that's sales. our have XX% XX% And of all, in

Peter Gundermann

expect XXXX, $XXX are that million looking an bit last we test, in $XX adjusted unchanged, of the So be X% we $XXX the about to an actually has of guidance Aerospace, revenue million, the the to midpoint at up to and leaving growth consolidated over intact growth and adjusted our million $XXX That's on year. $XXX revenue at midpoint. $XX million, forward, million but rest X% to million on growth range basis basis. a quite XX%

terms flow the little are year, the second sequence we're We're expecting expecting the the quarter timing In revenues up. and a of $XXX it's range; lighter. just be lining million bit to for of the things in way somewhere actually the

And restructuring some so earlier somewhere saw described have pretty should in will we that their the of in including that this over will improve a that in this the will a charges even what the our two also on first initiatives less, $X charges, businesses call, approximately the losses million restructuring million again, in - hit I or to neighborhood operating be bit the quarter. little improvement big struggling we're based second of quarter. expecting $X We

let's up now. that our I prepared it open for think, questions ends think I Christine, remarks.

Operator

you. Thank

question-and-answer Thank [Operator Instructions] session. you. will We a be now conducting

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

Jon Tanwanteng

thanks quarter now. Nice a taking my half, if questions. you AeroSat? for you What's at but talk them, I some think risk and orders the order for gentlemen. Can from currently little the a distribution your the over partners for real-time the by about taking have I back progress been feedback? you're morning, month should correctly, Good seeing mentioned update what's recall

Peter Gundermann

the to is to couple need for the enthusiastic customers materialize, it. and work Type There that's way things ones feedback is pretty the half want well seems be say, the critical work Certificate we airplanes, pretty system half STC, orders to envision seem Supplemental A to the but and right ultimately one things don't. I'd models happen to about approximately are, to the of of of Well, and that and them are now. on where we put be of STCs, system targeting, airplane have that

So are shape but and we'll and those need from to closely in of of to happen where a right, the going we going intern, buying getting what us. our we're to do year really accumulating know then STCs we kind that second things the partners the is and orders is attention up, - see the STCs think need lot end is I watching quarter, by of and year where those you're to see

Jon Tanwanteng

the [ph]? seeing it STCs on is uptake And totally the fatal you at are all that good do have models now, or

Peter Gundermann

XX We've good of systems to a there, Reasonably or little it's we to and so, installed. put or be tell. sold about out kind or early installed have -

the be it's running in we've crawling fourth orders run what the the so that We'd than we're little different quarter. and And somewhere like these but a third are seen to walk, materially where it's so one between and And crawl, bit far. those of things are the walking.

Jon Tanwanteng

you would I business comments the aerospace businesses that you bit. QX the of terms strengthen, made core about and in as QX you a just then any see said step little well? strengthening Do know problem these And

Peter Gundermann

to pretty be on mean, watch bookings Well, we hope been our strong positive have we shipments. to bookings strong. and would continue pretty closely I even

the So, our overall, situation positioned. that tariffs, all there we are that happening I are that, bit XXX in some mean, like are trade - are of. But industry things that things the concerning. the a sense little mindful all that is we're well

to services that half have enthusiastic Our goods of continue a good And the the we're about we are really and offering. to customers second expect year.

Jon Tanwanteng

the having I you to XXX. you production then of could expect outlook? you your impact to mentioned be business it your going And resuming the kind now, in ask, significant that's of was do out if future? full And on in break currently have when what it you

Peter Gundermann

say to a somewhere we XXXX. the going others pretty million about that hit point, pretend can know mean I neighborhood the to be it's status this we're thinking to best so $X million we been in the don't, don't has much our $X we tell to don't far would as impact in of program revenue, know, Well, at but of modest, I

growth the Fortunately revise from not sales feel down seeing we're we in our necessary that the offsetting us, enough - rest areas to for forecast of other it's year. did for

forecast that's but the we part in to to short orders release be get a and that of at why orders as those held the thinking plan seems out and the it is environment business XXX and we in XXXs order too was, relatively where far. go we our particular, the have So, release it don't that fluid pretty with a lines

in a generally been the of for pass there little what's it's we've kind press what out July build seen of timeframe, terms consistent rates. is in that to predict with So but us hard

Operator

Our Seaport question. with Sullivan Please with next question Global. of comes from Josh your proceed the line

Josh Sullivan

here. Good morning. Nice quarter,

XXX Just that follow-up furnished difference if you by but any just the if supplier go between that, any on your far, two does related at dichotomy that that maybe XXX just you there's curious and between equipment if buyer to the versus see answer point? question, this to timeline out equipment curious saying furnished

Peter Gundermann

is BFE it's retrofit not to sure Sure. I or usually that I line-fit, aftermarket. question; our how I'm not usually know answer guess

through us, those really, line on from and so exterior would a has so and agreements say the most seen do we PSUs primarily overhead lights - service for companies the reading that companies units and residence. not and we us been or those slowdown effect or hang that cabin. like the not with oxygen so related or and in work we've just - some passenger people generally fit significantly leasing operators and lighting airline would and system do cockpit that's things on are things far effect. audio So the an I Those that's that are avionics - XX The and

seen I the on an definitely feel we've short fit. we've line impact term, aftermarket don't In an So like seen yet. affect

David Burney

In and for we're a deliveries drops impact to as it to of that, our timing quarter throughout get to get part in we on second weakest of the the build why recover XXX on we're projecting terms reason year to quarter. our second second expect the you by quarter the end of biggest and of the is the cadences then to the of be year, going rate the - the normal That's year. the to back expected - The be be quarter. end a

Josh Sullivan

so million, And broke should regard is $XX is that? $XX as down the total $X.X it you read we year, for stragglers, expectation be then million, break still just by the to $X the million, QX, that way with to so the three million, even

Peter Gundermann

of an ugly say than we're plan this I will I is to guess bit that significantly on by. because point. obviously I a it We that's just think but that there little that, this timing, I bit, based road. quarters the should better a I - good as think a hedging little has go at been update do opportunity should

balance it I we it expectation, our there's for I programs So our to third reasonable that's to also for development fourth the quarter, than could on - setbacks in better, desired room suppose expectation. now, up expecting off we're take is go but a room we that's have there mean in to go a have of for slower and could that take plan, on hit but the now, some worse, for

Josh Sullivan

doing you executing are Then acquisition allocation point? are guess, this last point? this on between front; versus on one what target seeing now, and M&A one hurdle rate on the the what's at at that thoughts then remain repurchase multiples what verticals capital What attractive more I authorization just

David Burney

of cash Yes, at if expect when an discounted have approach potential, don't we we come earnings, typically, the speculative with cases. use XX% we to cookie-cutter at rate of probably different you point, our different, but so acquisition, would look in terms rate bit XX% the will, - we little to some rate our, hurdle least the more we at low approaching They on acquisitions. qualities I'd flow, look say, for a using a it would that at when hurdle might one earnings a in

how side that's So acquisition we of approach it. the

Josh Sullivan

you. thank Okay,

David Burney

at out their program that was future. academic it the XXBX big execute articles cite predict in we and at when we lot we, large we us. lower place end peaks. - what program in management's a share significantly So but would own price for buybacks that similar did repurchase a you up buy our at of did the ended a that than with had there shares last of being very lower at to lower looking were prices use share would approach that, inability notoriously through XXBX companies but and we different to I price average that prices purchased prices know, a out to what business a was share we stock don't remember more buyback, a there put Historically we where successful the at year share probably there and where purchase later. the we there, There risks since a more are tend know couple about very our is of

Josh Sullivan

you. thank Okay,

Operator

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

Ken Herbert

'XX into it's motion had bigger should contribution. maybe even quarter Airlines in and the through really the revenue Is that? I electrical we power here about pick of the - low and a the product million you, ask 'XX of just think reset nice a sustainable rate terms on or or as some there U.S. how is upside and that's speed into that up to first within you're of the the, run sort programs with Pete, clearly in into you $XX wanted line aerospace and

Peter Gundermann

Well, business XX% quarter believe flexing well, it's strengthened out, year. pretty ago. it's over in first performing as ago, think A I is we - really the up up it you a pointed it was course year solid the the of and and a year over

a So one. been nice it's

strong there we increasingly an We continues has a wide-bodies. position and very continue to long for to in-demand it it offering, and be bodies, just a kind narrow of been have product think time like market

distribution know product our critical into that not like aircrafts, you working a continues in we it first of grouping - flight years investing tell have to expand on heavily as is also. I'm probably private our bigger will that I So, primarily for power lesser and five one it's over smaller hope that it's role built taking sure something product which that, last you Ken, on lines, pretty the and been

is our overall to going next material should year terms the So of product statement, power this expectation electrical on start in only our be that income is having specifically, of good a that and a but impact more and contributor. line not our end year consolidated motion product reporting

Ken Herbert

you of imagine run last up going Because the a are comps get maintain year, in line, year represents but business. million you're on to to the product that have go to you will ramp sort did tougher this only so very million if a nice that the slow reported as that growth nice able step so $XX rate, through $XX that

encouraging. that's So

Peter Gundermann

I Yes, agree.

Ken Herbert

XXXX suppliers lot you I but you mean, business really sounds of this sort any lumpy very systems are military had from seeing and any they are XXXX money side a I point you'd as like quarter the know drove there that Are was On of of of can are be are seeing see the to through. in catch-up nice fiscal that finally other on market it flow there, a you particular military and test some there authorized you, program that nice the well side? starting test or quarter to the that the

Peter Gundermann

there, bit and see we and and expecting side adjusted why were test, with better we the of reason I so the of we're of if neighborhood that year-over-year. that business agree would A&D XX% quarters the in that first growth of in and that's think you semiconductor the third we on flow are selling programs comfortable of in a expecting Well, I are starting reflection we a even growth had like money test little the range did bookings we're is that quarter to shipments fourth the it's a the part or the our

stay expecting of whale go have necessarily be and you're, years bit things driving three that we a be hunt or little So higher a for from it's our those right, awards, game or think pretty test pursuing and optimistic a there this won't them there be programs and if two to in whales a - in that there point, it's few but that prefer to at naming we're for out it's there are yes, case prospects two XXXX the but often XXXX target changers some - that guess, company size the like and away I you're resolved, the there could a nice could three trajectory. I'd business, be next could much

I of a transition earlier, the the for immediately turn front easy. of size big we business. it's got quarter then as to we right organization hasn't it, sold on We are So in and off said prospects been execute those for our and it that a and had chunk prospects. It to test

business, not is no would worthwhile means front by of our and test a it's think in some has one of it. a - there it's So, scenario, it's very targets doom but front gloom lot in

Ken Herbert

that's in really the of ramp way on your maybe line you the think targets struggling of in on the terms businesses, on with cost reflective especially to have really you've of improvements get side AeroSat it? And they're the but sort you outlined the this top you is done that of down in are not the cost million, the but it to case of and to the can if restructuring revenue and on the not the with right I the cost improvement in some about the side way on assuming second that half from the in really the volume, the visibility right that could is just year, side, AeroSat substantial primarily think CSC about reflective finally $X.X help the, stragglers

Peter Gundermann

said will quarter that the million than it's did - result we ramp, per think do two-step approach; is what similar over quarter did have of challenge mean, don't not of than it year be the is we CSC, --a And get I have likely that, a that in it's but don't a a the so ramp if of closer cost the costs, middle you $X.X a front did are where we we quarter that both. will kind are particular. kind line in development I revenue with two outcomes our through revenue program the being fourth of clear the CCC, we driven cost reasonable to or terms revenues to loss, get the and And then cutting assumption the program that, manage of cost related I'm much sight that the world reasonable winds something with mean, been and that last and It's me, road to that the anticipation the up the in more guessing, have of situation at third just we there by - revenue. I I in a CCC, result we pick really part down the we that in in of of the for quarter. - in cost those it's and if third development - range

Ken Herbert

those significantly it year. businesses Now, looks derisked this you've like

really nice Well, So, for time. there. great Thanks work the quarter.

Operator

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

Michael Ciarmoli

questions, that I taking nice the Thanks numbers. note a to morning, and how earlier apologize, went Good for quarter out I wrong guys. know today with the consensus have

apologize on that. that's So I me. for

Peter Gundermann

We didn't Mike. notice,

Michael Ciarmoli

did. else think everybody I

Just Ken's sort given cost $XX the you this to of see just revenues and go be, had year, on took to revised questioning, million, million Where Armstrong the CCC, I guess some I know you looking you AeroSat, now $XX do from out. been could expectations?

Peter Gundermann

most. That's three legs when about business little built In bit. XXXX expectations for in talk, a - about particular, our really good we're talk were we really to question the But and it's on we a talk program AeroSat tail there hedging our stool. we a that, jet mount down

XXXX One out of XXXX. of into those moved legs

but question, it's So I'm going not to probably say exactly million I'm for going into or consolidated, $XX to million prepared so. turn $XX your

Michael Ciarmoli

Okay.

Peter Gundermann

For those three.

David Burney

Let think we're, me add an - let me important I that be little it's It's big I more range. but in a it's prepared down next still improvement. bit, think quarter,

Michael Ciarmoli

keeping the then, areas other the to in guidance same. strength Got point, you've business, of got But your the it.

Peter Gundermann

Yes.

Michael Ciarmoli

through And you know a more out was I fly just on I called us thinking? scenarios, been sort mean, of of what to obviously like don't, to little had plane then, supply pull what other may in maybe interior September. producing be chain what more any bit this is doing you sort of on XX going I you from kind of expect it any can but, visibility equipment got fuselages of I are the mean, this a color XXX. I walk we've at most I the wouldn't sensitivities wrong, presumably or kind seems the gets you mean know a beyond Boeing, range what I to maybe, content heard a Spirit and kind but XX up not impact, the have of is going you until thinking, [indiscernible]. there. or but of I rate month that but storing that of none is bodies, on year back you've that? but narrow

Peter Gundermann

lighter. second of I it of this. part term that's think said, XX PECO operation out quarter little a May And a job little that's not or our - because comes good the is hit has in stand and of XX and think to is later content the our is, of back that Boeing are between the intended in and suppliers like guess so has it very terms not June Oregon. Most up in - and a at near I the bit be Boeing get pull that that in communication big in can the up really cases inventory, I My done and an a slowdown I think Boeing our to Portland, little getting pretty in and its our year. we to trucks is production our our facility We're short going endeavors floor relief. volume going float We're Boeing very if supporting is official you we're we're Boeing Well, confident taking Dave helps. meet for why case. our in our offer PECO in dock their Seattle mean, on opportunity in and some operation, up, any not the up, using caught afternoon loading that I sense requirements treatment that and if to some is getting it's caught see highly the you up morning I various ability

Michael Ciarmoli

And out forward, sort to and get last you just businesses of once you're that improve of running us have a ex I losses. obviously, called the but is losses the is I up XX% to the was mean calibrate to normalized margin margin challenged levels? those you one strong, sustainable of for guys kind really think kind which you going operating going me; mean,

Peter Gundermann

territory niche think kind picture. starts especially to to they a with to been take play our technology a and it handsome haven't that's its I can pretty and in, for margin so really of some and like they those business breakeven. around breakeven that the be time long margins three we would numbers, the you a nice get get operate a think and napkin We of look rest well really XX% so, they sure they that assuming but and with stragglers the like markets assumes and comparable to kind actually in should above of

So that's get where to. where we - want that's to we

revenue lot at our obviously strong, going level. a up make on. that need to sure first quarter stays was there was The We

be up the quarter year Second got the to nice. the pretty bit two we've the still a on could will hit on point; us restructuring costs be stragglers face and and the of second winding shape but half starring - losses the those at losses this - operating little in of we're down the a

Michael Ciarmoli

Got guys. Thanks it, lot perfect. a

Operator

next [Operator question comes question. the Ryan your Dougherty. with line of proceed Instructions] from Please Our with Dick

Dick Ryan

Thank you.

business list off on or a going changes or there is Armstrong due So Pete, combo certification to better took of oversight of that you the the stragglers, both? are in some

Peter Gundermann

we share We better oversight. of middle can ago year December, the Telefonix some Chicago operations three organizationally in and last we know, think Certainly, - and the we - they a have acquired resources Greater year into better last so much area, led to now Armstrong early as I you minimize synergies, which Telefonix moved kind structure costs. and

point badly, kind them in just by though business weren't that the of at really off in us list they as part is very this it's itself that breakeven profitable So but not because took it's hurting we range.

the get we we that everybody's point, So to them - in of quarter about the get in million could of stop expect the higher it. expectations, here operating the there, kind rest the can really would also. and we're just happy talking that really But so, short we other performed well; side business obviously also. better on that was of But first loss swallow we'll at we the two $XX.X order

Dick Ryan

of - about like sort would talking range breaking do expenses is longer necessarily any there should we looks you're E&D to no or that XX% that out, kind reason consider remain you're them Dave, of of or it Is in Sure. revenue? they

David Burney

rate they so last breaking don't we million of on - so, because that little we've it the for them been over we annualized margin basis $XXX reason a changes. don't consistent is so. are the then explanation that It's an there four that's not the quarters bring run and or pretty to or I out running at out - Yes, any been the haven't

Dick Ryan

great. Okay,

David Burney

side. that's the clarify, me on Let aerospace

Dick Ryan

Thanks, Okay, Dave. great.

Operator

your Lewis question with next comes proceed with question. Please Scott Management. the Lewis of from line Our Capital

Scott Lewis

over? technology, of hurdles the to degree lot I Good development just morning, difficulties Thanks of have Are get of done just taking passed and it's get you to were XXs of on tackling there get high you CCC ready scale. on blocking a call. In quarter. guys, Pete, you good of kind some do a basic or still kind some words, other hurdles to kind have all over for the know program; things those? before

Peter Gundermann

be guess, there for I say me it that are but showstoppers are there hurdles, confident not it's no done front. no architectural reasonably would Well, yet, so more risky in we're to

kind nothing some And execution, deadlines XX So really that we're tackling, weeks is be holding delivery hoping of of more about to cases, some our the and - we're works. to earlier in again, within the breath, delivered. nervous of it blocking it X for system

got we've major better be not this big then a showstoppers there So point, problem. at

that So - will the we're you industry. brag reasonably opportunity be optimistic, since of I premier that be would Scott, the program we're working something in that something that the system think think we the we're up, program will it on and in developing, to is just take the due is kind bring course, about substantial the we and architecture

in state-of-the-art enable So and industry systems cases not used just - in the feasible. otherwise that really very will today the is it

to airplanes are for going by best. pretty who these it's but expensive cheap afford can generally So designed operators the be not

be industry So expect the forward. to the going we highly industry as sought-after-system considered highly a it's and in goes

Scott Lewis

point at some first for install Okay, - or to have system press you sale? a have great. available then, release And do when you them the expect

Peter Gundermann

It to has point, our been an has active discussion than and this shy. proven point, be at more customer

to love do been but it, So, we I if able haven't it, could. I'd to do

Scott Lewis

Thanks great. question. the Okay, for taking

Operator

Please proceed your Robax with Hillary Christopher of line question. with the from comes question next Our [ph] Capital.

Unidentified Analyst

good Hi, morning.

share your already demand you was aren't could progressing as watch that kind or that have you you've commentary Things quickly marketplace? as see the this out anything of up So other few might you'd are product a respect if comments curious in you going for, changes but in any on you'd to I that made things like. where

Peter Gundermann

side, and not supporter and hardware entertainment companies something and don't prefer a going the rather an wasn't them, and rather popular, software. I pressures was be business the many largely business I kept business, and proven that, around that in that world of that yet, ago that and provider, what them would oil business all a there I and [ph] sell short-term Well, the AXXX could out MAX our be the the available. for lag will our exercise air markets that's is They to as of there they development turns that ancillary two as too assembly. in and including AXXX, that with in-flight the world the contributor recent I going of the popular on our out a calls airplanes ourselves tremendously of the sell world we're spots the price I hardware long severe but frame platform, think mean, focus really those get business in-flight so believe XXXs large this to MAX, all feel have I business jets, mean, depressed to a VVIP very our profitable front-row jet have those be program an unrivaled to well The and all jets, the that a yet, the positioned tool pressures go Neo with be at I the be rest bandwidth primarily which available we market, wasn't and to that the plenty we're become VVIP and air those on would CCC, need out we're it between most never And very think RV and devoted the transoceanic between the similar there as To tail claim really a market positioned. be do obviously are kind kind bandwidth there have there solid and and and we've been is cases, through wasn't we favor I XXXs amount geopolitical were this through platform storage back industry, has have But we of of that models, frames turning life in things challenges, tensions to that airplane entertainment and wasn't like. to and available feeling turned it in the hardware out were are VVIP to in example, offering content XXX like we potential seat today. even oil such cycles the the product - and the appreciate around. as go there, going but and the of - to price

the a the but It's of not short they're file including order. in the wireless next for outfit think need to a only times. an you with own and scheduled world So short of when XX the are relatively life of years, obsolete think XX you with not points unchanged to airplanes think antenna or like going the relatively airplane system be to that's or stuff relatively access our braking hardware lot going the on the servers systems all and years, change major think opening you over the airplanes an fly up expectations of And consumer opportunity parts of the there's performance, of we China. to cycle increasing to electronics

situation. think focused, like spot we're well the positioned I pretty So, even of guess were I to a slow pretty a it's the where sweet we're if is down industry - customer - rich of around the one good XXX and I unrivaled performance think an and rewards we've product and one, set it's airlines got a world, offerings relationships that and it's good

Operator

Thank you.

closing We comments. have the now time. like I to back at management this no would over floor to for turn questions further

Peter Gundermann

closing day. talking good a We at forward your the end Have Thank the to look for you to you again attention. quarter. second comments. No of

Operator

teleconference. this today's gentlemen, conclude and Ladies does

participation, have time. may you You at and your wonderful lines day. a disconnect Thank this your for