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Astronics Upbeat Over Robust Orders

Increase in confidence leads to revised estimates for 2011

By Matt Glynn

May 6, 2011
 
Astronics Corp. set some records in 2010, but Peter J. Gundermann said he is even more upbeat about what he sees on the horizon.

“The way I look at this business, the best leading indicator of what we’re going to be doing in the future is what our order rates are,” Gundermann, Astronics’ president and chief executive officer, said at the company’s annual meeting Thursday. “If order rates are bigger than our sales numbers, we should be growing. And that’s what we expect to happen this year.”

The East Aurora-based maker of aircraft electronics and lighting systems last year reported a record $210 million in orders. It also reported record sales of nearly $196 million and profits of almost $15 million, its second-best total in history.

Astronics’ outlook has improved even more since the start of this year. It just revised its estimated 2011 revenue to a range of $210 million to $225 million, from the $205 million to $215 million range it forecast in February.

Part of that increased confidence is reflected in Astronics’ first-quarter results, announced Wednesday. The company reported a 53 percent increase in profits to $5.2 million and an 18 percent increase in sales to $55.1 million from a year ago.

“Probably the best news about the first quarter is, we don’t think it’s out of line with what we’re going to do in the second quarter and really for the rest of this year,” Gundermann said.

Astronics’ aerospace business looks strong, with industry predictions that commercial plane production rates will continue to rise over most of the next decade, he said. Most of the growth is projected in “wide-body” airplanes — such as Boeing 747 — rather than “narrow-body” planes.

“That’s of significance to us, because the products we sell to the commercial transport market are more prominent in the wide-body airplanes than in the narrow-body airplanes,” Gundermann said.

The proliferation of personal electronic devices that passengers carry on flights, including iPads and laptops, are good news for Astronics, since the company’s products enable passengers to use those devices while flying.

The business jet market also looks more promising than in recent years, and Astronics is positioned to get its products on airplanes now in development, Gundermann said.

Astronics is finally seeing some positive signs from its test systems business, which the company acquired in early 2009 but has struggled. In the first quarter, the segment turned a small operating profit.

Astronics forecasts its test systems segment will generate $20 million to $23 million in sales this year, up from $16.2 million in 2010.

“The key thing is to get orders,” Gundermann said. “We know whether we’ve got good leads out there, and we make estimates based on the proba-

bility of winning things. We believe we’ve got good opportunities. We think that business is turning around from a tough market.”

Astronics employs about 1,200 people at six facilities, including about 250 in East Aurora. Gundermann was asked if the company’s projected growth will lead to more hiring.

“Certainly if the market conditions continue to strengthen, we’re going to be to the point where we’re going to have to do that,” he said. “And obviously that’s a positive picture and something we’d like to do.”

The company’s work force has been productive, generating increased volume while the head count remained steady over the past few years, he said.

“Obviously, it’s valuable to us to continue that trend as long as we can,” Gundermann said. “But if demand continues to stay strong, and if the volume continues to be up, we will and are starting to hire in certain locations.”