Astronics Corporation expands aerospace revenue, eyes margin growth in 2025 amid legal costs

Astronics Corporation, an American aerospace electronics company, has delivered a solid performance in the fourth quarter of 2024, with sales rising 6.8% to $208.5 million, reflecting continued demand for its aerospace technologies. The company’s Aerospace segment sales climbed 12% to $188.5 million, offsetting weaker performance in its Test Systems segment, which saw a decline in defense-related revenues. Despite reporting a net loss of $2.8 million, Astronics achieved adjusted EBITDA of $31.5 million, demonstrating improved operational efficiencies and higher margins.

A key highlight of the quarter was the company’s ability to drive consistent revenue growth, marking its third consecutive year of double-digit expansion. The results reinforced Astronics’ position as a leading supplier of advanced aerospace technologies, with strong bookings indicating sustained demand. However, challenges stemming from legal disputes, restructuring costs, and supply chain constraints impacted overall profitability.

What Factors Drove Aerospace Segment Growth?

Astronics’ Aerospace division was the primary growth engine in the quarter, reporting a record $188.5 million in revenue, an increase of 11.7% compared to the previous year. The Commercial Transport market, the company’s largest revenue contributor, saw a 13.5% rise in sales, driven by higher demand for cabin power systems and in-flight entertainment and connectivity (IFEC) solutions. Airlines continued to invest in electrical power and motion products to enhance passenger experience and operational efficiency, reflecting broader industry trends.

The Military Aircraft sector recorded a 41.6% increase, reaching $24.5 million, supported by strong orders for lighting and safety technologies and ongoing developments in the Future Long Range Assault Aircraft (FLRAA) program. However, the General Aviation segment declined by 12.3%, indicating weaker demand for smaller aircraft systems.

Astronics’ growth trajectory was somewhat hindered by disruptions in Boeing‘s 737 production, which led to lower sales in commercial lighting and safety products. Despite these challenges, backlog levels remained high, with strong bookings reflecting continued confidence in the company’s aerospace technology offerings.

How Did Legal and Debt-Related Costs Impact Financial Results?

While Astronics posted strong revenue gains, profitability was negatively affected by legal costs and restructuring expenses. The company recorded a $4.8 million increase in legal reserves related to an ongoing patent infringement case in the UK, alongside $2.2 million in additional litigation costs. These expenses weighed on operating income, although adjusted operating income doubled to $23.8 million, supported by higher sales volumes and efficiency improvements.

Astronics also absorbed $1.4 million in restructuring-related severance costs in its Test Systems division, which continues to face soft demand for defense-related testing equipment. The segment’s revenue dropped 24.7% to $20 million, reflecting a slowdown in government contracts. To address this challenge, Astronics initiated cost-cutting measures, including facility consolidations and workforce adjustments, which are expected to generate $4 million to $5 million in annual savings starting in 2025.

The company further reported a $3.2 million loss on extinguishment of debt, primarily due to the refinancing of its term loan and issuance of convertible senior notes. While these actions strengthened liquidity, they also added near-term costs. However, Astronics ended the year with net debt of $156.6 million, down from $161.2 million in 2023, positioning itself for future growth investments.

What Does Astronics’ Record Backlog Indicate for 2025?

Astronics entered 2025 with a record backlog of $599.2 million, underscoring strong future demand for its aerospace and defense technologies. The company reported $195.9 million in Q4 bookings, bringing total 2024 bookings to $808.1 million, resulting in a book-to-bill ratio of 1.02:1. These figures suggest that Astronics is securing steady order inflows, providing visibility into future revenue growth.

The Aerospace segment accounted for the bulk of the backlog, with orders totaling $537.6 million. This strength supports management’s 2025 revenue forecast of $820 million to $860 million, implying mid-single-digit growth compared to 2024. In contrast, the Test Systems segment backlog declined to $61.7 million, reflecting continued softness in defense-related testing orders.

Astronics expects first-quarter 2025 revenue to range between $190 million and $205 million, with progressive growth in subsequent quarters. Margin expansion remains a key focus, with efforts underway to optimize operations and reduce non-essential costs.

How Is Astronics Strengthening Its Financial Position?

To support long-term growth, Astronics undertook significant financial restructuring in late 2024. The company issued $165 million in convertible senior notes, maturing in 2030, to enhance financial flexibility while minimizing equity dilution. Additionally, it amended its revolving credit facility, increasing the credit line to $220 million, with $10 million drawn at year-end.

Astronics also fully repaid its outstanding term loan, clearing $54.9 million in principal obligations, which helped reduce interest expenses. Capital expenditures for 2024 totaled $8.4 million, with plans to increase investments to $35 million-$40 million in 2025. These funds will be allocated toward facility consolidations, capacity expansion, and infrastructure upgrades to support anticipated growth.

What Are the Key Takeaways for Investors?

Astronics Corporation continues to demonstrate resilience and growth momentum, with strong Aerospace segment performance driving revenue expansion. Despite legal and restructuring-related costs impacting net income, the company’s adjusted EBITDA and operating margins improved, indicating progress toward greater profitability.

The record backlog of $599.2 million provides a solid foundation for 2025, with management maintaining revenue guidance of up to $860 million. Strategic debt refinancing and cost-cutting initiatives position the company for sustained long-term growth.

Investors will closely monitor Aerospace order trends, legal developments, and Test Systems recovery efforts to gauge the company’s ability to deliver on profitability goals in 2025 and beyond.