Astronics (NASDAQ:ATRO) capped fiscal 2025 with what management described as a “very strong” fourth quarter, posting record revenue and improved profitability as higher sales volume, favorable mix, and pricing and productivity initiatives combined to lift margins. Executives also reiterated preliminary fiscal 2026 revenue guidance and discussed order trends, tariffs, and key program catalysts during the company’s earnings call.
Record fourth-quarter revenue and margin expansion
Chairman, President and CEO Peter Gundermann said fourth-quarter revenue reached $240 million, a new quarterly record that exceeded the company’s prior peak from 2018. Revenue was up 15% versus the year-ago quarter and 13.5% sequentially. Gundermann attributed the growth to strong market conditions across the business and “solid execution across our operations.”
Bookings totaled $257 million in the quarter for a 1.07 book-to-bill ratio, leaving year-end backlog at a record level, according to management.
Financial details: volume, mix, pricing, and lower legal expense
Chief Financial Officer Nancy Hedges said fourth-quarter gross profit rose nearly 29% to $80 million, with gross margin expanding 350 basis points year over year to 33.3%. She said margin expansion was driven primarily by higher volume and favorable mix, including “a surge in aircraft spares orders” that management expects will also benefit the first quarter.
Hedges said 2025 results benefited from repricing actions taken throughout the year, along with “normal course catch-up pricing” on a couple of programs, productivity gains, and benefits from prior test systems restructuring actions. Those improvements more than offset $2.9 million of increased tariff expenses in the quarter.
R&D spending was $10.6 million, or 4.4% of sales, which Hedges said is within the company’s expected 4%–5% run rate. SG&A expense declined by $7.3 million, primarily due to a $9 million reduction in legal reserves and litigation-related expenses. Hedges noted SG&A also included incremental expense from the Bühler acquisition, plus one-time legal and accounting costs related to the deal.
Operating income rose to $35.5 million from $8.9 million a year ago. On an adjusted basis excluding acquisition expenses and continued patent litigation costs, operating income was $38.3 million and adjusted operating margin was 16%.
Astronics reported quarterly net income of $29.6 million, or $0.78 per diluted share, compared with a loss in the prior-year period. Adjusted net income was $28.5 million, or $0.75 per diluted share, which Hedges said reflected a normalized quarterly tax rate.
Segment performance: aerospace strength and test systems progress
Hedges said aerospace operating profit in the quarter was $41.7 million, about 2.5x the prior-year period, and aerospace operating margin was 19% of sales. On an adjusted basis, aerospace operating profit margin expanded to 19.8%.
Test systems posted operating profit of $1.1 million despite “a relatively low level of sales,” compared with slightly below break-even results a year ago. Hedges said the improvement reflected simplification and restructuring actions taken in 2024 and 2025, partially offset by unfavorable mix and under-absorption of fixed costs at current volumes. She added that the company expects profitability to improve “meaningfully” once production on the U.S. Army Radio Test Program ramps.
Tariffs, cash flow, and balance sheet items
On tariffs, Hedges referenced a U.S. Supreme Court decision holding that tariffs imposed under the International Emergency Economic Powers Act exceeded statutory authority. She said Astronics is reviewing potential implications but is not assuming any benefit in its outlook. The company has treated tariffs as a normal cost of doing business and has not recognized any asset for potential refunds. Hedges said “time will tell” whether the company can recoup any or all of approximately $8 million in incremental tariffs previously paid.
For fiscal 2025, Astronics generated $74.8 million in operating cash flow. Capital expenditures were $31.7 million for the year. Hedges said the company expects $40 million–$50 million of CapEx in 2026 as it continues work on the Redmond, Washington facility consolidation. Separately, Astronics is planning approximately $14 million–$18 million of investment in a global ERP system; due to accounting treatment, that spending will be reflected as cash outflow from operations rather than CapEx. The ERP implementation is expected to be staged over about five years, with the heaviest spending in 2026.
Astronics ended the year with $18.2 million in cash and cash equivalents. Net debt was $324.8 million, up from $156.6 million at the end of 2024, reflecting refinancing actions in September 2025. Hedges detailed the repurchase of 80% of the company’s 5.5% convertible bonds and issuance of $225 million of 0% convertible bonds, along with the purchase of a capped call that elevated the strike price on the new bonds to $83.41.
2026 outlook: growth expected to accelerate; key risks and catalysts
Gundermann said fiscal 2025 played out largely as expected: growth moderated while the company focused on efficiency initiatives, cost structure, and pricing actions to improve margins. He said 2025 revenue growth was 8.4%, while adjusted operating margin improved to 12.2% from 7.7% in 2024, and adjusted EBITDA margin rose to 15.6% from 12.1%.
For 2026, management reiterated preliminary revenue guidance of $950 million to $990 million, with the midpoint implying 12.5% growth. The company does not provide bottom-line guidance, but Gundermann said it expects continued progress given the initiatives in place and the higher sales volume anticipated. For cadence, he said first-quarter sales are expected to be $220 million to $230 million, with a modest step-up thereafter and quarterly sales above $250 million in the second half.
During Q&A, management discussed margin expectations at higher revenue levels. In response to a question on whether Astronics could sustain EBITDA margins similar to the fourth quarter’s 19% as revenue rises, Gundermann said that is “the goal,” while noting the fourth quarter benefited from several tailwinds. He also said the company’s historical marginal contribution on incremental revenue dollars has been in the 40%–50% range, and that thesis will be tested as volumes rise.
On bookings, Gundermann said fourth-quarter orders were “pretty broad-based” across both line-fit and aftermarket, and he said management is optimistic about the pipeline, adding that demand is not a primary concern at this point.
He also discussed program timing and assumptions used in the 2026 outlook. Gundermann said Astronics is discounting some OEM production-rate increase timing by “three or four months” to be conservative. On the TS-4549/T U.S. Army Radio Test Program, he said the company now believes volume production will turn on “early in the second quarter of 2026 or shortly thereafter,” noting the prior government shutdown delayed progress.
Management also provided an update on the MV-75/FLRAA-related work. Gundermann said Astronics generated roughly $30 million of revenue in 2025 on the program (about $20 million the year before) and expects to step up to “somewhere in the neighborhood of $40 million” in 2026. He said the company expects to be largely done with the development phase by the end of 2026 and expects completion in the first half of 2027.
About Astronics (NASDAQ:ATRO)
Astronics Corporation (NASDAQ: ATRO) is a global leader in the design and manufacture of advanced technologies primarily for the aerospace, defense and semiconductor industries. Headquartered in East Aurora, New York, the company was founded in 1968 and has grown through a combination of internal development and strategic acquisitions. Astronics operates multiple business units focused on power conversion, distribution and control; cabin electronics and connectivity; aircraft lighting and safety solutions; and automated test systems.
The company’s aerospace products include onboard power generation and management systems, in-flight entertainment and connectivity hardware, LED and fluorescent lighting for aircraft cabins and cockpits, and safety equipment such as escape slide power units.
