- Unaudited revenue of approximately $198 million for fourth quarter 2019 exceeded guidance
- 2020 revenue guidance withdrawn due to uncertainty related to 737 MAX
- New VVIP IFE platform “Avenir” successfully launched
- Expects restructuring charges related to antenna business of $29 million to $35 million in fourth quarter 2019
- Estimating intellectual property damages of an additional $18 million in fourth quarter; Company has filed appeal and is vigorously defending position
- Temporarily pausing stock buyback initiatives
East Aurora, NY | February 3, 2020- Astronics Corporation (Nasdaq: ATRO), a leading provider of advanced technologies for global aerospace, defense, and other mission critical industries, today provided an update on various projects and events impacting 2019 results and expectations for 2020.
Fourth Quarter Revenue and 2020 Guidance
The Company ended 2019 with unaudited preliminary revenue of approximately $198 million in the fourth quarter, slightly exceeding the high end of guidance that was issued on November 5, 2019. Preliminary bookings were
$156 million in the fourth quarter and preliminary backlog at year-end was $359 million. Bookings were negatively impacted by uncertainty in the market, which the Company believes is related to the ongoing 737 MAX grounding. In addition, the Company cancelled orders of approximately $7 million related to the restructuring and refocusing of its antenna business. Unaudited preliminary revenue for the full year totaled approximately $773 million.
Given the uncertain 2020 production schedule for the 737 MAX and timing of its return to service, along with the related impact on aftermarket spending by commercial airlines, the Company is rescinding its initial 2020 revenue guidance issued in November 2019. Astronics expects to issue revised revenue guidance as the outlook becomes clearer.
Peter Gundermann, Astronics Chairman and CEO, said, “The ongoing 737 MAX grounding affects our business both because of the production pause and because it leaves many of our airline customers short of capacity. This makes them reluctant to take planes out of service to install the types of products they buy from us. The situation is likely to persist until the 737 MAX returns to service. We will publish revenue expectations when we have more insight on the situation. In the meantime, we have taken actions to align our cost structure, anticipating a lower level of production and an extended disruption in the market.”
Astronics has line fit content of approximately $95 thousand on each 737 MAX as well as buyer furnished equipment, such as passenger power and connectivity hardware, that varies depending on aircraft configuration.
Completed Development of Avenir VVIP Inflight Entertainment and Connectivity Solution (“IFEC”)
Late in the fourth quarter, the Company delivered a functional Avenir shipset to its launch customer, completing the design and development phase of the Avenir platform for the VVIP inflight entertainment and connectivity (“IFEC”) market. This effort has required significant financial investment by the Company’s Custom Control Concepts (“CCC”) operating unit for the last two years. While the program will require limited additional refinement during launch, the substantial levels of investment are completed. The Company expects that CCC will be profitable in the second half of 2020 and substantially breakeven for the year.
The best-in-class Avenir solution provides significant increases in bandwidth and speed for IFEC applications both on and off the aircraft. Astronics is now actively promoting the Avenir system and recently secured an additional undisclosed customer.
Restructuring and Refocusing the Antenna Operation
Astronics has made significant progress with the restructuring of its antenna business. The plan narrows the initiatives for the business to focus primarily on near-term opportunities pertaining to business jet connectivity. As a result of the narrowed focus, the Company anticipates total restructuring charges of approximately $29 million to $35 million that will be recorded in the fourth quarter of 2019. Approximately $29 million of the charge will be non- cash, including the write-down of goodwill, intangible assets, fixed assets, inventory and other assets associated with the refocusing of the business activity. The emerging plan has a downsized manufacturing operation remaining in New Hampshire, with significantly reduced personnel and operating expenses. After restructuring, breakeven for the business will be approximately $10 million in revenue.
Mr. Gundermann commented, “We are putting an end to the high level of losses we have incurred in our antenna business the last few years. Simplifying the business and focusing more narrowly on the business jet market gives us the best chance of success. There remains some level of risk with our plan, but we have begun to lower annual fixed cost by about $11 million by reducing operating and R&D costs, while leaving the business positioned to pursue our best near-term opportunity.”
Intellectual Property Dispute
Late in the fourth quarter, the Company received an unfavorable ruling from a German court regarding the scope and calculation of damages in its long-running patent infringement suit. As a result, the Company estimates that an additional $18 million in damages will be recorded in the fourth quarter of 2019. The ruling pertains to shipments of in-seat power systems the Company directly or indirectly made into Germany between 2007 and 2014. Astronics believes the court’s ruling in this matter is deficient and has initiated an appeal that will likely extend resolution into late 2021.
The dispute was previously argued and resolved in the Company’s favor in the United States. Cases are now beginning in the United Kingdom and France. Astronics does not expect these cases to be resolved during 2020.
Pause in Stock Buyback Program
To conserve cash, the Company is cancelling its 10b5-1 trading plan for its share buyback program and is temporarily postponing initiatives related to stock buybacks until market conditions are clearer, especially the circumstances surrounding the 737 MAX. The Board authorized a $50 million share buyback program in September 2019, which remains in place. Under the plan, Astronics has repurchased approximately 310 thousand shares through Friday, January 31, 2020 at an average price of $27.47
Mr. Gundermann concluded, “While external factors are providing new challenges for 2020, we believe we have taken the steps to improve the operating performance of the business by addressing the losses incurred by our challenged operating units. We expect to face challenging market conditions until the 737 MAX situation improves, but we will continue to work on promising innovation and growth prospects in the meantime, maximizing our performance in the near term while pursuing growth and stronger earnings in the long term.”
United Kingdom | December 5, 2016– Hawaiian Airlines (HAL) has selected Inmarsat’s next generation IP-based SwiftBroadband-Safety (SB-S) platform for installation on its new Airbus A321neo (new engine option) fleet.
Inmarsat’s SB-S service will deliver secure broadband connectivity via the Cobham AVIATOR 350D system to the flight deck for all voice and data applications on HAL’s new single aisle aircraft being line fit by Airbus.
The new agreement expands the current partnership between HAL, Inmarsat, Cobham and Rockwell Collins, established during on-going in-flight evaluations of Inmarsat SB-S and Cobham’s purpose-built AVIATOR solution on-board HAL’s Boeing 767-300 aircraft, as part of a Federal Aviation Administration (FAA) supervised technology evaluation.
Paradigm shift
SB-S is Inmarsat’s next generation communications platform offering global, high-speed, secure IP connectivity for the flight deck. It enhances airline safety and operations through more powerful and flexible communications and the availability of real-time, in-air information for pilots, crew and air traffic management.
It represents a paradigm shift in aviation safety services, delivering always on, always secure applications such as flight data streaming (“Black Box in the Cloud”) and real-time Electronic Flight Bag (EFB) applications, including networked graphical weather.
Rockwell Collins provides the managed service between the Inmarsat ground stations that enable the aircraft to seamlessly communicate with HAL’s host systems, ground crews and regulatory agencies anywhere in the world without interruption.
Airline innovation
Captain Mary McMillan, Inmarsat Aviation Vice President of Safety and Operational Services, said: “Airlines with eyes on the big picture are seeking innovative ways to achieve efficiency gains and dynamically manage their fleets through the use of digital solutions.
“We are pleased that Hawaiian Airlines has experienced the benefits of SwiftBroadband-Safety and has now chosen to expand its commitment to high speed broadband in the flight deck with its A321neo’s. Clearly, the evaluation has been a great success.”
Brian Anderson, Air Transport Sales Manager, Americas, Cobham SATCOM, said: “The selection is a direct result of the team’s recent success with the Hawaiian B767 program for the FAA evaluations of SwiftBroadband-Safety service which is affirming the reliability and performance of the Cobham hardware and the Inmarsat’s satellite network.”
Industry support
Inmarsat’s SB-S has received a high level of industry support, including the recent selection by Airbus of the Inmarsat solution for its A320 and A330 aircraft families and the successful ongoing evaluations with Hawaiian Airlines.
Recently, Inmarsat, Cobham and Hawaiian Airlines announced that SwiftBroadband-Safety and Cobham avionics had enabled in-air Electronic Flight bag connectivity for the first time with Hawaiian Airlines.
Watch Hawaiian Airlines pilots and Flight Operations leadership talk about the benefits of IP broadband in the flight deck in this video
Whitepapers
Inmarsat’s whitepaper ‘SwiftBroadband-Safety: The Future Of Aircraft Communications’ can be downloaded online here.
Inmarsat’s whitepaper ‘Black Box in the Cloud Solutions’ can be downloaded online here.
● Rockwell Collins will distribute Inmarsat SwiftBroadband-Safety to aviation industry
● Agreement lays foundation for smooth transition to IP-based aviation safety services
London, UK | October 18, 2016– Inmarsat (ISAT.L), the world’s leading provider of global mobile satellite communications, and Rockwell Collins (NYSE: COL), a leading provider of aviation electronics and communications, have announced plans to expand their strategic relationship to include the new SwiftBroadband-Safety service for cockpit and aircraft operations.
Rockwell Collins is a long-time provider of Inmarsat’s Classic Aero safety service as part of its information management solutions portfolio. Under a Letter of Intent (LoI) signed this week, it is now set to provide Inmarsat’s next-generation SwiftBroadband-Safety service to both existing and new customers from across the aviation industry.
The agreement outlines the companies’ mutual interest and plans to work with airlines to develop and introduce a smooth and cost effective migration path from traditional flight deck connectivity solutions to new, higher bandwidth secure IP connections available through SwiftBroadband-Safety services.
SwiftBroadband-Safety represents a paradigm shift in the advancement of aviation safety services. It utilises secure internet protocol (IP) based broadband connectivity that exceeds the capabilities of other IP alternatives currently available in the market. The ‘always on and always secure’ solution enables a range of breakthrough aviation applications, including flight data streaming (‘Black Box in the Cloud’) and real-time Electronic Flight Bag applications, such as networked graphical weather.
It also enables air traffic management modernisation programmes throughout the world and fulfils the requirements of the International Civil Aviation Organization (ICAO)’s Global Aeronautical Distress Safety System (GADSS), including global flight tracking, by offering reliable and secure satellite surveillance and communications (FANS/ACARS).
Frederik van Essen, Inmarsat Aviation’s Senior Vice President of Strategy and Business Development, said: “Satellite communications has driven a significant expansion of air traffic over the world’s oceans, promoting global economic growth and expansion. Now, SwiftBroadband-Safety brings secure IP to the cockpit and its host of unparalleled capabilities for the aviation industry will drive even more expansion through greater efficiency, reliability and capacity at a lower cost per bit for the information exchanged.
“We are delighted to extend our successful relationship with Rockwell Collins to include this transformative new generation of aviation safety services. Rockwell Collins has the global market strength and capability to deliver these benefits to the aviation industry. Our confidence is further reinforced by Inmarsat’s current evaluation of SwiftBroadband-Safety with Hawaiian Airlines, which is being conducted with Rockwell Collins and continues to be extremely successful.”
Michael DiGeorge, Rockwell Collins Vice President of Commercial Aviation and Network Services, said: “The aviation community depends on safe, secure and affordable flight deck connectivity for critical operations that are vital to their business. The move to this advanced technology platform ushers in a new era of information and connectivity solutions for the global aviation industry. We anticipate strong demand from our existing and new ARINC GLOBALinkTM customers for SwiftBroadband-Safety services.”
The agreement will provide attractive incentives for upgrading to SwiftBroadband-Safety, together with price assurances for Inmarsat Classic Aero customers served by Rockwell Collins. New enterprise agreement options and shared corporate allowance packages are envisioned to offer additional new benefits, including simplified pricing models, increased flexibility, predictability and highly-competitive packaged data and services.
SwiftBroadband-Safety hardware is currently available for initial retrofit installation on existing aircraft and will become a standard option on new aircraft deliveries starting in 2018. This capability builds on Inmarsat’s reputation as a provider of high-quality voice and data services to 95% of the world’s transoceanic aircraft fleet and Rockwell Collins’ high reliability, secure ARINC Global Network.
- Next generation MSAT system integrates radio, cellular and satcom networks for wider, more reliable and cost effective coverage
Las Vegas, Nevada | March 21, 2016– Cobham SATCOM’s innovative new EXPLORER MSAT-G3 will be shown on the Cobham booth at IWCE 2016 (booth #1055). An innovative new solution, EXPLORER MSAT-G3 is an IP-based Push-To-Talk (PTT) radio communications system that uniquely supports Satellite/3G/LTE/LAN backhaul and Land Mobile Radio (LMR) integration to provide seamless voice communication in any situation.
EXPLORER MSAT-G3 is the next generation MSAT solution utilizing the power of the Ligado Networks (former LightSquared) SkyTerra-1 satellite and ViaSat’s low-latency, IP-based L-band Mobile Satellite Services network. In the field, the system enables critical interoperable communications among homeland security officials, law enforcement, emergency responders, and public safety officials from various departments and agencies across the USA. EXPLORER MSAT-G3 extends coverage by combining satellite links and the existing cellular based networks, which can reduce terrestrial infrastructure costs while introducing significantly improved communications availability in any environment, when on the move. It is designed to cost effectively expand and augment LMR systems and as such, is compatible with many different brands of LMR to support lower capital costs.
The previous generation MSAT Push-To-Talk and Telephony voice is a satellite only service, but the EXPLORER MSAT-G3 offers a wealth of additional benefits by extending MSAT Push–To-Talk capabilities to hybrid data networks. With no user intervention required, the system automatically routes voice and data traffic via the most reliable network available. The solution is based on Cobham SATCOM’s advanced EXPLORER Push-To-Talk system and the all-new EXPLORER 122, a compact comms-on-the-move satellite terminal developed to operate over the Ligado SkyTerra-1 satellite network.
EXPLORER MSAT-G3 looks and feels just like a standard LMR system, utilizing a simple Push-To-Talk Control Speaker Microphone. The system is also as easy to install as a standard LMR system. Uniquely, up to two USB cellular modems (optional) can be connected to the PTT terminal to enable two independent cellular network connections. In action, EXPLORER MSAT-G3’s sophisticated routing functionality automatically switches between the available networks, dynamically selecting the most suitable one based on quality and availability at any time. This all happens seamlessly without user intervention.
“The combination of the new generation MSAT, using the SkyTerra-1 satellite and ViaSat’s Managed Network Services, and EXPLORER MSAT-G3 will be a step change in communication capabilities for US government and emergency services,” said Henrik Nørrelykke, Vice President, Land Business, Cobham SATCOM. “By automatically and seamlessly routing voice and data communication over the best available network the system extends coverage and provides a more reliable connection. It essentially delivers more value and better performance in order to make people on the ground safer and more effective in their work.”
The 2009 Aircraft Interiors Expo was extremely productive for SIE. Structural Integrity Engineering (SIE) has long experience with antenna installation design and certification on commercial, business and military aircraft. So at Hamburg, it was gratifying to see the broadband connectivity market reaching a level of growth and maturity where installations are going to ramp up and the broadband dream can be realized.”