Astronics Corp Jefferies Global Industrials Conference 2026

Thank you, Simon, and good morning, everybody. Thanks for tuning in at this early hour. Not sure how we ended up in this spot, but here we are. I'm going to speak for probably about 20 minutes, giving you a quick overview of Astronics Corporation, where we've been, what we do, where we're going. Nancy will conclude with some bit of a deep dive into our recent financials. I guess we're going to do questions at the end, or if there's.

Yeah. We'll see if Nancy leaves you any time for questions, but we are obviously a public company, market cap in the $3.3 billion range at current stock prices. 43 million shares outstanding. We do have two classes of stock. B shares have 10 votes but don't trade. Common shares have one vote. The B shares convert to common to monetize over time, so they have the same economic value as common shares. Inside ownership, about 6%. Pretty strong institutional ownership, up over 80% these days. A couple pie charts that give you a high overview look at the company. The pie chart on the left here talks about our two segments. We typically run about 90% aerospace. We are about 10% test. Our comments will skew that way. We're going to spend most of our time in this discussion talking about aerospace, relatively little time talking about test.

The pie chart on the right looks at our major markets, and you can see pretty easily that about 70% of our volume comes from commercial transport. A smaller percentage, about 20%, is government or defense, and about 10% is business jets on a trailing 12-month basis. That 70% commercial transport is critical in understanding the journey we've been on. Obviously, that kind of exposure was an unfortunate place to be during the COVID pandemic when the worldwide travel industry shut down. If you look at our historical financials, if you do any research into where we've been, you can see that we took a really big dip when the pandemic hit and have been since climbing back out. We bottomed out at about $445 million. We are this year expecting to be over $1 billion for the first time in our company's history in terms of revenue.

There are a bunch of tailwinds driving that. We'll talk about most of them as we go through this presentation. They're listed here in summary form on the right side of this chart. I'm not going to go through them in too much detail here, but they're available on our investor presentation if you want to look at them more closely. With the rising volume comes a pretty strong improvement in margins. This has been a focus of ours. A bunch of elements or a number of elements have contributed to the progress that we've made. We feel like there's quite a bit of room to run on all of these, and there's not one big thing.

I guess the one big thing would be just the overall volume increase, but beyond that, there's a lot of pricing, there's been a lot of efficiencies built into the business and a lot of simplification, and those processes continue. One more pie chart. This pie chart looks at our major product lines. There are five of them. The biggest one and the one that we are probably best known for these days is as a supplier to the in-flight entertainment and connectivity business. We'll talk about that shortly. Our second-largest one is lighting. We are active as an aerospace lighting company, lighting in the cockpit, lighting in the cabin, and lighting in the exterior of airplanes. Then three smaller product lines. One is flight-critical electrical power. This is not power that's a passenger amenity, but power that basically runs the airplane. There obviously are generators on an airplane.

Those generators generate electricity and distribute it, and we have some advanced technologies which have positioned us very well in some emerging markets. Seat motion is a product line that we've been involved in for a long time, but we haven't talked about it a whole lot. These days there's a real revolution going on in high-end business class and first class seating, and we're doubling our revenue in this area this year, and we made a little acquisition in Germany at the end of last year. So we're a pretty prominent supplier to seat companies around the world. We'll talk about that briefly when we get there.

Our test systems business, which is our second segment, is ramping up as we speak on a recently awarded significant volume production contract for the U.S. Army on a radio test program that is really going to revolutionize the way that contribution looks from that business. We are pretty excited to get into that. We are going to go through these in sequence. In-flight entertainment and connectivity. We are involved in basically what people do in the cabin of the aircraft with entertainment and connectivity. Our premise is that everybody wants to be entertained, everybody wants to be connected, everybody wants to be powered, and that is a secular trend that is accelerating and is constantly evolving, and the constant evolution means there is a continual opportunity for retrofits.

A system for entertainment and connectivity that was modern five, six, seven years ago is not modern today and is prone to being upgraded long before it wears out, which provides a significant retrofit, a string of opportunities for our company. We got into this many years ago by inventing really the in-seat power business. If you sit in an aircraft and you plug in your computer or you plug in your laptop, there is a very good chance, we say about a 90% market share probability, that you are using our system. It is both 110 volts, originally it was DC, but 110 volts and increasingly USB Type-A and USB Type-C. We say we have about 90% market share. It is a global business. You can see some of the characteristics here.

We would say today that 90% of the wide body fleet that is flying in the world is outfitted with some form of in-seat power, and somewhere in the neighborhood of 65% of narrow body airplanes flying around the world today are outfitted with some form of in-seat power. Again, 90% market share. This presence or market position led us into some other areas that we have developed by both product development and by acquisition, and that is both connectivity and in-flight entertainment or IFE hardware. Again, the wireless access points, the file servers, the antenna systems and mounting hardware, the certification systems that goes along with all that. We are basically capable of developing our own system if we wanted to from nose to tail for entertainment. For the most part, we sell to other companies that provide those kind of systems.

Major customers include Panasonic in the IFE world and companies like Viasat and SES, for example, in the connectivity world. Lighting and safety, again, I mentioned cockpit lighting, cabin lighting, exterior lighting. There are some examples on this slide. There is a cockpit of a business jet in the upper right. That is an F-35. We do the exterior suite, upper left. Lower left is a passenger service unit on a Boeing 737 interior. We provide all those, and then there is an Embraer business jet in the lower right, again, exterior lighting example. Flight critical electrical power. This is a pretty exciting part of our business. We are specialists in advanced electrical power generation and distribution systems, primarily for smaller aircraft. Smaller aircraft can be business jets. That is where we started. It can be helicopters. It can be military helicopters or fighters, and these days we're spending a lot of time working in drones.

Not the small little handheld drones, but the CCA collaborative combat kind of drones, and also electric aircraft, EVTOL. The key to our technology, I'm not going to get too nerdy here, but electronic circuit breakers and very high reliability generation devices, spinning machines. Instead of a traditional electrical motor, with windings, we use permanent magnets and induction topologies, which allows the machines to have a significantly longer life, up to 30,000 hours as opposed to less than 1,000 hours. I fly a business jet and it's got a couple generators, and those generators get replaced every 700 hours because that's how long they last. But with permanent magnets or induction, those types of machines could last, do last up to 30,000 hours. The electronic circuit breakers are critical.

Again, I'm not going to get too nerdy here, but instead of a bunch of thermal breakers like you see in the cockpit on the left, which is a traditional Learjet 45 cockpit, you see this airplane all over the place. It's very common. Look at all the circuit breakers on the left side and the right side of that cockpit and compare it to the Pilatus PC-24, the picture on the right, where there are no such panels. There actually are a handful of circuit breakers in that aircraft, but for the most part, they're all electronic circuit breakers. The advantage to electronic circuit breakers is that they can be remotely operated or automated so that fault resolution or a drone type of aircraft can be controlled remotely.