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Astronics Corporation
ATRO
#4128
Rank
C$4.43 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
C$103.16
Share price
-1.39%
Change (1 day)
115.67%
Change (1 year)
๐Ÿš€ Aerospace
Categories
  1. Astronics Corporation
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2026 Q2

Astronics Corporation - 10-Q quarterly report FY2026 Q2


Text size:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
☒
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended July 4, 2026
or
 
☐
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission File Number 0-7087
 
ASTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
 
New York
(State or other jurisdiction of
incorporation or organization)
16-0959303
(IRS Employer
Identification Number)
130 Commerce Way, East Aurora, New York
(Address of principal executive offices)
14052
(Zip code)
(716) 805-1599
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $.01 par value per shareATROThe NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer☒Accelerated filer☐
Emerging growth company
☐
Non-accelerated filer
☐
Smaller Reporting Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act. ¨
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý
As of August 6, 2026, 43,009,064 shares of common stock were outstanding consisting of 36,107,984 shares of common stock ($.01 par value) and 6,901,080 shares of Class B common stock ($.01 par value).


TABLE OF CONTENTS
PAGE
PART I
Item 1
•
3
•
4
•
5
•
6
•
7
•
9
Item 2
23
Item 3
29
Item 4
30
PART II
Item 1
31
Item 1A
31
Item 2
31
Item 3
31
Item 4
31
Item 5
31
Item 6
32
33

2
Part I – Financial Information
Item 1. Financial Statements
ASTRONICS CORPORATION
Consolidated Condensed Balance Sheets
July 4, 2026 with Comparative Figures for December 31, 2025
(Unaudited)
(In thousands)
 
July 4, 2026December 31, 2025
Current Assets:
Cash and Cash Equivalents
$9,016 $18,180 
Accounts Receivable, Net of Allowance for Estimated Credit Losses
228,900 204,672 
Inventories
220,065 196,860 
Prepaid Expenses and Other Current Assets
27,763 18,027 
Total Current Assets
485,744 437,739 
Property, Plant and Equipment, Net of Accumulated Depreciation115,568 107,078 
Operating Right-of-Use Assets31,273 32,269 
Other Assets14,366 11,316 
Intangible Assets, Net of Accumulated Amortization49,392 55,353 
Goodwill64,501 62,923 
Total Assets
$760,844 $706,678 
Current Liabilities:
Accounts Payable
$64,399 $41,080 
Current Operating Lease Liabilities5,930 5,802 
Accrued Expenses and Other Current Liabilities
66,462 68,324 
Customer Advance Payments and Deferred Revenue
26,589 26,069 
Total Current Liabilities
163,380 141,275 
Long-term Debt310,319 334,451 
Long-term Operating Lease Liabilities36,717 38,101 
Other Liabilities52,208 52,777 
Total Liabilities562,624 566,604 
Shareholders’ Equity:1
Common Stock
457 456 
Accumulated Other Comprehensive Loss(6,108)(4,410)
Other Shareholders’ Equity
203,871 144,028 
Total Shareholders’ Equity
198,220 140,074 
Total Liabilities and Shareholders’ Equity$760,844 $706,678 
See notes to Consolidated Condensed Financial Statements.





1 Prior-period Shareholders’ Equity balances have been adjusted to reflect the impact of the twenty percent Class B stock distribution to shareholders of record on June 15, 2026, with no impact on Total Shareholders’ Equity.
3
ASTRONICS CORPORATION
Consolidated Condensed Statements of Operations
Three and Six Months Ended July 4, 2026 with Comparative Figures for 2025
(Unaudited)
(In thousands, except per share data)
 
Six Months EndedThree Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Sales$490,576 $410,614 $259,957 $204,678 
Cost of Products Sold328,546 296,938 173,060 151,851 
Gross Profit162,030 113,676 86,897 52,827 
Research and Development Expenses22,958 22,639 10,869 11,572 
Selling, General and Administrative Expenses71,375 73,142 35,561 36,497 
Income from Operations67,697 17,895 40,467 4,758 
Other Expense (Income), Net390 (377)281 (190)
Interest Expense, Net of Interest Income4,668 6,247 2,332 3,097 
Income Before Income Taxes62,639 12,025 37,854 1,851 
Provision for Income Taxes2,039 1,183 2,794 537 
Net Income$60,600 $10,842 $35,060 $1,314 
Earnings Per Share:
Basic1
$1.41 $0.26 $0.82 $0.03 
Diluted1
$1.31 $0.25 $0.75 $0.03 
See notes to Consolidated Condensed Financial Statements.
















1All per share information have been adjusted to reflect the impact of the twenty percent Class B stock distribution to shareholders of record on June 15, 2026.
4
ASTRONICS CORPORATION
Consolidated Condensed Statements of Comprehensive Income
Three and Six Months Ended July 4, 2026 with Comparative Figures for 2025
(Unaudited)
(In thousands)
 
Six Months EndedThree Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Net Income$60,600 $10,842 $35,060 $1,314 
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustments
(1,953)2,931 (798)2,179 
Retirement Liability Adjustment – Net of Tax
255 (472)128 (236)
Total Other Comprehensive (Loss) Income(1,698)2,459 (670)1,943 
Comprehensive Income$58,902 $13,301 $34,390 $3,257 
See notes to Consolidated Condensed Financial Statements.
5
ASTRONICS CORPORATION
Consolidated Condensed Statements of Cash Flows
Six Months Ended July 4, 2026 with Comparative Figures for 2025
(Unaudited)
Six Months Ended
(In thousands)July 4, 2026June 28, 2025
Cash Flows from Operating Activities:
Net Income$60,600 $10,842 
Adjustments to Reconcile Net Income to Cash Flows from Operating Activities:
Non-cash items:
Depreciation and Amortization12,235 10,966 
Amortization of Deferred Financing Fees1,204 1,214 
Provisions for Non-cash Losses on Inventory and Receivables3,257 2,941 
Equity-based Compensation Expense4,819 3,902 
Deferred Tax Expense (Benefit)1,022 (1,125)
Operating Lease Non-cash Expense2,806 3,174 
Simplification Initiative-related Non-cash Charges— 6,229 
Other1,223 (601)
Changes in Operating Assets and Liabilities Providing (Using) Cash:
Accounts Receivable(24,997)5,803 
Inventories(27,500)(1,498)
Accounts Payable23,620 2,957 
Operating Lease Liabilities(3,093)(2,302)
Accrued Expenses(1,929)(17,064)
Income Taxes(1,128)(10,505)
Customer Advance Payments and Deferred Revenue478 (859)
Cloud Computing Implementation Costs(4,122)— 
Supplemental Retirement Plan Liabilities(367)(202)
Other Assets and Liabilities(7,403)(864)
Net Cash Provided by Operating Activities40,725 13,008 
Cash Flows from Investing Activities:
Capital Expenditures(16,869)(6,710)
Net Cash Used by Investing Activities(16,869)(6,710)
Cash Flows from Financing Activities:
Proceeds from Long-term Debt40,000 1,143 
Principal Payments on Long-term Debt(65,000)(11,143)
Financing-related Costs— (740)
Stock Award Activity(5,441)(1,730)
Other(2,220)(76)
Net Cash Used by Financing Activities(32,661)(12,546)
Effect of Exchange Rates on Cash(359)1,280 
Decrease in Cash and Cash Equivalents and Restricted Cash(9,164)(4,968)
Cash and Cash Equivalents and Restricted Cash at Beginning of Period18,180 18,428 
Cash and Cash Equivalents and Restricted Cash at End of Period$9,016 $13,460 
Supplemental Disclosure of Cash Flow Information
Capital Expenditures in Accounts Payable (Non-Cash Investing Activities)$422 $— 
Interest Paid$3,972 $2,967 
Income Taxes Paid, Net$2,110 $12,848 
See notes to Consolidated Condensed Financial Statements.
6
ASTRONICS CORPORATION
Consolidated Condensed Statements of Shareholders’ Equity
Three and Six Months Ended July 4, 2026 with Comparative Figures for 2025
(Unaudited)
(In thousands)
Six Months EndedThree Months Ended
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Common Stock
Beginning of Period$345 $329 $348 $333 
Net Issuance of Common Stock for Restricted Stock Units (“RSUs”)1 1 — — 
Class B Stock Converted to Common Stock12 7 10 4 
End of Period358 337 358 337 
Convertible Class B Stock1
Beginning of Period111 122 109 119 
Class B Stock Converted to Common Stock(12)(7)(10)(4)
End of Period99 115 99 115 
Additional Paid in Capital1
Beginning of Period4,827 144,078 1,942 144,693 
Equity-based Compensation Expense and Net Exercise of Stock Options, including ESPP4,819 3,902 2,263 1,557 
Tax Withholding Related to Issuance of RSUs(5,441)(1,730)— — 
Cash Paid in Lieu of Fractional Shares from Stock Distribution(135)— (135)— 
End of Period4,070 146,250 4,070 146,250 
Accumulated Comprehensive Loss
Beginning of Period(4,410)(3,863)(5,438)(3,347)
Foreign Currency Translation Adjustments(1,953)2,931 (798)2,179 
Retirement Liability Adjustment – Net of Taxes255 (472)128 (236)
End of Period(6,108)(1,404)(6,108)(1,404)
Retained Earnings
Beginning of Period216,699 192,208 242,239 201,736 
Net Income60,600 10,842 35,060 1,314 
End of Period277,299 203,050 277,299 203,050 
Treasury Stock
Beginning of Period(77,498)(76,777)(77,498)(76,777)
End of Period(77,498)(76,777)(77,498)(76,777)
Total Shareholders’ Equity$198,220 $271,571 $198,220 $271,571 
See notes to Consolidated Condensed Financial Statements.





1 Prior-period Shareholders’ Equity balances have been adjusted to reflect the impact of the twenty percent Class B stock distribution to shareholders of record on June 15, 2026, with no impact on Total Shareholders’ Equity.
7

ASTRONICS CORPORATION
Consolidated Condensed Statements of Shareholders’ Equity, Continued
Three and Six Months Ended July 4, 2026 with Comparative Figures for 2025
(Unaudited)
(In thousands)
Six Months EndedThree Months Ended
(Shares)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Common Stock
Beginning of Period34,464 32,871 34,786 33,301 
Net Issuance of Common Stock for RSUs160 143 — — 
Class B Stock Converted to Common Stock1,186 729 1,024 442 
End of Period35,810 33,743 35,810 33,743 
Convertible Class B Stock1
Beginning of Period11,132 12,252 10,971 11,965 
Net Issuance from Exercise of Stock Options1 — — — 
Class B Stock Converted to Common Stock(1,186)(729)(1,024)(442)
End of Period9,947 11,523 9,947 11,523 
Treasury Stock
Beginning of Period2,751 2,694 2,751 2,694 
End of Period2,751 2,694 2,751 2,694 
See notes to Consolidated Condensed Financial Statements.
















1 All share information have been adjusted to reflect the impact of the twenty percent Class B stock distribution to shareholders of record on June 15, 2026.
8
ASTRONICS CORPORATION
Notes to Consolidated Condensed Financial Statements
July 4, 2026
(Unaudited)
1) Basis of Presentation
The accompanying unaudited statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.
On June 1, 2026, Astronics Corporation announced a twenty percent stock distribution of Class B Stock (the “Class B stock distribution”) to holders of both Common and Class B Stock. Stockholders received one share of Class B Stock for every five shares of Common and Class B Stock held on the record date of June 15, 2026, with an ex-dividend date of June 15, 2026. All prior-period share or per share amounts presented herein have been retroactively adjusted to reflect the Class B stock distribution. The number of shares underlying, and the exercise price of outstanding stock options and other equity awards were proportionately adjusted to reflect the Class B stock distribution.
Operating Results
The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the six months ended July 4, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
The balance sheet on December 31, 2025, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
For further information, refer to the Consolidated Financial Statements and the notes thereto included in Astronics Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2026 (the “2025 10-K”).
Description of the Business
Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense, and electronics industries. Our products and services include advanced, high-performance inflight entertainment and connectivity products and services, lighting and safety systems, flight critical electrical power generation and distribution systems, seat motion systems and automated test systems.
We have principal operations in the United States (“U.S.”), Canada, France and Germany, as well as engineering offices in Ukraine and India.
The Company has two reportable segments, Aerospace and Test Systems. The Aerospace segment designs and manufactures products for the global aerospace and defense industry. Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries.
Acquisition Activities
On June 30, 2025, the Company purchased the membership interests of Envoy Aerospace, LLC (“Envoy Aerospace”), located in Aurora, Illinois. Envoy Aerospace is an FAA Organization Designation Authorization (“ODA”) services provider. Envoy Aerospace is included in our Aerospace segment. The total purchase price was approximately $8.3 million, net of cash acquired and the closing adjustment. Of the purchase price, $4.5 million was paid at the closing date and $2.0 million was paid on the first anniversary of the closing date which was reflected as an outflow from financing activities in the Consolidated Condensed Statement of Cash Flows. A payment of $1.8 million becomes payable by the Company following the second anniversary of the closing date based on the achievement of certain milestones.
On October 13, 2025, the Company acquired all of the issued and outstanding capital stock of Bühler Motor Aviation (“BMA”), located in Uhldingen-Mühlhofen, Germany. BMA is an established manufacturer of aircraft seat actuation systems with a broad product portfolio that includes actuators, electronics, control panels, pneumatic systems, and lighting. BMA is included in our Aerospace segment. The total purchase price was approximately $18.0 million, net of cash acquired and the estimated closing adjustment. The purchase price was paid at the closing date.
9
Restricted Cash
Under the provisions of the Company’s prior asset-based revolving credit facility which was terminated on October 22, 2025, the Company had a cash dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts were contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility. Account balances that had not yet been applied to the ABL Revolving Credit Facility were classified as restricted cash in the applicable Consolidated Condensed Balance Sheets.
Trade Accounts Receivable and Contract Assets
The allowance for estimated credit losses is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable and supportable forecasts of future economic conditions that may affect a customer’s ability to pay.
The changes in allowances for estimated credit losses for the three and six months ended July 4, 2026 and June 28, 2025 consisted of the following:
Six Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Balance at Beginning of the Period$847 $2,377 $1,363 $2,291 
Bad Debt Expense, Net of Recoveries117 (105)(535)23 
Write-off Charges Against the Allowance and Other Adjustments(97)(1,430)39 (1,472)
Balance at End of the Period$867 $842 $867 $842 
Simplification Initiatives
In the second quarter of 2025, the Company initiated simplification activities in the Aerospace segment, including costs related to footprint rationalization and portfolio shaping. Restructuring charges, including impairments of inventory and other long-lived assets, were recorded as a result of these simplification initiatives. In the three and six months ended June 28, 2025, the Company recorded $5.8 million and $0.4 million in simplification initiative charges to Cost of Products Sold and Selling, General and Administrative Expenses, respectively, in the accompanying Consolidated Condensed Statements of Operations. No such charges were recorded in the three and six months ended July 4, 2026.
Cloud Computing Arrangements
The Company incurs costs to implement cloud computing arrangements hosted by third-party vendors. Implementation costs incurred during the application development phase are capitalized in accordance with ASC Topic 350-40, Intangibles—Goodwill and Other—Internal-Use Software, and are included in Other Non-Current Assets on the Consolidated Condensed Balance Sheets. Capitalized costs are amortized on a straight-line basis over the contractual term of the arrangement, beginning when the related cloud computing solution is ready for its intended use. Implementation costs are reflected within Cash from Operating Activities on the Consolidated Condensed Statements of Cash Flows. Amortization expense was immaterial for the three and six months ended July 4, 2026 and June 28, 2025. As of July 4, 2026 and December 31, 2025, the Company had capitalized implementation costs of $6.7 million and $2.8 million, respectively, which relate to one cloud computing implementation project that has not yet been placed into service; accordingly, amortization on this project has not yet begun.
Valuation of Goodwill and Long-Lived Assets
The Company tests goodwill at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Long-lived assets are evaluated for recoverability whenever adverse effects or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability test consists of comparing the undiscounted projected cash flows with the carrying amount. Should the carrying amount exceed undiscounted projected cash flows, an impairment loss would be recognized to the extent the carrying amount exceeds fair value.
As of July 4, 2026 and June 28, 2025, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the six-month periods then ended.
10
Foreign Currency Translation
The aggregate foreign currency transaction gain or loss included in operations was immaterial for the three and six months ended July 4, 2026 and June 28, 2025.
New or Recent Accounting Pronouncements
We consider the applicability and impact of all ASUs. There have been no new applicable accounting pronouncements or changes in accounting pronouncements during the three months ended July 4, 2026 as compared with the recent accounting pronouncements described in the 2025 10-K. ASUs not disclosed were assessed and determined to be either not applicable or had or are expected to have minimal impact on our financial statements and related disclosures.
2) Revenue
On July 4, 2026, we had $780.6 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $642.2 million of our outstanding performance obligations as revenue over the next twelve months and the balance thereafter.
The Company’s contract assets and contract liabilities consist primarily of costs and profits in excess of billings and billings in excess of cost and profits, respectively. The following table presents the beginning and ending balances of contract assets and contract liabilities:
(In thousands)Contract AssetsContract Liabilities
Beginning Balance, January 1, 2026
$54,687 $26,962 
Ending Balance, July 4, 2026
$56,961 $27,282 
The increase in contract assets reflects the net impact of new revenue recognized in excess of billings exceeding billing of previously unbilled revenue during the period. The increase in contract liabilities reflects the net impact of new customer advances or deferred revenues recorded in excess of revenue recognized.
During the three and six months ended July 4, 2026, the Company recognized $12.7 million and $13.9 million, respectively, in revenues that were included in the contract liability balance at the beginning of the period. During the three and six months ended June 28, 2025, the Company recognized $9.9 million and $17.8 million, respectively, in such revenues.
The Company recognizes an asset for certain, material costs to fulfill a contract if it is determined that the costs relate directly to a contract or an anticipated contract that can be specifically identified, generate or enhance resources that will be used in satisfying performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Start-up costs are expensed as incurred. Capitalized fulfillment costs are included in Inventories in the accompanying Consolidated Condensed Balance Sheets. Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off. The Company’s capitalized fulfillment costs amounted to $6.9 million and $6.0 million on July 4, 2026 and December 31, 2025, respectively. Amortization of fulfillment costs recognized within Cost of Products Sold was $0.1 million and $0.2 million for the three and six months ended July 4, 2026, respectively, and $0.1 million and $3.4 million for the three and six months ended June 28, 2025, respectively.
Beginning in the current year, the Company reorganized its product line structure to align with changes in internal reporting. Prior‑period disaggregated revenue information has been recast to conform to the current‑period presentation, including all prior years presented. The Company’s updated disaggregation of revenue by product lines is consistent with the information used by the Chief Operating Decision Maker (“CODM”) to evaluate operating performance and allocate resources. There was no impact on total revenue as a result of this change. The Company’s disaggregation of revenue by market segments remains unchanged from the Company’s prior presentation.
11
The following table presents our revenue disaggregated by Market Segments for the periods indicated:
Six Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Aerospace Segment
Commercial Transport
$333,425 $283,115 $177,006 $145,573 
Military Aircraft
64,133 60,696 30,631 27,433 
General Aviation
49,052 33,613 27,603 18,370 
Other
4,502 7,577 2,052 2,250 
Aerospace Total451,112 385,001 237,292 193,626 
Test Systems Segment
Government & Defense
39,464 25,613 22,665 11,052 
Test Systems Total39,464 25,613 22,665 11,052 
Total$490,576 $410,614 $259,957 $204,678 
The following table presents our revenue disaggregated by Product Lines for the periods indicated:
Six Months EndedThree Months Ended
RecastRecast
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Aerospace Segment
Inflight Entertainment & Connectivity$236,756 $209,012 $126,008 $105,902 
Lighting & Safety111,977 108,057 59,170 56,100 
Flight Critical Electrical Power48,423 37,146 23,660 15,832 
Seat Motion42,065 16,889 22,186 10,217 
Other11,891 13,897 6,268 5,575 
Aerospace Total451,112 385,001 237,292 193,626 
Test Systems39,464 25,613 22,665 11,052 
Total$490,576 $410,614 $259,957 $204,678 
Inflight Entertainment & Connectivity (“IFEC”) is a combination of the previous Avionics and Systems Certification product lines, as well as cabin power products which were included in the previous Electrical Power & Motion product line. The remainder of the previous Electrical Power & Motion product line is now split into two discrete product lines, Flight Critical Electrical Power and Seat Motion. Lighting and Safety remains consistent and Structures is now reported within Other Aerospace revenue.
For the six months ended July 4, 2026, revenue in the Flight Critical Electrical Power product line includes $2.6 million related to performance obligations satisfied in prior periods due to a change in estimate of variable consideration.
3) Inventories
Inventories consisted of the following:
(In thousands)
July 4, 2026December 31, 2025
Finished Goods
$33,609 $32,838 
Work in Progress
46,146 38,686 
Raw Material
140,310 125,336 
$220,065 $196,860 
12
4) Property, Plant and Equipment
Property, Plant and Equipment consisted of the following:
(In thousands)
July 4, 2026December 31, 2025
Land
$8,869 $8,902 
Buildings and Improvements
99,450 83,482 
Machinery and Equipment
139,759 131,610 
Construction in Progress
8,333 19,616 
Total Property, Plant and Equipment, Gross256,411 243,610 
Less Accumulated Depreciation140,843 136,532 
Total Property, Plant and Equipment, Net$115,568 $107,078 
5) Intangible Assets
The following table summarizes acquired intangible assets as follows:
July 4, 2026December 31, 2025
(In thousands)
Weighted
Average Life
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Patents11 years$2,146 $2,146 $2,146 $2,146 
Non-compete Agreement4 years11,082 11,082 11,082 11,082 
Trade Names10 years11,544 10,633 11,565 10,541 
Completed and Unpatented Technology9 years47,944 46,260 47,980 45,207 
Backlog4 years3,888 602 3,991 177 
Customer Relationships15 years145,623 108,352 145,773 104,531 
Licensing Agreement13 years6,760 520 6,760 260 
Total Intangible Assets13 years$228,987 $179,595 $229,297 $173,944 
All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows:
Six Months EndedThree Months Ended
(In thousands)
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Amortization Expense
$5,771 $5,920 $2,884 $2,945 
Amortization expense for acquired intangible assets expected for 2026 and for each of the next five years is summarized as follows:
(In thousands)
2026$11,312 
2027$9,498 
2028$8,711 
2029$7,161 
2030$4,406 
2031$4,195 
13
6) Goodwill
The following table summarizes the changes in the carrying amount of goodwill for the six months ended July 4, 2026:
(In thousands)December 31, 2025Acquisition Adjustments
Foreign
Currency
Translation
July 4, 2026
Aerospace$41,288 $1,048 $530 $42,866 
Test Systems21,635 — — 21,635 
$62,923 $1,048 $530 $64,501 
7) Long-term Debt and Notes Payable
Revolving Credit Facility
On October 22, 2025, the Company entered into a $300.0 million senior secured, cash flow-based revolving credit facility (the “Revolving Credit Facility”), which replaced the Company’s prior asset-based revolving credit facility, which was terminated. The scheduled maturity date for the Revolving Credit Facility is October 16, 2030. Under the terms of the Revolving Credit Facility, the Company pays interest on the unpaid principal amount outstanding at a rate equal to Term SOFR (as defined in the Revolving Credit Facility) plus an applicable margin ranging from 1.25% to 2.125%, determined based upon the Company’s Total Net Debt Leverage Ratio (as defined in the Revolving Credit Facility). The Company pays a quarterly commitment fee on unused Revolving Commitments ranging from 0.20% to 0.35%, determined based upon the Company’s Total Net Debt Leverage Ratio. The Revolving Credit Facility has an accordion feature that allows the Company to request incremental commitments of up to $100.0 million plus additional incremental amounts, subject to compliance with specified leverage requirements.
Pursuant to the Revolving Credit Facility, the Company is subject to a total net debt leverage ratio covenant that requires that the Company’s Total Net Debt Leverage Ratio may not exceed 4.50 to 1.00, a consolidated interest coverage ratio covenant that requires that the Company’s Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Facility) may not be less than 3.50 to 1.00, and a secured net debt leverage ratio covenant that requires that the Company’s Secured Net Debt Leverage Ratio (as defined in the Revolving Credit Facility) may not exceed 3.00 to 1.00. As of July 4, 2026, the Company was in compliance with these covenants.
There was $60.0 million outstanding and $237.8 million available for future borrowings, net of outstanding letters of credit, under the Revolving Credit Facility at July 4, 2026, and $85.0 million outstanding and $212.8 million available at December 31, 2025.
Unamortized deferred debt issuance costs associated with the Revolving Credit Facility were $2.7 million and $3.0 million as of July 4, 2026 and December 31, 2025, respectively, and are recorded within Other Assets. Debt issuance cost amortization expense was $0.6 million for each of the three months ended July 4, 2026 and June 28, 2025, and $1.2 million for each of the six months ended July 4, 2026 and June 28, 2025. All costs are amortized to interest expense over the term of the respective agreement.
Interest expense was $2.3 million and $3.1 million for the three months ended July 4, 2026 and June 28, 2025, respectively, and $4.7 million and $6.2 million for the six months ended July 4, 2026 and June 28, 2025, respectively.
2030 Convertible Notes
On December 3, 2024, the Company issued $165.0 million aggregate principal amount of 5.500% Convertible Senior Notes due 2030 (the “2030 Convertible Notes”). The 2030 Convertible Notes bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The 2030 Convertible Notes will mature on March 15, 2030, unless earlier converted, redeemed or repurchased. As adjusted for the Company’s twenty percent Class B stock distribution, the conversion rate is 53.0389 shares of common stock per $1,000 principal amount of 2030 Convertible Notes, which represents a conversion price of $18.85 per share. The 2030 Convertible Notes are convertible at the option of the holders at any time on or after December 15, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligations by paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.
Beginning March 20, 2028, if the Company’s stock price has been at least 130% of the conversion price for a specified period of time, the 2030 Convertible Notes may be called at the option of the issuer. Under the same conditions, the Company can elect to redeem the 2030 Convertible Notes for cash. After the first quarter of 2025, if the Company’s stock price has been at
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least 130% of the conversion price for 20 of 30 trading days ending on and including the last trading day of the immediately preceding quarter, the 2030 Convertible Notes may be called at the option of the holder. During the fiscal quarter ended July 4, 2026, the Company’s stock price met the price trigger defined above, and therefore holders of the 2030 Convertible Notes will have the ability to convert their notes at their option at any time during the fiscal quarter ending October 3, 2026.
2031 Convertible Notes
On September 15, 2025, the Company issued $225.0 million aggregate principal amount of Convertible Senior Notes due 2031 (the “2031 Convertible Notes”). The 2031 Convertible Notes do not bear interest and will mature on January 15, 2031, unless earlier converted, redeemed or repurchased. As adjusted for the Company’s twenty percent Class B stock distribution, the conversion rate is 22.1283 shares of common stock per $1,000 principal amount of 2031 Convertible Notes, which represents a conversion price of $45.19 per share. The 2031 Convertible Notes are convertible at the option of the holders at any time on or after October 15, 2030, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligations by paying cash up to the aggregate principal amount of the 2031 Convertible Notes to be converted and paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, in respect of any amount in excess of the aggregate principal amount of the notes being converted.
Beginning January 22, 2029, if the Company’s stock price has been at least 130% of the conversion price for a specified period of time, the 2031 Convertible Notes may be called at the option of the Company. After the fourth quarter of 2025, if the Company’s stock price has been at least 130% of the conversion price for 5 of the first 20 trading days of a fiscal quarter, the 2031 Convertible Notes may be redeemed at the option of the holder during the 30‑trading day period beginning on, and including, the 21st trading day of such quarter. During the fiscal quarter ended July 4, 2026, the Company’s stock price met the price trigger defined above, and holders of the 2031 Convertible Notes had the ability to convert their notes at their option during the 30‑trading day period beginning on, and including, the 21st trading day of the quarter. No notes were converted.
The following table presents the outstanding principal amount and carrying value of the Convertible Notes as of the dates indicated:
July 4, 2026December 31, 2025
(In thousands)PrincipalUnamortized Debt Issuance CostsCarrying ValuePrincipalUnamortized Debt Issuance CostsCarrying Value
2030 Convertible Notes
$33,000 $(902)$32,098 $33,000 $(1,023)$31,977 
2031 Convertible Notes
225,000 (6,779)218,221 225,000 (7,526)217,474 
Total
$258,000 $(7,681)$250,319 $258,000 $(8,549)$249,451 
The Company estimates the fair value of the convertible notes based on quoted prices for these instruments in active markets and classifies these fair value measurements as Level 1 within the fair value hierarchy. The fair value of the 2031 Convertible Notes was approximately $378.2 million and $264.1 million as of July 4, 2026 and December 31, 2025, respectively. The fair value of the 2030 Convertible Notes was approximately $126.7 million and $84.8 million as of July 4, 2026 and December 31, 2025, respectively.
Capped Call Transactions
In connection with the issuance of the 2031 Convertible Notes, we entered into capped call transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the 2031 Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2031 Convertible Notes, subject to a cap. As adjusted for the Company’s twenty percent Class B stock distribution, the cap price of the Capped Calls is approximately $68.44 per share of the Company’s common stock and is subject to certain adjustments under the terms of the capped call transactions. The Capped Calls expire January 15, 2031.
The Company used approximately $26.9 million of the net proceeds from the 2031 Convertible Notes to purchase the Capped Calls. These instruments are classified as equity and recorded within additional paid-in capital in the Consolidated Condensed Statements of Changes in Stockholders’ Equity.
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8) Product Warranties
In the ordinary course of business, the Company warrants its products against defects in design, materials, and workmanship typically over periods ranging from twelve to sixty months. The Company determines warranty reserves needed by product line based on experience and current facts and circumstances.
Activity in the warranty accrual, which is included in Accrued Expenses and Other Current Liabilities on the Consolidated Condensed Balance Sheets, is summarized as follows:
Six Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Balance at Beginning of Period$20,740 $18,081 $19,525 $17,611 
Warranties Issued2,523 3,401 1,574 2,494 
Warranties Settled(3,884)(2,928)(2,075)(1,608)
Change in Warranty Estimate(411)459 (56)516 
Balance at End of Period$18,968 $19,013 $18,968 $19,013 
9) Income Taxes
The effective tax rates were approximately 7.4% and 29.0% for the three months ended and 3.3% and 9.8% for the six months ended July 4, 2026 and June 28, 2025, respectively. Beginning with the 2025 tax year, U.S. domestic research and development costs can be expensed as incurred. In addition, there are options to expense any remaining unamortized research and development costs that were previously capitalized during the 2022 through 2024 tax years. The tax rate in the 2026 period was favorably impacted by the reversal of valuation allowances related to net operating losses expected to be utilized in the 2026 period and previously capitalized research and development costs that are expected to be expensed in the 2026 period, partially offset by certain timing differences. In addition, the tax rate in the 2026 period was impacted by state and foreign income taxes and a discrete adjustment to recognize a benefit from deductible stock-based compensation expense.
The Company records a valuation allowance against the deferred tax assets if and to the extent it is more likely than not that the Company will not recover the deferred tax assets. In evaluating the need for a valuation allowance, the Company weighs all relevant positive and negative evidence, and considers among other factors, historical financial performance, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, and tax planning strategies. After considering the losses in recent periods and cumulative pre-tax losses in the three-year period ending with the most recently completed fiscal year, the Company determined that projections of future taxable income could not be relied upon as a source of income to realize its deferred tax assets. However, the Company is relying on a significant portion of its existing deferred tax liabilities for the realizability of deferred tax assets, which required us to reverse a portion of the valuation allowance associated with such deferred tax assets expected to be so realized. Accordingly, during the years ended December 31, 2025 and 2024, the Company determined that a portion of its deferred tax assets were not expected to be realizable in the future and the Company continues to maintain the valuation allowance against its residual amount of deferred tax assets as of July 4, 2026.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA permanently extends and modifies significant provisions enacted in 2017 as part of the Tax Cuts and Jobs Act (“TCJA”) that were originally set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, many of which were not in effect until 2026. Key provisions of the OBBBA relevant to the Company’s operations include immediate expensing of certain domestic research and development expenses and domestic capital expenditures beginning in 2025 as well as changes to various U.S. international tax provisions beginning in 2026. These provisions of the OBBBA have favorably impacted the Company’s effective tax rate and cash tax rate for the 2025 and 2026 tax years and are expected to have favorable impacts in future years. Changes in tax laws may affect recorded deferred tax assets and deferred tax liabilities and our effective tax rate in the future and the Company is continuing to evaluate the impacts of the new legislation.
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10) Earnings Per Share
The following table sets forth the computation of basic earnings per share:
Six Months EndedThree Months Ended
(In thousands, except per share amounts)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Basic Earnings per Common Share:
Net Income - Basic$60,600 $10,842 $35,060 $1,314 
Weighted Average Shares - Basic42,944 42,416 43,008 42,487 
Basic Earnings per Common Share$1.41 $0.26 $0.82 $0.03 
The following table sets forth the computation of diluted net income per share:
Six Months EndedThree Months Ended
(In thousands, except per share amounts)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Diluted Earnings per Common Share:
Net Income - Diluted$60,600 $10,842 $35,060 $1,314 
Weighted Average Shares - Basic42,944 42,416 43,008 42,487 
Net Effect of Dilutive Stock Awards1,783 855 1,819 1,154 
Net Effect of Dilutive Convertible Notes1,492 — 1,708 — 
Weighted Average Shares - Diluted46,219 43,271 46,535 43,641 
Diluted Earnings per Common Share$1.31 $0.25 $0.75 $0.03 
The above information has been adjusted to reflect the impact of the twenty percent distribution of Class B Stock for shareholders of record on June 15, 2026.
The Company includes the dilutive effect of shares issuable upon conversion of its Convertible Notes in the calculation of diluted income per share using the if-converted method. The Company has the option for the 2030 Convertible Notes to settle the conversion value in any combination of cash or shares, and as such, the maximum number of shares issuable are included in the dilutive share count if the effect would be dilutive. The Company excluded all impacts of the 2030 Convertible Notes from the computation of diluted earnings per share at the three and six months ended July 4, 2026 as the effect would be anti-dilutive. The Company will settle the principal amount of the 2031 Convertible Notes by paying cash and settle the premium in any combination of cash or shares. The Company’s average stock price during the period outstanding was above the conversion price for the 2031 Convertible Notes, therefore incremental shares were included in diluted earnings per share at the three and six months ended July 4, 2026.
Stock options with exercise prices greater than the average market price of the underlying common shares are excluded from the computation of diluted earnings per share because they are out-of-the-money and the effect of their inclusion would be anti-dilutive.
Antidilutive shares excluded from diluted earnings per share computations as of the date indicated were as follows:
Six Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Stock Options and Unvested RSUs— 522 — 479 
2030 Convertible Notes1,750 8,751 1,750 8,751 
Total Antidilutive Securities1,750 9,273 1,750 9,230 
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11) Shareholders’ Equity
Share Buyback Program
The Company’s Board of Directors from time to time authorizes the repurchase of common stock, which allows the Company to purchase shares of its common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions. The Company has the capacity under the currently authorized program to repurchase additional shares of its common stock with a maximum dollar value of $41.5 million.
At-the-Market Equity Offering
On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $30.0 million. During the three and six months ended July 4, 2026 and June 28, 2025, the Company did not sell any shares of its common stock under the ATM Program. As of July 4, 2026, the Company had remaining capacity under the ATM Program to sell shares of common stock having an aggregate offering price up to approximately $8.2 million.
Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
(In thousands)July 4, 2026December 31, 2025
Foreign Currency Translation Adjustments$(7,105)$(5,152)
Retirement Liability Adjustment – Before Tax(1,285)(1,540)
Tax Benefit of Retirement Liability Adjustment2,282 2,282 
Retirement Liability Adjustment – After Tax997 742 
Accumulated Other Comprehensive Loss$(6,108)$(4,410)
The components of other comprehensive (loss) income are as follows:
Six Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Foreign Currency Translation Adjustments$(1,953)$2,931 $(798)$2,179 
Retirement Liability Adjustments:
Reclassifications to Selling, General and Administrative Expenses:
Amortization of Prior Service Cost
193 193 96 97 
Amortization of Net Actuarial Losses (Gains)62 (665)32 (333)
Retirement Liability Adjustment255 (472)128 (236)
Other Comprehensive (Loss) Income$(1,698)$2,459 $(670)$1,943 
12) Sales to Major Customers
The loss of major customers or a significant reduction in business with a major customer would significantly, and negatively impact our sales and earnings. In the three and six months ended July 4, 2026, the Company had one major customer over 10% of consolidated sales primarily in the Aerospace segment. Sales to The Boeing Company (“Boeing”) accounted for 12.0% and 11.1% of consolidated sales in the three and six months ended July 4, 2026. Accounts receivable from Boeing on July 4, 2026 were approximately $27.1 million. In the three and six months ended June 28, 2025, the Company had no major customers over 10% of consolidated sales.
13) Legal Proceedings and Other Matters
Legal Proceedings
One of the Company’s Aerospace subsidiaries is involved in numerous patent infringement actions brought by Lufthansa Technik AG (“Lufthansa”) in Germany, the United Kingdom (“UK”) and France. The Company is vigorously defending all such litigation and proceedings. Additional information about these legal proceedings can be found in Note 19, Legal Proceedings and Other Matters, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in the 2025 10-K.
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As previously disclosed, Lufthansa and AES have filed requests with the German Federal Supreme Court to be granted leave to file appeals against the decision in both the direct and indirect matter. On February 25, 2026, the German Federal Supreme Court rejected Lufthansa’s and AES’s petitions for leave to appeal in both matters. Therefore, the decisions of the Higher Regional Court of Karlsruhe have become final.
The reserve for the German indirect claim and interest was approximately $17.8 million at July 4, 2026 and $17.6 million at December 31, 2025. The Company currently believes it is unlikely that the damages in the German indirect proceedings and related interest will be paid within the next twelve months. Therefore, the liability related to this matter is classified within Other Liabilities (non-current) in the Consolidated Condensed Balance Sheets at July 4, 2026 and December 31, 2025.
In the matter before the UK High Court of Justice, Lufthansa had pleaded its case for monetary compensation at a separate trial which was conducted in October 2024. Both the Company and Lufthansa submitted to the UK High Court of Justice calculations of the estimated profits derived from the reports of the parties’ respective financial experts. The account of profits trial judgment was published on February 21, 2025 by the court in the amount of $11.9 million. Such amount was recorded as a liability in the Company’s Consolidated Financial Statements as of December 31, 2024. Following a consequential hearing on March 20, 2025, the amount was adjusted upwards by $0.5 million related to the resolution of a provisional item. Additionally, on April 30, 2025, the UK High Court of Justice issued a draft order related to interest associated with damages, which obligated the Company to accrue a reserve estimate of $5.7 million relating to such interest associated with the damages. Both of these amounts were recorded within Selling, General and Administrative Expenses in the Company’s Consolidated Condensed Statement of Operations during the first quarter of 2025.
There was a further consequential hearing on May 16, 2025 which addressed applications concerning interest on the ordered damages, permission to appeal the court’s findings in these matters, as well as the issue of reimbursement of legal fees in the damages phase of the litigation. The Company was ordered to make payments of $5.7 million in relation to previously accrued interest and $3.5 million for partial reimbursement of Lufthansa’s legal costs. The legal cost reimbursement was recorded within Selling, General and Administrative Expenses in the Company’s Consolidated Condensed Statement of Operations during the second quarter of 2025.
During the three and six months ended June 28, 2025, the Company made payments totaling $21.6 million, in satisfaction of the liabilities for damages, interest and provisional legal fee reimbursement.
Both the Company and Lufthansa were granted permission to appeal the rulings by the UK High Court of Justice. The appeals were heard by the UK Court of Appeal in July 2026 and judgment was handed down on July 27, 2026. The Court’s judgment is that Lufthansa failed in its appeal and the Company succeeded in one of its appeals. The Company’s position is that approximately $2.2 million (including interest) of the damages paid by the Company to Lufthansa following the judgments in February 2025 and April 2025 is due to be repaid to the Company by Lufthansa. The Company is seeking an order for repayment of this money from the Court of Appeal. The Company is also seeking from the Court of Appeal that a portion of its legal expense for the appeals and the first instance damages trial is reimbursed; such amount has not yet been estimated. It is possible for either side to seek permission to appeal to the UK Supreme Court. No such applications have yet been made by either side. The Company expects to record the gain for the damages repayment as well as the legal fee reimbursement as an offset to Selling, General and Administrative Expense in the quarter in which the Court orders such payments.
A liability for reimbursement of Lufthansa’s legal expenses associated with the UK matter, exclusive of the damages phase, was approximately $1.0 million at July 4, 2026 and December 31, 2025, which is expected to be paid within the next twelve months and, as such, is classified in Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheets as of July 4, 2026 and December 31, 2025.
With respect to the proceeding in France, the Court of Appeal of Paris is set to hear the appeal on nullity on October 28, 2026. Should the Court find the patent to be valid, the trial date for the infringement and damages is scheduled for December 2027. As loss exposure is not probable and estimable at this time, the Company has not recorded any liability with respect to the French matter at July 4, 2026 or December 31, 2025.
Each of the German, France and UK claims are separate and distinct. Validity and infringement of the Lufthansa patent in each country is a matter for the courts in each of these countries, whose laws differ from each other. In addition, the principles of calculating damages in each jurisdiction differ substantially. Therefore, the Company has assessed each matter separately and cannot apply the same calculation methodology as in the German direct and indirect matters. However, it is reasonably possible that additional damages and interest could be incurred if the appellate court in France was to rule in favor of Lufthansa, or if damages in the UK matter upon conclusion of the appeal are calculated on a different basis than the initial judgment.
There were no other significant developments in any of these matters during the three months ended July 4, 2026.
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Other than these proceedings, we are not party to any significant pending legal proceedings that management believes will result in a material adverse effect on our financial condition or results of operations.
Other Matters
On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court decision, the U.S. Administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, which was subsequently struck down on May 7, 2026 by the U.S. Court of International Trade. Refunds of previously paid tariffs represent gain contingencies under ASC 450-30. Consistent with this guidance, the Company recognizes such refunds as a reduction of Cost of Products Sold in the period in which the gain is realized or realizable, generally when cash is received. Refunds that have been approved but not yet received, or that remain subject to appeal, further agency action, or other contingencies, are not recognized until realization criteria are met.
As a result, during the three and six months ended July 4, 2026, the Company received $2.0 million in IEEPA tariff refunds in the Consolidated Condensed Statement of Operations. The ultimate impact of these developments on our future financial results remains uncertain, including the timing and extent of any future refunds of tariffs previously paid under IEEPA and the nature, scope, and rate of any replacement tariffs or other trade measures that may be implemented.
14) Segment Information
The Company reports segment information based on the management approach, which designates the internal reporting used by the CODM for making decisions and assessing performance as the source of the Company’s reportable segments. The CODM, which is the Company’s Chief Executive Officer, allocates resources and assesses the performance of each operating segment based on historical and potential future product sales, gross margin associated with those sales, and operating profit (loss) before interest, taxes, and corporate expenses. The Company has determined its reportable segments to be Aerospace and Test Systems based on the information used by the CODM.
20
Segment information and reconciliations to consolidated amounts are as follows:
Six Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Sales:
Aerospace$451,135 $385,035 $237,292 $193,647 
Less Inter-segment Sales(23)(34)— (21)
Total Aerospace Sales451,112 385,001 237,292 193,626 
Test Systems39,498 25,933 22,674 11,341 
Less Inter-segment Sales(34)(320)(9)(289)
Total Test Systems Sales39,464 25,613 22,665 11,052 
Total Consolidated Sales490,576 410,614 259,957 204,678 
Less1
Cost of Products Sold:
Aerospace298,267 271,627 155,140 138,735 
66.1 %70.6 %65.4 %71.7 %
Test Systems30,279 25,311 17,920 13,116 
76.7 %98.8 %79.1 %118.7 %
Other Segment Items2
Aerospace69,249 73,071 33,888 36,852 
Test Systems8,190 9,235 4,153 4,646 
Operating Profit and Margins:
Aerospace83,596 40,303 48,264 18,039 
18.5 %10.5 %20.3 %9.3 %
Test Systems3
995 (8,933)592 (6,710)
2.5 %(34.9)%2.6 %(60.7)%
Total Operating Profit84,591 31,370 48,856 11,329 
17.2 %7.6 %18.8 %5.5 %
Deductions from Segment Measure of Operating Profit:
Interest Expense, Net of Interest Income
4,668 6,247 2,332 3,097 
Corporate Expenses and Other
17,284 13,098 8,670 6,381 
Income Before Income Taxes$62,639 $12,025 $37,854 $1,851 
1 The significant expenses and amounts presented align with the segment-level information that is regularly provided to the CODM. Inter-segment expenses are included within the amounts shown.
2 Other segment items include Selling, General and Administrative Expenses, Research and Development Expenses, and sublease and rental income.
3 In the three and six months ended June 28, 2025, revisions of estimated costs to complete certain long-term mass transit Test contracts had an adverse impact to operating profit of $6.9 million and $8.8 million, respectively.
(In thousands)July 4, 2026December 31, 2025
Total Assets:
Aerospace
$614,128 $570,294 
Test Systems
126,664 119,603 
Corporate
20,052 16,781 
Total Assets$760,844 $706,678 
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Six Months EndedThree Months Ended
(In thousands)
July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Depreciation and Amortization:
Aerospace
$11,205 $8,955 $5,826 $4,457 
Test Systems
1,002 1,990 497 912 
Corporate
28 21 18 9 
Total Depreciation and Amortization$12,235 $10,966 $6,341 $5,378 
Capital Expenditures:
Aerospace
$16,221 $6,525 $5,490 $4,443 
Test Systems
605 185 176 162 
Corporate
43 — 43 — 
Total Capital Expenditures$16,869 $6,710 $5,709 $4,605 
15) Fair Value
There were no financial assets or liabilities carried at fair value measured on a recurring basis on July 4, 2026 or December 31, 2025.
There were no non-recurring fair value measurements performed in the six months ended July 4, 2026 and June 28, 2025.
Due to their short-term nature, the carrying value of cash and equivalents, accounts receivable, and accounts payable approximate fair value. The carrying value of the Company’s variable rate long-term debt instruments also approximates fair value due to the variable rate feature of these instruments. Refer to Note 7, Long-term Debt and Notes Payable, for additional information relating to the fair value of the Company’s outstanding fixed-rate Convertible Notes.
16) Acquisitions
Envoy Aerospace, LLC
On June 30, 2025, the Company purchased the membership interests of Envoy Aerospace, LLC (“Envoy Aerospace”), located in Aurora, Illinois. Envoy Aerospace is an FAA Organization Designation Authorization (“ODA”) services provider. Envoy Aerospace is included in our Aerospace segment. The total purchase price was approximately $8.3 million, net of cash acquired and the estimated closing adjustment. Of the purchase price, $4.5 million was paid at the closing date and $2.0 million was paid on the first anniversary of the closing date. A payment of $1.8 million becomes payable by the Company following the second anniversary of the closing date based on the achievement of certain milestones. The Company has finalized the purchase price allocation. Purchased intangible assets and goodwill are expected to be deductible for tax purposes over 15 years. This transaction was not considered material to the Company’s financial position or results of operations.
Bühler Motor Aviation
On October 13, 2025, the Company acquired all of the issued and outstanding capital stock of Bühler Motor Aviation (“BMA”), located in Uhldingen-Mühlhofen, Germany. BMA is an established manufacturer of aircraft seat actuation systems with a broad product portfolio that includes actuators, electronics, control panels, pneumatic systems, and lighting. BMA is included in our Aerospace segment. The total purchase price was approximately $18.0 million, net of cash acquired and the estimated closing adjustment. The purchase price was paid at the closing date. The Company has not yet finalized the purchase price allocation. Purchased intangible assets and goodwill are not expected to be deductible for tax purposes. This transaction was not considered material to the Company’s financial position or results of operations.

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Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(The following should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2025 10-K.)
OVERVIEW
Astronics Corporation, through its subsidiaries, is a leading provider of advanced technologies to the global aerospace, defense, and electronics industries. Our products and services include advanced, high-performance inflight entertainment and connectivity products and services, lighting and safety systems, flight critical electrical power generation and distribution systems, seat motion systems and automated test systems.
We have two reportable segments, Aerospace and Test Systems. Our Aerospace segment has principal operating facilities in the United States, Canada, France and Germany and an engineering office in Ukraine. Our Test Systems segment has principal operating facilities in the United States and an engineering office in India.
Our Aerospace segment designs and manufactures products for the global aerospace and defense industry. Product lines include lighting and safety systems, electrical power generation, distribution and seat motion systems, inflight entertainment and connectivity products, and other products. Our primary Aerospace customers are the airframe manufacturers (“OEM”) that build aircraft for the commercial transport, military and general aviation markets, suppliers to those OEMs, aircraft operators such as airlines, suppliers to the aircraft operators, and branches of the U.S. Department of Defense (“USDOD”). Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEMs and prime government contractors for both electronics and military products.
Our strategy is to increase our value by developing technologies and capabilities, either internally or through acquisition, and using those capabilities to provide innovative solutions to our targeted markets where our technology can be beneficial.
Important factors affecting our growth and profitability are the rate at which new aircraft are produced, government funding and timing of awards of military programs, our ability to have our products designed into new aircraft, the rates at which aircraft owners, including commercial airlines, refurbish or install upgrades to their aircraft and supply chain and labor market pressures. New aircraft build rates and aircraft owners’ spending on upgrades and refurbishments is cyclical and dependent on the strength of the global economy. Once one of our products is designed into a new aircraft, the spare parts business associated thereto is also frequently retained by the Company. Future growth and profitability of the Test Systems business is dependent on developing and procuring new and follow-on business. The nature of our Test Systems business is such that it pursues large, often multi-year, projects. There can be significant periods of time between orders in this business, which may result in large fluctuations of sales and profit levels and backlog from period to period. Test Systems segment customers include the USDOW, prime contractors to the USDOW, mass transit operators and prime contractors to mass transit operators.
Each of the markets that we serve presents opportunities that we expect will provide growth for the Company over the long-term. We continue to look for opportunities in all of our markets to capitalize on our core competencies to expand our existing business and to grow through strategic acquisitions.
The main challenges that we continue to face include varying levels of supply chain pressures, material availability and cost increases (including costs associated with the imposition of tariffs by the United States and other countries discussed herein), labor availability and cost, and improving shareholder value through increasing profitability. Increasing profitability is dependent on many things, primarily sales growth, both acquired and organic, and the Company’s ability to pass cost increases along to customers and control operating expenses, and to identify means of creating improved productivity. Sales are driven by increased build rates for existing aircraft, market acceptance and economic success of new aircraft and our products, continued government funding of defense programs, the Company’s ability to obtain production contracts for parts we currently supply or have been selected to design and develop for new aircraft platforms and continually identifying and winning new business for our Test Systems segment.
Reduced aircraft build rates driven by regulatory actions impacting OEM production, a weak economy, aircraft groundings, tight credit markets, fuel price spikes, reduced air passenger travel, tariffs impacting OEM demand, and an increasing supply of used aircraft on the market would likely result in reduced demand for our products, which will result in lower profits. Reduction of defense spending may result in fewer opportunities for us to compete, which could result in lower profits in the future. Many of our newer development programs are based on new and unproven technology and at the same time we are challenged to develop the technology on a schedule that is consistent with specific programs. Delays in delivery schedules and incremental costs resulting from tariffs and other trade policy matters, supply chain pressures, and labor market pressures have in the past
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resulted in, and could in the future also result in, lower profits. We will continue to address these challenges by working to improve operating efficiencies and focusing on executing on the growth opportunities currently in front of us.
On October 22, 2025, the Company entered into the $300.0 million senior secured Revolving Credit Facility. The Revolving Credit Facility replaced the Company’s ABL Revolving Credit Facility which was terminated. The Revolving Credit Facility subjects us to various financial and other affirmative and negative covenants with which we must comply on an ongoing or periodic basis. These include financial covenants pertaining to a total leverage ratio, a consolidated interest coverage ratio, and a secured net debt leverage ratio requirement. An unexpected decline in our revenues or operating income, including occurring as a result of events beyond our control, could cause us to violate our financial covenants.
Challenges affecting the commercial aviation industry or key participants can adversely impact the demand for our products and services, the timing of orders, deliveries and related payments and other factors. We are monitoring the production levels and anticipated ramp-ups at Boeing and Airbus, and we continue to align our operations with their production expectations.
We are monitoring the ongoing conflicts between Russia and Ukraine, conflicts in the Middle East, as well as other geopolitical tensions and conflicts around the world, and the potential impact of related export controls, financial and economic sanctions, and other restrictions imposed by the U.S., the U.K., the European Union, and other countries. While these conflict have not resulted in a direct material adverse impact on our business to date, the implications of global conflicts in the short-term and long-term are difficult to predict. Factors such as increased energy costs, disruptions in the availability of certain raw materials, restrictions on air travel or trade with affected regions, sanctions on companies or industries, shifts in customer stability, and broader impacts on the global economy and aviation sector could pose risks to our operations and financial performance.
Recent Acquisitions
On June 30, 2025, the Company purchased the membership interests of Envoy Aerospace, located in Aurora, Illinois. Envoy Aerospace is an FAA ODA services provider. Envoy Aerospace is included in our Aerospace segment. The total purchase price was approximately $8.3 million, net of cash acquired and the estimated closing adjustment.
On October 13, 2025, the Company acquired all of the issued and outstanding capital stock of BMA, located in Uhldingen-Mühlhofen, Germany. BMA is an established manufacturer of aircraft seat actuation systems with a broad product portfolio that includes actuators, electronics, control panels, pneumatic systems, and lighting. BMA is included in our Aerospace segment. The total purchase price was approximately $18.0 million, net of cash acquired and the estimated closing adjustment.
Recent Developments
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA permanently extends and modifies significant provisions enacted in 2017 as part of the Tax Cuts and Jobs Act (“TCJA”) that were originally set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, many of which were not in effect until 2026. Key provisions of the OBBBA relevant to the Company’s operations include immediate expensing of certain domestic research and development expenses and domestic capital expenditures beginning in 2025 as well as changes to various U.S. international tax provisions beginning in 2026. The Company anticipates it will elect to deduct the remaining previously capitalized domestic research and development costs equally between 2025 and 2026 and expense domestic research and development costs as incurred for the 2025 and 2026 tax years.
On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court decision, the U.S. Administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, which was subsequently struck down on May 7, 2026 by the U.S. Court of International Trade. Refunds of previously paid tariffs represent gain contingencies under ASC 450-30. Consistent with this guidance, the Company recognizes such refunds as a reduction of Cost of Products Sold in the period in which the gain is realized or realizable, generally when cash is received. Refunds that have been approved but not yet received, or that remain subject to appeal, further agency action, or other contingencies, are not recognized until realization criteria are met.
As a result, during the three and six months ended July 4, 2026, the Company received $2.0 million in IEEPA tariff refunds in the Consolidated Condensed Statement of Operations. The ultimate impact of these developments on our future financial results remains uncertain, including the timing and extent of any future refunds of tariffs previously paid under IEEPA and the nature, scope, and rate of any replacement tariffs or other trade measures that may be implemented.
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CONSOLIDATED RESULTS OF OPERATIONS
Six Months EndedThree Months Ended
($ in thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Sales$490,576 $410,614 $259,957 $204,678 
Gross Profit (sales less cost of products sold)$162,030 $113,676 $86,897 $52,827 
Gross Margin33.0 %27.7 %33.4 %25.8 %
Research and Development Expenses$22,958 $22,639 $10,869 $11,572 
Selling, General and Administrative Expenses (“SG&A”)$71,375 $73,142 $35,561 $36,497 
SG&A Expenses as a Percentage of Sales14.5 %17.8 %13.7 %17.8 %
Interest Expense, Net$4,668 $6,247 $2,332 $3,097 
Effective Tax Rate3.3 %9.8 %7.4 %29.0 %
Net Income$60,600 $10,842 $35,060 $1,314 
A discussion by segment can be found in “Segment Results of Operations” in this MD&A.
CONSOLIDATED SECOND QUARTER RESULTS
Growth in sales was driven by the Aerospace segment’s continued strength in demand primarily from the Commercial Transport market, including $5.9 million from the acquisition of BMA. Aerospace sales increased $43.7 million, or 22.6%, while Test Systems sales grew $11.6 million, or 105.1%. Test Systems sales in the prior year were negatively impacted by $6.4 million due to revisions of estimated costs to complete certain long-term mass transit contracts.
Consolidated cost of products sold in the second quarter of 2026 was $173.1 million, compared with $151.9 million in the second quarter of 2025, primarily due to higher volume. This increase was partially offset by a $2.0 million IEEPA tariff refund. The prior year included a $5.8 million charge related to Aerospace simplification initiatives.
SG&A decreased $0.9 million. Litigation-related expenses were down $0.9 million, and the prior-year period included a $3.5 million legal fee reimbursement charge relating to the patent infringement dispute in the UK. These decreases were mostly offset by higher wages and benefits, higher incentive-based compensation expenses driven by increased profitability, and incremental expenses related to the acquired BMA business. R&D was down $0.7 million reflecting the timing of projects.
Interest expense was down $0.8 million, or 24.7%, on lower rates following the September 2025 refinancing activities. Tax expense in the quarter of $2.8 million reflects the benefits of a partial valuation allowance reversal and research and development costs expected to be expensed.
Consolidated net income of $0.75 per diluted share improved from $0.03 per diluted share in the prior-year period from stronger operating profit.
Bookings of $306.2 million in the quarter resulted in a book-to-bill ratio of 1.18:1. For the trailing twelve months, bookings totaled $1.06 billion and the book-to-bill ratio was 1.13:1. Backlog at the end of the quarter was $780.6 million.
CONSOLIDATED YEAR-TO-DATE RESULTS
Growth in sales was driven by the Aerospace segment’s continued strength in demand primarily from the Commercial Transport market, including $10.5 million from the acquisition of BMA. Aerospace sales increased $66.1 million, or 17.2%, while Test Systems sales grew $13.9 million, or 54.1%. In the prior year, year-to-date consolidated sales were negatively impacted by $8.3 million, resulting from revisions of estimated costs to complete certain long-term mass transit contracts in the Test Systems segment.
Consolidated cost of products sold in the first half of 2026 was $328.5 million, compared with $296.9 million in the same prior-year period primarily attributable to higher volume. The prior year included a $5.8 million charge related to Aerospace simplification initiatives.
SG&A decreased $1.8 million. Litigation-related expenses were down $2.1 million and the prior-year period included $9.7 million reserve adjustment relating to the patent infringement dispute in the UK. These decreases were mostly offset by higher wages and benefits, higher incentive-based compensation expenses driven by increased profitability, and the incremental expenses related with the acquired BMA business. R&D was up $0.3 million reflecting the timing of projects.
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Interest expense was down $1.6 million, or 25.3%, on lower rates following the September 2025 refinancing activities. Tax expense in the first half of 2026 was $2.0 million compared with tax expense of $1.2 million in the prior-year period, mostly as a result of a $2.7 million discrete adjustment for the expected benefit of a stock-based compensation deduction along with a partial valuation allowance reversal associated with an expected net operating loss deduction and with research and development costs that are expected to be expensed for tax purposes in the current year under the One Big Beautiful Bill Act. Tax expense in the prior year was partially offset by a $1.1 million discrete adjustment to reverse certain federal and state deferred tax liabilities.
Consolidated net income of $1.31 per diluted share improved from $0.25 per diluted share in the prior-year period from stronger operating profit.
Bookings of $596.6 million in the first half of 2026 resulted in a book-to-bill ratio of 1.22:1.
SEGMENT RESULTS OF OPERATIONS
Operating profit, as presented below, is sales less cost of products sold and other operating expenses, excluding interest expense, other corporate expenses and other non-operating sales and expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment. Operating profit is reconciled to income before income taxes in Note 14, Segment Information, to the Consolidated Condensed Financial Statements in Item 1, Financial Statement, of this report.
AEROSPACE SEGMENT
Six Months EndedThree Months Ended
($ in thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Sales$451,135 $385,035 $237,292 $193,647 
Less Inter-segment Sales
(23)(34)— (21)
Total Aerospace Sales
$451,112 $385,001 $237,292 $193,626 
Operating Profit$83,596 $40,303 $48,264 $18,039 
Operating Margin18.5 %10.5 %20.3 %9.3 %
Aerospace Sales by MarketSix Months EndedThree Months Ended
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Commercial Transport$333,425 $283,115 $177,006 $145,573 
Military Aircraft64,133 60,696 30,631 27,433 
General Aviation49,052 33,613 27,603 18,370 
Other4,502 7,577 2,052 2,250 
$451,112 $385,001 $237,292 $193,626 
Aerospace Sales by Product LineSix Months EndedThree Months Ended
RecastRecast
(In thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Inflight Entertainment & Connectivity$236,756 $209,012 $126,008 $105,902 
Lighting & Safety111,977 108,057 59,170 56,100 
Flight Critical Electrical Power48,423 37,146 23,660 15,832 
Seat Motion42,065 16,889 22,186 10,217 
Other11,891 13,897 6,268 5,575 
$451,112 $385,001 $237,292 $193,626 
Beginning in the current year, the Company reorganized its product line structure to align with changes in internal reporting. Prior‑period disaggregated revenue information has been recast to conform to the current‑period presentation.
(In thousands)July 4, 2026December 31, 2025
Total Assets
$614,128 $570,294 
Backlog
$657,212 $600,803 
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AEROSPACE SECOND QUARTER RESULTS
Aerospace segment sales of $237.3 million increased $43.7 million, or 22.6%. Sales in the Commercial Transport market increased $31.4 million, or 21.6%. Growth was primarily related to increased demand for seat motion and inflight entertainment & connectivity (“IFEC”) products. General Aviation sales increased $9.2 million, or 50.3%, to $27.6 million due to higher IFEC sales of VVIP products. Military Aircraft sales increased $3.2 million, or 11.7%, to $30.6 million due to increased sales of flight critical airframe power products.
Aerospace segment operating profit of $48.3 million, or 20.3% of sales, improved over the prior-year period reflecting the leverage gained on higher volume, improving production efficiencies, a $2.0 million IEEPA tariff refund, a $4.6 million decrease in litigation-related expenses and legal reserve adjustments related to the UK patent dispute previously discussed, and the absence of a $6.2 million charge for simplification initiatives in the prior-year period.
Aerospace bookings were $243.1 million for a book-to-bill ratio of 1.02:1. Backlog for the Aerospace segment was $657.2 million at quarter end.
AEROSPACE YEAR-TO-DATE RESULTS
Aerospace segment sales of $451.1 million increased $66.1 million, or 17.2%. Sales in the Commercial Transport market increased $50.3 million, or 17.8%. Growth was primarily related to increased demand for seat motion and IFEC products. General Aviation sales increased $15.4 million, or 45.9%, to $49.1 million due to higher IFEC product sales to the VVIP market. Military Aircraft sales increased $3.4 million with the prior-year period. Other sales decreased $3.1 million as the Company has wound down its non-core contract manufacturing arrangements.
Aerospace segment operating profit of $83.6 million, or 18.5% of sales, improved over the prior-year period reflecting the leverage gained on higher volume, improving production efficiencies, a $2.8 million catch-up of profit on the MV-75 FLRAA program based on revised program estimates, a $11.6 million decrease in litigation-related expenses and legal reserve adjustments related to the UK patent dispute previously discussed, and the absence of a $6.5 million charge for simplification initiatives in the prior-year period.
Aerospace bookings of $507.5 million in the first half of 2026 resulted in a book-to-bill ratio of 1.13:1.
TEST SYSTEMS SEGMENT
Six Months EndedThree Months Ended
($ in thousands)July 4, 2026June 28, 2025July 4, 2026June 28, 2025
Sales$39,498 $25,933 $22,674 $11,341 
Less Inter-segment Sales(34)(320)(9)(289)
Total Test Systems Sales$39,464 $25,613 $22,665 $11,052 
Operating Profit (Loss)$995 $(8,933)$592 $(6,710)
Operating Margin2.5 %(34.9)%2.6 %(60.7)%
All Test Systems sales are to the Government and Defense Market.
(In thousands)
July 4, 2026December 31, 2025
Total Assets
$126,664 $119,603 
Backlog$123,346 $73,692 
TEST SYSTEMS SECOND QUARTER RESULTS
Test Systems segment sales of $22.7 million were up $11.6 million from the comparator quarter in 2025. Segment sales in the prior-year period were negatively impacted by a $6.4 million revision of estimated costs to complete certain long-term mass transit contracts reducing revenue recognized in the period.
Test Systems segment operating profit was $0.6 million, compared with an operating loss of $6.7 million in the second quarter of 2025. The revisions to the estimated costs to complete had a $6.9 million detrimental impact to operating income in the prior year. Test Systems profitability continues to be negatively affected by mix and under absorption of fixed costs at current volume levels, as well as approximately $4.1 million of revenue in the current quarter at no margin related to dedicated raw materials for the U.S. Army and U.S. Marine Corps Radio Test programs. Margin on that revenue will be recognized through 2026 as production on those programs progress further.
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Bookings for the Test Systems segment in the quarter were $63.1 million. The book-to-bill ratio was 2.78:1 for the quarter. Backlog for the Test Systems segment was $123.3 million at quarter end.
TEST SYSTEMS YEAR-TO-DATE RESULTS
Test Systems segment sales of $39.5 million were up $13.9 million from the comparator quarter in 2025. Segment sales in the prior-year period were negatively impacted by $8.3 million revision of estimated costs to complete certain long-term mass transit Test contracts reducing revenue recognized in the period.
Test Systems segment operating profit was $1.0 million, compared with an operating loss of $8.9 million in the first half of 2025. Test Systems profitability, while improving, continues to be negatively affected by mix and under absorption of fixed costs at current volume levels. In the prior-year period, the revisions to the estimated costs to complete had a $8.8 million detrimental impact to operating income.
Test Systems bookings of $89.1 million in the first half of 2026 resulted in a book-to-bill ratio of 2.26:1.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities:
Cash provided by operating activities totaled $40.7 million for the first six months of 2026, as compared with $13.0 million cash provided by operating activities during the same period in 2025. Cash flow from operating activities increased compared with the same period of 2025 reflecting higher cash earnings offset by higher working capital requirements, including higher inventory levels to support anticipated revenue growth in the coming quarters. Cash provided by operating activities in the prior-year period included $21.6 million in payments related to the UK patent dispute and $12.8 million in net income tax payments.
Investing Activities:
Cash used for investing activities was $16.9 million for the first six months of 2026 compared with $6.7 million in cash used for investing activities in the same period of 2025 reflecting elevated capital expenditures for necessary catch-up investments on previously deferred spending as well as the consolidation of operations and capacity improvement in a new Seattle facility.
Financing Activities:
Cash used for financing activities totaled $32.7 million for the first six months of 2026, as compared with cash used for financing activities of $12.5 million during the same prior-year period. The Company made net payments on long-term debt of $25.0 million compared to $10.0 million in the prior-year period.
Cash on hand at the end of the quarter was $9.0 million. Net debt was $309.0 million, compared with $324.8 million at the end of 2025.
Our ability to maintain sufficient liquidity and comply with financial debt covenants is highly dependent upon achieving expected operating results. Failure to achieve expected operating results could have a material adverse effect on our liquidity, our ability to obtain financing or access our existing financing, and our operations in the future and could allow our debt holders to demand payment of all outstanding amounts. As of July 4, 2026, we are in compliance with all covenants under each of our financing arrangements. Our financing arrangements are more fully discussed in Note 7, Long-term Debt and Notes Payable, to the Consolidated Condensed Financial Statements in Item 1, Financial Statements, of this report for additional details.
The Company expects its cash flow from operations will provide sufficient cash flows to fund operations, including capital expenditures and payment of any further amounts related to the Lufthansa matters. The Company may also evaluate various actions and alternatives to enhance its profitability and cash generation from operating activities, which could include manufacturing efficiency initiatives, cost-reduction measures, working with vendors and suppliers to reduce lead times and expedite shipment of critical components, and working with customers to expedite receivable collections.
On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $30.0 million. During the three and six months ended July 4, 2026, and June 28, 2025, the Company did not sell any shares of its common stock under the ATM Program. As of July 4, 2026, the Company had remaining capacity under the ATM Program to sell shares of common stock having an aggregate offering price up to approximately $8.2 million.
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OFF BALANCE SHEET ARRANGEMENTS
We do not have any material off balance sheet arrangements that have or are reasonably likely to have a material future effect on our results of operations or financial condition.
BACKLOG
The Company’s backlog on July 4, 2026 was $780.6 million compared with $674.5 million on December 31, 2025 and $645.4 million on June 28, 2025.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
Our contractual obligations and commitments have not changed materially from the disclosures in our 2025 10-K.
MARKET RISK
Although the majority of our sales, expenses, and cash flows are transacted in U.S. dollars, we have exposure to changes in foreign currency exchange rates related primarily to the Euro and the Canadian dollar. The Company believes that the impact of changes in foreign currency exchange rates on its business and financial results for the three and six months ended July 4, 2026 was not significant.
The future impacts of U.S. trade policies, treaties, and tariffs and their residual effects, including economic uncertainty, inflationary environment, and disruption within the global supply chain, and aerospace industry, on our business remain uncertain. As we cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and various other countries, what products may be subject to such actions, what actions may be taken by the other countries in retaliation, and what actions we may be able to take to address and mitigate such tariffs, the ultimate financial impact on our results cannot be reasonably estimated but could be material. The impact of tariffs on its business and financial results for the three and six months ended July 4, 2026 was approximately $0.7 million and $3.2 million, respectively, net of $2.0 million of IEEPA tariff refunds.
CRITICAL ACCOUNTING POLICIES
Refer to Note 2, Revenue, to the Consolidated Condensed Financial Statements in Item 1, Financial Statements, of this report for the Company’s critical accounting policies with respect to revenue recognition. For a complete discussion of the Company’s other critical accounting policies, refer to the 2025 10-K.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 1, Basis of Presentation, to the Consolidated Condensed Financial Statements in Item 1, Financial Statements, of this report.
FORWARD-LOOKING STATEMENTS
Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume,” and “assume,” and other words and terms of similar meaning, including their negative counterparts, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual results to differ materially from the expected results described in the forward-looking statements. Certain of these factors, risks and uncertainties are discussed in the sections of this report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. Except as may be required by law, we disclaim any obligation to update the forward-looking statements made in this report to reflect any change in our expectations with regard thereto, or any changes in events, conditions or circumstances on which any such statement is based.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The disclosure above under the heading “Market Risk” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this report is incorporated by reference into this Item 3.
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Item 4. Controls and Procedures
a.Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer (its Principal Executive Officer) and Chief Financial Officer (its Principal Financial and Principal Accounting Officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures as of July 4, 2026. Based on that evaluation, the Company’s management, including our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of July 4, 2026.
b.Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Except as described below, there have been no material developments from the legal proceedings as previously disclosed in Note 19, Legal Proceedings and Other Matters, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of the 2025 10-K.
Currently, we are involved in legal proceedings relating to an allegation of patent infringement and, based on rulings to date, we have concluded that losses related to certain of these proceedings are probable. For a discussion of contingencies related to legal proceedings as of July 4, 2026, see Note 13, Legal Proceedings and Other Matters, to the Consolidated Condensed Financial Statements in Item 1, Financial Statements, of this report.
Item 1A. Risk Factors
In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in the 2025 10-K, which could materially affect our business, financial condition or results of operations. The risks described in this report and in the 2025 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes our purchases of our common stock for the three months ended July 4, 2026:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Program (1)
April 5, 2026 - May 2, 2026— $— — $41,483,815 
May 3, 2026 - May 30, 2026— $— — $41,483,815 
May 31, 2026 - July 4, 2026— $— — $41,483,815 
(1) On September 17, 2019, the Company’s Board of Directors authorized a share repurchase program. This program authorizes Company repurchases of up to $50 million of its common stock. Cumulative repurchases under this plan were approximately 310,000 shares at a cost of $8.5 million before the 10b5-1 plan associated with the share repurchase program was terminated on February 3, 2020.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Securities Trading Plans of Directors and Officers
(c) During the three months ended July 4, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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Table of Contents
Item 6. Exhibits
2026 Long Term Incentive Plan, incorporated by reference to Exhibit A to the registrant’s Definitive Proxy Statement on Schedule 14A for the 2026 Annual Meeting of Shareholders, as filed with the SEC on April 17, 2026.
2026 Employee Stock Purchase Plan, incorporated by reference to Exhibit B to the registrant’s Definitive Proxy Statement on Schedule 14A for the 2026 Annual Meeting of Shareholders, as filed with the SEC on April 17, 2026.
Section 302 Certification - Chief Executive Officer
Section 302 Certification - Chief Financial Officer
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101*
The financial statements from the Company’s Quarterly Report on Form 10-Q for the three months ended July 4, 2026, formatted in Inline XBRL
Exhibit 101.INS*Inline XBRL Instance Document
Exhibit 101.SCH*Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 104*Cover Page Interactive Data File (the cover page Inline XBRL tags are embedded within the Inline XBRL document)
*
Filed herewith.
**Furnished herewith.
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
ASTRONICS CORPORATION
(Registrant)
Date:
August 12, 2026
By:
/s/ Nancy L. Hedges
Nancy L. Hedges
Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)

33

What is the market capitalization of a company?

The market capitalization sometimes referred as Marketcap, is the value of a publicly listed company.
In most cases it can be easily calculated by multiplying the share price with the amount of outstanding shares.

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