ATRO

ASTRONICS CORP

NASDAQ · INDUSTRIALS · AIRCRAFT PARTS & AUXILIARY EQUIPMENT, NEC

59.20

−2.62 −4.24%

USD · close Oct 22

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MKT CAP $1.9BP/E 31.3DIV YIELD —FCF YIELD 3.18%REV TTM $942.1M +14.5%NET INCOME $79.1MNET DEBT $174M52W 37.49 – 93.45SEC XBRL · TTM TO Invalid Date

How ATRO rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

66%

of sentences unchanged

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new sentences

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sentences removed

Length

+250

words, now 10,397

New in FY2025

In 2025, 2024, and 2023 we had a concentration of sales to Boeing representing approximately 10.4%, 10.2%, and 11.0% of our sales, respectively.
Any new pandemic or other future public health crisis, and efforts to contain such public health crises, could materially adversely affect our business, financial condition and results of operations.
The commercial aerospace market is a global duopoly where Boeing and Airbus SE (“Airbus”) serve as the OEMs.
Their production health is vital to our performance.
Historical disruptions, such as quality control challenges and factory labor actions, have previously hindered our scalability.
Future shifts in their production rates remain a primary factor in our projected results.
This could result in our being unable to borrow additional funds under our Revolving Credit Facility or being obliged to refinance or renegotiate our indebtedness on potentially unfavorable terms for us.
Our competitors include larger, more diversified corporations and vertically integrated companies that may have greater financial, marketing, production and research and development resources than we do.
In recent years, U.S. government appropriations have been affected by larger U.S. government budgetary issues and related legislation, and the U.S. government has been unable to complete its budget process before the end of its fiscal year, resulting in both governmental shutdowns and continuing resolutions providing only enough funds for U.S. government agencies to continue operating at prior-year levels.
Our business, program performance, and results of operations could be impacted by the resulting disruptions to federal government offices, workers, and operations.
We cannot be certain that current levels of congressional funding for programs involving our products or services will continue and that our business related to these products and services will not decline or increase at currently anticipated levels, or that we will not be subject to delays in the negotiation or award of contracts or purchase orders or increased costs due to changes in the funding of U.S. government programs or government shutdowns.
Increased vertical integration by our customers may reduce the demand for our solutions and increase competition in our target markets.
Refer to the risk factor below under the heading “ Currently, our subsidiary, Astronics Advanced Electronic Systems Corp., is a defendant in actions filed in various jurisdictions by Lufthansa Technik AG relating to an allegation of patent infringement and based on rulings to date, we have concluded that losses related to these proceedings are probable ” and Note 19, Legal Proceedings and Other Matters, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for further discussion.
Recent spending by hyperscalers and others to support AI is beginning to pressure supply chains for goods used to manufacture our products.
Price inflation for labor and materials, further exacerbated by political and economic instability could adversely affect our business, results of operations and financial condition.
Russia’s invasion of Ukraine, and other instances of political and economic instability, including civil unrest, acts of terrorism, war, and other armed conflict, may continue to result in increased inflation, escalating energy and commodity prices and increasing costs of materials.
To the extent such political and economic instability adversely affects our business as discussed above, it may also have the effect of heightening many of the other risks described herein, such as those relating to cybersecurity, supply chain, volatility in prices and market conditions, any of which could negatively affect our business and financial condition.
For the year ended December 31, 2025, fixed-price contracts represented almost all of the Company’s sales.
Executive orders or regulatory priorities issued or rescinded by the U.S. federal government administration may require us to make additional capital expenditures or incur additional costs, or cause a delay or the abandonment of projects or awarded contracts, which could materially adversely affect our business, results of operations and financial condition.
In addition, increased regulatory uncertainty following the forementioned U.S.
Supreme Court decisions could result in delays and other impediments to the federal agency rulemaking process, which could materially adversely affect our business, results of operations and financial condition.
Financial Risks We have incurred losses in prior fiscal years and our future profitability is not certain.
For the years ended December 31, 2024 and 2023, we incurred a net loss of $16.2 million and $26.4 million, respectively.
Although we achieved net income in the year ended December 31, 2025, our operating results for future periods are subject to numerous uncertainties and we cannot be certain that we will be profitable or that we will not experience substantial net losses in the future.
If we are not able to maintain revenue or our costs, we may not be able to achieve profitability in future periods and our business, financial condition, results of operations and cash flows may be materially adversely affected.
Our Revolving Credit Facility contains financial and restrictive covenants that we may be unable to satisfy, and that, if not satisfied, could result in the acceleration of any outstanding indebtedness thereunder and limit our ability to borrow additional funds.
Our 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 requirement, a consolidated interest coverage ratio requirement and a secured net debt leverage ratio requirement.
A covenant violation could result in a default under the Revolving Credit Facility.
If the debt under the Revolving Credit Facility were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full our debt.
On December 3, 2024, the Company issued $165.0 million aggregate principal amount of 5.500% Convertible Senior Notes due 2030, unless earlier converted, redeemed or repurchased.
On September 15, 2025, the Company issued $225.0 million of Convertible Senior Notes due 2031.
These 2031 Convertible Notes do not bear interest and are convertible under the terms of the 2031 Convertible Notes.
Proceeds from the 2031 Convertible Notes were used to repurchase $132.0 million of the 2030 Convertible Notes and enter into capped call transactions to reduce potential dilution to the Company’s common stock upon conversion of the 2031 Convertible Notes.
If a fundamental change (as defined in the indentures governing the Convertible Notes) occurs, then, subject to limited exceptions, holders of our Convertible Notes may require the Company to repurchase all or any their Convertible Notes for cash.
In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversion of Convertible Notes may be limited by law, by regulatory authority or by agreements that will govern our future indebtedness.
A default under the indenture governing the Convertible Notes or the fundamental change itself could also lead to a default under the Revolving Credit Facility.
As of December 31, 2025, we had approximately $343.0 million of debt outstanding.
Changes to our level of debt subsequent to December 31, 2025, could have significant consequences to our business, including the following: • Depending on interest rates and debt maturities, a substantial portion of our cash flow from operations could be dedicated to paying principal and interest on our debt, thereby reducing funds available for our acquisition strategy, capital expenditures or other purposes; • A significant amount of additional debt could make us more vulnerable to changes in economic conditions or increases in prevailing interest rates; • Our ability to obtain additional financing for acquisitions, capital expenditures or for other purposes could be impaired; • The increase in the amount of debt we have outstanding and the associated interest expense increases the risk of non-compliance with some of the covenants in our debt agreements which require us to maintain specified financial ratios; and • We may be more leveraged than some of our competitors, which may result in a competitive disadvantage.
We may incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes.

and 39 more.

Gone since FY2024

In 2024, 2023, and 2022 we had a concentration of sales to Boeing representing approximately 10.2%, 11.0%, and 11.0% of our sales, respectively.
While both domestic air travel and international air travel utilizing primarily widebody aircraft have recovered from the impact of the COVID-19 pandemic, if a global health crisis similar to the COVID-19 pandemic were to occur in the future, we may find it difficult to access our existing financing or obtain additional financing and/or fund our operations and meet our debt service obligations.
Any new pandemic or other future public health crisis could materially adversely affect our business, financial condition and results of operations.
This could result in our being unable to borrow additional funds under the ABL Revolving Credit Facility or being obliged to refinance or renegotiate our indebtedness on potentially unfavorable terms for us.
Some of our competitors are larger, more diversified corporations and have greater financial, marketing, production and research and development resources than we do.
We cannot be certain that current levels of congressional funding for programs involving our products or services will continue and that our business related to these products and services will not decline or increase at currently anticipated levels, or that we will not be subject to delays in the negotiation of contracts or increased costs due to changes in the funding of U.S. government programs or government shutdowns.
Refer to the risk factor below under the heading “ Currently, our subsidiary, Astronics Advanced Electronic Systems Corp., is a defendant in actions filed in various jurisdictions by Lufthansa Technik AG relating to an allegation of patent infringement and based on rulings to date, we have concluded that losses related to these proceedings are probable ” and Note 19, Legal Proceedings, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for further discussion.
Price inflation for labor and materials, further exacerbated by the Russian invasion of Ukraine or the Israel-Hamas war, could adversely affect our business, results of operations and financial condition.
Russia’s invasion of Ukraine and the Israel-Hamas war, and prolonged conflict in either such situation, may continue to result in increased inflation, escalating energy and commodity prices and increasing costs of materials.
To the extent the war in Ukraine or the Israel-Hamas war adversely affects our business as discussed above, it may also have the effect of heightening many of the other risks described herein, such as those relating to cybersecurity, supply chain, volatility in prices and market conditions, any of which could negatively affect our business and financial condition.
For the year ended December 31, 2024, fixed-price contracts represented almost all of the Company’s sales.
In addition, in January 2024, the FAA ordered the temporary grounding of Boeing 737-9 MAX aircraft as a result of an incident where a Boeing 737-9 MAX lost a “door plug.” This incident and the subsequent investigation, and the potential for more issues to be identified during further investigations, could result in a suspension or reduction of manufacturing of 737 MAX aircraft by Boeing.
Air travelers may also respond negatively to the 737 MAX aircraft due to perceived safety concerns, which could negatively impact Boeing.
Boeing is a major customer of ours and any financial or customer losses it suffers may result in a negative impact on our business, financial condition and results of operations.
Executive orders or regulatory priorities issued or rescinded by the U.S. federal government administration may require us to make additional capital expenditures or incur additional costs, or cause a delay or the abandonment of projects or awarded contracts, which could materially adversely affect our business, results of operations and financial condition In addition, increased regulatory uncertainty following the forementioned U.S.
Supreme Court decisions could result in delays and other impediments to the federal agency rulemaking process, which could materially adversely affect our business, results of operations and financial condition Financial Risks We have incurred losses in prior fiscal years and our future profitability is not certain.
For the years ended December 31, 2024, 2023 and 2022, we incurred a net loss of $16.2 million, $26.4 million and $35.7 million, respectively.
Our operating results for future periods are subject to numerous uncertainties and we cannot be certain that we will be profitable or that we will not experience substantial net losses in the future.
If we are not able to increase revenue or reduce our costs, we may not be able to achieve profitability in future periods and our business, financial condition, results of operations and cash flows may be materially adversely affected.
Our ABL Revolving Credit Facility contains financial and restrictive covenants that we may be unable to satisfy, and that, if not satisfied, could result in the acceleration of any outstanding indebtedness thereunder and limit our ability to borrow additional funds.
In addition, the terms of our ABL Revolving Credit Facility contains covenants that restrict our current and future operations, particularly our ability to take certain actions.
Our ABL 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 minimum excess availability and minimum fixed charge coverage ratio requirements.
A covenant violation could result in a default under the ABL Revolving Credit Facility.
Further, as the amount available to us under our ABL Revolving Credit Facility is subject to borrowing base calculations determined by the value of accounts receivable, inventory, real estate and machinery and equipment, an unexpected decline in the value of these assets would require a mandatory prepayment.
In addition, following an event of default, the lenders under the ABL Revolving Credit Facility will have the right to proceed against the collateral granted to them to secure the debt, which includes our available accounts receivable, inventory, machinery and equipment, real estate and intellectual property.
If the debt under the ABL Revolving Credit Facility were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full our debt.
Additionally, our ABL Revolving Credit Facility contains a number of restrictive covenants that impose significant operating and financial restrictions on the Company and our subsidiaries and may limit our ability to engage in acts that we believe to be in our long-term best interests.
The ABL Revolving Credit Facility include covenants restricting, among other things, the ability of the Company and our subsidiaries to: • incur additional indebtedness; • pay dividends on or repurchase our capital stock; • make certain acquisitions or investments; • sell assets; and • engage in certain business activities.
On December 3, 2024, we issued an aggregate principal amount of $165 million 5.500% Convertible Notes due March 15, 2030, unless earlier converted, redeemed or repurchased.
If a fundamental change (as defined in the indenture governing the Convertible Notes) occurs, then, subject to limited exceptions, holders of our Convertible Notes may require the Company to repurchase all or any their Convertible Notes for cash.
In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversion of Convertible Notes is limited by the ABL Revolving Credit Facility and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness.
A default under the indenture governing the Convertible Notes or the fundamental change itself could also lead to a default under the ABL Revolving Credit Facility.
As of December 31, 2024, we had approximately $175.0 million of debt outstanding.
Changes to our level of debt subsequent to December 31, 2024, could have significant consequences to our business, including the following: • Depending on interest rates and debt maturities, a substantial portion of our cash flow from operations could be dedicated to paying principal and interest on our debt, thereby reducing funds available for our acquisition strategy, capital expenditures or other purposes; • A significant amount of additional debt could make us more vulnerable to changes in economic conditions or increases in prevailing interest rates; • Our ability to obtain additional financing for acquisitions, capital expenditures or for other purposes could be impaired; • The increase in the amount of debt we have outstanding and the associated interest expense increases the risk of non-compliance with some of the covenants in our debt agreements which require us to maintain specified financial ratios; and • We may be more leveraged than some of our competitors, which may result in a competitive disadvantage.
Subject to the limits contained in our ABL Revolving Credit Facility, we may incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes.
As of December 31, 2024, goodwill and net intangible assets were approximately 8.9% and 8.1% of our total assets, respectively.
We had no goodwill impairment charges during 2024, 2023 or 2022.
We had no such asset impairment charges in 2024, 2023 or 2022.
The most significant impact of this provision is to the cash tax liability for 2024 and 2023 (as the liability for 2022 is partially offset by certain tax credits and loss carryforwards); the impact will decline annually thereafter over the five-year amortization period to an immaterial amount in year six.

and 22 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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