Street Calls of the Week
EAST AURORA, N.Y. - Astronics Corporation (NASDAQ:ATRO), which has seen its stock surge over 150% year-to-date according to InvestingPro data, announced on Tuesday it has closed a $225 million offering of 0% convertible senior notes due 2031, which includes the full exercise of the $15 million option granted to initial purchasers. The company, currently valued at $1.42 billion, maintains a "GOOD" overall financial health score based on InvestingPro’s comprehensive analysis.
The aerospace and defense supplier said it used part of the proceeds to retire approximately $132 million principal amount of its 5.5% convertible notes due 2030, leaving about $33 million of those notes outstanding. The transaction was funded through a combination of the new notes’ proceeds, $85 million in borrowings under its asset-based revolver, and $11 million in cash. According to InvestingPro analysis, Astronics operates with a moderate level of debt and maintains strong liquidity with a current ratio of 3.04, indicating its ability to meet short-term obligations.
Astronics also purchased a capped call overlay for approximately $26.9 million, resulting in an effective conversion price of $83.41 per share, representing a 90% premium over the $43.90 volume-weighted average price of its common stock on September 10.
The new notes have an initial conversion rate of 18.2243 shares per $1,000 principal amount, equivalent to an initial conversion price of $54.87 per share, representing a 25% premium over the reference price.
"This transaction represents a significant optimization of our capital structure," said Peter J. Gundermann, Chairman, President and CEO of Astronics, according to the company’s press release. "We have reduced our cost of debt and meaningfully limited future potential dilution for our shareholders."
The company also indicated plans to restructure its asset-based revolver into a revolving line of credit.
The notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 and have not been registered under the Securities Act.
Astronics supplies technologies for aerospace, defense and other mission-critical industries, specializing in power, connectivity, lighting, structures, interiors and test technologies.
In other recent news, Astronics Corporation reported a strong financial performance for the second quarter of 2025. The company posted an earnings per share (EPS) of $0.38, exceeding analysts’ expectations of $0.29, marking a 31.03% increase. Revenue for the quarter reached $204.67 million, slightly above the anticipated $203.94 million. Additionally, Astronics announced its plan to offer $210 million in convertible senior notes due 2031 in a private placement to qualified institutional buyers. The proceeds from this offering are intended to partially refinance its existing 5.500% Convertible Senior Notes due 2030. Furthermore, the company is engaging in capped call transactions to mitigate potential share dilution. These developments reflect Astronics’ strategic financial management and commitment to optimizing its capital structure.
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