Earnings call transcript: Astronics Q3 2025 earnings beat forecasts, stock dips

Astronics Corporation (ATRO) reported its third-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.49 against a forecasted $0.34, reflecting a significant 44.12% surprise. Despite these positive results, the company’s stock fell 1.68% in after-hours trading, closing at $47.55, down from the previous close of $48.74.

Key Takeaways

• Astronics’ Q3 EPS of $0.49 exceeded expectations by 44.12%.
• Revenue reached $211.4 million, slightly above projections.
• Stock price declined 1.68% in after-hours trading.
• The company highlighted strong performance in the aerospace segment.
• Future guidance suggests continued growth into 2026.

Company Performance

Astronics demonstrated robust performance in Q3 2025, achieving its second-highest quarterly revenue at $211.4 million. The company saw a notable improvement in its operating margin, which increased to 10.9% from 4.1% a year ago. The aerospace segment was particularly strong, with an operating margin of 16.2%. These results underscore Astronics’ effective cost management and strategic acquisitions, which have bolstered its competitive position in the aerospace market.

Financial Highlights

• Revenue: $211.4 million (up from $210.59 million forecasted)
• EPS: $0.49 (exceeding the $0.34 forecast)
• Gross profit: $64.5 million (+17% YoY)
• Operating margin: 10.9% (up from 4.1% last year)
• Free cash flow: $21 million

Earnings vs. Forecast

Astronics delivered a notable earnings surprise with an EPS of $0.49, outperforming the forecasted $0.34 by 44.12%. This significant earnings beat is a positive indicator of the company’s operational efficiencies and strategic growth initiatives. Revenue also slightly surpassed expectations, coming in at $211.4 million compared to the anticipated $210.59 million.

Market Reaction

Despite the positive earnings report, Astronics’ stock fell 1.68% in after-hours trading, closing at $47.55. This decline may reflect investor caution or profit-taking following the stock’s recent highs. The stock remains within its 52-week range, with a high of $51.88 and a low of $14.13.

Outlook & Guidance

Looking ahead, Astronics projects Q4 2025 revenue in the range of $225 to $235 million. The company anticipates growth of 10% or more in 2026, driven by increased demand for its aerospace products and potential significant contributions from its involvement in the U.S. Army’s FLRAA program.

Executive Commentary

CEO Pete Gundermann expressed optimism about the company’s future, stating, "We expect the fourth quarter to be a step change for the company." He also highlighted the ongoing industry trends, saying, "We believe these industry trends and opportunities have legs."

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact production schedules.
• Market Saturation: Increased competition in the aerospace sector could pressure margins.
• Macroeconomic Pressures: Economic downturns could affect demand for aerospace products.
• Government Policies: Changes in defense spending or regulations could influence revenue streams.

Q&A

During the earnings call, analysts inquired about the integration of recent acquisitions and the expected impact of the FLRAA program. Management reassured stakeholders of smooth integration processes and positive growth prospects from these strategic moves.

Full transcript - Astronics Corporation (ATRO) Q3 2025:

Craig Maholick, Moderator/Operator: Greetings and welcome to the Astronics Corp’s third quarter, fiscal year 2025 financial results. At this time, all participants are in the listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Craig Maholick. Thank you. You may begin.

Craig, Company Representative, Astronics Corp: Yeah, thank you and good afternoon, everyone. We appreciate your time today and your interest in Astronics. Joining me here are Pete Gundermann, our Chairman, President, and CEO, and Nancy Hedges, our Chief Financial Officer. Our third quarter results crossed the wires after the market closed today, and you can find that release on our website at astronics.com. As you are aware, we may make forward-looking statements during the formal discussion and the Q&A session of this conference call. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents filed with the Securities and Exchange Commission. You can find those documents on our website or at sec.gov.

During today’s call, we’ll also discuss some non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the table that accompanied today’s release. So with that, I’ll turn it over to Pete to begin.

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: Thanks, Craig. Hello, everybody, and welcome to our third quarter call. We feel it was a very positive quarter, and we are pleased to share the results. As is our practice, I’ll start off with a summary of the headlines for the quarter. Then Nancy will go through the financial fine points. Then we will discuss expectations for the future for both the fourth quarter, and also we’ll take an early look at 2026. Finally, we’ll open up the lines for questions. The first headline for the quarter is that we had solid volume with a revenue of $211.4 million. This was our second highest quarterly level ever and just marginally below our record.

That sales level is a tick up from the first couple quarters of 2025 and is the result of broad-based demand across our product lines, markets, and customers, as well as improved performance in our supply chain and better efficiencies in our production system. Our aerospace segment led the way with sales of $192.7 million, a level consistent with recent periods. Our test business had sales of $18.7 million, which is down from the third quarter of 2024 but higher than the earlier two quarters of this year. The second headline has to do with margins. As one would expect, higher revenue together with efficiency improvements have led to higher margins. Operating margin of 10.9% in the quarter was higher than last year’s 4.1%. Adjusted operating margin, taking into account expenses related to restructuring, litigation, and acquisitions, was 12.3% for the quarter.

Our aerospace segment specifically had operating margin of 16.2%. Generating all of our operating income for the quarter. Test operating margin was essentially break-even at negative 0.1%. While no one is happy with a 0% operating margin, this actually represents progress and is a testament to the cost reduction initiatives we have put in place in recent periods. To break even on a modest revenue level of $19 million in a quarter promises good things in the future since we expect test sales to increase. Adjusted EBITDA was 15.5% of sales, our highest since the pandemic struck in 2020. Our third headline has to do with bookings. Even though third quarter shipments were on the upside side, bookings kept right up. Total bookings of $210 million yielded a book-to-bill of 1.0.

We ended the quarter with backlog of $647 million, a very high level by historical norms, which sets us up well for the coming periods. Our fourth headline has to do with acquisitions. We have made a couple of smaller acquisitions recently, one early in the third quarter and one just recently, early in the fourth. The first one was Envoy Aerospace, which we previously discussed in our second quarter call in August. Envoy Aerospace is an ODA, which stands for Organizational Designation Authority. ODA is a program in which the FAA grants certification approval authority to outside organizations by which the FAA extends its capacity and reach. We believe having an ODA is a competitive differentiator as we are often involved in aircraft retrofit programs, and FAA certification is becoming a more important capability in the eyes of our customers.

Having certification authority lessens program and schedule risk, both for us and for our customers. Envoy has external sales of about $4 million annually. Prior to the acquisition, we were consistently one of their largest customers. The second acquisition is that of Buhler Motor Aviation, or BMA. Located in southern Germany, BMA is an established manufacturer of aircraft seat actuation systems with a broad product portfolio that includes actuators, control electronics, pneumatics, and lighting. BMA competed with our PGA operation in France in the seat actuation market, and now they will work cooperatively with each other to better serve the needs and opportunities of that market. We expect BMA to have sales of $20-$25 million in 2026, and we paid less than one-time sales for the acquisition. Much of the cost related to the acquisition, legal and diligence, and the like were included in our third quarter expenses.

The acquisition’s operating contributions will be captured in the fourth quarter and onward. Finally, our last headline, we completed a couple of important refinancing actions in recent weeks, one in the third quarter and one just after its close. These financings lowered our cost of debt, improved our financial flexibility, and importantly, reduced future dilution potential. Nancy will cover the accounting treatment, which is a little bit complex. But basically, in the third quarter, we issued a new $225 million 0% convertible bond to buy back a majority of an earlier convertible bond that was significantly in the money, meaning it was already fairly expensive to settle. And if our stock continued to rise, as we expect it to do. It would get even more expensive.

Using proceeds of the new convert plus some borrowings under our existing revolver and available cash, we successfully repurchased 80% of the previous 5.5% convertible note, effectively lowering our cost of debt while also eliminating 5.8 million shares of potential dilution. As part of the transaction, we also bought a capped call on the new 0% notes that effectively raises the equity conversion price to $83. Meaning that there will be no dilution on the new bond unless and until the market price of our stock exceeds $83. So this transaction significantly reduced the potential dilution we would otherwise be facing. The earlier convert had a face value of $165 million. Since we bought in 80% of it, there is now 20% still outstanding, or $33 million. We can pay this smaller bond off when it comes due in about four years in either cash or stock.

We intend to use cash, but even if we use stock, the dilution will be a maximum of 1.4 million shares, or about 4% based on our existing share count. This is a significant reduction in the potential dilution risk that existed before the buyback. We also benefit in terms of interest, obviously. The new bond has a 0% coupon while the older bond is at 5.5%. So we replaced some more expensive debt with much cheaper debt. Our second refinancing step completed just a couple of weeks ago was a transition from the ABL facility we had in place to a cash flow revolver. The size of the ABL was $220 million, and the cash flow revolver is sized at $300 million. The interest expense is comparable, but the new facility offers less administrative burden and increased financial liquidity for the future.

The financial implications of the new convertible bond and the repurchase of the majority of the previous bond are fully reflected in our third quarter financials. The ABL to RCF transition will be reflected in our fourth quarter financials. Now I’ll turn it over to Nancy.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Thanks, Pete. I’ll review profitability and various accounting and other events related to our Q3 2025 financials. We had gross profit of $64.5 million, up nearly 17% compared with the prior year period, as the benefits of higher volume, pricing actions, and productivity improvements helped to offset the $4 million impact of tariffs in the quarter. Last year’s third quarter also had a $3.5 million impact from an atypical warranty reserve. Gross margin of 30.5% reflects the 31.4% gross margin realized by the aerospace business, which was muted somewhat by the test segment gross profit of 21.6%. R&D expense declined $2.3 million to $10.2 million, or 4.8% of sales based on the timing of projects. We believe we’re at a more normalized run rate, currently at about 5% of sales. Of course, this can vary based on the timing and opportunity of new projects.

The $3.1 million decline in SG&A expense was primarily the result of a $4.3 million decline in litigation expense. While it’s been quite a while since we can claim any form of normalcy, historically, we’ve operated the business with SG&A at about 14%-15% of sales. Operating income was up over two and a half times to $23 million. We recorded a loss on debt settlement of $32.6 million. I’ll cover the details of the accounting treatment for the new 0% convertible bond and the capped call here in a bit. We had a $1.2 million tax benefit as we reversed the valuation allowance for R&D expenses that can now be deducted in the current year for tax purposes as a result of recent tax reform.

Notably, we generated $34 million of cash in the quarter and had free cash flow of $21 million, driven by strong cash earnings combined with lower working capital requirements. I should point out that $3 million of the cash from operations was from a tenant improvement allowance reimbursement. This is offset by the CapEx investments in the build-out and consolidation for our new Redmond, Washington facility. We expect an additional approximately $5 million in reimbursement for the project in the fourth quarter. This project is what’s driving our fourth quarter CapEx to be around $20-$30 million. Year to date, we’ve generated $47 million in cash from operations and have had $20 million in capital expenditures for free cash flow of $27 million. We would expect to be free cash flow positive for the year.

Our fourth quarter cash flows will reflect the purchase of BMA, both in terms of the purchase price and the operating activity from the acquisition date forward. Turning to our balance sheet and refinancing actions, let me talk a bit about the convoluted accounting treatment for the new 0% convertible notes that Pete discussed. First, I’ll point out the impact to the income statement. We recognized a non-cash loss on the settlement of debt of $32.6 million, which represents the inducement charge for bondholders to redeem the $132 million in principal of the 5.5% convertible notes. Second, let me talk to the source and use of funds related to the new convertible note, as well as the implications to the balance sheet. Proceeds from the new convertible bond were $217 million after payment of $8 million in fees and expenses.

That $217 million, coupled with an $85 million draw on our ABL revolver, plus $11 million in cash on hand, were used to repurchase 80% of the old convertible note for approximately $286 million, and to purchase the capped call for $27 million. Debt increased about $175 million from the end of the second quarter to $334 million. That’s a function of three factors. First, we incurred new debt of that $217 million related to the new convertible bond, which is the $225 million netted down by $8 million in issuance fees and expenses, which are required under GAAP to be presented as an offset to the debt on the face of the balance sheet.

Second, as I mentioned, we borrowed $85 million on our ABL to fund part of the repurchase transaction, and third, debt was reduced by $128 million, representing the $132 million in principal paid off on the previous convertible, net of $4 million in associated issuance fees that also needed to be written off. Shareholders’ equity declined as a result of the transaction. The premium paid of $121 million, plus the cost of the capped call of $27 million, plus $4 million write-off of the unamortized debt issuance cost related to the repurchased 5.5% notes, resulted in a $152 million reduction in shareholders’ equity. The net result is, as Pete discussed, lower cost debt, significantly reduced potential dilution, and combined with the refinancing of our revolver to being cash flow-based, meaningfully greater financial flexibility.

I should point out that we currently have $95 million outstanding on the $300 million cash flow revolver and liquidity of $169 million, and let me hand it back to Pete.

Craig Maholick, Moderator/Operator: Thank you, Nancy. I’ll now turn the discussion to the future and what we expect for both the fourth quarter and our initial expectations for 2026. We expect the fourth quarter to be a step change for the company. We have generated average revenue of $207 million over the first three quarters of 2025. In the fourth quarter, however, we are expecting revenue to climb to a range of $225-$235 million, which is a significant step up. The increase is due in part to our recent German acquisition, but mostly to the various market forces that are driving our business. The higher volume should mean good things for our income statement, as we typically see 40%-50% marginal contribution on incremental revenue dollars. Further, we think the higher volume expected in the fourth quarter will provide a baseline for 2026.

We are not ready yet to issue formal revenue guidance for next year, but we are well along in our budgeting process, and it appears 2026 will be a year of solid growth. Our belief at this point is that we will see 10% growth or better. We are working to refine the range and expect to release initial revenue guidance closer to year-end 2025. You may ask, what is driving the growth? Our company has been and continues to benefit from a wide range of industry trends. I’ll cover the major ones briefly, and I’ll try to be concise. First and most obviously, increasing OEM build rates are a big positive for us. Narrow-body and wide-body production rates are trending up at both Airbus and Boeing and, to a lesser extent, across private aviation OEMs also.

Our typical content for major aircraft programs is spelled out on our investor presentation, which is available on our website, and quite simply, when OEMs make more planes, we ship more product. Second, we are heavily involved, as you all surely know, in passenger connectivity and entertainment in aircraft, and it is a well-established secular trend in our world today that people want to be connected and entertained at all times, including when they are riding in airplanes. This reality, combined with the fact that the consumer electronics industry is characterized by high levels of innovation and short life cycles, means that adoption rates on new aircraft are increasing, and retrofit and upgrade opportunities across the existing fleet are regularly present.

We work with more than 200 airlines around the world, along with the broad set of in-flight entertainment and connectivity providers, to help ensure that the expectations of airline passengers around the world are met. These expectations are high and getting higher, which provides an excellent field of opportunity for us. Third, we are specialists in developing technically advanced flight-critical electrical power distribution systems for smaller aircraft in particular, and our electrical power franchise is gaining acceptance on a wide range of new and innovative aircraft types that are in development today. We started with business jets and turboprops, but today we are also involved with a wide range of emerging types, including EVTOLs, electric vertical takeoff and landing aircraft, unmanned drones, and smaller military aircraft, both rotary and fixed wing.

A high-profile example, which is getting lots of attention these days, is Bell’s V-280 aircraft, now known as the MV-75, which is the U.S. Army’s replacement for the Sikorsky Black Hawk. This program is in development currently, and Bell has chosen Astronics to supply the electrical power distribution system. There’s a lot I could say about this program, but suffice it now to say it has the potential one day soon to be a very significant aircraft production program for our company and to run for a very long time. Finally, there are some other important new programs which we expect to come online in short order, particularly for our test business. One of the most significant is the radio test program that we’ve talked about before on this call for the U.S. Army called 4549T.

We have been in development on this one for some time and expect production turn-on at year-end or shortly thereafter. It’s a $215 million IDIQ contract to start that will run for the next four to five years. Our test business, with all the cost reductions that we’ve implemented, is running at break-even currently, but when the 4549T program gets layered on top, the financial profile in that segment will be much improved. We believe these industry trends and opportunities have legs. We’ve been benefiting from some of them for a while, but others will only begin to positively impact our business in coming quarters. Collectively, we feel they provide an excellent opportunity set as we move into 2026 and beyond. So again, the growth from these drivers should have a positive impact on our earnings as we ramp.

And as such, we expect to turn in a strong finish to 2025 and believe 2026 will be a very good year for Astronics. That ends our prepared remarks, so we can open up the lines now for questions.

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star key. First question comes from Greg Helm. This is Greg Helm, and please go ahead.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Yeah, thanks. Congrats on the results, the execution, and probably most impressively, the profitability or operating leverage in the quarter.

Craig Maholick, Moderator/Operator: Thanks.

Nancy Hedges, Chief Financial Officer, Astronics Corp: I wanted to maybe first. Maybe bridge Q3 to Q4 in terms of the expectation. What is built in for Test relative to the revenue that you achieved in Q3?

Craig Maholick, Moderator/Operator: We expect tests to take a little step up. I don’t have that in front of me. I guess it’s in the $20-$21 million range. They were at $18 million in the third quarter. So that’ll be a little bit of a step up, but it’ll be their strongest revenue quarter for 2025. So. Hopefully lays a good foundation as we round the corner to 2026 also.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Okay. So that implies that aerospace should see a bigger step up, even excluding the impact of acquisition. So I guess it begs the question, what are you seeing there, whether it’s increased build rates, whether it’s higher retrofit activity, anything in military with the FLRAA program, just a little bit more color on maybe the step up they’re expecting in Q4?

Craig Maholick, Moderator/Operator: Yeah. I’d say a couple of things. First of all, we are expecting a general ramp between where we were in Q3 and where we will be in the first quarter. I’m getting a little bit ahead of myself because we’re still in the budgeting process, but the early look at 2026 is that we’ll run a sustained rate that’s above what we’re forecasting for the fourth quarter. So the fourth quarter, we’ll see. To a large extent, a general ramp across the business, but there are a few kind of significant programs that are in play, hence the wide range of the revenue forecast for the fourth quarter. We’re not sure if a lot of them are going to fall in the fourth quarter and therefore be 2025 revenue, or you always run the risk at the end of the year that things can slip into the new year.

So it’s a little bit of a wider range than we’d prefer to have at this point. But basically, it’s just scheduling of major point in time. That’s not true. They’re revenue over time programs for the most part.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Got it. Okay.

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: It’s a mix.

Craig Maholick, Moderator/Operator: It’s a mix.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Yep. Understood.

Craig Maholick, Moderator/Operator: Yeah.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Okay. Well, and then I was going to maybe dovetail into my question on fiscal 2026, just in terms of the confidence level at this time to provide, not guidance, but expectations of that low double-digit growth. And specifically, what is baked in in terms of the Army test program at this point? And just given the shutdown, I mean, I wouldn’t have expected your visibility levels to be all that good, but it still sounds like you expect that ramp up to begin sort of end of this year, maybe early next.

Craig Maholick, Moderator/Operator: Yeah. It’s a very good question, and we are guessing a little bit, and that’s a little bit why we’re hedging. But long story short, we were, when the government shut down, hoping for production turn-on towards the end of the year. It might be this year. It might slip into the next year, but basically either late fourth quarter or early first quarter. At this point, we don’t have reason to think that that’s going to slide a whole lot. It’s probably reasonable to think it’s going to slide day for day with the shutdown. And obviously, the longer the shutdown goes on, the more at-risk year-end turn-on becomes. But we’ve had some unofficial contact with program managers and executives who have reiterated that the funding is secure. The user community really wants to have the product get going.

And so it’s just not obvious at this point if there’s going to be a big delay there or not. So we will have to make a decision there as to what we include or what we don’t include. But in general, we’re still on a track where we think it’s going to be a pretty significant contributor over the course of 2026.

Nancy Hedges, Chief Financial Officer, Astronics Corp: But just to be clear. In terms of that full year 2026 expectation, there’s some, I guess, presumably significant level of contribution that’s baked in or not necessarily?

Craig Maholick, Moderator/Operator: No, there will be. Absolutely. We expect that program to be an important contributor, both top line and bottom.

Nancy Hedges, Chief Financial Officer, Astronics Corp: Yep. Okay. I will leave it there. Congrats again.

Craig Maholick, Moderator/Operator: All right. Thank you.

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: Thank you. Next question, John Tan Womelan with CJS Securities. Please go ahead.

This is actually Jeremy on for John. Thanks for taking the time, and kind of working off of what we were just talking about, how should we think about the FLRAA program revenue and margin over the medium to longer term as it transitions out of development and into production?

Craig Maholick, Moderator/Operator: Well, into production is a little bit early to say because we don’t know the ramp, and we don’t have pricing ready to go on that one. We don’t have pricing agreement with the customer, I should say. And also, I don’t know if you’re aware, but there is an active debate going on in the industry about when production is actually going to start. The Army is interested in trying to accelerate that program, which would mean the production ramp would start a couple of years earlier than it otherwise would. But closer to home and from what we can tell right now, we had revenue of about $28 million in 2025. We’re planning and we’re thinking that 2026 will be closer to $38-$40, something in that range.

From a margin standpoint, it’s worth pointing out that we basically have been doing development work at zero margin thus far because we’re still negotiating a development program. Once that program is developed, we will catch up on margin that we would otherwise have recognized earlier. And so it should be a pretty significant contributor as we turn the corner and go through 2026. I’m just saying.

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: I would say that’s right. Yep.

Very helpful. Thank you. And then switching gears a little, could you just talk more about the Buhler and the capability it brings to the table? And the accretion you’re expecting over the next year?

Craig Maholick, Moderator/Operator: It’s a smaller company. We expect revenue of $20-$25 million. At that level, we do expect it to be profitable. So I think it’s a reasonable assumption that its margin profile will be consistent with the rest of our company. It’s going to report through our PGA operations. So you’re basically going to take two competitors and have them act as one. And there are certain efficiencies that you might expect there. There’s market knowledge and reach that can be beneficial. Their products basically do what a lot of our products do. We’re talking about seat motion here, high-end aircraft seats, first-class seats, business-class seats where you have a lot of moving surfaces. Think lie-flat and things like that, reclining seats. So the product lines are complementary, but they are not really interchangeable.

So their products are sold to seat companies that are designed around their type of system, and our products are designed into seats and seat customers that use our system. But we’ll be able to get some efficiencies. We might have some. The market concentration might yield some pricing efficiencies. Those are things that will play out over the next few years. It’s a smaller market. We don’t talk a whole lot about it, but combined, we should be somewhere in the $80 million a year range.

Very helpful. Thank you again for taking the time. I’ll hop back in the queue.

Sure. Okay.

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: Once again, if you would like to ask a question, please press Star 1 on your telephone keypad. Next question comes from Alexandra Mandary with Truist. Please go ahead.

Hey, this is Alexandra Mandary on for Michael Tremoli at Truist Securities. Great results, guys. Can you talk about the integration of these two recent acquisitions and any additional capabilities you may look for in the future?

Craig Maholick, Moderator/Operator: Sure. Well, the integration of BMA or Buhler will be reporting through our PGA operation in France. So that’s already underway, and we intend to maintain both operations. We think moving and consolidating, it’s often easier, in my opinion, to calculate savings than it is to actually achieve them. So that is not our objective. Our objective is to work efficiently from a two-operation setup, both in Germany and in France. We’re early on in that. This thing just closed two weeks ago, three weeks ago. So we’ve got a long ways to go. But it’s a smaller operation, and so we should be able to get our hands around it pretty quickly. We don’t think it represents any systemic risk necessarily whatsoever. Envoy, think of Envoy as a consulting company.

It’s basically a bunch of engineers who are well-versed in FAA rules and regulations, and we have it reporting through our CSC operation, which is where we do most of our connectivity and in-flight entertainment electronics out of Waukegan, Illinois. So Envoy is essentially part of CSC. The exercise that we’re going to go through from an integration standpoint is figure out how we can take the Envoy expertise and apply it more broadly across our company to our other operations, and again, the real advantage of Envoy is it gives us the ability, basically, if we can maintain the ODA, which is our full intent, to certify our own development programs, which is where we get into a competitive advantage with other companies because we can more realistically guarantee program and schedule success to our customers when they know that we can self-certify with the blessing of the FAA.

That’s the whole idea, and we’ll report back on that as time goes by. But we do a fair amount of retrofit work, and to the extent that a company does retrofit work, having an ODA just makes it. It’s like greasing the wheels. It just makes everything go a little bit easier.

Okay. Great. And then I just had one follow-up. I might have missed it, but can you add more color on Q4 guidance for interest expense, CapEx, and depreciation amortization?

Pete Gundermann, Chairman, President, and CEO, Astronics Corp: So in terms of interest expense, like Pete said, the interest rate on the ABL and the RCF are very similar. We are going to have a pretty heavy CapEx quarter in the fourth quarter. So a tick up in the debt is not unexpected under the revolver. We’re still carrying $33 million of debt on the convertible, on the 5.5% convertible bond. So that will contribute as well. But then the remainder of the debt, that $225 million, is at 0%. And then in terms of depreciation and amortization, I don’t have those numbers, unfortunately, in front of me. I would expect a slight tick up there as well.

We’re working through the valuation of the two acquisitions, but it’s fair to assume that some portion of that’s going to be allocated to intangibles, and there will be a life assigned to those as well, and those will start to amortize during the quarter as well. But I mean, I don’t anticipate a material change from what our quarterly run rate’s been.

Great. Thanks.

Sure. Thank you. This does conclude today’s teleconference. We thank you for your participation. You may now disconnect your lines at this time.

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