Astronics Corporation (NASDAQ: ATRO) experienced a significant surge in its stock price on Wednesday, climbing 15.3% to $86.38 during midday trading. The sharp increase came after the aerospace supplier reported second-quarter results that showcased a record backlog and raised its full-year revenue forecast, signaling robust demand for its products.
Record Backlog and Raised Guidance
The company announced that its current backlog has reached $780.6 million, an all-time high and the third consecutive quarterly record. This figure represents 75.8% of the midpoint of the company's updated 2026 revenue guidance, which has been raised to a range of $1.02 billion to $1.04 billion. The midpoint, $1.03 billion, is up 4.6% from the previous guidance midpoint of $985 million. Approximately 82% of the backlog, or nearly $640.1 million, is expected to be delivered within the next 12 months, providing strong visibility into near-term revenue.
Strong Second-Quarter Financials
Astronics reported second-quarter sales of $260.0 million, a 27% increase from $204.7 million in the same period last year. The company's gross margin expanded significantly, rising 760 basis points to 33.4%, partly due to a $2.0 million tariff refund. Operating income surged to $40.5 million from $4.8 million, while adjusted EBITDA more than doubled to $51.5 million, up 102.9% year-over-year. The adjusted EBITDA margin improved to 19.8%, a 740-basis-point increase. Diluted earnings per share came in at $0.75, compared to $0.03 in the prior-year quarter.
Segment Performance
The Aerospace segment, which accounts for 91.3% of total sales, generated $237.3 million in revenue, up 22.6% from the prior year. The segment's adjusted operating margin reached 21.4%. The smaller Test Systems segment also showed improvement, with sales more than doubling to $22.7 million and posting a profit of $0.6 million, reversing a loss of $6.7 million in the same quarter last year.
Bookings and Cash Flow
Orders continued to outpace deliveries, with quarterly bookings totaling $306.2 million, resulting in a book-to-bill ratio of 1.18. This indicates that the company is adding more orders than it is shipping, further supporting the growing backlog. Operating cash flow was strong at $30.1 million in the second quarter, and the company reduced its debt by $24.1 million, bringing total debt down to $310.3 million.
CEO Commentary
Chief Executive Officer Peter Gundermann commented on the results, stating, “We had a very strong second quarter, with record sales, operating income, bookings and backlog.” The company's performance reflects the benefits of operating leverage, as profit growth outpaced sales growth.
Analyst Sentiment
Prior to the earnings release, analyst price targets were largely centered around $100, with ratings including Buy from Truist Securities (target $107) and Craig-Hallum (target $100), and TD Cowen (target $100). The consensus rating among five analysts is 4 Buy, 1 Hold, with an average price target of $91.38. These targets were set before the upward revision in guidance and do not reflect any post-earnings changes.
Risks and Outlook
While the results are encouraging, there are risks that could impact future performance. Commercial aircraft production rates can shift rapidly, and supply chain constraints, certification delays, or softer demand for Test Systems could hinder backlog conversion. The tariff refund that boosted gross profit may not recur. The company's ability to execute on its substantial backlog and maintain margin improvements will be key to sustaining investor confidence.
Astronics has provided third-quarter revenue guidance in the range of $265 million to $275 million, indicating continued growth momentum. The company's strong backlog and raised outlook suggest a positive trajectory, though execution will be critical in the coming quarters.