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Astronics profits sag on acquisition costs

Astronics Corp.’s second-quarter profits slipped by 1 percent as expenses stemming from its acquisition of an Oregon company offset a 3 percent improvement in the earnings from its operations.

Astronics said its profits dipped to $5.16 million, or 34 cents per share, from $5.19 million, or 39 cents per share, a year earlier, as the company absorbed about $900,000 in expenses associated with its $136 million acquisition of PECO, an Oregon company that makes the aircraft cabin lighting and air flow components located above passenger seats.

The earnings were weaker than the 46 cents per share that analysts were expecting. Share prices dropped $1.97, almost 4.75 percent, to $39.51 Wednesday.

Astronics’ sales grew by 9 percent to $70.9 million, fueled by stronger revenues from its cabin electronics products and its military markets. The sales, which were up from $65 million a year ago, were less than the $74.7 million that analysts were forecasting but still were the second strongest in Astronics’ history.

“Our markets remain robust, and we continue to see strong demand for our products,” said Peter Gundermann, Astronics’ president and chief executive officer.

“We’re pretty pleased with how the first half came together, and we think it positions us pretty well for the second half,” Gundermann said during a conference call Wednesday.

Astronics said it expects the PECO acquisition, which was completed two weeks ago, to have a positive impact on the company’s performance going forward, adding about $35 million to $40 million to the company’s sales during the rest of this year.

Gundermann, however, said the company has not determined what impact the deal will have on earnings in the coming quarters as it reviews the accounting treatment of the deal, although he expects PECO’s operations to be at least as profitable as the company’s existing aerospace business.

For all of this year, Astronics said it expects its sales to range between $325 million and $340 million following the PECO acquisition, which is in line with analyst forecasts of $333 million. The company narrowed its revenue forecast for its existing business to between $290 million to $300 million, compared with its previous forecast of $280 million to $310 million.

Operating profits from the company’s aerospace business rose by 5 percent to $11.4 million as sales grew by 10 percent, fueled by an 18 percent jump in cabin electronics revenues and a 50 percent surge in sales of avionics equipment.

The company’s struggling test systems business in Florida cut its losses in half to $610,000 from $1.3 million a year ago, even though sales fell by 16 percent to $2.2 million.