67 WALL STREET, New York - January 5, 2012 - The Wall Street Transcript has just published its Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Increased Commercial Aircraft Production Rate - Defense Budget Uncertainty - Aftermarket Service Growth Deceleration - Emerging Markets Air Travel Growth Rates
Companies include: AAR (AIR); ABB (ABB); ANA (9202.TYO); AeroVironment (AVAV); Airbus (EAD.PA); and many more.
In the following brief excerpt from the 38 page , interviewees discuss the outlook for the sector and for investors.
Peter J. Gundermann was appointed the President and Chief Executive Officer of Astronics Corporation in 2003. Previously, he held the position of President of Luminescent Systems Inc., an operating subsidiary of Astronics, since 1991. Mr. Gundermann has been with Astronics since 1988 and a member of the board of directors since 2000. He holds a B.A. in applied mathematics and economics from Brown University and earned his MBA from Duke University.
TWST: Please start by telling us a bit about the company, a brief history of Astronics and an overview of your business today.
Mr. Gundermann: Astronics (ATRO) has been a public company since the 1970s. Over the years, it has been involved in a number of different types of business, but for practical purposes over the last decade we have been an aerospace company, and that's how we consider ourselves today. We report in two segments: approximately 93% of our sales these days are aerospace related, the remaining 7% is defense electronics.
TWST: Please tell us about the company's products.
Mr. Gundermann: Our aerospace product lines revolve primarily around lighting systems and electrical power generation and control. The lighting systems are primarily cockpit related. A lot of things light up in a cockpit, similar to a car. Also, like a car, there are a lot of exterior lights on airplanes: the red and green position lights most people are familiar with, and there are also landing lights, taxi lights and flashing anticollision lights. Then, in the cabin there are a wide range of lights, some of which are amenity related for the benefit of passengers, but many of which are either safety related or service related for the crew. On the electrical generation side, probably our best-known product is what I will call passenger power, which allows passengers the option of plugging in their personal electronic devices so they can save their battery and operate their device off of airframe power. The second avenue of our electrical products has to do with complete electrical systems for small aircraft, primarily business jets - everything from the generators all the way up to the end-use systems. We're capable of providing complete systems to those types of airplanes.
TWST: Who are your typical customers for this?
Mr. Gundermann: We do work with all the OEMs, from the biggest airplanes down to the smallest airplanes. We have products that are standard issue on the Airbus A380, for example, and we have products that are standard issue on a Cessna 172. We span the industry. We sell to the people who make airplanes and also sell to subsystem suppliers. For example, somebody who puts in a Rockwell Collins Pro Line 21 avionics suite gets Astronics' controls on the face of those devices. We are also involved in the military market, which I haven't talked about yet. Just like we span the range of commercial airplanes, we also span the range of military airplanes. Some of the more popular models talked about these days are the Joint Strike Fighter. We do work on the lighting side for Lockheed on that airplane, and on the B22 we do both power and lighting work on the Boeing vertical-lift platforms.
TWST: Do you see any demand trends from your customer base?
Mr. Gundermann: Certainly. I think the biggest trend affecting our business has been our success over the years with developing new products. Those who look at our history will find that we have grown pretty rapidly relative to the industry over the last 10 years. The main driver for that growth has been our ability to develop new products that our customers find appealing. As a result, we've been successfully increasing our ship-set content on new platforms as they are developed. In other words, a new airplane - say by Cessna, for example - tends to have quite a bit more content from Astronics than the older model they are replacing. So the biggest trend has been placing more ship-set content, and being responsible for bigger systems on new airplanes as they are developed.
TWST: You mentioned earlier how sales at Astronics are split between the two business segments, 93% aerospace, 7% defense electronics. Do you see that changing at all?
Mr. Gundermann: We are pursuing a number of opportunities for our defense electronics business to increase the significance of that business segment. We are working diligently to that end, but we certainly don't see us abandoning our aerospace orientation. We consider ourselves an aerospace company. We expect we will continue to consider ourselves an aerospace company.
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