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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Astronics Corporation, through its subsidiaries, is a leading supplier of advanced technologies and products to the global aerospace and defense industries. Our products and services include advanced, high-performance electrical power generation and distribution systems, seat motion solutions, lighting and safety systems, avionics products, aircraft structures, systems certification, and automated test systems.

We have two reportable segments, Aerospace and Test Systems. Our Aerospace segment has principal operating facilities in the United States, Canada, France and Germany and an engineering office in Ukraine. Our Test Systems segment has principal operating facilities in the United States and an engineering office in India.

Our Aerospace segment designs and manufactures products for the global aerospace industry. Product lines include lighting and safety systems, electrical power generation, distribution and seat motion systems, aircraft structures, avionics products, systems certification, and other products. Our primary Aerospace customers are the airframe manufacturers (“OEM”) that build aircraft for the commercial transport, military and general aviation markets, suppliers to those OEMs, aircraft operators such as airlines, suppliers to the aircraft operators, and branches of the U.S. Department of Defense (“USDOD”). Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense and mass transit industries. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEMs and prime government contractors for both electronics and military products.

Our strategy is to increase our value by developing technologies and capabilities, either internally or through acquisition, and using those capabilities to provide innovative solutions to our targeted markets where our technology can be beneficial.

Important factors affecting our growth and profitability are the rate at which new aircraft are produced, government funding and timing of awards of military programs, our ability to have our products designed into new aircraft, the rates at which aircraft owners, including commercial airlines, refurbish or install upgrades to their aircraft and supply chain and labor market pressures. New aircraft build rates and aircraft owners’ spending on upgrades and refurbishments is cyclical and dependent on the strength of the global economy. Once one of our products is designed into a new aircraft, the spare parts business associated thereto is also frequently retained by the Company. Future growth and profitability of the Test Systems business is dependent on developing and procuring new and follow-on business. The nature of our Test Systems business is such that it pursues large, often multi-year, projects. There can be significant periods of time between orders in this business, which may result in large fluctuations of sales and profit levels and backlog from period to period. Test Systems segment customers include the USDOD, prime contractors to the USDOD, mass transit operators and prime contractors to mass transit operators.

Each of the markets that we serve presents opportunities that we expect will provide growth for the Company over the long-term. We continue to look for opportunities in all of our markets to capitalize on our core competencies to expand our existing business and to grow through strategic acquisitions.

The main challenges that we continue to face include varying levels of supply chain pressures, material availability and cost increases (including costs associated with the imposition of tariffs by the United States and other countries discussed herein), labor availability and cost, and improving shareholder value through increasing profitability. Increasing profitability is dependent on many things, primarily sales growth, both acquired and organic, and the Company’s ability to pass cost increases along to customers and control operating expenses, and to identify means of creating improved productivity. Sales are driven by increased build rates for existing aircraft, market acceptance and economic success of new aircraft and our products, continued government funding of defense programs, the Company’s ability to obtain production contracts for parts we currently supply or

have been selected to design and develop for new aircraft platforms and continually identifying and winning new business for our Test Systems segment.

Reduced aircraft build rates driven by regulatory actions impacting OEM production, a weak economy, aircraft groundings, tight credit markets, reduced air passenger travel, tariffs impacting OEM demand, and an increasing supply of used aircraft on the market would likely result in reduced demand for our products, which will result in lower profits. Reduction of defense spending may result in fewer opportunities for us to compete, which could result in lower profits in the future. Many of our newer development programs are based on new and unproven technology and at the same time we are challenged to develop the technology on a schedule that is consistent with specific programs. Delays in delivery schedules and incremental costs resulting from tariffs and other trade policy matters, supply chain pressures, and labor market pressures have in the past resulted in, and could in the future also result in, lower profits. We will continue to address these challenges by working to improve operating efficiencies and focusing on executing on the growth opportunities currently in front of us.

On October 22, 2025, the Company entered into the $300 million senior secured Revolving Credit Facility. The Revolving Credit Facility replaced the Company’s ABL Revolving Credit Facility which was terminated on October 22, 2025. The Revolving Credit Facility subjects us to various financial and other affirmative and negative covenants with which we must comply on an ongoing or periodic basis. These include financial covenants pertaining to a total leverage ratio, a consolidated interest coverage ratio, and a secured net debt leverage ratio requirement. An unexpected decline in our revenues or operating income, including occurring as a result of events beyond our control, could cause us to violate our financial covenants.

See Item 1A, Risk Factors, of this report for an additional discussion of risks associated with our potential inability to satisfy the financial and restrictive covenants set forth in the Revolving Credit Facility.

Challenges affecting the commercial aviation industry or key participants can adversely impact the demand for our products and services, the timing of orders, deliveries and related payments and other factors. We are monitoring the production levels and anticipated ramp-ups at Boeing and Airbus, and we continue to align our operations with their production expectations.

We are monitoring the ongoing conflict between Russia and Ukraine, as well as other geopolitical tensions and conflicts around the world, and the potential impact of related export controls, financial and economic sanctions, and other restrictions imposed by the U.S., the U.K., the European Union, and other countries. While the Russia-Ukraine conflict has not resulted in a direct material adverse impact on our business to date, the implications of both this and other global conflicts in the short-term and long-term are difficult to predict. Factors such as increased energy costs, disruptions in the availability of certain raw materials, restrictions on air travel or trade with affected regions, sanctions on companies or industries, shifts in customer stability, and broader impacts on the global economy and aviation sector could pose risks to our operations and financial performance.

In October 2024, a customer reported within the Aerospace segment declared bankruptcy. As a result, the Company recorded a full reserve of $1.0 million for outstanding receivables, a reserve of $1.7 million for inventory and $0.6 million for impairment of fixed assets. In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment filed for bankruptcy under Chapter 11. As a result, the Company recorded a full reserve of $7.5 million for outstanding accounts receivable and a reserve of $3.6 million for inventory.

During 2025, the Company initiated simplification activities in the Aerospace segment, including costs related to footprint rationalization and portfolio shaping. Restructuring charges, including a reduction of inventory and impairment of other long-lived assets, were recorded as a result of these simplification initiatives. In the year ended December 31, 2025, the Company recorded $5.8 million and $0.4 million in simplification initiative charges to Cost of Products Sold and Selling, General and Administrative Expenses, respectively, in the accompanying Consolidated Statements of Operations.

On January 20, 2026, the United States Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”) did not authorize the President to impose tariffs. The IEEPA tariff case has been remanded back to the Court of International Trade to address whether the lower court can issue a nationwide injunction against tariffs imposed under IEEPA. It is unknown at this time if or when refunds will be issued for IEEPA tariffs previously paid by the Company.

ACQUISITIONS

On June 30, 2025, the Company purchased the membership interests of Envoy Aerospace, located in Aurora, Illinois. Envoy Aerospace is an FAA ODA services provider. Envoy Aerospace is included in our Aerospace segment. The total purchase price was approximately $8.3 million, net of cash acquired and the estimated closing adjustment.

On October 13, 2025, the Company acquired all of the issued and outstanding capital stock of BMA, located in Uhldingen-Mühlhofen, Germany. BMA is an established manufacturer of aircraft seat actuation systems with a broad product portfolio that

includes actuators, electronics, control panels, pneumatic systems, and lighting. BMA will be included in our Aerospace segment. The total purchase price was approximately $18.0 million, net of cash acquired and the estimated closing adjustment.

DIVESTITURES

On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems segment. The total proceeds of the divestiture included contingent purchase consideration (“earnout”). In March 2023, the Company agreed with a final earnout calculation in the amount of $3.4 million. The Company recorded the gain and received the payment in the first quarter of 2023. We are not eligible for any further earnout payments related to this divestiture.

MARKETS

Commercial Transport Market

The commercial transport market is our largest end market with sales driven by new aircraft production and aftermarket airline retrofit programs. In the commercial transport market, while many of our key long-term fundamentals remain intact, we continue to see residual, though improving, near-term market pressure due to effects of certain supply chain challenges. We have experienced improvement throughout 2025 driven by improved activity with our airline customers and recovery from negative effects on production from the quality control issues and labor workforce stoppage on the 737 MAX experienced in late 2024. Aircraft build rates improved in 2025, and are expected to continue to ramp during 2026 and 2027 from current levels as production of both the 737 MAX and A-320 are expected to increase, and the aftermarket is expected to strengthen over the course of the year as aircraft utilization and load factors increase. International travel utilizing primarily widebody aircraft has returned to pre-pandemic levels and we believe widebody aircraft production rates will continue to directionally match air traffic volumes.

Sales to the commercial transport market include sales of lighting and safety systems, electrical power and seat motion systems, aircraft structures, avionics products and systems certification. Sales to this market totaled approximately $599.3 million or 69.5% of our consolidated sales in 2025.

Maintaining and growing sales to the commercial transport market will depend on airlines’ capital spending budgets for cabin upgrades as well as the purchase of new aircraft by global airlines. This spending by the airlines is impacted by their profits, cash flow and available financing as well as competitive pressures between the airlines to improve the travel experience for their passengers. We expect that new aircraft will be equipped with more passenger and aircraft connectivity and in-seat power than previous generation aircraft which drives demand for our avionics and power products. This market has historically experienced strong growth from airlines installing in-seat passenger power systems on their existing and newly delivered aircraft. Our ability to maintain and grow sales to this market depends on our ability to maintain our technological advantages over our competitors and maintain our relationships with major in-flight entertainment suppliers and global airlines.

The satellite communications industry is experiencing significant ongoing disruption, as customers evaluate the benefits of lower-cost, low Earth orbit (“LEO”) solutions, challenging the traditional geosynchronous satellite-based systems. This transition represents both a risk to portions of our existing products and an opportunity to evolve our offerings to align with the growing demand for LEO products and services.

Military Aerospace Market

Sales to the military aerospace market include sales of lighting and safety products, avionics products, electrical power products and structures products. Sales to this market totaled approximately 13.5% of our consolidated sales and amounted to $116.3 million in 2025.

The military market is dependent on governmental funding which can change from year to year. Risks are that overall spending may be reduced in the future, specific programs may be eliminated or that we fail to win new business through the competitive bid process. Astronics does not have significant reliance on any one program such that cancellation of a particular program will cause material financial loss. We believe that we will continue to have opportunities similar to past years with respect to this market.

General Aviation Market

Sales to the general aviation market consist mostly of line-fit products driven by aircraft build rates although there are some aftermarket sales as well. Sales to the general aviation market include sales of lighting and safety products, avionics products, and electrical power products. Sales to this market totaled approximately 8.1% of our consolidated sales in 2025 and amounted to $69.8 million.

Sales to the general aviation market are driven by our ship set content on new aircraft and build rates of new aircraft. General aviation OEM build rates are impacted by global wealth creation and corporate profitability. We continue to see opportunities on new aircraft currently in the design phase to employ our lighting and safety, electrical power and avionics technologies in this market. There is risk involved in the development of products for any new aircraft including the risk that the aircraft will not ultimately be produced or that it will be produced in lower quantities than originally expected and thus impacting our return on our engineering and development efforts.

Test Systems Products

Sales by our Test Systems segment accounted for approximately 7.5% of our consolidated sales in 2025 and amounted to $64.8 million. This segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as training and simulation devices for both commercial and military applications. Sales to the aerospace and defense market were $35.4 million in 2025. Sales to the mass transit market were $5.3 million and sales to the radio test market were $24.1 million in 2025.

Sales to the military and mass transit markets are subject to fluctuations resulting from changes in governmental spending, elimination of certain programs, or failure to win new business through the competitive bid process. Consistent with the Aerospace segment, the Test Systems segment does not significantly rely on any one program such that cancellation of a particular program will cause material financial loss, and we believe that we will continue to have opportunities similar to past years regarding this market.

CRITICAL ACCOUNTING ESTIMATES

Our financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles. The preparation of the Company’s financial statements requires management to make estimates, assumptions and judgments that affect the amounts reported. These estimates, assumptions and judgments are affected by management’s application of accounting policies, which are discussed in Note 1, Summary of Significant Accounting Principles and Practices, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report. The critical accounting policies have been reviewed with the Audit Committee of our Board of Directors.

Revenue Recognition

Astronics recognizes revenue when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control is transferred either at a point-in-time or over-time. The majority of our revenue is recognized at a point-in-time when control is transferred, which is generally evidenced by the shipment or delivery of the product to the customer, a transfer of title, a transfer of the significant risks and rewards of ownership, and customer acceptance. For certain contracts under which we produce products with no alternative use and for which we have an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date and for certain other contracts under which we create or enhance a customer-owned asset while performing repair and overhaul services, control is transferred to the customer over time. The Company recognizes revenue using an over time recognition model for these types of contracts.

We utilize the cost-to-cost method as a measure of progress for performance obligations that are satisfied over time as we believe this input method best represents the transfer of control to the customer. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. These projections require management to make numerous assumptions and estimates relating to items such as the complexity of design and related development costs, performance of subcontractors, availability and cost of materials, labor productivity and cost, overhead, capital costs, and manufacturing efficiency. We review our cost estimates on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends and other economic projections.

See Note 2, Revenue, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for a further description of revenue recognition under ASC 606.

Reviews for Impairment of Goodwill

Our goodwill is the result of the excess of purchase price over net assets acquired from acquisitions. We had approximately $62.9 million and $58.1 million of goodwill as of December 31, 2025 and 2024, respectively.

We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those

components. The Test Systems operating segment is its own reporting unit while the other reporting units are one level below our Aerospace operating segment.

The Company tests goodwill at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for some or all of the Company's selected reporting units. If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to a quantitative test. The Company may also elect to perform a quantitative test instead of a qualitative test for any or all of the Company's reporting units. The quantitative impairment test consists of comparing the fair value of a reporting unit to its carrying value.

We use the discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected sales growth rates, operating profit margins and cash flows, the terminal growth rate and the discount rate. Management projects sales growth rates, operating margins and cash flows based on the reporting unit’s current business, expected developments and operational strategies. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and the impairment loss is recorded for the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.

The Company’s five reporting units with goodwill as of the first day of our fourth quarter were subject to the annual goodwill impairment test. Based on our assessments of our reporting units, we concluded that goodwill was not impaired in 2025, 2024 or 2023.

CONSOLIDATED RESULTS OF OPERATIONS AND PERFORMANCE

RESULTS OF OPERATIONS:

Gross Profit (sales less cost of products sold) 258,158 220,428

Research and Development Expenses (“R&D”)1 43,475 52,086

Selling, General and Administrative Expenses (“SG&A”) 138,271 141,876

SG&A Expenses as a Percentage of Sales 16.0 % 17.8 %

Effective Tax Rate 8.1 % (106.1) %

1 R&D Expenses have been reclassified from Cost of Products Sold to a separate line item below Gross Profit. All periods presented have been revised to reflect this presentation.

A discussion by segment can be found at “Segment Results of Operations” in this MD&A.

CONSOLIDATED OVERVIEW OF OPERATIONS

2025 Compared With 2024

Growth in sales was driven by continued strength in demand for the Aerospace segment primarily from the Commercial Transport market. Aerospace sales increased $90.6 million, or 12.8%, which more than offset the $23.9 million decline in Test Systems sales. Consolidated sales were negatively impacted by $8.3 million from revisions of estimated costs to complete certain long-term mass transit contracts in the Test Systems segment.

Consolidated cost of products sold in 2025 was $604.0 million, compared with $575.0 million in the prior year. The increase was primarily due to higher sales volume and $10.4 million of tariff expense in 2025. Additionally, simplification initiatives in the Aerospace segment, including costs related to footprint rationalization and product portfolio shaping activities, resulted in $5.8 million in charges within cost of products sold during the year. The prior year was negatively impacted by $3.8 million in higher warranty expense related to an atypical warranty campaign and $1.7 million in reserves associated with customer

bankruptcies. Both periods reflect the change in presentation for R&D, which is now identified as an expense item on the income statement below gross profit.

Selling, General and Administrative expenses were $138.3 million in 2025 compared with $141.9 million in the prior year driven by a decrease of $5.6 million in litigation-related legal expenses and reserve adjustments and $1.5 million of prior-year reserves associated with customer bankruptcies, partially offset by $1.8 million in higher legal and accounting expenses related to acquisitions. R&D was $8.6 million lower reflecting the timing of projects.

The current year includes a $32.6 million loss on settlement of debt as a result of a partial repurchase of the 2030 Convertible Notes, compared to a loss on settlement of debt of $10.1 million in the prior year, which was related to the $4.5 million in call premiums on the previous term loans, which were extinguished upon issuance of the 2030 Convertible Notes, and the write-off of $5.6 million of associated deferred financing costs.

As a result of the lower outstanding borrowings and the reduced cost of debt resulting from the refinancing actions in late 2024 and in 2025, interest expense decreased $9.4 million or 42.9%.

Tax expense was $2.6 million compared with a tax expense of $8.3 million in the prior year, primarily due to a valuation allowance reversal associated with research and development costs that are expected to be expensed for tax purposes in the current year under the OBBBA, along with a $1.0 million adjustment to reverse certain federal and state deferred tax liabilities.

Consolidated net income of $0.81 per diluted share improved from a net loss of $(0.46) per diluted share in the prior year from the strength in operating profit and lower interest expense.

Bookings were up 14.4% to $924.4 million with a book-to-bill ratio of 1.07:1 in 2025. The book-to-bill ratio is calculated as total orders received during the period compared with total revenue recognized during the period. Backlog as of December 31, 2025 was $674.5 million.

Income Taxes

Our effective tax rates for 2025 and 2024 were 8.1% and (106.1)%, respectively. Prior to 2022, research and development costs were deducted as incurred. However, beginning with the 2022 tax year, as required by the 2017 Tax Cuts and Jobs Act, these costs were required to be capitalized for tax purposes and amortized over five years. In 2025, the One Big Beautiful Bill Act (“OBBBA”) restored the ability to deduct research and development expenditures immediately in the year incurred for tax years beginning in 2025 and also provided the ability to deduct research and development costs that were previously capitalized prior to 2025. Due to our cumulative three-year pre-tax loss, a valuation allowance was applied against the deferred tax asset. In addition to state and foreign income taxes, the following items had the most significant impact on the difference between our statutory U.S. federal income tax rate (21% in 2025 and 2024) and our effective tax rate:

2025:

•Removal of approximately $8.7 million of valuation allowance against federal deferred tax assets. See Note 11, Income Taxes, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for additional information.

•Approximately $6.9 million of nondeductible items which reduced the federal net operating loss for the year. The recognition of the federal net operating loss was offset by the federal valuation allowance recognized during the year.

•Recognition of approximately $3.4 million of 2025 U.S. R&D tax credits which were offset by the federal valuation allowance recognized during the year.

2024:

•Recognition of approximately $13.6 million of valuation allowance against federal deferred tax assets. See Note 11, Income Taxes, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for additional information.

•Recognition of approximately $3.4 million of 2024 U.S. R&D tax credits.

2024 Compared With 2023

For a comparison of our results of operations for the years ended December 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 5, 2025.

SEGMENT RESULTS OF OPERATIONS

Operating profit, as presented below, is sales less cost of products sold and other operating expenses, excluding interest expense, other corporate expenses and other non-operating sales and expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment. Operating profit is reconciled to income (loss) before income taxes in Note 20, Segments, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report.

We do not have material off-balance sheet arrangements that have or are reasonably likely to have a material future effect on our results of operations or financial condition.

AEROSPACE SEGMENT

(In thousands, except percentages) 2025 2024

Operating Margin 14.2 % 8.8 %

2025 Compared With 2024

Aerospace segment sales of $797.3 million were up $90.6 million, or 12.8%. Sales in the Commercial Transport market grew $74.7 million, or 14.2%. Growth was primarily related to increased demand by airlines for cabin power, lighting and safety, seat motion and system certification products and services.

Military Aircraft sales increased $28.3 million, or 32.1%, to $116.3 million, driven by pricing initiatives and increased demand for lighting and safety products, and continued progression on the MV-75 program engineering efforts. General Aviation sales decreased $4.5 million, or 6.1%, to $69.8 million, as a result of lower airframe power sales due to timing of programs. Other sales decreased $7.8 million as the Company has wound down its non-core contract manufacturing arrangements.

Aerospace segment operating profit of $113.2 million, or 14.2%, improved over the prior year resulting from leverage gained on higher volume, favorable mix, pricing initiatives and improved production efficiencies. The year also benefitted from a $6.5 million decrease in litigation-related legal expenses and reserve adjustments related to the ongoing patent dispute previously discussed. Additional benefits include a $3.8 million decrease in warranty expenses related to an atypical warranty

campaign and the absence of reserves for customer bankruptcies, which were $3.2 million in the prior year. These gains were partially offset by a $6.3 million increase in costs related to simplification and restructuring initiatives during the current year.

Aerospace bookings in 2025 were $847.5 million, for a book-to-bill ratio of 1.06:1. The Aerospace segment’s backlog at December 31, 2025 was $600.8 million, compared to $537.6 million at December 31, 2024.

2024 Compared With 2023

For a comparison of Aerospace segment results for the years ended December 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 5, 2025.

TEST SYSTEMS SEGMENT

(In thousands, except percentages) 2025 2024

Operating Margin (12.1) % (9.6) %

2025 Compared With 2024

Test Systems segment sales were $64.8 million, down $23.9 million from 2024. The decrease was driven by lower sales on our U.S. Army and U.S. Marine Corps’ radio Test programs. Additionally, segment sales were negatively impacted by $8.3 million due to revisions of estimated costs to complete certain long-term mass transit Test contracts. The revisions resulted in reduced revenue recognized in the period due to lower estimates of the percentage of work completed on the programs.

Test Systems operating loss was $7.8 million compared with operating loss of $8.5 million in 2024. Net revisions to the estimated costs to complete had a $8.8 million detrimental impact to operating income and partially offset the net savings realized from recent restructuring activities. Test Systems continues to be negatively affected by mix and under absorption of fixed costs at current volume levels.

Bookings for the Test Systems segment in 2025 were $76.8 million, for a book-to-bill ratio of 1.19:1 for the year. Backlog in the Test Systems segment was $73.7 million at December 31, 2025, compared to $61.7 million at December 31, 2024.

2024 Compared With 2023

For a comparison of Test Systems segment results for the years ended December 31, 2024 and 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 5, 2025.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

For further information on our contractual obligations and other commitments as of December 31, 2025 and estimated timing thereof, see the notes to the Consolidated Financial Statements referenced below, in Item 8, Financial Statements and Supplementary Data, of this report.

Long-term Debt and Interest Payments — Refer to Note 8, Long-Term Debt, in Item 8, Financial Statements and Supplementary Data, of this report. On November 25, 2024, the Company entered into a second amendment to the ABL Revolving Credit Facility that increased the maximum aggregate amount available to be borrowed thereunder to $220.0 million from $200.0 million. On October 22, 2025, the ABL Revolving Credit Facility was terminated and replaced with a cash flow-based Revolving Credit Facility with a $300.0 million limit. The scheduled maturity date for the Revolving Credit Facility is October 16, 2030. Under the terms of the Revolving Credit Facility, the Company pays interest on the unpaid principal amount outstanding under the Revolving Credit Facility at a rate equal to Term SOFR plus an applicable margin ranging from 1.25% to 2.125% determined based upon the Company’s Total Net Debt Leverage Ratio. The Company pays a quarterly commitment fee under the Revolving Credit Facility on unused Revolving Commitments ranging from 0.20% to 0.35%.

On December 3, 2024, the Company issued $165.0 million aggregate principal amount of 2030 Convertible Notes. The 2030 Convertible Notes bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025. The 2030 Convertible Notes will mature on March 15, 2030, unless earlier converted, redeemed or repurchased. The initial conversion rate is 43.6814 shares of common stock per $1,000 principal amount of Convertible Notes, which represent the initial conversion price of $22.89 per share. The Company partially repurchased $132.0 million of the 2030 Convertible Notes during the third quarter of 2025 and $33.0 million remains outstanding at December 31, 2025. The 2030 Convertible Notes can be settled in any combination of cash or shares.

On September 15, 2025, the Company issued $225.0 million of 2031 Convertible Notes. The 2031 Convertible Notes do not bear any interest and will mature on January 15, 2031, unless earlier converted, redeemed or repurchased. The initial conversion rate is 18.2243 shares of common stock per $1,000 principal amount of 2031 Convertible Notes, which represents the initial conversion price of $54.87 per share. The principal amount of the 2031 Convertible Notes will be settled by paying cash and the premium, if any, can be settled in any combination of cash or shares.

In connection with the issuance of the 2031 Convertible Notes, the Company entered into capped call transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the 2031 Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2031 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap price of approximately $83.41 per share of the Company’s common stock. The Capped Calls expire January 15, 2031.

Future interest payments over the next twelve months under the Revolving Credit Facility and the Convertible Notes of approximately $6.9 million have been estimated using the applicable interest rate of each debt instrument based on expected future borrowings or outstanding amount of Convertible Notes, as applicable. Actual future borrowings and rates may differ from those used to estimate the amounts discussed above.

Purchase Obligations — Purchase obligations are comprised of the Company’s commitments for goods and services in the normal course of business and amount to approximately $226.1 million payable over the next twelve months.

Supplemental Retirement Plan and Post Retirement Obligations — Anticipated payments related to the Company’s defined benefit plans are detailed in Note 13, Retirement Plans and Related Post Retirement Benefits, in Item 8, Financial Statements and Supplementary Data, of this report.

Lease Obligations — Refer to Note 10, Leases, in Item 8, Financial Statements and Supplementary Data, of this report for details on obligations and timing of expected future lease payments, including a five-year maturity schedule.

Legal Reserves — Refer to Note 19, Legal Proceedings and Other Matters, in Item 8, Financial Statements and Supplementary Data, of this report for management’s estimate of damages to be paid related to our ongoing litigation with Lufthansa Technik and timing thereof.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Data

Net Cash Flows from:

Year-end Financial Position

Other Data for the Annual Period

1Working capital is calculated as the difference between Current Assets and Current Liabilities.

Our cash flow from operations and available borrowing capacity under our credit facilities are expected to provide us with the financial resources needed to run our operations and reinvest in our business for at least the next 12 months.

Our ability to maintain sufficient liquidity is highly dependent upon achieving expected operating results. Failure to achieve expected operating results could have a material adverse effect on our liquidity, our ability to obtain financing or access our existing financing, and our operations in the future.

Operating Activities

Cash provided by operating activities totaled $74.8 million in 2025, as compared with $30.6 million cash provided by operating activities in 2024. Cash flow from operating activities improved compared with 2024 reflecting higher cash earnings offset by higher working capital requirements associated with increased activity. Cash provided by operating activities in 2025 included $21.6 million in payments related to the UK patent dispute and $11.6 million in net federal and state income tax payments.

Our cash flows from operations are primarily dependent on our net income adjusted for non-cash expenses and income and the timing of collections of receivables, inventory levels and payments to suppliers and employees. Sales and operating results of our Aerospace segment are influenced by build rates of new aircraft, which are subject to general economic conditions, airline passenger travel and spending for government and military programs. Our Test Systems segment sales depends in part on capital expenditures of the aerospace and defense industry which, in turn, depend on current and future demand for those products. A reduction in demand for our customers’ products would adversely affect our operating results and cash flows.

Investing Activities

Cash used for investing activities in 2025 was $53.7 million compared to $8.4 million cash used for investing activities in 2024, driven by a higher level of capital expenditures related to the ongoing facility expansion activities and acquisitions during the year.

Future requirements for property, plant and equipment (“PP&E”) depend on numerous factors, including expansion of existing product lines and introduction of new products. Management believes that our cash flow from operations and available capacity under our credit facilities will provide for these capital expenditures. We expect to continue to evaluate acquisition opportunities in the future.

Financing Activities

Cash used for financing activities totaled $22.4 million for 2025, as compared with cash used for financing activities of $14.5 million for 2024. The Company received net proceeds under its convertible notes and revolving credit facilities of $14.2 million, offset by $26.9 million in payments for capped call transactions and $10.4 million in financing-related fees and expenses in 2025. Net proceeds of debt were $2.5 million in the prior year, offset by $16.6 million in financing-related fees, expenses and settlement costs.

Cash on hand at the end of the year was $18.2 million. Net debt was $324.8 million, compared with $156.6 million at the end of 2024.

Our ability to maintain sufficient liquidity and comply with financial debt covenants is highly dependent upon achieving expected operating results. Failure to achieve expected operating results could have a material adverse effect on our liquidity, our ability to obtain financing or access our existing financing, and our operations in the future and could allow our debt holders to demand payment of all outstanding amounts. As of December 31, 2025, we are in compliance with all covenants under each of our financing arrangements. Our financing arrangements are more fully discussed in Note 8, Long-Term Debt, to our Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report.

The Company expects its cash flow from operations will provide sufficient cash flows to fund operations, including payment of any further amounts related to the Lufthansa matters. The Company paid $21.6 million for ordered liabilities for damages, interest and legal fee reimbursement related to the UK matter in the year ended December 31, 2025. Both the Company and Lufthansa have been granted permission to appeal the rulings by the UK High Court of Justice. The appeals are scheduled to be heard by the UK Court of Appeal in March 2026. The Company may also evaluate various actions and alternatives to enhance its profitability and cash generation from operating activities, which could include manufacturing efficiency initiatives, cost-reduction measures, working with vendors and suppliers to reduce lead times and expedite shipment of critical components, and working with customers to expedite receivable collections.

Lufthansa Technik AG (“Lufthansa”) filed actions in Germany, the United Kingdom (“UK”) and France. These matters are more fully discussed in Note 19, Legal Proceedings and Other Matters, to our Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data and Item 1A, Risk Factors, of this report.

On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $30 million. During the year ended December 31, 2025 and 2024, the Company did not sell any shares of its common stock under the ATM Program. As of December 31, 2025, the Company had remaining capacity under the ATM Program to sell shares of common stock having an aggregate offering price up to approximately $8.2 million.

DIVIDENDS

Management believes that it should retain the capital generated from operating activities for investment in advancing technologies, acquisitions and debt retirement. Accordingly, there are no plans to institute a cash dividend program at this time.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1, Summary of Significant Accounting Principles and Practices, of the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has limited exposure to fluctuation in foreign currency exchange rates to U.S. dollar, primarily in Canadian dollars and Euros currency. Approximately 90% of the Company’s consolidated sales are transacted in U.S. dollars. Net assets held in or measured in Canadian dollars amounted to $13.9 million at December 31, 2025. A 10% change in the value of the U.S. dollar versus the Canadian dollar would have had an immaterial impact to 2025 net income. Net assets held in or measured in Euros amounted to $52.5 million at December 31, 2025. A 10% change in the value of the U.S. dollar versus the Euros would have had an immaterial impact to 2025 net income.

Risk due to fluctuation in interest rates is a function of the Company’s floating rate debt obligations, which total approximately $85.0 million as of December 31, 2025. A change of 1% in interest rates of all variable rate debt would impact annual net income by approximately $0.9 million, before income taxes.

As discussed elsewhere in this report, our business continues to face uncertainty due to various economic factors, including inflationary pressures, disruptions in the global supply chain (such as costs related to recently imposed tariffs by the United States and other countries), challenges with labor availability and associated costs, and the ongoing conflict between Russia and Ukraine and broader geopolitical tensions. The duration and scope of the Russia-Ukraine war, along with the broader economic and geopolitical uncertainties, remain unpredictable. Consequently, while we cannot reasonably estimate the ultimate financial impact on our results at this time, such impacts could be material.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Astronics Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Astronics Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1992.

Buffalo, New York

February 26, 2026

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025 based upon the framework in Internal Control – Integrated Framework originally issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting is effective as of December 31, 2025.

We completed acquisitions in 2025, which were excluded from our management’s report on internal control over financial reporting as of December 31, 2025. We acquired Envoy Aerospace, LLC on June 30, 2025 and Bühler Motor Aviation, on October 13, 2025. These acquisitions were included in our 2025 consolidated financial statements and constituted $22.8 million and $18.7 million of total and net assets, respectively, as of December 31, 2025 and $6.9 million and $0.5 million of sales and net income, respectively, for the year then ended.

Ernst & Young LLP, independent registered public accounting firm, has audited our Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting.

By: /s/ Peter J. Gundermann February 26, 2026

Peter J. Gundermann

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Nancy L. Hedges February 26, 2026

Nancy L. Hedges

Vice President and Chief Financial Officer

(Principal Financial Officer)

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Astronics Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Astronics Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Astronics Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Envoy Aerospace, LLC and Bühler Motor Aviation. The Company acquired Envoy Aerospace, LLC on June 30, 2025 and Bühler Motor Aviation, on October 13, 2025. These acquisitions were included in the 2025 consolidated financial statements of the Company and constituted $22.8 million and $18.7 million of total and net assets, respectively, as of December 31, 2025 and $6.9 million and $0.5 million of sales and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Envoy Aerospace, LLC and Bühler Motor Aviation.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 26, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Buffalo, New York

February 26, 2026

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

Net Gain on Sale of Businesses — — 3,427

Basic Earnings (Loss) Per Share $ 0.83 $ (0.46) $ (0.80)

Diluted Earnings (Loss) Per Share $ 0.81 $ (0.46) $ (0.80)

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

Other Comprehensive (Loss) Income:

Foreign Currency Translation Adjustments 3,070 (1,871) 984

Retirement Liability Adjustment – Net of Tax (3,617) 7,434 (884)

Total Other Comprehensive (Loss) Income (547) 5,563 100

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31,

(In thousands, except share and per share data) 2025 2024

ASSETS

Current Assets:

Restricted Cash — 9,143

Prepaid Expenses and Other Current Assets 18,027 16,557

Property, Plant and Equipment, Net of Accumulated Depreciation 107,078 80,687

Intangible Assets, Net of Accumulated Amortization 55,353 52,477

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Accrued Payroll and Employee Benefits 34,900 33,409

Current Operating Lease Liabilities 5,802 4,697

Customer Advanced Payments and Deferred Revenue 26,069 27,491

Long-term Operating Lease Liabilities 38,101 20,508

Shareholders’ Equity:

Accumulated Other Comprehensive Loss (4,410) (3,863)

Total Liabilities and Shareholders’ Equity $ 706,678 $ 648,764

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash Flows from Operating Activities

Adjustments to Reconcile Net Income (Loss) to Cash from Operating Activities:

Non-cash Items:

Provisions for Non-Cash Losses on Inventory and Receivables 10,011 13,782 16,003

Deferred Tax (Benefit) Expense (1,362) (20) 146

Simplification Initiative-related Non-cash Charges 6,229 — —

Net Gain on Sale of Business, Before Taxes — — (3,427)

Non-cash 401K Contribution and Quarterly Bonus Accrual — 3,454 6,549

Non-cash Annual Stock Bonus Accrual — — 2,806

Non-cash Litigation Provision Adjustment — 4,468 (1,305)

Non-cash Deferred Liability Recovery — — (5,824)

Changes in Operating Assets and Liabilities:

Tenant Improvement Allowance Refund 8,138 — —

Cloud Computing Implementation Costs (1,117) — —

Customer Advanced Payments and Deferred Revenue (4,189) 5,693 (4,835)

Supplemental Retirement Plan Liabilities (716) (410) (408)

Cash Flows from Investing Activities

Acquisitions of Businesses, Net of Cash Acquired (22,075) — —

Proceeds from Sale of Businesses and Assets — — 3,537

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

Year Ended December 31,

Cash Flows from Financing Activities

Proceeds from Issuance of Convertible Debt 225,000 — —

Partial Repurchase of 2030 Convertible Notes (285,752) — —

Payments for Capped Call Transactions (26,888) — —

Financing Settlement Costs — (4,496) —

Stock Award and Employee Stock Purchase Plan (“ESPP”) activity 753 (241) 2,476

Proceeds from At-the-Market (“ATM”) Stock Sales — — 21,269

Supplemental Disclosure of Cash Flow Information

Non-Cash Investing Activities:

Capital Expenditures in Accounts Payable $ 2,025 $ — $ —

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Year Ended December 31,

Common Stock

Issuance of Common Stock Through At-the-Market Offering — — 14

Net Exercise of Stock Options, including ESPP 3 2 4

Net Issuance of Common Stock for Restricted Stock Units (“RSUs”) 2 5 1

Class B Stock Converted to Common Stock 11 8 4

Convertible Class B Stock

Beginning of Year $ 51 $ 59 $ 63

Class B Stock Converted to Common Stock (11) (8) (4)

Additional Paid in Capital

Partial Repurchase of 2030 Convertible Notes (120,632) — —

Purchase of Capped Call Transactions (26,888) — —

Issuance of Common Stock Through ATM Offering, Net of Offering Costs — — 21,246

Gross Shares Issued to Fund Bonus Obligations — 6,281 —

Accumulated Comprehensive Loss

Foreign Currency Translation Adjustments 3,070 (1,871) 984

Retirement Liability Adjustment – Net of Taxes (3,617) 7,434 (884)

Retained Earnings

Partial Repurchase of 2030 Convertible Notes (4,868) — —

Reissuance of Treasury Shares for 401K Contribution — (1,330) (4,186)

Treasury Stock

Net Exercise of Stock Options (721) — —

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED

Year Ended December 31,

Common Stock

Issuance of Common Stock Through ATM Offering — — 1,334

Net Issuance from Exercise of Stock Options, including ESPP 270 220 437

Net Issuance to Fund Bonus Obligations — 218 —

Net Issuance of Common Stock for RSUs 192 165 147

Class B Stock Converted to Common Stock 1,131 866 362

Convertible Class B Stock

Net Issuance from Exercise of Stock Options 11 — —

Class B Stock Converted to Common Stock (1,131) (866) (362)

Treasury Stock

Net Exercise of Stock Options 57 — —

Shares Issued to Fund 401K Obligation — (139) (322)

See notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND PRACTICES

Description of the Business

Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense, and electronics industries. Our products and services include advanced, high-performance electrical power generation, distribution and seat motion systems, lighting and safety systems, avionics products, systems certification, aircraft structures and automated test systems.

We have principal operations in the United States (“U.S.”), Canada, France and Germany, as well as engineering offices in Ukraine and India.

The Company has two reportable segments, Aerospace and Test Systems. The Aerospace segment designs and manufactures products for the global aerospace and defense industry. Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as training and simulation devices for both commercial and military applications.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.

The Company accounts for its acquisitions under Accounting Standard Codification (“ASC”) Topic 805, Business Combinations and Reorganizations (“ASC Topic 805”). ASC Topic 805 provides guidance on how the acquirer recognizes and measures the consideration transferred, identifiable assets acquired, liabilities assumed, non-controlling interests, and goodwill acquired in a business combination.

See Note 21, Acquisitions, for details of our recent acquisitions.

Cost of Products Sold, Research and Development and Selling, General and Administrative Expenses

Cost of Products Sold includes the costs to manufacture products such as direct materials and labor and manufacturing overhead as well as all engineering and developmental costs. The Company is engaged in a variety of research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. Research and development costs are expensed as incurred and include salaries, benefits, consulting, material costs and depreciation. Research and development costs amounted to $43.5 million in 2025. Beginning in 2025, the Company changed its financial statement presentation of research and development costs. These costs were previously included within Cost of Products Sold and were included in arriving at Gross Profit. Research and development expenses, which amounted to $52.1 million in 2024 and $53.7 million in 2023 have been reclassified from Cost of Products Sold to a separate line item below Gross Profit in the accompanying Consolidated Statements of Operations. All periods presented have been revised to reflect this presentation. Selling, General and Administrative (“SG&A”) expenses include costs primarily related to our sales, marketing and administrative departments. Interest expense is shown net of interest income. Interest income was insignificant for the years ended December 31, 2025, 2024 and 2023.

Simplification Initiatives

Shipping and Handling

Shipping and handling costs are included in Cost of Products Sold.

Equity-Based Compensation

The Company accounts for its stock options following ASC Topic 718, Compensation – Stock Compensation (“ASC Topic 718”). ASC Topic 718 requires all equity-based payments to employees, including grants of employee stock options and RSUs, to be recognized in the statement of earnings based on the grant date fair value of the award. For awards with graded vesting,

the Company uses a straight-line method of attributing the value of stock-based compensation expense, subject to minimum levels of expense, based on vesting. The Company accounts for forfeitures as they occur.

Under ASC Topic 718, stock compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Equity-based compensation expense is included in SG&A Expenses.

Cash and Cash Equivalents

All highly liquid instruments with a maturity of three months or less at the time of purchase are considered cash equivalents.

Restricted Cash

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 8, Long-Term Debt) which was terminated on October 22, 2025, the Company had a cash dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts were contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility. Account balances that had not yet been applied to the ABL Revolving Credit Facility were classified as restricted cash in the accompanying Consolidated Balance Sheets.The following table provides a reconciliation of cash and restricted cash included in Consolidated Balance Sheets to the amounts included in the Consolidated Statements of Cash Flows.

December 31,

Restricted Cash — 9,143

Customer Bankruptcies

In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment filed for bankruptcy under Chapter 11. As a result, the Company recorded a full reserve of $7.5 million for outstanding accounts receivable and a reserve of $3.6 million for inventory.

Accounts Receivable and Allowance for Estimated Credit Losses

Accounts receivable are composed of trade and contract receivables recorded at either the invoiced amount or costs in excess of billings. These receivables are expected to be collected within one year and do not bear interest. The Company records a valuation allowance to account for estimated credit losses. The estimate for credit losses is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable and supportable forecasts of future economic conditions that may affect a customer’s ability to pay. Balances are written off when determined to be uncollectible.

Although the Company has historically not experienced significant credit losses, the Company’s exposure to credit losses may increase if its customers are adversely affected by global economic recessions, industry conditions, or other customer-specific factors.

Inventories

We record our inventories at the lower of cost or net realizable value. We determine the cost basis of our inventory on a first-in, first-out or weighted average basis using a standard cost methodology that approximates actual cost. Inventory costs include direct materials, direct labor, and manufacturing overhead, including freight-in, custom duties, and import tariffs directly attributable to bringing the inventory to its existing location and condition. The Company records reserves to provide for excess, slow moving or obsolete inventory. In determining the appropriate reserve, the Company considers the age of inventory on hand, the overall inventory levels in relation to forecasted demands as well as reserving for specifically identified inventory that the Company believes is no longer salable or whose value has diminished.

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by third party vendors. Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application development phase. Amortization is calculated on a straight-line basis over the contractual term of the cloud computing arrangement. Implementation costs associated with cloud computing arrangements are reflected in Cash from Operating Activities on the Consolidated Statements of Cash Flows in accordance with ASC Topic 350-40, Intangibles - Goodwill and Other - Internal-Use Software. The Company capitalized $2.8 million related to such arrangements within other non-current assets in the Consolidated Balance Sheets as of December 31, 2025. Costs capitalized were insignificant as of December 31, 2024. Amortization expense was insignificant in 2025, 2024 and 2023.

Property, Plant and Equipment

Property, plant and equipment (“PP&E”) are recorded at cost less accumulated depreciation. Depreciation of property, plant and equipment is computed using the straight-line method for financial reporting purposes and using accelerated methods for income tax purposes. Estimated useful lives of the assets are as follows: buildings, 25-40 years; and machinery and equipment, 4-10 years. Leased buildings and associated leasehold improvements are amortized over the shorter of the terms of the lease or the estimated useful lives of the assets, with the amortization of such assets included within depreciation expense.

The cost of properties sold or otherwise disposed of and the accumulated depreciation thereon are eliminated from the accounts and the resulting gain or loss, as well as maintenance and repair expenses, is reflected within operating income. Replacements and improvements are capitalized.

Depreciation expense was approximately $10.2 million, $11.5 million and $12.2 million in 2025, 2024 and 2023, respectively.

Deferred Financing Costs

The Company incurs debt issuance costs in connection with amending or entering into new credit facilities. These costs are amortized as an adjustment to interest expense over term of the credit facility on a straight-line basis, which approximates the effective interest method. This amortization expense is included in interest expense in the Company’s Consolidated Statements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense, loss on debt settlement or a reduction to equity based on the nature of the debt instrument.

See Note 8, Long-Term Debt, for details of our deferred financing costs.

Long-Lived Assets

Long-lived assets to be held and used are initially recorded at cost. The carrying value of these assets is evaluated for recoverability whenever adverse effects or changes in circumstances indicate that the carrying amount may not be recoverable. Impairments are recognized if future undiscounted cash flows from operations are not expected to be sufficient to recover long-lived assets. The carrying amounts are then reduced to fair value, which is typically determined by using a discounted cash flow model.

Assets held for sale are to be reported at lower of its carrying amount or fair value less cost to sell. Judgment is required in estimating the sales price of assets held for sale and the time required to sell the assets. These estimates are based upon available market data and operating cash flows of the assets held for sale.

Goodwill

We may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for all or selected reporting units. If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative test. We may also elect to perform a quantitative test instead of a qualitative test for any or all of our reporting units.

Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value. We use the discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected sales growth rates, operating margins and cash flows, the terminal growth rate and the weighted average cost of capital, which are Level 3 inputs in the fair value hierarchy. If the carrying value of the

reporting unit exceeds its fair value, goodwill impairment is measured as the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.

The 2025, 2024 and 2023 assessments indicated no impairment to the carrying value of goodwill in any of the Company’s reporting units and no impairment charges were recognized.

Intangible Assets

The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as earnings and cash flows. Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated useful lives. Acquired intangible assets with an indefinite life are not amortized, but are reviewed for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the carrying amounts of those assets are below their estimated fair values. Impairment is tested under ASC Topic 350, Intangibles - Goodwill and Other, as amended by ASU 2012-2.

The 2025, 2024 and 2023 assessments indicated no impairment to the intangible assets of the Company and no impairment charges were recognized.

Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and long-term debt. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company does not hold or issue financial instruments for trading purposes. Due to their short-term nature, the carrying values of cash and equivalents, restricted cash, accounts receivable and accounts payable approximate fair value. The carrying value of the Company’s variable rate long-term debt instruments also approximates fair value due to the variable rate feature of these instruments. The Company estimates the fair value of the convertible notes based on quoted prices for these instruments in active markets, classified as Level 1 measurements within the fair value hierarchy. The fair value of the 2030 Convertible Notes was approximately $84.8 million and $176.9 million as of December 31, 2025 and 2024, respectively. The fair value of the 2031 Convertible Notes was approximately $264.1 million as of December 31, 2025.

From time to time, the Company makes long-term, strategic equity investments in companies to promote business and strategic objectives. These investments as classified within other assets in the Consolidated Balance Sheets. For investments requiring equity method accounting, we recognize our share of the investee’s earnings or losses within Other Expense, Net of Other Income in the Consolidated Statements of Operations. For investments not requiring equity method accounting, if the investment has no readily determinable fair value, we have elected the practicability exception of ASU 2016-01, under which the investment is measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer.

We recognized income of $1.8 million associated with the reversal of a liability related to an equity investment, as we were no longer required to make an associated payment. This amount is included in Other Expense, Net of Other Income in the Consolidated Statement of Operations in 2023.

Deferred Tax Asset Valuation Allowance

The Company records a valuation allowance against the deferred tax assets if and to the extent it is more likely than not that the Company will not recover the deferred tax assets. In evaluating the need for a valuation allowance, the Company weighs all relevant positive and negative evidence, and considers among other factors, historical financial performance, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, and tax planning strategies. After considering the losses in recent periods and cumulative pre-tax losses in the three-year period ending with the current year, the Company determined that projections of future taxable income could not be relied upon as a source of income to realize its deferred tax assets. However, the Company is relying on a significant portion of its existing deferred tax liabilities for the realizability of deferred tax assets. As a result, the Company has valuation allowances against its deferred tax assets of approximately $74.5 million, $78.7 million, and $65.6 million during the years ended December 31, 2025, 2024 and 2023, respectively, for the portion of deferred tax assets not realizable by the Company’s existing deferred tax liabilities.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of sales and expenses during the reporting periods in the financial statements and accompanying notes. Actual results could differ from those estimates.

Foreign Currency Translation

The Company accounts for its foreign currency translation in accordance with ASC Topic 830, Foreign Currency Translation. The aggregate transaction gains and losses included in operations were insignificant in 2025, 2024 and 2023.

Dividends

The Company has not paid any cash dividends in the three-year period ended December 31, 2025.

Loss Contingencies

Loss contingencies may from time to time arise from situations such as claims and other legal actions. Loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. In all other instances, legal fees are expensed as incurred. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent liabilities are often resolved over long time periods. In recording liabilities for probable losses, management is required to make estimates and judgments regarding the amount or range of the probable loss. Management continually assesses the adequacy of estimated loss contingencies and, if necessary, adjusts the amounts recorded as better information becomes known.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

Standard Description Financial Statement Effect or Other Significant Matters

Recent Accounting Pronouncements Not Yet Adopted

Standard Description Financial Statement Effect or Other Significant Matters

We consider the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable or had or are expected to have minimal impact on our financial statements and related disclosures.

NOTE 2 — REVENUE

Revenue is recognized when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or services. Sales shown on the Company’s Consolidated Statements of Operations are from contracts with customers.

Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 90 days after the performance obligation has been satisfied; or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of receipt of consideration, the Company has determined that the Company’s contracts generally do not include a significant financing component. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from sales.

The Company recognizes an asset for the incremental, material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer. The Company has elected the practical expedient available under ASC 340-40-25-4 to immediately expense the incremental cost of obtaining a contract when the expected benefit of those costs is less than one year. As of December 31, 2025 and 2024, the Company did not have material incremental costs on any open contracts with an original expected duration of greater than one year.

The Company recognizes an asset for certain, material costs to fulfill a contract if it is determined that the costs relate directly to a contract or an anticipated contract that can be specifically identified, generate or enhance resources that will be used in satisfying performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Start-up costs are expensed as incurred. Capitalized fulfillment costs are included in Inventories in the accompanying Consolidated Balance Sheets. Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off. The Company has capitalized $6.0 million and $8.3 million of costs as of December 31, 2025 and 2024, respectively. Amortization of fulfillment costs recognized within Cost of Products Sold was $3.5 million and $3.1 million in 2025 and 2024, respectively. No amortization of fulfillment costs was recorded in 2023.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct. Thus, the contract’s

transaction price is the revenue recognized when or as that performance obligation is satisfied. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations.

In contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated standalone selling price of each distinct good or service in the contract. In these cases, the Company uses an expected cost plus margin approach to determine the standalone selling price for each performance obligation. Shipping and handling activities that occur after the customer has obtained control of the good are considered fulfillment activities, not performance obligations.

Contract modifications are routine in the performance of our contracts, and contracts may be modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as new contracts. The effect of modifications has been reflected when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price.

The majority of the Company’s revenue from contracts with customers is recognized at a point in time, when the customer obtains control of the promised product. In general, the customer has obtained control when they have legal title, significant risks and rewards of ownership of the asset, and the Company has a present right to payment for the product. From time to time, contracts may contain variable consideration, which could include incremental fees or penalty provisions related with performance. In these situations, variable consideration is included in the estimated transaction price based on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company and updated at the end of each reporting period as additional information becomes available. Most of our contracts do not contain rights to return product; where this right does exist, it is evaluated as possible variable consideration.

For contracts that are subject to the requirement to accrue anticipated losses, the Company recognizes the entire anticipated loss in the period that the loss becomes probable.

For contracts with customers in which the Company promises to provide a product to the customer that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time, using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead.

The Company also recognizes revenue from service contracts (including service-type warranties) over time. The Company recognizes revenue over time during the term of the agreement as the customer is simultaneously receiving and consuming the benefits provided throughout the Company’s performance. The Company typically recognizes revenue over time using a cost-to-cost method, where revenues are recognized proportionally as costs are incurred, or on a straight-line basis throughout the contract period.

On December 31, 2025, we had $674.5 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $533.1 million of our remaining performance obligations as revenue in 2026.

Costs in excess of billings includes unbilled amounts resulting from revenues under contracts with customers that are satisfied over time and when the cost-to-cost measurement method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs in excess of billings are classified as current assets, within Accounts Receivable, Net of Allowance for Estimated Credit Losses on our Consolidated Balance Sheets.

Billings in excess of cost includes billings in excess of revenue recognized as well as other elements of deferred revenue, which includes advanced payments, up-front payments, and progress billing payments. Billings in excess of cost are reported in our Consolidated Balance Sheets classified as current liabilities, within Customer Advance Payments and Deferred Revenue, and non-current liabilities, within Other Liabilities.

The Company’s contract assets and contract liabilities consist primarily of costs and profits in excess of billings and billings in excess of cost and profits, respectively. The following table presents the beginning and ending balances of contract assets and contract liabilities:

(In thousands) Contract Assets Contract Liabilities

The increase in contract assets reflects the net impact of new revenue recognized in excess of billings exceeding billing of previously unbilled revenue during the period, partially offset by $8.3 million in revisions of estimated costs to complete certain long-term mass transit Test contracts which were recorded in 2025. The revisions resulted in reduced revenue recognized during 2025 due to lower estimates of the percentage of work completed on the programs. The decrease in contract liabilities reflects the net impact of revenue recognized in excess of new customer advances or deferred revenues recorded.

We recognized $20.8 million and $16.8 million during the year ended December 31, 2025 and 2024, respectively, in revenues that were included in the contract liability balance at the beginning of the period.

The following table presents our revenue disaggregated by Market Segments as of December 31 as follows:

Aerospace Segment

Test Systems Segment

The following table presents our revenue disaggregated by Product Lines as of December 31 as follows:

Aerospace Segment

NOTE 3 — ACCOUNTS RECEIVABLE

Accounts receivable at December 31 consists of:

Unbilled Recoverable Costs and Accrued Profits 54,687 54,171

Less Allowance for Estimated Credit Losses (847) (2,377)

The following table provides a roll-forward of the allowance for estimated credit losses that is deducted from accounts receivable to present the net amount expected to be collected at December 31:

(In thousands)

Bad Debt Expense, Net of Recoveries 1,348

Write-off Charges Against the Allowance and Other Adjustments (8,164)

Bad Debt Expense, Net of (Recoveries) (36)

Write-off Charges Against the Allowance and Other Adjustments (1,494)

As further described in Note 1, Summary of Significant Accounting Principles and Practices, the Company recorded a $1.0 million and $7.5 million reserve for outstanding receivables for customer bankruptcies within the Aerospace segment in 2024 and 2023, respectively. The write-offs in the periods ended December 31, 2025 and 2024 relate primarily to accounts receivable reserved for in previous periods related to these customer bankruptcies.

NOTE 4 — INVENTORIES

Inventories at December 31 are as follows:

At December 31, 2025, the Company’s reserve for inventory valuation was $48.7 million, or 19.8% of gross inventory. At December 31, 2024, the Company’s reserve for inventory valuation was $43.3 million, or 17.8% of gross inventory.

As further described in Note 1, Summary of Significant Accounting Principles and Practices, the Company recorded a $5.8 million reduction in inventory in the year ended December 31, 2025 in connection with simplification initiatives.

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment at December 31 are as follows:

Total Property, Plant and Equipment, Net $ 107,078 $ 80,687

NOTE 6 — INTANGIBLE ASSETS

The following table summarizes acquired intangible assets at December 31 as follows:

Amortization is computed on the straight line method for financial reporting purposes. Amortization expense for intangibles was $11.5 million, $12.9 million and $13.9 million for 2025, 2024 and 2023, respectively.

Based upon acquired intangible assets at December 31, 2025, amortization expense for each of the next five years is estimated to be:

(In thousands)

NOTE 7 — GOODWILL

The following table summarizes the changes in the carrying amount of goodwill at December 31 as follows:

(In thousands) Aerospace Test Systems Total

Foreign Currency Translations and Other (154) — (154)

Foreign Currency Translations and Other 108 — 108

The Company’s five reporting units with goodwill as of the first day of our fourth quarters of 2025, 2024 and 2023 were subject to the annual goodwill impairment test. Based on our assessments of our reporting units performed during our annual goodwill impairment tests, the Company concluded that no impairment to the carrying value of goodwill in any of the Company’s reporting units was indicated and no impairment charges were recognized in 2025, 2024 and 2023.

NOTE 8 — LONG-TERM DEBT

The Company entered into a $90.0 million term loan facility on January 19, 2023, and paid interest at a rate equal to SOFR (which was required to be at least 2.50%) plus 8.75%. The Company refinanced its credit facilities on July 11, 2024, and repaid in full all outstanding indebtedness under the previous term loan dated January 19, 2023.

The Company amended its asset-based revolving credit facility (the “ABL Revolving Credit Facility”) on July 11, 2024, by entering into the Seventh Amended and Restated Credit Agreement, which set the maximum aggregate amount that the Company can borrow pursuant to the revolving credit line at $200.0 million, with amounts borrowed thereunder carrying an interest rate of SOFR plus between 2.50% to 3.00%. Borrowings were subject to a borrowing base determined primarily by inventory, accounts receivable, machinery and equipment and real estate. The Company also entered into a $55.0 million term loan facility (“Term Loan Facility”) on July 11, 2024 at an interest rate of SOFR plus between 5.50% to 6.75%.

On November 25, 2024, the Company entered into a second amendment to the ABL Revolving Credit Facility which increased the maximum aggregate amount that the Company could borrow pursuant to the ABL Revolving Credit Facility to $220.0 million from $200.0 million. The maturity date of borrowings under the ABL Revolving Credit Facility was July 11, 2027. The Company and the applicable lenders also agreed in a separate first amendment to increase the amount of unsecured indebtedness the Company was permitted to incur under the ABL Revolving Credit Facility, subject to completion of the 2030 Convertible Notes offering (discussed below).

Under the terms of the ABL Revolving Credit Facility, the Company paid interest on the unpaid principal amount of the ABL Revolving Credit Facility at a rate equal to SOFR plus a term SOFR adjustment in the amount of 0.10% per annum (which collectively shall be at least 1.00%) plus an applicable margin ranging from 2.75% to 3.25% determined based upon the Company’s Excess Availability (as defined in the ABL Revolving Credit Facility). The Company was required to pay a quarterly commitment fee under the ABL Revolving Credit Facility on undrawn revolving credit commitments in an amount equal to 0.25% or 0.375% based on the Company’s average excess availability under the ABL Revolving Credit Facility.

Pursuant to the ABL Revolving Credit Facility, the Company was subject to a minimum fixed charge coverage ratio of 1.10 to 1.00. The Company was also required to maintain a minimum excess availability of the greater of 10% of the borrowing base under the ABL Revolving Credit Facility, or $15.0 million. On December 31, 2024, there was $10.0 million outstanding on the ABL Revolving Credit Facility and there remained $209.7 million available for future borrowings, net of outstanding letters of credit, before our minimum excess availability requirement.

On December 3, 2024, the Company repaid in full all outstanding indebtedness under the Term Loan Facility. The Term Loan Facility payoff consisted of a repayment of a principal amount of approximately $54.9 million, plus accrued but unpaid interest, fees and expenses, including a call premium of 3.00% which satisfied all of the Company’s indebtedness obligations thereunder. The Company funded the repayment of its obligations under the Term Loan Facility with a portion of the proceeds received from the issuance and sale of the 2030 Convertible Notes (discussed below).

On October 22, 2025, the Company entered into a $300.0 million senior secured, cash flow-based revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility replaced the Company’s ABL Revolving Credit Facility, which was terminated on October 22, 2025. The scheduled maturity date for the Revolving Credit Facility is October 16, 2030. Under the terms of the Revolving Credit Facility, the Company pays interest on the unpaid principal amount outstanding under the Revolving Credit Facility at a rate equal to Term SOFR (as defined in the Revolving Credit Facility) plus an applicable margin ranging from 1.25% to 2.125% determined based upon the Company’s Total Net Debt Leverage Ratio (as defined in the Revolving Credit Facility). The Company pays a quarterly commitment fee under the Revolving Credit Facility on unused Revolving Commitments ranging from 0.20% to 0.35% determined based upon the Company’s Total Net Debt Leverage Ratio.

Pursuant to the Revolving Credit Facility, the Company is subject to a total leverage ratio covenant that requires that the Company’s Total Net Debt Leverage Ratio may not exceed 4.50 to 1.00, provided that the Company’s Total Net Debt Leverage Ratio for the fiscal quarter ending December 31, 2025, may not exceed 4.75 to 1.00. The Company is also subject to a consolidated interest coverage ratio covenant that requires that the Company’s Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Facility) may not be less than 3.50 to 1.00 and a secured net debt leverage ratio covenant that requires that the Company’s Secured Net Debt Leverage Ratio (as defined in the Revolving Credit Facility) may not exceed 3.00 to 1.00. As of December 31, 2025, the Company was in compliance with these covenants. On December 31, 2025, there was $85.0 million outstanding on the Revolving Credit Facility and there remained $212.8 million available for future borrowings, net of outstanding letters of credit. The Revolving Credit Facility has an accordion feature, which allows the Company to request incremental commitments of up to $100.0 million plus additional incremental amounts so long as maximum leverage requirements are met.

2030 Convertible Notes

On December 3, 2024, the Company issued $165.0 million aggregate principal amount of 5.500% Convertible Senior Notes due 2030 (the “2030 Convertible Notes”). The 2030 Convertible Notes bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025. The 2030 Convertible Notes will mature on March 15, 2030, unless earlier converted, redeemed or repurchased. The initial conversion rate is 43.6814 shares of common stock per $1,000 principal amount of 2030 Convertible Notes, which represent the initial conversion price of $22.89

per share. The 2030 Convertible Notes are convertible at the option of the holders at any time on or after December 15, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligations by paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. Beginning March 20, 2028, if the Company’s stock price has been at least 130% of the conversion price for a specified period of time, the 2030 Convertible Notes may be called at the option of the issuer. Under the same conditions, the Company can elect to redeem the 2030 Convertible Notes for cash. After the first quarter of 2025, if the Company’s stock price has been at least 130% of the conversion price for 20 of 30 trading days ending on and including the last trading day of the immediately preceding quarter, the 2030 Convertible Notes may be called at the option of the holder. During the fiscal quarter ended December 31, 2025, our stock price met the price trigger defined above, and therefore, holders of our 2030 Convertible Notes have the ability to convert their notes at their option at any time during the fiscal quarter ended April 4, 2026.

2031 Convertible Notes

On September 15, 2025, the Company issued $225.0 million aggregate principal amount of Convertible Senior Notes due 2031 (the “2031 Convertible Notes”) for net proceeds of $216.7 million. The Company used part of the net proceeds to repurchase a portion of the 2030 Convertible Notes and the remainder to enter into the capped call transactions, as further described below. The 2031 Convertible Notes do not bear any interest and will mature on January 15, 2031, unless earlier converted, redeemed or repurchased. The initial conversion rate is 18.2243 shares of common stock per $1,000 principal amount of 2031 Convertible Notes, which represents the initial conversion price of $54.87 per share. The 2031 Convertible Notes are convertible at the option of the holders at any time on or after October 15, 2030, until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligations by paying cash up to the aggregate principal amount of the 2031 Convertible Notes to be converted and paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted. Beginning January 22, 2029, if the Company’s stock price has been at least 130% of the conversion price for a specified period of time, the 2031 Convertible Notes may be called at the option of the issuer. After the fourth quarter of 2025, if the Company’s stock price has been at least 130% of the conversion price for 5 of the first 20 trading days of such fiscal quarter, the 2031 Convertible Notes may be redeemed at the option of the holder during the 30-trading day period beginning on, and including, the 21st trading day of such quarter. As of December 31, 2025, the 2031 Convertible Notes were not redeemable.

Partial Repurchase of 2030 Convertible Notes

The Company used approximately $189.8 million of the net proceeds from the issuance of the 2031 Convertible Notes, together with approximately $85.0 million of borrowings under its ABL Revolving Credit Facility and approximately $11.0 million of cash on hand, to repurchase approximately $132.0 million in aggregate principal amount of outstanding 2030 Convertible Notes pursuant to privately negotiated exchange agreements entered into with certain holders of the 2030 Convertible Notes. The total cash paid in connection with this repurchase was approximately $285.8 million. The repurchase was accounted for in accordance with ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and resulted in the recognition of an inducement charge of $32.6 million within Loss on Settlement of Debt in the Consolidated Statements of Operations. The Company also recorded a reduction to equity of $125.5 million, inclusive of a reduction to unamortized debt issuance costs of $4.3 million.

Interest expense was $12.6 million, $22.0 million and $23.3 million for 2025, 2024 and 2023, respectively.

The Company recorded non-cash write-offs of deferred financing costs related to exiting ABL lenders of approximately $0.6 million and $0.5 million in years ending December 31, 2025 and 2024, respectively, in Interest Expense within the Consolidated Statements of Operations. In 2024, the Company recorded a Loss on Settlement of Debt of approximately $10.1 million, which was comprised of $4.5 million of prepayment fees on the previous term loans and a write-off of $5.6 million of unamortized deferred financing costs.

Debt issuance cost amortization expense was $2.5 million, $2.6 million and $3.0 million for 2025, 2024 and 2023, respectively. All costs are amortized to interest expense over the term of the respective agreement. Unamortized deferred debt issuance costs associated with the Revolving Credit Facility ($3.0 million as of December 31, 2025) and ABL Revolving Credit Facility ($3.0 million as of December 31, 2024) were recorded within Other Assets.

The following table presents the outstanding principal amount and carrying value of the Convertible Notes as of the dates indicated:

The Company estimates the fair value of the convertible notes based on quoted prices for these instruments in active markets, classified as Level 1 measurements within the fair value hierarchy. The fair value of the 2031 Convertible Notes was approximately $264.1 million as of December 31, 2025. The fair value of the 2030 Convertible Notes was approximately $84.8 million and $176.9 million as of December 31, 2025 and December 31, 2024, respectively.

Capped Call Transactions

In connection with the issuance of the 2031 Convertible Notes, the Company entered into capped call transactions (the “Capped Calls”) with certain financial institutions. The Capped Calls are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the 2031 Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2031 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Calls is initially approximately $83.41 per share of the Company’s common stock and is subject to certain adjustments under the terms of the capped call transactions. The Capped Calls expire January 15, 2031.

We used approximately $26.9 million of the net proceeds from the 2031 Convertible Notes to purchase the Capped Calls. These instruments are classified as equity and recorded as a reduction of additional paid-in capital in the Consolidated Statements of Changes in Stockholders’ Equity.

NOTE 9 — WARRANTY

In the ordinary course of business, the Company warrants its products against defects in design, materials and workmanship typically over periods ranging from twelve to sixty months. The Company determines warranty reserves needed by product line based on experience and current facts and circumstances. Activity in the warranty accrual, which is included in Other Accrued Expenses on the Consolidated Balance Sheets, is summarized as follows:

Warranty Liabilities Acquired 995 — —

Warranties issued includes an atypical warranty reserve for a new product launch that requires field modification that resulted in $1.4 million and $5.2 million in expense during 2025 and 2024, respectively.

NOTE 10 — LEASES

The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. We have concluded that when an agreement grants us the right to substantially all of the economic benefits associated with an identified asset, and we are able to direct the use of that asset throughout the term of the agreement, we have a lease. We lease certain office equipment under finance leases, and we lease certain production facilities, office equipment and vehicles under operating leases. Some of our leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised. The right-of-use (“ROU”) assets, ROU lease liabilities, and lease costs related to the Company’s finance leases were immaterial as of December 31, 2025 and December 31, 2024.

If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the payments used in the calculation of a new lease liability include fixed payments and variable payments (if the variable payments are based on an index) over the remaining lease term. Variable lease payments based on indices have been included in the related right-of-use assets and lease liabilities on our Consolidated Balance Sheets, while variable lease payments based on usage of the underlying asset have been excluded and are expensed in the period they are incurred, as they do not represent present rights or obligations. Variable lease components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales and real estate taxes.

Any new additional operating and financing lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. The Company’s operating lease liability increased approximately $15.3 million as a result of acquiring ROU assets from new leases entered into during the year ended December 31, 2025. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution.

The following is a summary of the Company’s operating ROU assets and lease liabilities at December 31:

Operating Leases:

Operating Right-of-Use Assets, Net $ 32,269 $ 23,609

Short-term Operating Lease Liabilities $ 5,802 $ 4,697

Long-term Operating Lease Liabilities 38,101 20,508

The following is a summary of the Company’s operating lease costs as of December 31:

Short-term Lease Cost (excluding month-to-month) 137 178

Less Sublease and Rental Income (1,152) (969)

The following is cash (received) paid for amounts included in the measurement of operating lease liabilities as of December 31:

Operating Cash Flow for Operating Leases $ (966) $ 6,664

During the year ended December 31, 2025, the Company had positive operating cash flow for operating leases due to the receipt of $8.1 million tenant improvement allowances. As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and ROU asset.

The weighted-average remaining term for the Company’s operating leases is approximately 7 years. The weighted-average discount rate for the Company’s operating leases is approximately 6.4%.

The following is a summary of the Company’s maturity of operating lease liabilities:

(In thousands) Operating Leases

Total Lease Payments 54,971

Total Lease Liability $ 43,903

NOTE 11 — INCOME TAXES

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets are reduced, if deemed necessary, by a valuation allowance for the amount of tax benefits which are not more likely than not to be realized.

The components of income (loss) before provision for (benefit from) income taxes are as follows:

The provision for (benefit from) income taxes at December 31 consists of the following:

Current

Deferred

The following table summarizes the Company’s income tax payments net of tax refunds by jurisdiction:

U.S. State and Local 742

Foreign:

Total Cash Paid for Income Taxes, Net of Refunds $ 11,605

1 Includes jurisdictions below the threshold for the period presented

The company adopted ASU 2023-09 prospectively in 2025. The 2025 reconciliation between U.S. Federal tax rate and the effective tax rate under ASU 2023-09 is below. The reconciliation for 2024 and 2023 under the prior guidance follows.

The effective tax rates differ from the statutory federal income tax rate as follows:

Amount(in thousands) Percent

Statutory Federal Income Tax Rate $ 6,708 21.0 %

State and Local Income Taxes, Net of Federal Income Tax Effect1 707 2.2 %

Foreign Tax Effects

France

Change in Valuation Allowance (1,243) (3.9) %

Other Foreign Jurisdictions 267 0.8 %

Effect of Cross-Border Tax Laws

Global Intangible Low-taxed Income 2,307 7.2 %

Foreign-derived Intangible Income (513) (1.6) %

Tax Credits

Research and Development Tax Credits (4,291) (13.4) %

Change in Valuation Allowance (8,711) (27.2) %

Nontaxable or Nondeductible Items

Stock Compensation Expense (822) (2.6) %

Nondeductible Premium on Bond Repurchase 4,491 14.1 %

IRS Audit Adjustments 361 1.1 %

Effective Tax Rate $ 2,586 8.1 %

The table below includes a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective tax rate for the years ended December 31, 2024 and 2023, prior the adoption of ASU 2023-09:

Statutory Federal Income Tax Rate 21.0 % 21.0 %

Permanent Items

Stock Compensation Expense (2.0) % (1.4) %

Meals and Entertainment (1.7) % — %

Parking Expenses (1.4) % — %

Other (7.4) % (1.4) %

Foreign Tax Rate Differential 7.1 % (0.4) %

State Income Tax, Net of Federal Income Tax Effect (8.9) % (4.6) %

Research and Development Tax Credits 47.4 % 14.1 %

Change in Valuation Allowance (172.7) % (26.1) %

Net GILTI and FDII Tax Expense (Benefit) 16.4 % (1.0) %

Penalties (3.1) % — %

Other (0.8) % (0.6) %

Effective Tax Rate (106.1) % (0.4) %

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as tax attributes.

Significant components of the Company’s deferred tax assets and liabilities at December 31, are as follows:

Deferred Tax Assets:

Financing Costs 5,699 —

Section 163(j) - Interest Expense Limitation 43 2,982

Customer Advanced Payments and Deferred Revenue 697 257

Net Operating Loss Carryforwards and Other 18,139 10,060

Goodwill and Intangible Assets 575 890

Deferred Tax Liabilities:

ASC 606 Revenue Recognition - Section 481(a) Adjustment — 113

Net Deferred Tax Liabilities $ (18) $ (1,275)

The net deferred tax assets and liabilities presented in the Consolidated Balance Sheets are as follows at December 31:

Other Assets — Long-term $ 622 $ 159

Deferred Tax Liabilities — Long-term (640) (1,434)

Net Deferred Tax Liabilities $ (18) $ (1,275)

During the year ended December 31, 2025, the company recorded a deferred tax asset of approximately $6.3 million as an increase to additional paid-in capital with an offsetting valuation allowance of approximately $6.3 million as a decrease to additional paid-in capital. Any subsequently recognized tax benefits associated with this $6.3 million valuation allowance are expected to be credited directly to contributed capital.

During the year ended December 31, 2025, the Company reversed approximately $1.4 million of valuation allowances against certain foreign deferred tax assets as a result of no longer having cumulative pre-tax losses in the respective foreign jurisdictions during the three-year period ending with the current year.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA permanently extends and modifies significant provisions enacted in 2017 as part of the Tax Cuts and Jobs Act (“TCJA”) that were originally set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, many of which are not in effect until 2026. Key provisions of the Tax Act relevant to the Company’s operations include immediate expensing of certain domestic research and development expenses and domestic capital expenditures beginning in 2025 as well as changes to various U.S. international tax provisions going forward. The Company anticipates it will elect to deduct the remaining previously capitalized domestic research and development costs equally between 2025 and 2026 and expense domestic research and development costs as incurred for the 2025 tax year. As a result of this provision of the OBBBA, deferred tax assets related to capitalized research expenses decreased by approximately $16.3 million during the year ended December 31, 2025. The Company maintains a full valuation allowance against this deferred tax asset.

At December 31, 2025, gross federal net operating losses amounted to approximately $41.8 million, of which, $1.1 million are subject to annual limitations under Internal Revenue Code Section 382. Of these net operating losses, $0.7 million expire in 2038 and the remaining $0.4 million will carryforward indefinitely. The remaining $40.7 million of federal net operating losses, which are not subject to Internal Revenue Code Section 382 will carryforward indefinitely. The Company maintains a full valuation allowance against this deferred tax asset.

At December 31, 2025, gross state net operating loss carryforwards amounted to approximately $146.5 million. Of these state net operating loss carryforwards, $127.3 million begin to expire at various dates from 2025 through 2045 and the remaining $19.2 million will carryforward indefinitely. The Company maintains a full valuation allowance against this deferred tax asset.

At December 31, 2025, federal income tax credit carryforwards amounted to approximately $3.4 million and will expire in 2045. State income tax credit carryforwards amounted to approximately $1.4 million and begin to expire at various dates from 2025 to 2044. Additionally, the Company has approximately $0.2 million of foreign tax credits that it can carry forward through 2027. The Company maintains a full valuation allowance against these credits.

The Company has analyzed its filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. Should the Company need to accrue a liability for uncertain tax

benefits, any interest and penalties associated with that liability would be recorded as income tax expense. A reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:

Balance at Beginning of the Year $ — $ 100 $ 443

Decreases as a Result of Tax Positions Taken in Prior Years — (100) (343)

Balance at End of the Year $ — $ — $ 100

There are no material penalties or interest liabilities accrued as of December 31, 2025, 2024, or 2023, nor are any material penalties or interest costs included in expense for each of the years ended December 31, 2025, 2024 and 2023. The years under which we conducted our evaluation coincided with the tax years currently still subject to examination by major federal and state tax jurisdictions, those being 2019, 2020, and 2022 through 2024 for federal purposes and 2021 through 2024 for state purposes.

Pretax income from the Company’s foreign subsidiaries amounted to approximately $9.0 million, $9.6 million and $6.5 million for 2025, 2024 and 2023, respectively. The balance of pretax earnings or loss for each of those years were domestic.

Historically, we have asserted that the unremitted earnings of our foreign subsidiaries were indefinitely reinvested. However, for the years ended December 31, 2025, 2024 and 2023, we determined that we could no longer assert indefinite reinvestment on approximately $7.0 million, $3.0 million and $1.9 million of the unremitted earnings of Luminescent Systems Canada Inc., respectively. As a result, we have recorded a deferred tax liability of approximately $0.3 million, $0.2 million, and $0.1 million at December 31, 2025, 2024 and 2023, respectively, related to local country withholding taxes that are expected to be incurred upon ultimate repatriation of such earnings. All other foreign unremitted earnings, which total approximately $17.3 million, continue to be indefinitely reinvested. We continue to be permanently reinvested in outside basis differences other than unremitted earnings as we have no plans to liquidate or sell any foreign subsidiaries. In addition, we have not provided deferred taxes on any outside basis differences of our domestic subsidiaries as we have the ability and intent to recover these basis differences in a tax-free manner. It is not practicable to determine the amount of unrecognized deferred tax related to these basis differences.

The Inflation Reduction Act of 2022 (IRA) was signed into law on August 16, 2022. Key provisions under the IRA include a 15% corporate alternative minimum tax imposed on certain large corporations and the extension and expansion of clean energy tax incentives. There were no impacts related to the IRA recorded for the years ending December 31, 2025, 2024, and 2023.

Under an Organization for Economic Co-operation and Development Inclusive Framework, countries that agreed to enact a two-pillar solution aim to address the challenges arising from the digitalization of the world economy (“Pillar Two”). Pillar Two sets out global minimum Effective Tax Rate (“ETR”) rules to ensure that large multinational businesses with consolidated revenue over €750 million are subject to a minimum ETR of 15% on income arising in low-tax jurisdictions. Rules under Pillar Two generally became effective beginning January 1, 2024 in most jurisdictions that have issued legislation. The Company will continue to monitor the impact of Pillar Two; however, Pillar Two is currently not applicable as the Company does not meet the threshold of having consolidated revenue over €750 million in two out of the four preceding years.

NOTE 12 — PROFIT SHARING/401K PLAN

The Company offers eligible domestic full-time employees participation in a safe harbor 401K plan. The plan provides for an annual company contribution. In addition, employees may contribute a portion of their salary to the plan. The plan may be amended or terminated at any time.

Total charges to income before income taxes for this plan was approximately $9.6 million, $8.9 million and $5.3 million in 2025, 2024 and 2023, respectively. The Company had funded the contributions in 2023 and the first quarter of 2024 with treasury stock in lieu of cash and funded the remainder of the 2024 contribution and the 2025 contributions with cash.

ATROB US Equity

ATRO · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ATROB US Equity☆

ATRO · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ATROB US Equity