Astronics Corporation (NASDAQ:ATRO) Q2 2023 Earnings Call Transcript

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Sam Struhsaker: Great. And if I could just sneak in one more. What’s the update on the FLRAA program? Anything there?

Peter Gundermann: There is activity. I’m not at liberty to discuss it in this context right now, but we are engaged and looking to make some public news about that shortly.

Operator: [Operator Instructions]. Our next question will be a follow-up from Jon Tanwanteng with CJS Securities.

Jon Tanwanteng: I was wondering if you could go into a little bit more detail on the legal expenses in the quarter, what were they for? Kind of, what’s the run rate that you expect going forward and if there’s going to be an in any time soon?

Peter Gundermann: Well, we have a couple of long-running situations that we’ve been dealing with. The longest one is — has to do with our in-seat power product and electrical outlets, specifically against the German competitor, and that’s been playing out in 4 countries over the last decade, really. I mean the U.S., France, U.K. and Germany. The U.S. is done, and we won that case basically a long time ago. France, we think, is almost done. It could be done depending on whether an appeals court wants to hear the other side’s appeal. But either way, we think that one is pretty much done, and it’s very much going in our direction. The U.K. and Germany are a little bit more complicated. The U.K. we lost. So there will be a penalty phase.

We’ve accrued for what we think that’s going to be — that’s probably going to play out in 2024-2025. And Germany has been going on forever, and that’s also one that’s probably going to play out in really late 2024 or 2025. So it has been active for the last few months, and that’s why the bills are so high. We also have one going on in our Test segment — that is basically — it started off as a patent dispute. We got the patent dismissed. It was brought against us, and then it’s evolved into a copyright dispute. So from our way of thinking that the stakes are significantly reduced, but we had no choice but to pursue legal remedies to get there. So — and we’re not done yet. That will be something that actually it could shut down depending on court decisions by the end of this year.

If not, it will probably wrap up by the end of next year, I would say.

Operator: Our next question will be a follow-up from Sam Struhsaker with Truist Securities.

Sam Struhsaker: Just, I have two quick clarifying questions. In your prepared remarks, you mentioned the systems for the eVTOLs. Was that $10 million total or per potential customer?

Peter Gundermann: No, it’s $20 million total for the 10 customers.

Sam Struhsaker: Yes. Got it. Okay. And then within the — I think it was the USB, USB-C product that you guys have across narrow-bodies. Do you have any rough dollar content per aircraft on that?

Peter Gundermann: It’s pretty highly variable, but I think the general rule of thumb that we might — I mean it depends on the configuration, and some aircraft want to go just for certain classes of seats. But I would say it’s pretty widely variable. A real inexpensive installation might be $70,000 a ship in expenses, where a more normally priced one could be up around $130,000 or $140,000; highly variable depending on how the airline wants to configure their cabin.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Peter Gundermann for any closing remarks.

Peter Gundermann: No closing remarks. Thank you for your attention. Again, we think the second quarter was a very significant step forward. We think, we’re set up for a good second half and close to the year, and we look forward to talking to you next time. Have a good day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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