Greetings, and welcome to the Astronics Corporation First Quarter Fiscal Year 2021 Financial Results Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Deborah Galappi, Investor Relations.
Thank you. You may begin.
Thank you, Daryl, and good morning, everyone. We appreciate your time today and your interest in Astronics. I have here with me Peter Gunderman, our Chairman, President and CEO and Dave Berning, our Chief Financial Officer. You should have a copy of the Q1 financial results that were released this morning. And if not, you can find them on our website atastronics.com.
Let me mention that we may make some forward looking statements during the formal discussion as well as during the Q and A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in our earnings release as well as with other documents filed with the Securities and Exchange Commission. These documents can be found on our website or atsec.gov. During today's call, we will also discuss some non GAAP financial measures.
We believe that these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute accordance with GAAP. We have provided reconciliations of non GAAP financial measures with comparable GAAP measures in the tables that accompany today's release. With that, I'll turn it over to Pete to begin. Peter?
Thank you, Debbie, and good morning, everybody. Thanks for tuning into our call. I'm going to open the conversation here with a high level summary of our Q1 and an outlook for our markets and turn it over to Dave for a more detailed financial summary and a review of our banking arrangements, and then we'll close with questions and answer as usual. When I look at the Q1, to me, there are kind of 2 headlines. 1 is that we had obviously low sales by historical norms.
Not a real surprise there given the ongoing effects of the pandemic and where we are in the recovery cycle. The second headline that was more positive and that is that bookings have been showing steady and consistent improvements over the last few quarters, and we're going to dive into that in a little bit more detail. Specifically, the relationship in our company between bookings and shipments, which we think it tends to be pretty strong and pretty close, especially given the way that we measure bookings, and we talk about them pretty regularly in our quarterly reports and in these calls. In our business, there is generally a 2 to 3 quarter lag between bookings and shipments. In other words, bookings today influence shipments 2 to 3 quarters out or looked at the other way, shipments today are heavily influenced by bookings 2 or 3 quarters ago.
We just finished a quarter with revenue of $105,000,000 again, very low by historical norms. You got to go back to like 2013 to find that level consistently. And it's no coincidence in our view that bookings 2 to 3 quarters ago were anemic and highly influenced by the onset of the pandemic at that time. I'm talking about the Q2 of 2020 and the Q3 of 2020 specifically. Our bookings in the Q2, if you were to look back, were totaled about $61,000,000 on a consolidated basis for the company and in Q3 last year, dollars 82,000,000 so an average of $72,000,000 That compares to a quarterly average in 2019 of $176,000,000 So $176,000,000 on average in 2019, which was actually not a very strong booking year for us for a number of other reasons.
But $176,000,000 average dropping to $72,000,000 in the second and third quarter average of last year is obviously a substantial drop. The good news is that bookings since then have shown a pretty good comeback, pretty solid comeback. Our Q4 last year was 116,000,000 dollars and our Q1, the one just completed, was $120,000,000 So in that 2 quarter period or 6 month period, we averaged $118,000,000 in bookings per quarter. So we bounced up from $72,000,000 dollars on average in the second and third quarter last year to $118,000,000 in the 4th quarter and the first quarter this year, really good progress. Looking at the segments, most of the improvement is on the Aerospace side.
If you look at our quarters consecutively and these numbers are spelled out on the table on the last page of our press release, since the Q2 last year, our bookings have gone from 43,000,000 dollars to $65,000,000 to $74,000,000 to $100,000,000 That's just aerospace bookings. Now $100,000,000 that progress if you look at added on percentage terms can look pretty good. But of course, in 2019, our Aerospace quarterly average is about $160,000,000 So even at the first quarter level of $100,000,000 we're still a pretty far ways off from where we were in pre pandemic times when we were averaging about $160,000,000 in aerospace bookings per quarter. So what's driving the improvement? If you look into our Aerospace group, most of you know this, we have 2 smaller business units and one larger one.
The 2 smaller ones are military aircraft and what we call business jet or general aviation. And both of those tend to be in pretty good shape. Pre pandemic, they were about each about 10% of our total business, and we expect them to be a higher percentage this year, in part or largely due to the lower expectations for commercial transports, which I'll get to in a minute. Am not going to take everybody through the different dynamics in military aircraft and general aviation. Most of the people who follow our company follow the industry and you're probably well aware that military aircraft has been largely unaffected by COVID, certainly no demand effect.
And if anything, business jet demand has bounced back strongly, which we expect will result in increasing unit demand as time goes on here. And that's important to us because most of our business jet sales are line fit and not aftermarket. So production rates are important. So long story short, if you looked at aerospace, military aircraft and business jets are both in relatively good shape. The commercial transport side is the big issue.
Again, no real news here. In the quarter just finished, we had commercial transport sales of $38,000,000 which was down from 103 in the Q1 of 2020. That's a significant drop. We're encouraged, however, by the narrow body side where domestic flying is increasing dramatically where and when the pandemic is under control, recognizing that wide body remains under significant pressure. So a reasonable question might be, what is our split between narrow bodies and wide bodies historically and how are we positioned for today's world where narrow bodies are expected to recover relatively soon and wide bodies may lag quite a bit.
And these are numbers that we have not typically talked a whole lot about in this setting, But we've done some analysis to nail this down and it might seem like an obvious thing, but actually the way our business is structured, it's not always obvious where our products end up. So it's been a little bit of an effort. But the safe way to think about our business up to today is that our commercial transport business has almost a fifty-fifty split between narrow bodies and wide bodies. And also, if you cut it a different way, almost a fifty-fifty split between line fit and aftermarket. I don't think I said that very clearly.
Both the narrow body and the wide body revenue that we have is split almost fifty-fifty line fit and aftermarket. So you can almost think of our commercial transport business if you picture a 2 by 2 matrix with wide body on one axis and wide body narrow body on one axis and line fit aftermarket on the other axis, it's almost 25% of our commercial transport volume in each box. And again, our perspective not different from the conventional wisdom that's out there in the industry right now is that wide body, line fit and aftermarket is under pressure and will remain under pressure until international travel picks up. And we're hopeful for that to happen at least between the rich countries of the world where vaccines are likely to get pandemics under control, we hope to see some progress for that as 2021 wears on. But on the narrow body side, things are looking more promising.
Everybody in North America is aware of the increasing flights and load factors and crowds generally gathering at airports every day for domestic flying. It's another example how when and where the pandemic is under control, people want to fly. The 2 geographies in the world where this is most evident are in China and the U. S. And we hope and expect that Continental Europe will be in that camp sooner rather than later.
That supports the aftermarket. Flying supports the aftermarket. And production rates also are trending up on the narrow body side as most people know, including especially for us the 737 MAX. We the MAX back in 2019 was our biggest single aircraft production program, and it is picking back up although still at a slow rate. We were shipping at a volume or a rate of about 5 or 6 aircraft per month in the Q1, and we expect that to rise to over 20 So that talks a lot about aerospace.
Again, pretty solid expectations for military and business jet and reason to be optimistic on the narrow body side for commercial transport that fifty-fifty narrow body wide body split, we would expect by the end of this year to look quite a bit different skewed towards the side of the narrow body with increased flights that are happening now and increased production rates up for the 7 37 MAX and also potentially for the A320 line in Europe. Flipping over to the test side, I'm not going to say a whole lot about test today, but test has done well through the pandemic in terms of bookings and shipments. Shipments in the last 4 quarters were $91,000,000 up about 15%. And bookings for the last four quarters were $96,000,000 for a positive book to bill of $1,060,000 So, our expectation for the test side of the business remains strong. It's a combination of municipal government spending, potentially the beneficiary of some of the stimulus efforts underway in D.
C. These days and also a large element of defense spending, which has been strong. We expect it will continue to be strong over the coming year. I'll pause here for now and turn it over to Dave to talk through our financial statements, adjusted EBITDA levels, bank covenants, etcetera. Dave?
Thanks, Pete. 1st quarter sales were as expected soft and only about $105,000,000 down $51,000,000 from the Q1 of 2020. This was no surprise and was about where we forecast sales to be in our last earnings call, reflecting the low order intake that Pete had mentioned, particularly on commercial transport market orders. Sales in the commercial transport market were $38,200,000 down 64.6 compared to the 20 21st quarter illustrating that drop. Our GAAP loss, net loss for the quarter was $11,900,000 driven by the low sales level.
As expected, this low sales level of sales we are not profitable at this low level of sales, generating an operating loss of $9,500,000 and a slight adjusted EBITDA loss of $500,000 As we have discussed on previous calls, we do not expect that this will be our long term sales level and as such have not structured the company to be profitable at this low sales level. If we did expect sales to continue at this level, we clearly would adjust our cost structure and investment strategy. We've continued to invest in product development and win new programs requiring investment to ensure we're well positioned for the post pandemic world. Turning to the segments. Sales continue to be low in the Aerospace segment, resulting in segment operating loss of $5,600,000 and sales of $59,700,000 which were down 42% from the Q1 of 2020.
As has been the story for the past 4 quarters, the drop is primarily related to the effect the pandemic has had on the commercial transport market. Our Test Systems segment continues to operate steadily. Sales were $24,400,000 up 64% from the 20 21st quarter, if you exclude semiconductor test sales from the prior year. Test segment operating margin was 1.2 dollars or operating income was $1,200,000 or 4.9 percent of sales. Margins in this segment were compressed a bit by legal fees relating to an infringement claim.
Switching to cash flows. Our cash flow from operations was a negative $6,900,000 driven primarily by increased receivables and decrease in accounts payable. Inventory levels were down slightly from the 4th quarter. Also, I should note as we mentioned in the press release that we were recently notified by the acquirer of our semiconductor business that they've recalculated the earn out due to us. Originally, they calculated the earn out to be $10,700,000 and subsequently revised the calculation indicating that the new calculation is $7,100,000 We're reviewing the calculations and underlying information and expect to record a gain when that review is complete and the issue resolved.
The cash we receive will count toward our adjusted EBITDA under our earn out agreement for covenant purposes. And we expect to remain compliant with our debt covenants without the income that will be generated from this gain. To recap our amended credit facility, we amended it in May of 2020. The credit facility matures in February of 2023. It's a $375,000,000 revolving credit facility with a couple of key financial covenants.
A maximum leverage covenant that was in the original pre amendment facility was waived until Q3 of 2021, referred to as a suspension period. Then beginning in Q3 of 2021, this begins phasing in starting at 6x adjusted EBITDA as defined in the agreement, then decreasing to 5.5x in the 4th quarter, followed by 4.5x in the Q1 of 2022 and then down to 3.75x thereafter. It's important to note that adjusted EBITDA, as it's defined in the credit agreement allows for add backs of non cash expenses that typically are shown as non cash items on the statement of cash flows. Adjusted EBITDA as defined in the credit agreement was $2,400,000 for the Q1 of 2021 $22,800,000 for the trailing 4 quarters. There's 2 key financial covenants during the suspension period, a minimum liquidity and a minimum interest coverage ratio, which we are both compliant with and expect to continue to be compliant with through the suspension period.
Other covenants include a temporary restriction on the acquisition, share repurchases and dividends. And as far as the pricing of the revolver, the high end of the pricing grid is LIBOR plus 2 25 basis points at leverage above 4x adjusted EBITDA with a LIBOR floor of 100 basis points. So currently, the interest rate on the revolver is 3.25%. Our outstanding balance on the facility at the end of the Q1 was $173,000,000 flat with the December 31 drawn balance. On a net debt basis, which is what our debt covenants are considered on, We were at $142,600,000 compared with $132,300,000 at the end of 2020, which was an increase in net debt of $10,600,000
That's all I had, Pete. Thanks, Dave. Looking ahead, normally, we're in the practice of providing and maintaining revenue guidance, top line guidance over the current calendar year, but we suspended that like many companies as the pandemic took hold and we're still maintaining that approach. We believe that or based on the conversation that I gave earlier, 2nd quarter bookings here will be material in terms of how we end up the year, and we obviously don't know exactly how second quarter bookings are going to turn out. We're hoping that when we announce 2nd quarter results, which will be in early August, we'll have enough insight to give a window as to how we expect the year to shape out.
But in general, we have a picture of building revenue sequentially as the year progresses, assuming bookings cooperate and kind of come in as we expect or hope. That being said, we do believe that second quarter revenues will be in the neighborhood of $115,000,000 There's upside potential to that number and of course, I suppose downside potential too. But we think that's a safe number to look at from today's perspective given that we're 1 third of the way through the Q2. So I think that concludes our prepared remarks. Daryl, if there are questions, let's have those now.
Thank you. We will now be conducting a question and answer Our first questions come from the line of Ken Herbert with Canaccord Genuity. Please proceed with your questions.
Hey, good morning, Pete and Dave and Deb.
Good morning.
On the Aerospace sales in the quarter, you had a sequential step down from the Q4 about roughly $10,000,000 dollars but it looks like the guidance implies roughly sort of that $10,000,000 sequential step up from the 1st to the 2nd quarter in aerospace sales. Can you just provide a little bit more color on the Q1 and the step down and then expectations for that roughly sort of 10,000,000 sequential step up into the Q2, is that in line with your thinking as we think about the guidance for the Q2?
That is in line for us to have revenue growth over the next three quarters. I mean, most of it's going to come from commercial transport sales or aerospace sales, but commercial transport specifically. As for the step down from the Q4 to the Q1, there are a couple of things going on there. One thing that's going on is that you book a bunch of orders and they're not always timed smoothly. So you can have just lumps in the expected delivery schedules.
But the other thing that is a realistic factor in the Q4, we were holding customers to previously established delivery dates, even maybe when they wanted to slide them out in some cases. We had the inventory. We had it built. We had a schedule, which we'd agreed to. So that's one of the things that was kind of going on through the whole industry in terms of the whole destocking phase.
We took inventory that we would probably have preferred not to and so did our customers. So that made the Q4 perhaps look a little bit stronger than it would have been under different circumstances.
Okay. That's helpful. And the booking strength in Aerospace sequentially from the Q4 to Q1, can you provide any more detail around that? Was it aftermarket? I think of your aftermarket business as maybe a little bit more book and ship than the OE business.
But how would you can you provide any more color on the sequential growth in the bookings in the Q1 in Aerospace?
I would say it was kind of across the board, not so much on the wide body side, but on the narrow body side. Business jets are relatively steady, although we do tend to get some that would have been more of a 4th quarter phenomenon where major customers like Textron will load their production rates and issue orders accordingly as the year begins. But a big part of the improvement has been narrow body, both line fit and aftermarket. I mean, our sales guys are consistently saying that the level of activity and interest, not only in North America, but around the world, has picked up dramatically, whereas things were kind of dead at the doornail in terms of discussions that typically lead to orders in the last summer and even into the fall, they've picked up pretty dramatically as the year turned and as vaccines got closer. So a lot of the increase in bookings has been commercial transport related, has been narrow body related and we're hopeful that that continues.
Okay. That's helpful. And just one final question. Dave, I mean, I think when you put the agreement in place with the credit agreement last year, you probably didn't expect to be maybe as cutting as close on the 6x leverage in the Q3 as you could be? I mean, you should be well in the range assuming a nice sequential increase in the EBITDA into the second and third quarter.
But do you feel the need or should we expect maybe some changes to the agreements just to give yourself a little bit more breathing room? Or is that something that you're not contemplating?
We got to keep our eye on that. You're right. When we put the agreement in place back in the Q1 of largely in the Q1 of last year, I think it was finalized in May, we certainly expected a quicker recovery based on the information we had back then. And the recoveries dragged 3, 4, 5, 6 quarters longer if you look at the global commercial transport business and the wide body business. So yes, we are cutting it closer than what we expected when we put it in place and it's something we have to keep our eye on.
And we have ongoing dialogue with our bank group and we'll keep our eye on that. And if that's something we need to go to, we'll take a look at that. But right now, we're not forecasting to be in violation of the covenants.
Okay. I'll stop there and pass it back. Thanks a lot.
Thank you. Our next questions come from the line of Michael Ciarmoli with Truist Securities. Please proceed with your
question. Hey, good morning guys. Thanks for taking the questions. Good morning. Maybe just to stay on Ken's questioning there with the leverage and the credit, dollars 115,000,000 in revenue in 2Q, doesn't seem like you'll be able to be profitable.
What's I think you had said previously, 125 was sort of the breakeven point. And if I think about that 6 times leverage, is there going to be any cash generation or anything else that changes that net debt? I mean it would seem like that 3rd quarter EBITDA generation would have to be materially strong.
Yes. If you look at just our the traditional EBITDA numbers, Q1 we had a $500,000 EBITDA loss on $105,000,000 in sales. And incremental margins that we typically get from sales growth is 40% -ish depending on the mix. So we are expecting to generate positive cash flow over the next three quarters. Our CapEx expectation is around $10,000,000 this year, dollars 10,000,000 to $11,000,000 So we are expecting to generate positive cash flow to continue to pay down debt.
Also not included in there is any gain relating to the Advantest earn out on the sale of semi business. So and there are other levers that could be pulled in the credit agreement. For example, there's an opportunity if we decide to exclude a certain level of legal related costs on a one time basis. We haven't pulled that lever. I think we are again, we are forecasting it's going to be closer than we expected.
But there's some potential upside too, I think, depending on which direction the commercial transport business goes over the next couple of quarters.
Got it. Okay. Pete, what are you hearing from airline customers? I know you kind of said the bookings were pretty diversified across the board. But are you seeing the restart of retrofit campaigns?
I think we it was United maybe said they're kind of proceeding. But what sort of the buzz you're hearing from the airlines as they look to modernize and commonize those cabins?
It's positive, Michael, especially in North America and China. There's a lot of interest in updating IFE and interiors and adding new amenities, interestingly enough. One of the interesting phenomenon also is that whereas we have viewed the narrow body world primarily as a wireless Wi Fi kind of world, there's renewed interest it seems among airlines for seatback displays. We'll see how that plays out, but that's a higher level of investment in IFE than we might have expected today. But in North America, in China, very solid, very mature discussions and in some cases airlines deciding to pull things in because they see heavy levels of demand right around the corner.
In other parts of the world, it's usually a step behind and it's remarkable, but maybe not too surprising, I guess. In those areas where the pandemic is under control or where it's expected to be under control, the airlines are moving ahead with customer amenities, especially on the narrow body side. And if and when we get travel bubbles or something of that sort between, say, U. S. And Europe or Europe and China, we think there's going to be a bit of a pickup in Live Body also.
So it's going in the right direction for sure.
Okay. Got it.
Got it. Last one for me. Can you just talk maybe about your supply chain? Are you seeing any tightness on the electronic side that are critical to your product offerings? And then similarly, what about input costs, raw materials?
What are you seeing there? And are you able to pass those through to your customers?
Yes. Very good questions. And it's an emerging picture. Over the last month or so, I guess, we would say that we've become more and more confronted by part shortages or lead time stretches, not so much pricing differences at this point, but and no shortages or lead time effects that are materially affecting our outlook. It is not factored into our revenue expectations at this point.
But it's definitely something we're watching. It seems like the world shrunk down a little bit and certain parts of the economy and the demand picture got really hot really quickly and suppliers are unprepared. So we'll see if that demand persists and what the response is among the supply chains. But I would call it a watch item right now. I wouldn't call it a crisis necessarily, not yet.
Got it. Got it.
Perfect. I'll jump back in the queue. Thanks,
guys. Thank you.
Thank you. Our next questions come from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question.
Hey, good morning guys. Thank you for taking the questions. It's nice to see the order improvement. Continuing on that trend, I'm just wondering what the orders look like in April May and if you saw an improvement sequentially month by month or if they were relatively similar, just how you're seeing the early progress in Q2?
Q2 so far is essentially maintaining that pace of Q1. But 1 month, we don't get too excited about plus or minus. So we certainly aren't seeing a drop off. We're happy about that. But it's too early to draw big conclusions about the second quarter.
There's a long ways to go. But so far, so good. Okay.
Fair enough. And then just in the $115,000,000 guidance for Q2, do you have a breakdown? How much do you think test will be versus aerospace?
Dave is looking something up. I'm with a faulty computer today, so I don't have a number for you, but
it's about 24,000,000 tests.
Okay, great. That's helpful. And then Dave, just for you on the incremental EBITDA, you mentioned 40% is a good bogey. But are there any puts and takes to that as we as the revenue increases and you start layering back costs that maybe you've cut in the past year? And how should we think about at what breakpoints do those come back in place?
Well,
I'd say probably the most significant one is we have already provided rate annual raises to most employees here. So this is happening. But I think kind of the big thing and many of our employees are asking about is our 401 match. We're that's at the highest end of our priority to reinstate our 401 company contribution there. And we're going to watch the development of the cash flow generation and the bottom line and probably make a 4th quarter call on that in terms of 401 match.
And that's roughly a I'm going to say could be up to a $5,000,000 or $6,000,000 number if we go back to the match that we had prior to the pandemic. But right now, we're not anticipating any kind of layering in much in the way of adding a headcount or anything like that.
Okay, great. That's helpful. Pete, you didn't spend much time on test, but there's been you talked in the past about the potential for several more large rail projects in the future. And obviously, the environment just for the A and D side of it has been positive. Just talk about your outlook for that, if there's maybe something in the pipeline that's attractive or if there's any changes in the environment from the government side?
Yes. I didn't talk about it much, John, because it hasn't changed much since the last quarter. We do have some high value targets in front of us, we think, on the rail side, on the transit side that we're pursuing. Some of those efforts have been slowed by COVID, not necessarily because of funding constraints, but because people simply are in the office. And that's slowed some of those things down, but they're still out there.
The funding remains in place. In fact, if anything, the funding picture has perhaps improved based on the investment priorities of the Biden administration in DC. And that's true also of some of the radio test markets that we serve, especially for municipalities and police forces, first responders, things like that. Municipalities have been stressed during the pandemic and that's one area where we think there's been a little bit of a pullback in terms of expenditures. So we're hoping that that market turns a little more profitable.
And we do have some continued positive prospects in our traditional defense and aerospace markets. And so together, our test business is more subject to big gulps of water, big gulps of orders relative to our aerospace business, especially for its size in relation to its size. So we're optimistic that our revenue performance from last year in terms of growth can be continued this year. And there's a potential for a very strong booking year. As we get more and more into the year, it's unclear how those strong bookings might affect short term revenue.
Those take time to convert. But overall, it's a pretty optimistic picture.
Great. If I could slip in one more, just any update on the tailmont antenna business and how demand there is trending given the business jets have been doing well?
We hear good things. As you know, we're teams at this point with Collins Aerospace and they seem to have done a really good job putting together a team of partners of which we're 1. And I don't have specific numbers in front of me, but I can tell you that they are trying to pull things in. They originally had stuff scheduled out into 2022 with us. Now they're trying to pull it in and we're trying to accommodate them.
And they're talking about a substantially larger order in the next, what, 5 months, 6 months or not for this year necessarily, but for 2022. So I'll have with a little luck, you'll see a press release on that before we talk again.
Great. Thanks guys.
Sure. Thank you.
Our next questions come from the line of Dick Ryan with Colliers. Please proceed with your question. Thank you. So Pete, on the earn out that was the expectation or the that's under review, it looks like it moved from 10.7 to potentially 7.1. Are there any particular reasons behind that variance?
And is there any kind of sense of timing when you might be expecting that to conclude?
Well, we're a little confused by it, frankly, Dick. We got a number with a printout and we basically agreed to it and asked some questions and then we got a lower number in response. So we don't think it's an accounting issue. We don't think it's a numbers issue, but we're asking those questions. And I guess I would say that there's 2 general possible routes here.
1 is we discuss it and resolve it, and there are efforts underway to do that. And if we do, I would expect it to be resolved over the next well, certainly over the next quarter. But there's the potential that it turns into a bigger conflict and then I don't know what kind of orbit it spins into. So it's just too early to say at this point unfortunately.
Okay. Thank you.
Sure.
Thank you. Our next question comes from the line of Ken Herbert with Canaccord Genuity. Please proceed with your question.
Hey, Pete. On the MAX, you talked in prior quarters about sort of heading into this year with give or take sort of 40 to 45 ish or so shipsets in inventory and expecting to sort of have that work down coming out of the Q2 approximately or mid-twenty 1. Can you just update us on where you are with sort of the excess inventory in the channel on the MAX and the timing of when you expect to be sort of shipping in accordance with production rates at Boeing?
It's a good question. And I don't think we really know the answer, Ken. But I guess I would have gave you the observation that the schedule they've got us shipping to seems to line up pretty well with what other suppliers are saying. So whatever has happened to the inventory that we had built up when we went into 2019, either they're at a level that they're happy with and they're going to maintain that inventory or they whittled it down. I honestly don't know what the answer is.
And it's a little bit of a confusing picture because we put things on the 7 37 MAX both by direct shipment to Boeing, but also by shipments to wing manufacturers and avionics companies. And the rates are not consistent necessarily between those companies. So it's a little hard to keep track of who's got what inventory. But I guess I would say that we were at 5 or 6 shipsets a month for the Q1. And we have a pretty firm plans at this point.
We believe that we have a set about 21, 22 a month in the Q4. And that seems to be pretty consistent with what the world is experiencing. So we're okay with it.
Okay. That's very helpful. And if I could just one final follow-up. Have you seen any incremental softness in the last few months on either your 787 or A350 expected shipments here and schedules for the rest of this year? Are those still sort of running steady with where they were?
I know we've had some step down on those programs, but have you seen recently any incremental changes to those schedules?
No. We haven't seen anything other than what's kind of out there in the ether. 787 in particular is stepping down to 5 a month in the summer. 350 is making a similar kind of move, but it's consistent with what the general news is.
Great. All right. Thank you.
Sure.
Thank you. There are no further questions at this time. I would like to turn the call back over to management for any closing remarks.
No closing remarks. Thank you for your interest in Astronics. We look forward to talking to you again in the Q2, hopefully with the continuing turnaround on the booking side. Thanks for your interest. Have a good day.
Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.