AstroNova, Inc. (ALOT) on Q3 2021 Results - Earnings Call Transcript

Operator: Good day and welcome to the AstroNova's Third Quarter Fiscal 2021 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the call over to David Calusdian, of the Company’s Investor Relations firm, Sharon Merrill Associates. Please go ahead, sir. David Calusdian: Thank you. Good morning everyone and thank you for joining us. Hosting this morning’s call are Greg Woods, AstroNova’s President and CEO; and David Smith, the Company’s Chief Financial Officer. Greg will discuss the Company’s operating results, David will make a few comments on the financials, Greg will make concluding comments and then management will be happy to take your questions. Greg Woods: Thank you, David, and good morning everyone. Thank you for joining us today. We performed in line with our expectations for the third quarter, particularly in light of the ongoing effects of COVID-19. In the Product Identification segment, revenue and operating margin increased sequentially and year-on-year, while in Test & Measurement our results continue to reflect the effects of the pandemic on the commercial aerospace industry. Let me touch on each of these segments. On the Product Identification side, we're seeing the benefits of our new and fully-updated product offerings combined with the expanding emphasis on digital, sales and marketing. Our enhanced digital presence highlighted by our new website at astronovaproductid.com has been very well-received. Earlier this quarter, we launched the new site globally, which integrates our QuickLabel, TrojanLabel and GetLabel brands into one comprehensive site with state-of-the-art interactive capabilities. This site includes digital educational content such as online demonstrations, eBooks, White Papers and blogs to help customers to make informed decisions. The response from the user community to all of the newly added digital thought leadership content has been very positive across the board. David Smith: Thank you, Greg, and good morning everybody. Rather than repeating all the information on the earnings release, I'll just highlight a couple of key points about our P&L and balance sheet. In light of the ongoing economic impacts of COVID-19 and the 737 MAX impacts on us, in Q3we again remain focused on cost control initiatives as a result of actions that we've taken this year, including in the third quarter, operating expenses declined by about $2.5 million or 21% from the year earlier quarter. Through the first nine months of fiscal year '21, operating expenses are down $5.3 million or nearly 16%, which is about the same as a revenue percentage drop over that period. As a reminder, in the second quarter, we reduced executive compensation imposed across the board freeze on all other employee compensation in 2019 levels and reduced the host of expenses in professional and other services, travel and tradeshow expenses, and so forth. For fiscal 2021, we're still targeting in more than $7 million reduction in operating expenses compared with fiscal 2020. On a percentage basis, we're aiming to have the expense reduction exceed the decrease in revenue. One potential risk that targeted reduction is an uptick in COVID cases that is effective so that the past month and could result in higher personnel expenses in Q4. The operating margin in the quarter was 1.5%, up 20 basis points from the same period last year. As for non-cash charges, depreciation and amortization were $1.4 million and share-based compensation was 591,000. EBITDA in the quarter was 1.7 million or 6.1% of revenue. Through the first nine months of the year, EBITDA is 6.1 million or 7.1% of revenue. On the other expense line, we've reported expensive 436,000 in the quarter which primarily reflects interest expense and also some foreign exchange losses. Greg Woods: Thanks David. Looking ahead, we're optimistic that the third quarter momentum in our Product Identification business will continue in Q4, an exciting growing base of new customers and the ongoing ramp up of new products. On the Test & Measurement side, we're expecting fourth quarter revenue to be stronger than the third quarter based on anticipated contributions of shipments for defense applications. Now, David and I'd be happy to take your questions. Operator? Operator: Thank you. Our first question comes from Dick Ryan with Colliers. Dick Ryan: Greg, you mentioned on the Product ID side some new customer acquisitions. Can you give us a sense of how many new customers have come in? Or maybe just from a geographic standpoint, where are you seeing strength and weakness in the Product ID side with your new marketing initiative? Greg Woods: Dick Ryan: Any COVID driven business creating opportunities for you? Greg Woods: We're still seeing that in terms of the janitorial cleaning supplies, chemical products that is actually still ramping, as well as medical products. At recent, we have several kind of PPE-type customers and actually medical tests companies too where you can label business. And recently, we've got few new customers and kind of the eye care area, which I don't that's really COVID related, but just a better penetration overall for our business within the medical industry. Dick Ryan: On the T&M side, the sequential increase anticipated for the aero side, is that pretty much driven by these new military contracts? And maybe a bigger perspective on the 737 MAX issue, is there the printers inventory has have to be worked through as their production ramped kind of slowly improve? Or is that kind of a book and ship business with our level of production? Greg Woods: Yes. So, with the Boeing 737 MAX, it's a bit of a mix. I mean, Boeing does keep some inventory, but they don't keep a lot. It's mainly customer purchase printers, which we then directly shipped to Boeing for their aircraft assembly as is coming on the production line. And as you know, as we started, but it's kind of in the single digit type of numbers as far as installing aircraft production, but we are seeing increases and then we'll mention the extra aircraft models, but there are some of them that we went through a dry spell of very low to no orders for several months. Dick Ryan: Okay, what does the Honeywell handoff? And I mean, obviously, it's you've got the COVID issues, but how much longer do you anticipate that impacting margins? Greg Woods: We're hopeful to wrap that up this quarter. I know we've been trying to get it done for a few quarters here, but COVID did have some impacts in terms of restructuring at other -- both at Airbus and Honeywell as well as our own organization. So that a little disruption to the contract negotiations, but we're certainly in the final stages right now. I would say, very high probability that we'll have it done in Q4. And then, that will -- the impact will start pretty much immediately from there. Operator: Thank you. At this time, I am showing no further questions. I would now like to turn the call back over to Mr. Woods for closing remarks. Greg Woods: Thank you all for joining us here this morning. And on behalf of everyone at AstroNova, have a wonderful safe and healthy holiday season, and we look forward to keeping you informed and updated on our progress. Goodbye. Operator: Thank you, ladies and gentlemen. This concludes today's call. Thank you for your participation. You may now disconnect.
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AstroNova, Inc. (NASDAQ: ALOT) Director's Significant Share Purchase

  • Quain Mitchell I, a director at AstroNova, Inc. (NASDAQ: ALOT), purchased 10,000 shares, increasing his total holdings to 97,719 shares.
  • The company's commitment to enhancing accountability and transparency aims to build investor trust despite its current financial metrics showing a price-to-earnings (P/E) ratio of -4.33.
  • AstroNova's valuation metrics, such as a price-to-sales ratio of 0.45 and a debt-to-equity ratio of 0.61, reflect its market position and financial health.

AstroNova, Inc. (NASDAQ: ALOT) specializes in data visualization technology, offering products and services across various industries, including aerospace, automotive, and packaging. The company competes with other firms in the data visualization and printing sectors. On June 17, 2025, Quain Mitchell I, a director at AstroNova, made a significant investment by purchasing 10,000 shares at $9.05 each, thereby increasing his total holdings to 97,719 shares.

This strategic purchase by Quain Mitchell I aligns with AstroNova's ongoing efforts to bolster accountability and transparency, as emphasized in a recent shareholder letter. The board's dedication to responsible governance is designed to foster investor trust and confidence, which is vital given the company's current financial metrics. AstroNova's price-to-earnings (P/E) ratio stands at -4.33, signaling negative earnings, a potential red flag for investors.

Despite these challenges, AstroNova's price-to-sales ratio of 0.45 indicates that the stock is priced at 45 cents for every dollar of sales, potentially appealing to investors seeking undervalued opportunities. The enterprise value to sales ratio of 0.71 offers a broader view of the company's market valuation in relation to its sales.

The company's financial stability is also evident in its debt-to-equity ratio of 0.61, suggesting a moderate level of debt management. Furthermore, a current ratio of 1.67 indicates that AstroNova has sufficient current assets to meet its short-term liabilities, providing a safety net for financial obligations. However, the enterprise value to operating cash flow ratio of 47.68, combined with an earnings yield of -23.10%, underscores the challenges AstroNova faces in its earnings performance. Nevertheless, the company's initiatives to improve governance and transparency could mitigate these issues and bolster long-term investor confidence.