ALOT - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the AstroNova's Fiscal 2019 Fourth Quarter and Full Year Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Scott Solomon from the company's Investor Relations firm, Sharon Merrill Associates. Sir, please go ahead.

Scott Solomon

Thank you, Shantel. thank joining and everyone, morning, you us. for Good Greg President and this morning's and AstroNova's are call CFO. Hosting CEO; Woods, David Smith, discuss results. operating the will Greg company's David financials. through will take you the some will make Greg then comments, take questions. to management will your be concluding happy and received have release copy of should that you the issued was now a By today. earnings

not the statements fact during not Please only note www.astronovainc.com. considered Accordingly, have do of go statements. today's you assumptions actual within as XX, Securities XXXX. website, that of forward-looking Any undertakes copy, please as the that uncertainties. differ a historical could to Litigation of law. statements AstroNova and except made today, obligation forward-looking statements the forward-looking statements If Reform materially a Investors are March risks based these are XXXX. call company to are section update results required The of of on Private that These speak could no statements number by involve forward-looking Act

regarding call on differences, Report please the Exchange now For further risk makes cause that other the Annual the AstroNova's the Greg. company Commission. the factors the information and filings in turn with factors XX-K see over may and Form to Securities and statements I'll forward-looking

Gregory Woods

and Scott, good you, Thank morning, everyone.

quarter today's million, year-on-year. operating quarter a from an at double-digit begin gains improved revenue year. revenue by and me in $XX.X a same delivered call from perspective, quarter approximately fourth highlights leverage generated we increase Let profitability came XX% fiscal recapping record From our record some the financial XXXX results. Fourth and of in last and

revenue from Aerospace by year, group. increased to XX% For led momentum $XXX.X our continued strong the million, full

is in in margin focus to year, which Operating increase in an increased $XXX,XXX company, full successive our fiscal last team from X.X%, important $X.X we one to Throughout improve each And bps 'XX. year the on of million, revenue the continue X.X%. productivity. an improved coming all-time quarter our $XXX,XXX System that QX progress AstroNova operating member, leveraging It's XX% operating fiscal year of for XXX with up the to our margin over Our XXXX that operating per profit to the note of at of high of year. hit resulting an measure

to addition the and to bottom managing we productivity a percentage gains, In of are driving growth expenses line. greater our prudently

revenues additional up financial business Clearly, product with fiscal up GAAP during this to Our adoption bears a contributor more contract XXX% year but Honeywell that new were EPS a results & to with the on full our about growing $X.XX. of Starting major of Test the Measurement. XXX year-on-year, the by ToughWriter the line. $X.XX also of printer. saw our performance me XXXX than wins out Aerospace We XX% in GAAP EPS overall number But in fourth primarily the growth. segments year. let aerospace we're our driven performance later our Segment the pleased XX% is very quarter operations. details and on some will provide call, to and in David background up provide first,

'XX. fourth products did. our was Rhode quarter had XXXX efficiency into as the we our year and quarter that coordination of Our can't helped aerospace manufacturing large fiscal to successful ship by in fiscal was the the customer accelerated quickly West level delivery planned integration of here also I a Honeywell to complete year accomplishment of the first biggest the of team Island. Warwick, plant overstate Aerospace as in that line printer required Unquestionably, task of

remaining work customer transitioning AstroNova. Honeywell integration the overall the through we finalizing on progress make to to continue contracts We as

with incur associated those by the outstanding meantime, costs We associated we'll contracts. completed QX. of and end be this to the expect process continue In operating to transitioning

product repair addition recently family. This module, growing Daxus new verification input in asset line, series well development, printer eliminates business. our such our our and detects our positive first thermocouple in The and simplifies for upgrade ITCU-XX module business adapters, to maintenance, research a monitoring. is need launched as the supplies the product modules ideal new impact a as subtle of product for for new process and on applications validation, & I/O base In we Measurement units of and the as changes and and voltage. installed temperature having wiring sales, and is the In Test module

products Turning the now momentum TrojanLabel fiscal of with in to the year. XXXX, our Identification X% the at grew end nice Revenue gaining segment. Product

was Our introduced the We Trojan label of major the several Among ramped products TX-C product the year. Kiaro! highlights coordinated the color launch well. printer. digital and QL-XXX performed global new during particularly

materials. to began continue And finishing system. food-friendly commercial introduced growth Trojan in From perspective, also geographic compact the professional the of Asia. and We we Trojan new and TX see packaging label Americas shipments TX-C solution we to a print press digitally and nice flexible a

In QL-XXX several see QX have X-color, underperformed printer, be engine changer latest printing. digital we more sales to expectations in improve our The is Identification key Europe changes white dealers this getting Product but results that of game printer variety a the a on-site channel production we label QL-XXX, However, tabletop new the organization for printing. as toner-based, specifically It due segment. our label the expand sales features January, presence, toner. move designed fiscal launched world's an continues a we late Innovation drives program. through first there to breakthrough North our expansion made 'XX. to and in factors, In continue year to to we America, expect to

and materials printing into low done for benefits The to QL-XXX ink-based alike. of to allows white the our are manufacturers our ownership finish on inkjet magenta, metallic addition addition that applications a new once complements solution variety us labels It reach traditional and with to many printers them black allows versatility the that currently In by wide to total polyester The that of shops QL-XXX cost black of only papers clear printers. jobs enables in-house others. toners, served print cannot and and printers. yellow be by commercial cyan, owners, the a toner-based to huge professional of print nicely brand be expand could from

did Just the summer XX last out our sales dealer QL-XXX day the like QL-XXX, more and world same reaching last the force the to we than around countries. network, with languages direct customers was X month through rolled on in

Island. digital market systems materials, entire one line Warwick, Technology results, related our in allowing including to our carefully and action consumables. Centers and world, the provide around Rhode of These with quality support ITC and, optimal one portfolio, of printer, in test solution: global toners newly that label only the weeks, only the visit data and around software, been our QL-XXX closer presses, all us centers North our much Irvine Chicago to in it's our the product this and course, acquisition for strong a America The sales can associated X world. full in QL-XXX opened in Customers our our printers bring printing California. supplies. by is West customers, ensure joining with and tabletop few we been see As has to third Irvine, the entire see Innovation new center want not but alike of the though customers reps to and greeted Even matched enthusiasm

have release, in I we year workforce this record I team exceptionally that as of have deliver results who noted reiterate to of more the worked proud XXX Finally, want tirelessly our to achieved. I'm morning's that than global members throughout

Now let me turn David the to for call on detail more results. over financial our

David Smith

everybody. morning, Greg, good Thanks, and

to line all, first the revenue share quarter the want acquisition total fiscal expense September million a to quarter -- so concluded the the the product XXXX the press of of up $XX.X was XXXX, quarter full for a XXXX comparable year final year, GAAP up was Those up of release non-GAAP results prior for the is sales. is share. year, the large QX, product changes; for to had revenue in XX% end basis International items The the per and to financials those of XX.X% in The compared per of and tables. the full quarter, per for up increase revenue That where Domestic the a from fourth compared this in at was Act year, was are of the measure the and detailed for in XX.X% million, This year, expense changes it earnings X% transaction of and from Honeywell accounted $XX.X of true-up acquisition. revenue. year. fiscal $X.XX are on the non-GAAP that I First in we fourth year last total prior XX.X% was last note on X in XX% increase XX% represented last a XX.X% share months $X.XX an for Tax and basis. year-on-year $X.XX year.

the $XX.X $XX million For was year, was International XX.X%. revenue domestic revenue of million XX.X%. full of

the For revenue of XX%. the revenue of other And X.X% grew from year. revenues $XX.X from increased was and prior quarter, million million up supplies XX%. Hardware consolidated $X.X $XX.X of service million

up X.X%. the profitable, $XX.X revenue. We've For million got up million $XX.X of million service Hardware and was of a of XX%. recurring up was $XX.X of solid was other base supplies year, XX.X%. And

due the Honeywell X.X% margin. revenue $XX.X prior to $XX.X in acquisition. or increased million, the product was Turning for of the year in a to year from largely XX% Product segments this & mix in on up the million increased for up same basis XX was That's hardware to XX% and up million, quarter. and XXXX was the Test the $XX.X to service. to XX.X% Gross Measurement and to quarter million from period $XX.X million reflecting the points XXXX, fourth favorable again supplies $XX.X Identification quarter. full of fiscal sales the profit up more XX% QX higher printer fourth X% year over to

from For the XX.X% quarter profit of sales, XXXX. points operating was the up up gross XX.X% were million XX the of expenses basis year. prior Fourth $XX.X fiscal from quarter fourth of year,

on million points points into quite customer year-over-year and the percentage XXX reminder, basis, margin Fourth $XXX,XXX increase the increase. in segment expense Operating a with of they few last $X.X of from expenses operating and, a Honeywell same quarter, X% Product a declined year a in quarter the majority the basis the QX segment quarter $X.X revenue year. compared as sequentially. quarters. Identification for are million acquired up by account of from XX.X% As about relationship amortized were operating basis expense, intangibles income operating the XX of lowest only or generated for sales declined same real from third last

the prior bringing including million initiatives, million XX.X% sales XX.X% year, in The the XX.X% that $X.X operating XXXX, in QX of growth or margin year. compared $X.X XX.X% for difference tax income to QX operating And Test million $XX.X segment or compared an full for for in last provision For Measurement due a Greg rate products full sales again or of generated X.X% for $XX.X acquisition. to compares million in new segment sales year. effective XX.X% once Income the and $XXX,XXX & million to with the detailed. $X.X of or was to tax year, tax operating rate of income income operating to is XX.X%, million the of the XX.X%. the of the year was due $X.X of

around fiscal come in expect to rate at first the XXXX quarter XX%. tax We

Turning to the balance sheet.

in QX exited debt-to-capital debt, We a to and about continue debt with $X.X XX%. million million of and approximately net in our ratio $XX.X cash reduce

normal expenses projected Our we where level total the quarter million operating CapEx, to bringing we and roughly million for business-related $XXX,XXX, range. were which normal the That to than our is is this for XXXX time. at ongoing million fourth half That's in year. $X the normal project of the lower $X.XX $X.X

live. new calls, fiscal spend now of a to previous the system. that be ERP XXXX million in We we CapEx, in before noted range project expect $X.X about we spent to And expect I've completed As and in our we're $X go midyear. normal addition to in on implementing million

$X.XXX was of charges the Noncash $XXX,XXX. stock-based terms million. $X.XXX and $XXX,XXX, amortization, was quarter was million; and amortization compensation Fourth charges. $X.XX million; noncash year are $X.XX In compensation, depreciation million stock-based depreciation, full for

Sidoti I at be back Greg, turn note call Conference. will the that Investor the XXXX March AstroNova Thursday, please to Before presenting XX, Spring on

schedule meeting, If to we see alot@investorrelations.com, you're York like a and City. in and attending to please hope would you e-mail New

the turn me Greg for let to some now So call comments. back closing

Gregory Woods

David. Thanks,

anticipate line. Looking strong and in revenue another ahead, with a fiscal modest bottom the for year we percentage greater flowing to of revenue XXXX, that growth

strengthen to operational fundamental move our and innovation, will forward. improvement product capital to commitment Our working efficiency competitiveness continue as we

be your Now Operator? will David take and I happy to questions.

Operator

[Operator Instructions].

come Capital. will Hellauer, Robert question from Casey first Our

Robert Hellauer

the two only Can products? there? great have quick Are what's early know they coinciding about -- months timing so And QL-XXX Are with in, they like X it just happy sounds the I I have what's I but a expansion. around excited? launch follow-up. then questions. talk with One, you dealer the just we're new feedback the getting

Gregory Woods

Yes, end mentioned as And well commercial big actually, users sure, the in is, excited, thing Yes, printers. both I my there, Rob. the notes is white. the the everyone's here as

So we of But do things the there's of because over of have lot prior that have to printers CMYK. professional this only a we printers the that variety had a are years couldn't white.

of clear top material, down that on the that you a with or white, other kind print material, of colors. any with can material black can So on opaque then you first the put

those gives wide a people, materials, shows have since far. say, things, of over then, variety just of beers, wines type They're had a so this world excited very taken and that product couple a really product. industry of And of seen trade had the about So all things we've like especially it gone, of in we've you we've beverage demos very up lot -- that excited. the let's

Robert Hellauer

And contribution? had accelerate products Is contribute given potentially the how will into talked you will going contribution the this increased XXXX. that one will XXXX, that you revenue is in of that that -- investments -- help to margin about

Gregory Woods

in from about. the which also we're see product, right big well we And ahead other one. in that. in that's talked kind see the now. a we But We we competition great mean, that as and Yes, it's of top the in of but think I line, fiscal it areas we that would out see a that on efficiencies as operating to expect well. see we're driver that I 'XX,

Robert Hellauer

improvement? right. are you And a sounds I'm the It great. you upgrade, seem That's system can operational Right, like accelerate potentially then little will guys bit through which you're talk ERP sure about the halfway those kind have get XXXX? see it you in year like traction starting what it improvements. just But does done you going guys about and Can to of operational talk fiscal where you there.

Gregory Woods

Yes, it's Rob. thing, an ongoing

done operations. a things down to But up. that terms quite we in we've work of with different efficient, of chain. the make can it So That's we how efficient lot they reduce can same more things if things are cells make waste, add driving motion, ways and cells, always we fiscal frankly. thing eliminate so we the There get major at of can in supply to costs, looking -- for packaging, back 'XX, we handling. there little How can productivity. people continue eliminate up, And that our be internally increased do those one a more lot in you our how those of isn't lot -- gets thing And to add I look progress in to. a point of

little lot up things of course year. those that the of add there's through the So a

to we're this expecting from meantime, right? big kick ERP system. a It have So of the transition doing But there's so speak, system quite work course, new in year. then in will the later and people legacy it's Of work, from to their extra a lot this to system. job, day the frankly, benefits you

into new So until got the work get that of first you're don't the do half that really that's we bit we a see -- system to probably extra we've a online. drag isn't the continuing because benefit

Robert Hellauer

then, of and is the which kind last And the -- of is EPS looking et from I'm acquisition, higher at stated intangible guess, looking getting I'm EPS, adjusting is, cetera, I'm some My I for just than cash great. really amort, the question That's at now. finishing if much which EPS.

is, question do So my that I next guess you to cash year? with are going what all

David Smith

the put balance thing for first find pay to it it. use Well, we down is appropriate on do then we'll we'll and debt, we'll the sheet an until continue

Gregory Woods

we're mean, acquisitions for you as looking Yes. I know, well. as always

one cash. some So hopefully, use that of for we'll that's find good a

Operator

Ryan, from come Our next Dougherty. will question Dick

Richard Ryan

mentioned already flight in to? perspective QX to initially from shipping that versus & you're should how And QX flow on a you pull-in somebody customer. that? on Is more Measurement give Test expecting view direct Greg, we the a little you're Can you major the Say, printers the pull-in? if that that

Gregory Woods

Yes.

So it's QX. that couple customer large the a a typically of last orders, over fairly in years, order

out, terms able that. of the We've quarter we did to of scramble in other wanted That's was of see to have be. we So And our being get they do that. we to customer it quarter our to to desires it of what otherwise of but already we're revenue were course, But might lot not from were impact to going sitting a single-digit still. accommodate We're would it first if with nice Yes, be possibly make -- we it's try could low where and happy staged to able there. kind the best things. about a we course, expect the it that surprise, and for size up reduced of pull just we're that of And in. that that represents. got we'll in to

Richard Ryan

to to Okay. mode your are direct the in And you customers? where ship transitioning

Gregory Woods

in and expect countries, on like to to said yes, It's midyear be the frankly. different And through quite But different one agreed I we this. different through by on by progress an exact which but come don't one. a months, we've we couple been X continue Chinese make X, about percentage give We that, We of to for working progress customers, transition. in of that. companies comments, had finally and the making we're

Operator

from Inc. question Busch, will Resources, Steve Everglades next come Our

Steven Busch

I questions, three guess. So

kind -- percentage growth kind range? are is to XXXX, moderate thinking what for of XX%? you -- that on of Any that? X% us Are you X% XX% give one, a First you X%? to revenue can your X%? to on estimated color

Gregory Woods

No, we obviously, year, of had guidance. recurring the benefit but don't this which we year. we're not in we predict. something last year, I acquisition, we'll Honeywell nothing But the mean, find hopefully, giving can have that specific the again that

Steven Busch

you're Okay, I see saying. what

Okay, good. that's

print For material? we this make the printing food products, new packaging for material do

Gregory Woods

make it in-house. don't We

agreements third-party We have a proprietary have manufacturing for system that. where actually we

Steven Busch

the to on material the what we do foods? have I'm we processed get of sole trying around. patent that's itself? I for So source the material mean, Are

Gregory Woods

not it's it. to I No, do everyone patented tell how because didn't

trade it's have we supplier have suppliers. that who materials, work probably or kind materials -- as agreement our an with with put nonfood-safe that already materials So do just other same we supplier We us agreements we a XXX suppliers well. industry of those different have probably may with additional or that with

Steven Busch

see. I

razor if So printer food-safe with -- to of that's on so someone our that stuff, sole food-safe material, are use one the material, the of is blades? we buys the source this our

Gregory Woods

to but that it's the and cetera? Not right We is is have what world it it lab. have providing. can like expect I deal that really material us. you're product. But going whatever product us. our work people go of We out. a we're Yes. with somewhere if supplier of figure the vetting could else guaranteed -- from service they So to focus on issues have and it's through the like to mean, all customers the the that's going would adhesion, you work it materials an we couldn't it buy you et no benefit immediate them with potentially, printer? buy else test lot properly provide that our through these would just that get one the there in Does the not other with Is typically we of different their materials, not

Steven Busch

Right.

safer material other this our any out needs? or just is for particular safe there currently so materials And than

Gregory Woods

No, it just certain requirements. meets

as requirements any the print that's is. there's product, to it of So into will this what product differences food materials, you the really kind material when on certain incur with transfer and

package. put actually inside the food can You

Steven Busch

Right.

year? the know. to kind Any comment you enough. shipments to on of then, you to issues. Any that? this you MAX Good XXX maybe this think, going And is acknowledge? I add fair color Okay, can guess, And can affect,

Gregory Woods

So just ahead. I they Everything this Boeing with increase mean, it's obviously, can. happened, our point. is our anything. expect might as of Yes, kind you trying Sure. there's full production no been chain I change speed aware, supply right? at to to mean, through as Boeing don't as has be quickly we been contacts,

some hasn't lot the So aircraft major mean, important months, we it delivering impact, I to still don't this an if the this variety at for products our course, a XXX predecessor And as we expect which it. for MAX, obviously deliver was we're to of and there and a to Boeing orders impacted months continue NG, Obviously, customer -- aircraft. wide well. be months an the other it to OEMs. is and important is for point. of of point, but or and the Airbus But other MAX, other might

Steven Busch

are Right. couple And for planes be be anyway, another be most of for processed... your planes sales to Anything built to them that going you -- to already aren't right? of that going would years

Gregory Woods

the Yes, those it But planes kind of longer depends shipped are advance customer. anywhere to see to are going or sometimes we tail the on -- year to actual OEM. orders in X that a being from typically, years the of be that are

Operator

Hillary, Our last Christopher from Capital. Roubaix will question come

Christopher Hillary

whether or of are occur? just your long-term the got progress and targets, you've plan improvements. on you to to ask you cetera. margin expect contribution saw there I just and some have certain speak want as your you they forward? you, And to target Or obviously would long-term that great referred et how drivers that more about and made feel year-over-year we ERP meaningful Can you years improvements your going a type you certain

Gregory Woods

Yes.

is place. process, ago, at talked earlier the we I now. you really of in from put ERP buildup the to had -- calls, from working -- But about of And a infrastructure remember on here. we one look you what the working right had pieces, the that system about we're a we years of it's System, the in go a it's that the forward a of management expenses. to AstroNova improvements careful matter And the and percentages. we'd be able to we're thing. course, an expect cost if if it's lot that's be big drive linear And operating margin on a lot the in So -- improve that Chris, helps of ongoing then to talked that few not operating last of it the perfectly But is we going yes. And call, as Operating we'd of we'd that -- productivity. And a expect lot year-over-year, leveraged,

Christopher Hillary

And then you... can

Gregory Woods

Sorry. Pardon?

Christopher Hillary

-- no, percent was, are pardon current the ask then fiscal And to that see Oh, what wanted can me. I question remind whether year? supplies I you coming and much the changing sales consumables for us the of and other you from

Gregory Woods

Yes. the quarters, It's little it's range that XX% bit and the to for been at products higher TX, much it for I be example, a mean, bit, the product. $XXX,XXX but of lowers as things XX% it sales. if Trojan of continue kind had it. expected you Like over Quarter-to-quarter, look a the a I is in to fluctuates the several grow. that that are last typically in one range Trojan dollar we right is

have few revenue increasing there. but hardware with the percentage in a kicked overall Knocks Honeywell that we dollar an year it aerospace some higher hardware, keeps acquisition. So down last points, the

Operator

no queue. have we time, this At much. very questions in the you further Thank

So would conference the like back over turn Woods to remarks. I for to Mr. closing

Gregory Woods

updated now. our your and Bye forward look in and time AstroNova, you interest progress. Well, keeping we for you on your to thank

Operator

at and Ladies very time, now much. Thank conference. this gentlemen, concludes this you today's

your and a disconnect phone rest you. of Thank the may have You great lines, week.

AstroNova (ALOT) 14 Mar 192018 Q4 Earnings call transcript