ALOT - Earnings call transcript Q3 2020

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Operator

Good day and welcome to the AstroNova third quarter 2020 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 Brittany. thank joining and everyone morning you us. for Good Greg President company’s and this Financial morning’s and AstroNova’s are call the Hosting CEO, Woods, David Officer. Chief Smith, David the Greg take then management to some operating the happy will and results, be your discuss concluding comments, you Greg financials, take through will will make company’s will questions.

you release today. issued that should received copy a have now was By of earnings the

please go AstroNova you to Investors a do If the not section website, copy, www.astronovainc.com. have of the

made differ speak as statements forward-looking of considered statements company the that assumptions these Please law. statements. Any statements call statements number on within as Act today’s of materially, only undertakes by update are note forward-looking that are not X, involve results except Reform a no forward-looking of during historical that and could required meaning XXXX. XXXX. Litigation fact statements forward-looking These risks Private today, based of uncertainties; are Securities of December accordingly, to The obligation could actual the

information with Commission. further the cause and Factors the Risk the report forward-looking regarding and Securities company AstroNova’s statements may annual see please the makes filings Form in XX-K differences, other on factors and the Exchange that the For

I’ll the over now turn to Greg. call

Greg Woods

you Good Scott. morning joining you Thank today’s everyone. for on Thank call. us

quarter in second AstroNova’s margins the product our both and a affected of continuation segments results and in revenue third identification fiscal reflected quarter mix this the industry and year. measurement that test of headwinds

position for term our these term As or confident growth. we tailwinds noted challenges secular compromise us long positive strong do on outlook well our and not believe the profitability near QX call, that

throughout by and operational in focus on to continue impacted revenue efficiencies growth specific headwinds not company. on these improving We areas the accelerating

our continuing are achieve talent to objectives. strengthening long global as Additionally, products as in term technologies strategic to our new well and we invest

has and grounding to been affected the XXX measurement our be to which the by MAX Looking March. of effect ripple continued related test adversely idled at since segments, the

As installs on that QX to void this until our the service. upgrades maintenance grounding of not are call, also new affects on but printer discussed optional MAX us to terms returns aircraft fill retrofit we deferrals to needed only in the and

the business is by remains As and our on longer the term that long to the the status fourth as likely robust, well. business well we for of continue the well. impact as covered be, which press. first the general effects for situation through will that information, the industry expect and that quarter term well airplane when quarter will Based outlook bodes Boeing’s

the good coming previous military upgrade delay on and a expect call, to I fill networking On also referenced of news gear. related the shipments the quarters. complete to the and over in that is The we we began front multi-year contract that order that a QX avionics for

We during third that were The acquisition positive. very products, pleased Daxus quarter. been to DDX-XXX also our DX-XXX the reception see data line including have and performed new SmartCorder the well to

in suburban we automotive at a and ITC Railway Minneapolis, and and show expos data Detroit industry several during products demonstrated events, the Vegas. in Las in including quarter, Also telemetry the testing Expo in our Interchange China major acquisition XXXX,

result few some performing from flat segment, of customers we identification region. better year’s was quarter a product that our revenue some primarily with others. in softness with as experience to last quarter continue demand third In third weaker Asia, regions In than a

integrated structure the to identification of an from portion Organizationally, we global a regional started product completed business a in organization. management major QX transition of our

intelligence. our to service. This especially overall AstroNova centralized global responsibilities, new This grow latest roles hardware, response providing and rapid important accountability, With to now clarifying and we these in by global large enabling enables of and market place enhance customers. our as coordinated have supplies, effectiveness global and dedicated changes, list is leaders for structure we industry global trends

TrojanLabel September, gain featured color QL-XXXX printer On among QuickLabel and Brussels. Pocpoc QL-XXX in products continue at TX-C the in each the international to Las In and shows: in those installation. AstroNova front, customers label the were positive Label Vegas, three offerings and product trade new Pack XXXX Germany, new and major reviews have following [ph] Expo received Expo

TX-L. include These and feedback identification several been other labels QLAXX, create TX-OPX, products board flexible TrojanLabel label entire Customer printed we label addressable quarter, area of this offering. our the refresh also on year’s new digitally During packaging. these complete in that TrojanLabel also across new and positive. printer products market solutions the and of has expand introduced opportunities our the new the very product These color this QuickLabel

We’re also our TrojanLabel that into print in-line new the and system digital about printing TX, all-in-one labeling reach professional particularly the finish excited market. the extends

we upgrade Finally, of IT we moved phase. to that from across platform technology next We the to global in QX across months. the this phase completing I in our mentioned upgrade and have anticipate have hardware the portion With the In this infrastructure hardware the company. the latest few completed endpoint software project the hardware, hardware an of updating pleased completed, successfully started program that core of report aged the board. IT into QX, I’m array disparate the upgrade and telephony

the project. cloud-based and software. we that process are training the in steady of to conversion are phase very we NetSuite ERP progress our a making parallel, Presently of rigorous on testing In

year contributed significant beyond. transition many members AstroNova will time result who IT and the ’XX implementation and in team time have improve expense, While competitiveness, significantly state-of-the-art programs. it like designed to of these globally a and our in time I’d commend infrastructure on and effort substantial unified reaction our to this involves productivity fiscal

turn let the review. financial me for his Now to over program David

David Smith

third million Revenue $XXX compared was the revenue of $XX.X Thanks million Through date million $XX.X while was sales. accounted of XX.X% total with million first and revenue. for or Greg, sales. the in international or period or in same $XX.X and XX.X% revenue for the XX.X% the last period. $XX.X the revenue good at earlier revenue year, the total $XX.X nine morning quarter was everybody. $XX.X quarter Domestic total was versus $XX.X domestic sales, of for was for International of Year fiscal million million XX.X% came year. million of current total months revenue million to year

was from revenue was and and declines Hardware revenue was year printers. repairs the that increase last from down year aerospace was QuickLabel Greg million, printer the to on offset increases and TrojanLabel Service last primarily in customer by the due for million, mentioned. down parts a $XX.X $XXX,XXX printer-related in $X.X revenue million, aerospace issues XX% as from quarter supplies primarily good Supplies other partly for $XXX,XXX side. last $XX.X year Asian

by The Greg line an in noticeable and aerospace. impact measurement was product tempered ToughSwitch increase mentioned issue the of somewhat the test in sales of and the XXX products the

XX.X% last of of and quarter The basis both segments. a dynamics to is points from sales XXX year’s lower in aerospace third decline gross margin function adverse mix in

from Operating heavy third year primarily were marketing selling up and in this all show $XXX,XXX expenses the ago, a in year. calendar the fall quarter due trade to

period $X.X quarter million was or XX.X% date $X.X lower adverse million plus mix or of compared million a million result same profit to fiscal with in of or or third segment the Year growth, revenue and that ago. XXXX. operating was XX.X% year segment versus operating As $XX.X $XX.X the profit dynamics X.X% a XX.X%

tax diluted period $X.XX uncertain related third per earlier. release $X.XX income an of for year expect we recent million the of full to be the an or audit quarter was After tax Net share $X.X account, with year Year was Net all X% expense or compared $X.XX the our versus fiscal ago. a the $XXX,XXX a and for IRS per into date to XX%. position closed. credit net share taking to income diluted per that most includes quarter tax per to diluted $X.X for a $X.XX share million to be XXXX diluted about rate year income fourth share about after

business, The ERP mentioned, We the live now project. this that we again expect upgrades range $X levels the including with continues plus and year that the Greg much project for for first the base our ERP end near consistent infrastructure the capital about of of historical fiscal new in for next company, the implementation year the quarter million, to aim full year. expenditures still well go for

On depreciation non-cash was $X.XXX for and and $XXX,XXX. quarter, amortization the was charges million stock-based compensation

to and Needham in the Wednesday, XX on the York presenting Greg, one-on-one we’ll meetings December XX I in be New in Growth LD Before hosting call Los we’ll XXth the Micro Main Annual back Annual participating on January XXnd and City. be turn at Conference Event Angeles,

we are seeing attending, forward look If you there. to you

Now the for Greg hand call comments. back to closing I’ll

Greg Woods

revenue summary, XXXX. In David. to remains continue growth our overall modest we positive fiscal Thanks and expect in outlook

our are to favorable in making are term the of likely long combination prospects investments impact we are are business. we address and growth industry in to our term results, positioned well near and headwinds across growth trends growth While future secular confident

Now happy Operator? your take I’ll be to questions.

Operator

[Operator instructions]

with comes first Dick question Our Dougherty. from Ryan

Dick Ryan

you Thank can got Hopefully a here. hear guys. bad me, reception you. I’ve

Greg Woods

hear Yes, can you. we

Dick Ryan

Okay, great.

the business, issues that a how previous Airbus the the see on did of is more you you likely quarter, into even little there? maybe side MAX bit linger As going well can give QX, along and everything maybe the look specifics versus

Greg Woods

in we’re years the affected be impact, MAX. first. going out, few seeing more not an so gaining part may is Airbus XXX Airbus a last Airbus units this a no that’s quarter nice quarter, They is but actually it’s issue. Yes, and not growth fine, by orders, over so

go are yes, that, On going these they’re keep see looked comments, so be, what because website, a the what FAA there’s kind of so going. we in going still an you there will be requirements I there. requirements to it’s thing get aircraft to then get from QX, out. at them restarting I they and means you they that only like projecting, that ground, latest not likely for why to what that expect my say If lot is restart but morning, some it’s The you month. mentioned if say QX then the They the on say a can to that of have quarter, approval and have Boeing program matter that’s retraining impact a inching so it this this it’s the to Boeing, of it does again this they training actually the to

Dick Ryan

see we down what footprint quarters we Okay. should that from road? for? better seeing flowing looking How higher there. margins, global should [Indiscernible] be turn the into the in a Will be efficiency through we or moving

Greg Woods

down. going is spot not a be, The and of very us that’s as of so We and and importantly our some things, In changes take different efficiencies command we and a one made in on or world, about much in efficient then the that the on a can certainly leaders that, lower that three world boil started through in QX the should at, the things, having by accelerate they’re disseminate revenue different of revenue we’re appropriate that QX, help doing of change. groups these of to did rapidly one so a specific either by excited manner. the there, that place these parts we our side. to knowledgeable it, should though, then business. to that I in can part effectiveness trend we very very don’t different reason more those we’re changes, point but we to on put as more looked was side records, and challenge that we we think of in the improvement big level single overall the We We world we that the why around growth timely so the adjustments all sales the confirm actions having both players made profitability, is things nice before

Dick Ryan

How you at Okay. look whatever opex, coming going the next over opex trade quarter. in should the few quarters? forward shows of Dave, sort on and through we mentioned

Greg Woods

we no--let’s shows or Expo every than that to There’s typical years. Pack this sure the but planning Label the are other going several mix, the that the really our only Again, not--we put is drupa third end That’s expenses we every that’s We thing shows no we that’s and three this flow, high attending is so those, don’t trade big two a of year-end exactly on would it There have. to make add which new predict how year. our we’re see, crazy that in wanted second there’s to show. did quarter, for be in the show participated and way. years, in we four quarter. drupa other then us, but are Expo

Dick Ryan

Great, Greg. thanks

Greg Woods

Sure, you talk Dick. later, to

Operator

turn will remarks. Woods I call At over you. closing Thank time, the for this back to Mr.

Greg Woods

look on here you We you to thank progress to well us you Have day. soon. we’ll Okay, for good keeping talk morning. a and our updated forward joining this

Operator

teleconference. Thank today’s you This everyone. concludes

You may now disconnect.

AstroNova (ALOT) 4 Dec 192020 Q3 Earnings call transcript