ALOT - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the AstroNova Incorporated Fourth Quarter and Year-End Fiscal 2020 Financial Results Conference Call. Today's conference is being recorded. At this time, I would now like to turn the call over to Mr. David Calusdian. Please go ahead, sir.

David Calusdian

Karen. you, Thank and everyone, for us. joining Good thank morning, you Greg President company's and Hosting Financial this and AstroNova's are call the morning's 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 note go AstroNova could you statements to materially, within Investors company considered and private a could do Reform obligation of as involve the actual If these results call the XXXX. speak as Please forward-looking XX, not except forward-looking Accordingly, securities of XXXX. section historical risks The historical undertakes a Act forward-looking today's These website, are during that based copy, www.astronovainc.com. uncertainties. differ not statements statements by today, March that only on forward-looking statements have made of no statements are law. facts meaning Litigation the required of that statements. the Any of update assumptions number to are of

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

I'll now turn over to the call Greg.

Gregory Woods

thank joining today. us for everyone, you you, David. Good and morning, Thank

extent announced had a affect product to halt entering During the than greater production identification Boeing to Asia fourth quarter, grounding quarter. complete in expected and our continue as the XXX December. we margins the worsened with softness This, MAX a in revenue combined the situation

particularly of bring XXX demand. I'll of have several a MAX, the uncertainty of in to talk in result the just impact moment. the near-term the As actions that with about more revenue more we taken shortfall, costs line our and a outlook

products quarter. the quarter This the bookings double-digit, continued from our for Product led the barring row. this in a our favorable overall continue, positive growth we a acceleration bookings The momentum situation. are the Identification demand the that pleased to in side, our second But short-term for Identification to this in virus first, wake on key bookings response in expect impacts momentum, of segment Product way several fall to further on we post the and trade to see contributor was the at to COVID-XX quarter-over-quarter shows

growth In label addition on-site and the demand positive to these for profitability. and printing long-term us trend trends, market printing, towards color label growth secular position for digital well the

the remains Similarly, long-term our potential despite trend is aircraft COVID-XX short-term global that term issues the travel. for on market the the commercial impacts view MAX short air very and strong,

focus to we in see talent significant and growth to streamline our opportunities business. technologies improving in operational also efficiencies continue long-term on objectives. new operations As we invest company, future our segments our achieve continue of and for the both global our strengthen strategic throughout our the We

take In the profitability necessitated the lower our business. action of we to sales that short term, volume the improve

reduction initiatives investments these that cost we in million cost result, $X.X range like strategic X% that the basis. not other on annualized million of headcount affect to reductions we our $X reduction to a As expect do a emphasize an and initiatives. key our I'd implemented save to in

and strategic for those our We profitability believe value generate AstroNova that on shareholders. initiatives growth focus to continue we and for will drive

our look segments. at a Taking closer

fill upgrades terms are us, to both MAX impacted until As This service. to in aircraft-s to has needed continues I retrofit mentioned, of XXX the be to as grounding returns Test the maintenance the & well that as affected and and installs, new the of deferrals Measurement void XXX optional MAX. by printer

visibility clear return likely be sticking to prediction to will We, not its into the this the service, expect drag the to nor a of is midyear significant fiscal schedule. ramp a of post therefore, we timing up year. Boeing actual continued While have on service, current return throughout do results

discussed for gear. calls, a military few multiyear delay past related the networking contract and upgrade I avionics of our On

this industry did additional QX, not is any on drive will we we growth expect and later in when in aerospace secular contract believe year. made finally Boeing situation that While ship resolved. we the Despite the shipments product-related already to contract the to in QX ship trends strong have releases long-term in near-term challenges,

the capitalize and returns. prepared are to to products making be right the right when these have market We on the investments trends

of highest cockpit in products, in market. level performance functionality and particular, the printer printer offer latest AstroNova's the

Identification by few customers affected a weaker In Asia in segment, of from in softness a be our Product region. the demand sales as that continue result to

completed to quarter, response integrated a to management we effective for global across global the the and a transition our structure of improved During globe. more supplies from regional provide global sales now ability our have the dedicated organization to greatly rapid We hardware, and with global organization customers an service. leaders

products are bookings. and driving the well, performing Our quite has help a been in in improved big segment this

off new and feedback. with a Our is start positive TX-OPX to great very label Trojan demand strong initial

and encourage paper boxes, sold initial we print high-resolution production to directly beyond in overprinting allows images customers wooden us planks. postcards, market technology its at range of run packaging in applications, our breakthrough a video and this fact, next-generation you a of or broad of view bags new I January. that the cardboard, highly system labeling including OPX direct features fabric space. is out even taking website color product the identification bags, to into products, demonstration durable visit our In The a ink digitally to

developed engineered QL-XXXX, customers a have we to labels we label products new options enables the stand-alone end This that gain to gives label own the and ribbons TX of such transfer the their Through their in product all brand specifications for marketplace. to label tags durability broad the available quarter, of labeling to owners. to A QL-XXX, provides feature flexibility. Launching customers. of platform brand At the in-house thermal materials, as a TX-C and GetLabels continue produce traction Trojan blank the identification quick label and unique of just-in-time fourth new resellers launch Other GetLabels. of the announced and brand as us range to of and functionality the applications. aesthetics, our with a cover hundreds requirements GetLabels,

upgrade to the David Before results, review like to over I turn call on I'd our an to global program. our update financial provide IT

near we are our conversion and and ERP We NetSuite the this quarter. the expect year software to progress will company-wide hardware time current of state-of-the-art be to of upgrade fiscal We're telephony result products unified with We're expect also end this, excited competitiveness, cloud-based in infrastructure of and a on global productivity fiscal endpoint phase software the to on by in of this middle hardware to updating good completed we in reaction and domestically and the the potential making and initiatives, designed significantly our of beyond. which the related of complete hardware, track these IT the improve XXXX expect year.

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

David Smith

in the $XX.X $XX.X good $X.X came this down MAX. of versus year, fourth on much Identification strong morning, in mentioned, fourth reasons primarily Greg everybody. at million last the Product XXX Greg, Thanks, Measurement for Boeing decline were that the period and was million the same last was for the for quarter. the weaker Revenue million quarter quarter million, & Asian because Test $X.X segment revenues our and

the For year with again, the up Measurement or Boeing. do, million $XXX.X revenue was million million & million $XXX.X X.X%. situation full $X.X XXXX. with of because segment XXXX, down Identification, Test compared was Product though, for was $X.X

this quarter has minute. and indicated, cost, result disappointing will as Greg caused in a I us to fourth reduce was As mention

quarter of total revenue revenue. was Domestic revenue. total $XX.X while million revenue XX% revenue million. of of was million, International was Year-to-date, also or $XX.X or the revenue, million in international the revenue was domestic $XX.X XX% total $XX.X XX% fourth

was quarter million Service compared decline as issues, to $XX.X of lower million with with was million, to the $X.X to $XX.X in compared $XX.X result the other in Asian and million. revenue aerospace $X.X decline due and the was Asian the aerospace compared The shipments. a supply Supplies revenue Hardware revenue due printer primarily million million revenues. again. $XX.X

points of and segments. compared function We adverse of of basis million $X.X reported aerospace sales gross income both in operating from ago. fourth year a million XX.X% dynamics to margin $X.X in quarter mix is of fourth lower year's a decline to loss last The operating XXX quarter a

mentioned Net share versus quarter ago. operating earlier. to XXXX for year of Please profit fourth reduction in for XX% income was share per in Greg loss net -- the net Full related note year that diluted $X.X per was includes in severance $X.XX that the $XXX,XXX $X.XX versus our the $X.X force million about a quarter costs million XXXX. loss

the had In customer-related customer, costs addition, which relating expenses. bulk from settlement in the certain hit nonrecurring aerospace of product we an our disputes expenses expenses and operating for $XXX,XXX of vast reconfiguration unusual about for to

expect the incurred $XXX,XXX will this additional first in severance we in charges current We about have fiscal year. quarter

per per net share compared with or $X.X million $X.XX million was diluted or ago. diluted share year Full year income $X.XX $X.X a

CapEx depreciation compensation million $X.X and stock-based year implementation. ERP with was This million on quarter, another was amortization was spent $X.X NetSuite while $XXX,XXX. the Full $X.X normal million,

statement, of service of the operating are a The both but We in large in decision Greg arrangements $X.X implementation infrastructure expenses, cost to long-term items. and primarily certain variety million reduction the XXXX million. delay of and product specific be including the sales ERP year number and consulting the include of development also cost expected across a that $X the full and to wage-related they small expenses, range other capital mentioned income expenditures, upgrades very to reductions outside

is of $X plan in margins operating million to and in half in with lower range the year-over-year, million roughly favorably reductions roughly of current expenses half Our a expenses. gross $X.X those impacting reduction

on turn call I'd situation. virus I the Greg, Before to touch COVID-XX to the like back

enhance or and outbreak As that's among situation reported of in release, teammates, our this the we've our time, to closely have we'll and monitoring on clear our for any Island, do to this potential any chain safety as people viral workforce, we're monitor we Locally, demand we've actions further impacts result closely. the and chain. mentioned customer we and continue supply not emergency a state Rhode health of impacts. declared the morning's of this customer taken been cases At not our in supply press identified

for I'll Greg back the to Now turn closing comments. call

Gregory Woods

Thanks, David.

Looking and resulting reception Product positive quarter. fourth ahead, in the are customer performance excellent the to our bookings Identification new we encouraged by the offerings,

our a and of At breakeven same our to us optimistic process. time, result We profitability bullish possible our our new business. we cost are opportunities term, reduce for enabled Longer are fiscal sales sales in and improved that more by have effective we level structure sides reduction us measures made global on as secular the even trends XXXX. the forward also will more efficient into position both move about

on focus we business, order the opportunities. As wisely are capitalize cost we also containment on investing across these to in

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

Operator

[Operator Instructions].

will be Our from first Samir Patel. question

Samir Patel

Congrats on in ID. the nice launch product

Gregory Woods

Thanks.

Samir Patel

Yes.

So I've questions three here. got

into have you production, color I translate for would ahead can et production expectation The their of some you aerospace. would visibility. Just the with first some how Boeing production, of is of of on of MAX timing ramp builds your kind in I and MAX-related cadence if know that. behind provide along your new and revenues of talked XXXs understand in give builds revenue, cetera? general, lack about kind Spirit But XXXX. can some that others over

Gregory Woods

seen, advanced a the Most need line. we've It's of mean, half different function that. bit printers. probably down would of on I think, the be a there to a It's what's little for coming some I production difficult dozen likely, predict, estimates course.

or remember, buyer the BFE -- Boeing XXX, furnished the with If this you equipment. is

make need sure them. associated to have right that right the we So printers the tails with

follow the I Again, So have arriving. advance emphasize not typically half in typically, would air a this It's this that staff we it's point. if months, things some I know just-in-time months lead in these up because case, a the don't several start production. and say, not the those exactly thing. at in It's typically of to

Samir Patel

here, talked offline, plans impacted take the and constraints, and unwilling Okay. business. previously to MAX-related talked Also about making upgrades airlines in kind of you've guys you aerospace, supply spares your which

here opportunities conserving With coronavirus-driven maintenance additional and focused airlines on drop demand. seen deferring the in passenger you Have cash? or

Gregory Woods

as the seen to of probably we've and airline like travel. a a But we No, the looks Europe, and than China. bit airline of whatnot hit. haven't place That's other seen I mean, yet. China to within going impact in that hit take that's biggest anything yesterday, now

of CEOs, taking does if of changing the need in talked impact any So and thing aerospace mode and Commerce are service. mentioning that of I supply cockpit airline the in kind that They're and They with of it's D.C. no operation exactly. planes would of One on their to was out tough at respect side about to to you're don't less think, one business, I paper aircraft flying because Chamber less. to guess, I week event estimate the haven't directly us printing I ground. on print. the our the the planes last

-- So impact some probably that that will it have does way.

Samir Patel

question. Okay, And understood. the then final

You pride allocation. guys on yourself your capital

So can you to something? to stock decision talk or back about pay maintain using buy acquire versus cash dividend down the maybe debt, the that

Gregory Woods

Yes.

exactly they So what's back just to point, of and this the meeting, at had and meet capital also we the comfortable one dividend. reviewed And can't being And Directors in at I question Directors the meeting, our but dividend with the felt pay forth. though always Board is of said debated of needs it's this on Board week, comment course. able

Operator

do a Ryan [Operator Dougherty. question from coming Instructions]. with We Dick have

Richard Ryan

Greg, and cost or segments your I or on the one both wasn't reductions. other? sure that into headcount Is more across

Gregory Woods

at could but we support. programs affect you It We work, have a long-term took was a costs basically look never things, I to -- kind these and to took like do at mean, a our customer or of look mix. we trim our

affect the -- did individuals was sides, functionality So not both it the based equally, on involved. really but it was different of

Richard Ryan

level ballpark breakeven, now? you you lowering talked would your this And breakeven kind Okay. about where of at

Gregory Woods

to I don't if publish David we comment normally don't We information. on that. But we know wants -- disclose that. don't don't that actually

David Smith

Yes.

Richard Ryan

you. one of cost, Could that for split. the wasn't one that how just again? kind Dave, sure And I run on $XXX,XXX was you through of

David Smith

cost operating than didn't go talked Yes, The the little was, statement. split sort in sales, bulk as a was bit between expenses. I it where was but any of about There the operating further I primarily of in of on expenses, income it that in hit and that.

Operator

be Our Samir will question next Patel. from

Samir Patel

I had of others seem it like on couple doesn't else. anyone a ID, product since there's

those that translate the of the do long-term quickly more over how year? a to of course more is, bookings one Is kind of So typically quarter-to-quarter? that revenue? thing Is

Gregory Woods

new ID, about exactly products in the What just product or general?

Samir Patel

strong bookings to but You just -- related talked in the about for products? new that general, Trojan specifically

Gregory Woods

that. there's Typically, of couple Yes. tell about a things can I you

supplies that. turn behind but products pretty then So when typically, come out, they new lie quickly, the will

biggest So someone will get printers. competitors a new printer. are commercial Typically, our

labels. they have in-house So stock a of

they're and burned fairly ramp as X their that ramping use production the full learning product, new to So new typical That's production to from of the see of they're up we getting curve kind us to after full buying months a supplies. through burning in low -- load, it X a level. supplies of to Then while then up production. printer someone it existing terms

then So following. the the relatively hardware [indiscernible] And quickly. supply is

Samir Patel

That's helpful.

really only hardware probably bookings, X And guess, out? supply months they're in so those ordering you're not I reporting because

Gregory Woods

market, that And I means up the are in dropped both report Asian just Essentially, for complete is the significantly. that deficit and guess, happens We in back these what we're people customers ramped bookings. bookings as about online. coming you of being no. kind up, making no, talking that No, have off more the whole

ramp Just placing the a they generate more supplies up. and of the units as basis. general they on regular us there more people out kind printing globe, then And across more

Samir Patel

you XX% do like Do sometimes you not of for something your XX% your number license relative how you hardware supplies have may much have pick a and unit disclose, size you're initial typically maintenance or that like for kind just kind terms the a fee, or it with -- -- a guys hardware a like up have this maintenance to software, of of like it? in or like it does willing on you may to regards be have number you'll depend Do unit how be. but whatever kind of the to of

Gregory Woods

we typically of service with granular XX% I it. side X% about don't XX%, get things? the the on that we mean, Yes, to write

Operator

do coming from [Operator George question have Instructions]. We Melas. a

George Melas

little line. you Can Trojan product a bit talk your about

of acquired in February You it 'XX.

of sort now. it, pretty -- of for products, a of you bit under little but good revenue. story think X, you how years little the of ownership? evolved has I it you've X.X you give us Can no some when So almost a a Can had purchased and bit of was sort give us there that your

Gregory Woods

George. first track. we parallel and ran XXXX, lot of cross-selling sure, QuickLabel the Well, months integration in wasn't it or as that Trojan between had a the kind people acquired kind the a stand-alone of Yes, an is you It's through We correct. operation got And it, effect we X the of X went then beginning phase. a it label. of we

actually in integrated later it the team. year, that So fully Identification with Product we

seen And placement really well that ramp-up generation. as there selling. one out it's of team a point, as steady their So that's since nice, we've in new products products

TX-C happened that. So after the

Of I happens. course, TX-OPX today, the just the one mentioned just

lot got right that so they're well. now design as of things So on future fantastic there a team a the out that they've working and for

those So are received a the it in full our we channel through global market, put well basis. and products on

up person founder is As Mikkel, that of the fact, a of now actually global matter the our who heads hardware. organization,

So Product we on that all have the the of selling side. products Identification all -- in he's selling that space in-charge forward

George Melas

expectations adoption, won't there or you what's can but perspective? have a of us from from of revenue been? those product sales a a perspective sort of sort give sort hurdles of to whether that met if might sense And are some I what guess you development line, say the product it And

Gregory Woods

having with identified Yes, channels. our focused of getting of mainly kind channel that get overall was team, different not and X it them kind and sales

the after it's best ramped it expectations with to meeting then characterize way is, our ever first since. in up slow pleased start So year, let and very We're the a me it. say, probably

George Melas

market much of Okay. on on it have very sort that? sort the of sort commercial Or product And I printers, you focused really the you're right? expanded is through focusing available still of introductions? smaller think

Gregory Woods

Trojan kind production high it's call Well, then is you -- quick it's takes of have it that commercial printers printing small tabletop, really -- could the label the label the kind hybrid, a a if that. a was a and And very brand yes, of end into press. market. tabletop it bridges They us a

is really of -- box, brand label that's but example, package, print or nets large really commercial for very Trojan not even owners, large So directly the companies, the flexible there's on also printers us. global new packages, wooden that for for end, the TX-OPX, brand kind Trojan space a label the where involved. higher that on We boxes. more a label In

whole that's new So for market us. a

George Melas

maybe a for just And understand how just you reorg, the to us high Okay. very sales going help that's levels, question benefit guys? on

Gregory Woods

again? biggest coordination? can The better has you been thing that say Sorry,

George Melas

trying I'm minuses what understand of sales the to structure. are And and the plus new

Gregory Woods

really don't mean, in Yes. I we see it. minuses

the in sales Latin kind this a So advantage Asia, is, a of it instead in way America, leader leader of of doing having leadership. some

and leader So not coordinated. -- Asia rules, own fully their show each own -- one running Europe completely a and it's in sales but their making and

the side we a we type global the of you we XXX we can sure can when business or that same much issue, expect that operations on better type a basis. Now world, get it little It's things, large company, service, that. terms treated the make all you it's might they they're A the of and too. communications properly notice service like in supply global person really have it that support on world, get as and basis, It's of and around say, follow-up of hey, get service And one whether let's the customers, very evolved in sure faster aware we've sure or hardware now make escalate, make on in-charge it customers Bangladesh instant you then can instead consistency. for that. -- this, have Fortune the people as and a over then are to of waiting the we have of

George Melas

geographies. Or Okay. on purchase that not is so that you're there a that a big something Is expand? to of follow-up is that, part large are the but in that big, business? And multiple trying just very customers

Gregory Woods

products, is only have these they basis have it a No, and or every and of a they what year, not to types number a the and need when printed. in those and exactly was the was Typically, printed, that like product, production products And whatever those facility. company, it they part making customers on want labeling have or on goes more it's medical our more chemicals of a and business medical but we things a significant those global customers. know they products consistency, to of

and And so they've ability. got excellent choice

Operator

the queue no speakers at over further this to to turn for like time. showing questions I'd I'm the closing in back call our comments.

Gregory Woods

of for all you you us quarterly speaking thank next Have look And meeting. road We again or seeing Operator. you, a to on forward at joining here Thank with the day. you today. our good

Operator

and this Thank today's Ladies teleconference. you. gentlemen, concludes

You may now disconnect.

David Smith	VP, CFO & Treasurer
Gregory Woods	President, CEO & Director
Samir Patel	Askeladden Capital Management
Richard Ryan	Dougherty & Company
George Melas	MKH Management Company
David Calusdian	Sharon Merrill Associates

AstroNova (ALOT) 12 Mar 202020 Q4 Earnings call transcript