ALOT - Earnings call transcript Q4 2021

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Operator

Good day, and welcome to the AstroNova's Fiscal Fourth Quarter and Full Year 2021 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the conference over to David Calusdian of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead.

David Calusdian

Thank you. 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 financials, Greg comment will be your comments operating the take will management results, to discuss and then on will Greg questions. the happy make concluding company's will was you should copy By today. received now, of the issued a have earnings release that

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

the AstroNova's referring depreciation, and amortization share-based call, to the further makes and adjusted EBITDA. report today's with before be and the forward-looking statements Securities in taxes, cause differences, Form and interest, Exchange on For company filings or please the see information the risk factors will measure, management On factors Commission. other earnings non-GAAP financial that compensation, XX-K the adjusted the regarding may annual

core wish and comparisons and can today's this its AstroNova investors the of measure changes and Greg. reconciliation gain call release. a results non-GAAP helps earnings over a the other is AstroNova both also in to And most company's understanding available on of this non-GAAP measure believes that, the A turn who between that with GAAP comparable measure I'll to inclusion directly to GAAP companies basis. meaningful in help investors make of the operating

Greg Woods

morning, challenges, spite long-term everyone, team the Good million continue to initiative and strategic joining David. accommodate the in marketing the aircraft. areas suddenly Overall, created rapidly you, quickly new grounding the we you and found to virtual Product our objectives. segment, caused well our of content tools interactive the MAX customers Measurement grounding for & and workforce, to Boeing a strong by with pandemic and of XXX remain Identification themselves. reduce us. challenges and margin Thank progress nearly make realign in we XXXX move launched In environment which our thank performed significant fiscal within AstroNova on these in focused liquidity the in The our control. our we business. to our other ensure We costs a gross Amid comprehensive new on and increase that $XX MAX revenue adapted the unprecedented digital COVID-XX Test drop

XXXX, despite However, $X.X expense, operating or and AstroNova level decrease is in with a to million, overall revenue a through basis, on basis. million company year XX% a which actually efficiencies, fiscal combination focus, full post a total able income reduction increased year-over-year was in of $XX.X on of

bottom of $XXX,XXX earlier. we income down from the net reported a million year On $X.X line, year full

However, $XXX,XXX increased adjusted by EBITDA year-over-year.

folded With number just as year, color Product direct-to-product to shipped printer. of in by in part double-digit in year’s year surfaces the the in services the last to our and the revenue the Product driven market opened product year-over-year on up record segmental came eight color XX% highs fiscal TX-OPX to a across solution marking and than the both to Identification years, overprinting ability to growth. for straight two planks high-performance launched printers range Now we boxes year, paper increasing $XX.X revenue board strong years a in meet of turned print million, for Its with bags, ideal over owners at is to the adjacent quarter from known the segmental turning end across the strong Full the highest hardware hardware, notched $XX.X fourth and more percentage results, revenue and to for brand last demand others, TX-OPX growth supplies Identification in and printing. and continued markets. full another Product quarter other for QX. Identification million compared wooden many demand customers of TX-OPX

sales supplies business. our Our printer drive

Product year. full the in XX.X% noting quarter XX.X%, operating segment. compared the that It’s forward. and of and X.X% year, this our record fourth the profit margin quarter fourth the combination with profit, a record for So efficiencies sales segment, was the revenue business PI the of to XXXX for segment for moving The well is both an quarter portends of in operating the translated XXXX. worth margin supplies cost the we hardware fourth higher fiscal for saw in gains posted which for

now in period of $X.X quarter COVID-XX the same to compared adverse pandemic. the the grounding MAX continued of & of in and fourth falloff demand due to million the $X.X to Test XXXX industry Turning fiscal Measurement, revenue million impacts the to aerospace our the the to XXX dropped due

of the month XX on we Boeing’s to up that right quarter-over-quarter. The Early airlines hopeful has per XX recent the due flying China, shipment, at direction. forecast early the but revenue increase orders are moving However, to least sequentially was from rates seeing pickup current carriers ramp of to did the That part increase now And in XX% a are increasing year. there MAX. T&M signs commercial in per demand China MAX and next a military soon. in in the weeks, board aerospace except is month in come production placing MAX is are number in that been There this XX well, and business will we’re main repairs supplies to markets, two of to business. major drivers in factor especially service are One in aerospace all as MAX’s return our recovery. portion the and QX,

The the due to of of factor number is other passengers rollout several skies the the increasing returning to vaccines.

least the to of health U.S., has one the in at according received population already XX% officials. dose, instance, over vaccine For

to While nowhere the has near U.S. pandemic airlines returning levels level indicate the reports that pre-COVID its began. reached since travel air yet, are recent highest

an of mix, total XXXX. looking from domestic for for On revenue Southern Guangzhou, port at in accounted earlier. also Now Free note, XXXX, XX% Zone. compared XX% location Trade complementing XX% the our by XX% in to revenue in of city revenue we We strength revenue related Shanghai’s a approximately expanding fourth same geographic are in China of year total in increased quarter up fourth office EMEA, our the the where of period saw recently with particular in in team. marketing quarter opening enhanced fiscal a our we Pilot presence the International

commitment members aerospace Before our for role and business. and handing the call the their an deemed first to David, AstroNova dedication team around was fiscal Because to globe for critical of thank I medical the XXXX. industries, essential in want the play we

COVID-related a global of outset, precautions. allowing worked vigilantly another our have meet demands which pandemic, to All entire requirements safe, From us fully the necessary That incorporating of year is to keep to and past team, no to facilities had and and themselves customers. continue the credit the has over one our our remained the all severe incidents. health operational we’ve the of safety throughout

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

David Smith

morning, review Greg performance. Good our Greg. of provided everyone. Thanks a comprehensive

remarks, year, Consistent through year, the grounding so, less the that in in pandemic. in revenue our significant decrease Product business, XXX to So, drop and while Test prior $X.X expenses, services a XXX gross to operating million we percentage a the but XX% indicated for mix, XXXX. strong by the operating the points. gross from On process the a But adverse very down improved is off with we trend margins a gross better. exceeded through million, & impact digitization margins and basis in year. for of key just balance provide mix fiscal we at X Identification call standard profit standard MAX of within line, goals operational from results I few – number expenses it that all results the to directly or was margins, a The $XX did some the other the with the swan on highlight quarter revenue. factor cost I’m for points weather of about the sheet. workforce Greg’s about reduced and reinforce initiatives. reduction basis reduction still that that to realignment, the by only calls, the on the going full selling what prior basis, of points. in along expense The other were gross points would down line, margins points, are the segment basis P&L the To that income of reductions was fourth Measurement XX Eventually black revenue of like were were a outside year is up because margin was the comparisons, was and up And but and and the from make seen with two attributable difficult it events context nearly

fiscal the of which remote likely trade to for ability quarter expect remain travel cost in with that of initiatives show interaction increase statement We EBITDA our the income the with example, made fiscal reporting customers’ a degree to is adjusted XXXX. XXXX, for this further of as to travel the the them and EBITDA, returns, together or to in-person. the future on in adjusted in visible compensation. portion will acceptance as we’re only significant Beginning reduction virtual Others, depending expenses transition share-based we’ve opposed fourth of

the to quarter Adjusted in the press reconciliation $X.X only to million of our the compared income $XX,XXX of very of outset slightly XX.X% of fiscal and XXXX, here, the calculations used are fiscal period in that or is in release, the revenue, adjusted a debt from XXXX. fourth EBITDA at EBITDA included same covenants. in net the said we As was it call of differs

compared adjusted million, of For of the full or in revenue $XX.X X.X% revenue, XXXX. EBITDA million year, fiscal $XX.X X.X% was with or

Turning to the balance sheet.

profile has the is which at of end of loan year the XXXX. Cash Cash the million, totaled equivalents $X.X down equivalents excluding fiscal Debt at million from $XX.X the year end end was at at of first improved million. prior PPP fiscal the were fourth $XX.X dramatically. end of of and XXXX liquidity and Our end million. at million the the only XXXX the $XX.X and quarter quarter, $XX.X

while $XX which improvements. from enables term the million appears a bank we with increases should significantly it, comments. loan $XX which agreement $XX With in X.X million that, provides restrictions runs fewer amendment a need our so-called structural reduced The for increase some on through our more announced also credit also to the revolving financing, other filing additional of At outstanding for access end in it of and to better have back revolving improves and into which and term. the and structured million which details, bank facility credit turn a to in availability closing million facility, or me entered X-K includes credit The million, such we we debt accordion the this agreement, a covenants let addition credit nothing the earnings As other streamlined accelerated was an $X.X provides the just call XXXX, function release this bank and morning’s September arise. loan morning facility. within our built Greg uncommitted, to term down years closing, and payments XXXX for substantially amortization $XX.X and fiscal

Greg Woods

things least innovation, navigated growth of technology within We of coupled headwinds the external our The product We year new one of a on and major per remain a with XXXX disrupted launch range by to the our fiscal challenging engine have David. investment innovations focusing in not at the pace ancillary Thanks past business. year, our control. on products.

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

Operator

[Operator you. you, Thank Thank sir. Instructions]

Patel with Samir Capital. from comes question first Askeladden Our

Samir Patel

guys, on congrats things year, great a considered. all Hey

Greg Woods

Samir. thanks Yes,

Samir Patel

the capital? see get you X-K, allocate actual the any will I but the once agreement remaining on maybe restrictions off, are in there question, the to loan be filed, first paid credit So didn't guess PPP your I it ability

Greg Woods

Nothing significant.

Samir Patel

Okay.

And there. big that's that, pretty mean it pretty seems so you've built some a big, I in capacity with like

at looking kind or out as of of side are thinking you come M&A are other So COVID? the you what you opportunities

David Smith

critical. one going a in we'll as to have in we take then we'll if needs first business, at that, support Clearly, be of and Greg? well. do crack business, want chime to I'll to is also a ongoing that's again, those. to sure. be the to we're And opportunities, there that need that capacity external to beyond can grow some to that enough sure At is capacity point make start capital Greg the requirement. will working the and other operations. are that I'm some the thing we reinvested support growth number course, there level handle of Then have capital

Greg Woods

Yes, take looking at on to capital answer that. a best horizon a the There investment long-term maybe in going for it. at allocation is simpler to we and typically just short-term some obviously return little at a to that be look manner, is looking things a medium where

the growth acquisitions, really and have along active you number know applicate growth a As past that is the of product acquisitions that that our our with we do of through and organic development we business. in have we where of done strategy an pipeline part

to it'll I renegotiate and further growth place this invest that able the us this great we're business. accelerate the think of we’re where or opportunity But combination agreement find and fire a always acquisition a investment our if the the and good existing it's to power So bank about thing good looking to plenty for a be capital. we gives in best it with is agreement

Samir Patel

at And some discussed back. stick saying of of I the able rate talked so, little cost that MAX to kind a you to on before. example where come there, of to MAX and it of XX opposed margins as I about of bit Great. mean, for some to going may sort then Kind obviously the color prior – it's on more rates were back any get actually reductions, mean, being has

you'll when your you So the like profits I'm think – guys aerospace just that backup? kind curious, evolve winds of part will as kind how of

Greg Woods

Yes.

doesn't keep critical of drive of that to a cost. big We specialized business. of a part the it's of very the kind So aerospace people place, – part had a mass a in

cost the as of well of more in it. of product as So reductions general business, kind identification side the happened

not for half will what think trade again. spending is probably I Those very reasons. in open So the again, been travel categories you will dramatically up shows opportunities the open have two see reduced us will obvious much, up but first for

On which places, the resources right we're the is product respect utilizing aerospace opportunities. But side, some margin in general, depends high business in to of some facilities. which kind it with and it a our under areas, on now

is XX now it's that a is, see it. back of backlog building some nice last again, So that is improvements the that of good margin perspective about fact around airlines well passenger Boeing as as which and are we'll at a back we'll that it's flying year, the world looks known to keep little that see. MAX, on a and the But well. in that curve hopeful that's segment higher what travel end U.S. ramps higher the sign, close predicted records posting business which in up, like our plane pretty And good they've I people it the more a that I what think so got, of think than eye there

Samir Patel

Yes. Congrats. major And the product you last then new mentioned, the question introductions.

toasted? talk usually XXXX, specific us or bit to about those you’re You keep more, to little a going call for out you anything want

Greg Woods

season. but for that typically I'm works I we show has – bit of the in fall the probably one little it past years, in in releases should the identification a like now, keep say dark going those right to product you anything trade have

out in things look there PACK So that like that's later, maybe the at is but EXPO, works. I'd say, bit a – that, for little maybe keep a

Samir Patel

it. Appreciate Thanks. Understood.

Greg Woods

Thanks.

Operator

Thank you.

Ryan with Colliers. Dick next comes Our question from

Dick Ryan

mentioned you you QX. order Greg, aero Can Hey give kind shipment and you. magnitude of completed? us military was of that for it or an ongoing in is of still Thank it

Greg Woods

of It of that Yes, contract. a as was lion contract have, comment an up. it's magnitude, far specifically. on shipped order part the I it to wasn't mean, multi-year don't share ongoing I what want that of certainly as we a

and agreements, there these the think I earlier give pick I can course little we the unpredictable they up multi-year think mentioned in exactly releases. are us last some bit year, during year, I when of calls, a it’s the of

an hard some how to good we working on and idea hitting not it's them going in So have other they're that's ones call, on annual fairly to drop quarter, of this we're a as well. basis,

So hopefully to we add can that.

Dick Ryan

Okay. And airline from sense of max, it's you time more the to a side, just standard there, slate had them? inventory offering any Airbus, decision, obviously ship clean you Boeing of spent bit or the a with your inventory the little on are your starting aero kind printers kind of of with

Greg Woods

lot Yes. because Typically that's furnished of our a we buyer printers, equipment. keep inventory of don't

So actually Boeing, aircraft, particular printers can purchased so going as us we to be installed they production airlines this the for on tail. the and is those that ship airlines their into for production

are starting we for a and Boeing. on typically of so emergencies but We ship to So don't that, lot for keep don't order have keep visibility minute military, they back to they what the for in comes like to see us of some the inventory printers. get airlines our things they last from

Dick Ryan

Has sense are either airlines kind upgrading viewing installed, of printers old are printers decisions new post-COVID? of different that airlines impacted, COVID any already making or however,

Greg Woods

continue, superior do couple our newer the XXX% of yet, where but Well, functions we're brand of some we the I of number that to post-COVID see last impact features the mean, actually ToughWriter has of announcements printers. and airlines acquired. would we brands upgrade we'll of had that kind our not there, year expect compared other a and We adopting program

airline had these multi-year But potential a we for think is printers that move weight of COVID that process, airlines, to newer our the number old is things reengaged the And upgrade a migration more we'll a model. with see this of as one see of biggest the to people it's to the thing in works we several another things will their right I can a to slow. our the weight – in tend So half to prior deals industry ToughWriter, fairly typical printers. competitive about of

of So now few make able And on seeing as we're a better those they're already. reengaging of kinds get financial airlines to with that airlines we're those with decisions. now, they footing, some

Dick Ryan

Okay.

of ends we has supply boost the I plastics, supply some both down inventory. guys? obviously electronic the got How for and chain hear side line. the we see hear you've that impacted you On business, didn't of of issues up in shortages, any

there, So stockpile you're your of are seeing building some chain? kind but supply how you

Greg Woods

We're so seeing right, supply in delivery. The things huge thing things link is a that out in of our XX some especially good areas, are so chain certain the that is, aerospace products because had only dropped off, we quickly to long, six about fairly surplus. month – a

good way. thing, any the really stuck these significant purpose it's downturn, this it there, haven't haven't because pretty I you high kind So in disruptions do but docs, year us is seen right? stories, or shipped things this quite of a some to actually have we that actually surplus to With be a the critical it's are trying the we're on into that good we transit We thing big somewhere. have didn't Ships times, as we are operations too. in sitting things it disrupting things think for been of because our out all cushioning because they're a a turning in because in was And seeing. get buffer. as Those case we sea, out of know by canal

Dick Ryan

Okay. Thank you.

Greg Woods

Thanks, Sure. Dick.

Operator

Thank you.

question George MKH Melas comes with next from Management. Our

George Melas

you certainly fiscal year-over-year. aerospace, you Congrats whether back to year, a that that back, million interesting year. Greg you whether of $XX think morning, David. Is makes XXXX? question was an XXXX noted down there business or doubt revenue Good can of level go that of anything Hi. the guys go a Kind can I it good and follow-up on sort on fiscal

Greg Woods

Yes.

through correction, went quick lot there. we quickly a George, of one, Just numbers

of which is So $XX.X Measurement by segment, course the aerospace, Test million. largely & decreased

the So that was hit. aerospace related

is to two there, just what kind who grow couple ToughWriter that. it one back we those down are overall to to million and to that to people The brand, and I thing to that. brand do that tends to for a Our view, on higher we be people know of depends better talked of four was margin, between going revenue the the bit people But little points a years volume Some about listen This $XX.X are main expect it's two is of our saying year-over-year, clarifying your kinds get levels. a switching you years, therefore, predicting like but product back, do AstroNova you, our from question us. right?

to people more to been switch our improvement the that that's overall line. brand, So bottom

the we've costs us be help and thing that's as a things efficient this on So other more reduce having year, few past things going learned to is, well. to

you're see ramp margins higher we level. back back to as fairly going get we're back up So to that that up, confident the we as way on

you'll there, kinds to get plan getting predict. revenue we stick of if right higher see to hard whenever back now. in we that have numbers, the can So, place it's we to But margins those

George Melas

is And a a or revenue years? three share last from any the perspective Okay. with Airbus, market there airlines change from meaningful in with perspective, two

Greg Woods

we a already. have bit a up market We of share, share picked substantial so market little

the before, to, of for never adding like like major Honeywell other what's networking now direct but world, mix don't supplier a to to XXX going OEMs, a of it forward, the example. one expect companies added all is the lot happen to there. the some kind you and Telesis and we’re game products and airlines our that bit. we've we talked supplier we're right to the in since tier And of a So I products about to little out our this really a going plan know decrease,

now of and to is products upgrades adding kind on our mix. more So the the really focus

George Melas

OpEx for significantly – came then Okay, David. great. – cost quite question year. coming a the David, down And the this down this came

bit. What the perspective? in do of OpEx a year little sort from think coming you picking back sequentially I an expect they're

David Smith

able What we the We're to fair we've we a on our there be letting We've OpEx cautious specific are expenses bit that have and to that up. will any and expectations. this us some pick a give coming not back stick reductions know been expect I'll just people reiterate obtain to expense to that available going and do to operating year. said little is been guidance that probably portion of

So been of it's going what reduce. be not but we've We'll to it'll substantial to be able portion it. keep, to of XXX% a get

George Melas

you very much. Okay. Thank

Operator

Thank you.

from Patel we a with Next, have follow-up Samir Askeladden Capital.

Samir Patel

pre-COVID Hey. I just was wanted and hardware breakdown supplies curious, to independent follow-up of You of if that the have then MAX and years, I levels have two but kind ramp four over aircraft sort to the you as you then on don't of the shorter-term. next in aero two drivers, hopefully you other know business, to And right? side. production just the said. disclose the back still I new of the

supply side. about on the in example, travel, U.S., pickup talked domestic You for the the

thoughts if So any curious I have you was there.

David Smith

the they out. but don't coffee happens whatever or to gets use right, or what flying, see dumped it some fly, before, break is, the years we this our the of the of can cup we the over at the planes and they'll in, Yes, XX wear disclose our first and printers level, they them, aimed kind XX down more you are planes years, supplies the at more more segmental more

a faster that'll not support that was, off that part printers the pickup out particular level would it where as seen be there but business printer a that case more the the contribution. our part but of to and would back the of tend to new is of business, well, get orders. So smaller And XX% that that we've are and back. the it's I back, OEM kind probably the picks aerospace helps And think than as it’s of up overall MRO portion business

It's basically new So coming they more we supplemented on on equipment, by pickup. helped. that it's revenue the fly, kind more of see that's But that production business see upgrades. back passenger based by great it's that driven aircraft to model, the really the and

Samir Patel

Understood.

nitpicky, assume RPKs just just factor it David, during would is of is the And is amount X% kind a driven Like, be used load I the actually constant Wouldn't it sorry to mentioned be like you flights? of but by more – flight or whether XX%. now. paper

more is of it actually the flights RPKs? number or So the

David Smith

it's but also flight, of the it's distance the too. Yes, flights

a measure… maybe better it's So –

Samir Patel

Okay.

Understood. have. That's Thanks. all Okay. I

Greg Woods

Sure.

Operator

Thank today's concludes Q&A. you. This

like closing to Woods remarks. to call for the I’d turn back Now over Mr.

Greg Woods

Okay.

So thank you look us in everyone you progress future. joining morning, day. good this for updated now. on keeping forward Bye and a we Have our to the

Operator

you, concludes and This today's ladies teleconference. Thank gentlemen.

You disconnect. may now

AstroNova (ALOT) 25 Mar 212021 Q4 Earnings call transcript