Earnings call transcript Q2 2024

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Operator

Good day and welcome to the AstroNova's Fiscal Second Quarter 2024 Financial Results Conference Call. Today's conference is being recorded.

I would now like to turn the conference over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead, sir.

Scott Solomon

Thank you, Carla. thanks earnings us call. and second our everyone, XXXX quarter morning, for on joining fiscal Good Vice Financial Hosting AstroNova's Executive Smith, President morning's and and this call Chief Officer; are and Officer. Greg Woods, President Chief David Greg the will company's discuss highlights. operating financials through take high a the will level. at David you Greg will then comments, concluding management to happy be make questions. your some take and will

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

the please copy, go the AstroNova a website, have of www.astronovainc.com. don't you If Investors to page

a that call the today's not of on Accordingly, Any Private made statements that XXXX. by considered on XXXX. within risks note historical law. of of could statements today, involve Securities statements as could of and actual only speak are are meaning September required based are forward-looking fact forward-looking Act uncertainties. Please statements the statements XX, as assumptions These Litigation differ forward-looking number that Reform results materially, of except

to obligation statements. update forward-looking no undertakes AstroNova these

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

management to measures. non-GAAP be today's will financial On call, referring

most measures today's their a a in basis. non-GAAP to of comparable is gain these results. and non-GAAP the the a on that GAAP AstroNova and other helps comparisons investors financial make both changes release. also AstroNova believes meaningful who companies the financial between A reconciliation GAAP helps company's measures earnings of the inclusion It of available understanding operating directly investors in core wish to measures

call the turn to I'll Greg. that, with And over

Gregory Woods

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

Machine. further and designed announced realignment our That At financial restructuring of the in second Astro we reflected year's synergies quarter Product this results to Identification the strategic an the segment reported the on of last that morning. of of is acquisition we beginning initiative capitalize August,

Island, more transitioning Grove realign in taken the our first, segment manufacturing Village, from Asia plant for printer Astro actions and the we in include; of Machine reminder, specific Warwick, our have our a headquarters Rhode to PI As Illinois. West Elk

and us Product concentrate best This and with Second, segment's opportunities. and margin to to enable And global manufacturing, on distribution network. margin and rationalizing resources actions our by facilities on services product Machine provide will sales printers or streamlining AstroNova partner international exiting functionality lower products concentrate customers. turn our higher third, volume low and label greater PI lines Portfolio These the our highest Astro certain our marketing advanced consolidating sales demand. combined the the to and channel return in PI

had anticipated an the it million in create on a Although annualized a quarter, puts performance second in in resilient more the quarters stronger, a our business of position realignment to come. us and cost the GAAP to savings effect negative $X.X achieve

continued which the key segment. our Beyond of efficiency in posted Astro to aviation which is of the testing for the industry, year served we Machine, restructuring, drivers The we growth. growth the in during the double-digit our operating make within last improvements momentum aerospace top fact, line second year-over-year measurement we product QX continue and fiscal line quarter, acquired by and commercial

quarter, by XX%. performance revenue improved up profit Product charges, our was XX% the the segment, at Looking by restructuring operating Identification in excluding segment and

work PI quality Over printers, has a guidelines issue. program segment high as the tamped our number of the to ink retrofit past quarters, the due through supplier's a we been several down volume to large performance of

effective rapidly an quickly can the or to returned more accelerated our service. effort repair of to part they improve cost replace integral printers established we've segment, the an account restructuring for the full effort PI a field, to be to in As reserve so of

fiscal year. current retrofit this complete to expect We by of the program end the

brand and Product for business, of and growth us solutions an for the continues engine for printers. part to breadth OEMs development to our represents increase PI be enabling owners, the the commercial important

including This and quarter, products we plan addressing. to and applications, market labeling, for to mailing high-speed over-printing direct-to-package innovative four introduce new the

a we making Earlier up inches speeds format demanding high-performance label print applications. QL-XXX year, second, of introduced the robust high-speed X,XXX this the printer, at a solution dots of vibrant a most QL-XXX, at per XX per printing wide labels color for the to inch, resolution it

at action events weeks. These have place industry United the Our Expo in Atlanta. and taking see the Vegas, include customers other Labelexpo products these the Europe events PACK will and opportunity several Brussels, to and in PRINTING in Las in coming major EXPO

Test are a trends down the for printers, adverse XX% demand driving and aerospace was and however, our market. primarily to increased higher-than-normal traffic Segment aerospace stronger the strong Turning of due profit second services. supplies year-over-year, older-generation Robust product in operating quarter. shipments & continued of the in reflecting increased also to our passenger year-over-year deliveries, performance aircraft Measurement quarter, airline segment, the revenue mix

We transitioning more continue on focus customers printers. newer, ToughWriter of products our older-generation to to and from aerospace these family upgrading advanced,

into we consolidate margins. positively As expect product resulting manufacturing skews, segment our offerings fewer impact we high-volume will the gradually efficiencies

I'll that, for David to the hand over financial With review.

David Smith

million you, $X.X Thank charges overview It everybody. Restructuring this GAAP quarter. non-GAAP million the our I'll totalled geographic results write-off and in U.S. $XX,XXX severance $X in Greg, expenses. expenses in quarter. PI EMEA with the certain concentrated good for in of of restructuring but $XXX,XXX about impact start footprint, on the of the of lease in morning, abandonment inventory, and an and across the and consisted spread primarily costs the our

a to being small This of all of a that products our cover action low-volume, on closed higher-market for set not that the written expected applications customers product have. concentrate We inventory The was allows us products. that was off efficiently more showroom lower-market used.

we Greg and a printer year. track we're closely expenses in is The that of related In program to schedule connection buy with complete action this steps customer in very during a program the the on supported fiscal $XXX,XXX action, for retrofit liability described. recognized by detailed it

these presented the in you our to on give tables from basis both business included financials GAAP in backed clear detail of charges We've press of in release. the picture a as the a non-GAAP out is

details will be XX-Q net diluted million delivered is these after per in we when second tomorrow. quarter of it or our income sum, $X.XX the In of a basis. share $X.X further in tax discussed All non-GAAP on filed

acquisition. revenue attributable said, up Greg XX% were PI in quarter the gains $XX.X the by was Astro driven As the in segments gains million, and both to Machine to

million $XXX,XXX to XX.X% that of ago, operating a million quarter non-GAAP of Compared retrofit year. Astro $X.X the program amount. that Machine period from up X.X% from the year addition last year, increased a revenue the in X% charges excluding expenses revenue, basis, or only charges restructuring prior on last Astro in the to EBITDA non-GAAP just expenses Machine were up of in the same operating last or the about and was year on exceeded excluding Also, adjusted or to $X.X the quarter, when costs,

compared second supplies with made comprise XX% total quarter, year, versus up revenue revenue XX% $X.X last in XX% revenue total the revenue other to increased the of hardware million, and Looking million. grew to up of by revenue million. Supplies and of XX% accounted and by X% from fiscal XX% increased remaining at service while $XX.X In QX X% XX% revenue hardware XX% the category $XX.X to total, for type, last service year 'XX. in other

in XX% the digits. for growth In domestic up second saw revenue, revenue revenue single year the revenue, we double-digit XX% and while and geographic were a XX% accounted quarter low year. From total XX% compared in perspective, Europe nearly dollars, the Asia with of down last from international other last US,

cabinets operating of with that support of invest was end the to equipment and on $XX.X of end $X.X million, manufacturing and that all of the Total capital upgrade business. our million, the our up from facilities. million to about end $XXX,XXX and still we sufficient $X.X improve our fiscal our through hardware keep their have of of from XX. the at will the debt supplies demand outside We're new up We capacity and finance that plan we'll the equipment down to capacity $X.X bank credit ended QX efficiency of with compliance in existing year. the the needs cash At in the was quarter, end year million January debt all

the some -- expecting to declined used quarter change the the investment in the buffer still in in before extra we maintain supply still still components troubles, some modestly needing for write-off are products We're of experiencing inventory and stocks. T&M effect a Inventory we're instances, out of. getting electronic few products primarily we're

However, there are our we signs and abating as supply we levels aggregate decline still in are chain will year. move that the that those believe through inventory issues clear

cash plan flow to debt. is current free Our to any reduce use

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

Gregory Woods

positioned realignment margin the strategic PI half we second growth accelerated for a and revenue With XXXX, of David. Thanks the us, behind well business entered of improvement.

four at the demand to market. new products We benefiting be and segment weeks environment are from very PI about excited are commercial unveiled continue aviation the we our in strong expect to T&M the seeing coming the

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

Operator

We'll first Please Pete, from comes now our take Sidoti go Pete instructions] now open. ahead. Co. is line [Operator which your from question, & Sidoti

Peter Sidoti

gentlemen. morning, Good

Can cash can freeing next? and question. with for flow Just talk free And be talk capital a about you'll you adjustments, your year the this about quick these you up? spending

David Smith

period would we've and right probably now. that I it's a pretty don't year, have year going said bit traditionally We around consistent. Traditionally, us a we've $X spent CapEx. spending behind on to spend think about where that's we this systems and were it's we're business Peter, high. million little a $X probably maybe that quite more million had been which

$X probably about think this make million but year investments. $X.X million I those maintenance we and as to it's million like $X CapEx, more

reducing more to on specific bit issue improving which have cash sheet the more direction, management streamlining I line, efficiently focus side and my but don't guidance. I the a free our balance mentioned the during working cash clearly capital and and should and converting utilizing is us that inventory little think any we the of help free on flow remarks terms, that in product the critical earnings is where

Peter Sidoti

you, Thank gentlemen. Okay.

Operator

Peter. Thanks

question - next Samir, comes Samir is Capital. Our now Askeladden your go Patel Please ahead. line open. from

Samir Patel

Greg. David. Hey Hey

include and is restructuring on as such quickly the to these are question returning from kind just more benefits? manufacturing $X.X rectified -- labor that First or to retrofit of quoted the incremental to of getting does or I units understand, you cost that wanted million those that be direct cost be benefit leases, those or would restructuring costs, any benefits, getting is printers those savings.

Gregory Woods

That would be incremental.

Samir Patel

help makes that bookings printer that of going some sense demand. me product then were a significant I the down Is of the second about the there? talked what's or could related way that realignment understand question and kind to or fairly strong That you maybe of just notice is Okay. that you issues some on

David Smith

I address can that. Maybe

it's two different combination So, factors of really. a

So and from get to when that way come the from business, more those we orders, down. a up side we work where blankets disturbances. out large quarter the measurement then of blanket we happens test have of of and to if boost bulk quarter kind tends that That kind

fairly On business, tends the PI be steady. to

my Pardon. are effective offline, those Although, ink printers of mentioned of but as to out highest volume the I of tend the nothing there the in demand decreased it's some and ordinary. these unfortunately offline, that notes for printers be kind our machine, with printers

Samir Patel

it's mostly the machines. side for said a I Trojan-label on

Gregory Woods

machines effective the Yes, Trojan machines. or

Samir Patel

you. Got

some kind summary of there is really structural your any not the the of sort a -- of addressed It's it's issue. say not lumpier timing orders. that more of So

Gregory Woods

Correct.

David Smith

short in Greg it's the a side on in PI blanket great backlog not well. business as Yes, of business indicator is as very quite little necessarily orders although of business labels keep for a and term. discussed, that is lumpy cycle, that in a aerospace the short we get more could The the revenues bit mind the few

used metric, think be interesting I short effectively important don’t lot but it's it but of bookings, predict It's to an term So have it revenues. a obviously to fluctuate. can't will

Samir Patel

Understood. thanks. I'll turn right. over, it back All

Operator

from next Capital. Spiro now from line Spiro Our instructions] your go is question ahead. Please Tom open. Tom, [Operator is

Thomas Spiro

$XXX,XXX. first Hey, $XXX,XXX. is recollection see recalling initiatives, on If to or charge Good can ago, I'm restructuring I with and estimated folks morning, retrofit retrofit, so you the the Greg. correctly, difference? that a the you Dave. morning, it's Good respect that explain month is My

David Smith

on it that. high Yeah, a level kind give I can of

make As and my wanted get done get comments, fast we sure I as it in as done mentioned we possible. this to

as it sites it more in, involves the to that and sending and So, direct customer validating unit travel then back it opposed updating and to, out. checking sending

and actually So, for of on certain volume to that high site way. go more ones, customers, do the we're it going

gets it done but quicker. it more that's So, expensive,

Thomas Spiro

And this process will of end fiscal the by the be complete year.

David Smith

very but, XXX% few XXX%. There and XX% Yeah, on and that. a we've plan, expect follows we well it stragglers, could it be -- over our by if will large, at over got a systematic be process

Thomas Spiro

low much by we'll Okay. streamlining be margin That's that withdrawing very channel these low much. from etcetera. etcetera, There we partners volume speaking, is how were some from. products way away and walking Roughly sales those of We're initiatives?

David Smith

little on Machine -- products it's and in overlap win and the of the cases, sales cases, some other acquisition pre out and Machine AstroNova in very in it's product won part the Astro is and We've has some It's between line post. done little product. a to out up or going the front the Astro AstroNova products, still

no those and is are of product point other and they to of are with anyway we've very to decreasing processes different some the their those manufacturing units. two can of between kind just those is products similar, currently that kind in life that and two. that low there associated products box branding just we're we limit of streamline bulk having the the end revenue operations, just of were what kind There doing lines rationalizing we're So with consolidating products

Thomas Spiro

on doing that Is where the channel that channel of occurring? Is both? reducing streamlining domestically it Is we and primarily? are partners or Thanks partners, that's overseas? that

Gregory Woods

globally. It's no. No,

our So channel also totally in best that distributors -- sorting between strategy and get and to There it's of we're we AstroNova are keeping aligned Machine regions sure we it's that and there the out have making with again have really that is breed we're overlap as distributors, where focus. whatever, and partners Astro some, out all the well.

to we sure dedicated partner who really strong geographic AstroNova. it's each a have is region, make So that within given to

Thomas Spiro

million seemed of see kind acquired running that I I it 'XX, recall, were I on of a much? rate year. it it, believe we its a last million, weak changed little 'XX? recall, I $XX and $XX Is at And sales quarterly basis. $XX like Astro it then 'XX, a when Machine, running as Has something on as million, still annual quarter,

Gregory Woods

David? we It's running. off a the was where I it know don't Q, that. that in But disclosed Is bit from if

David Smith

will we'll talked you The end range slightly be of Q. same amount current quarter in the the But by the it's the -- of the was the range, think in in running lower. in year, be still And that I about.

Thomas Spiro

I see.

sorry, cut I'm off? So product you -- did I

Gregory Woods

in highlight Just their to I Machine, half. stronger something the last is Astro was historical said Greg, -- as information from I of going well to first than second the quarter just tends the that the what we've half year from seen be

Thomas Spiro

see. I

under last were if of PI the where X%-ish, So XX% quarter out PI to and is for I well was running it sales look at just year. the under back

David Smith

year. It last running is

Gregory - A Woods

behind It's yes. where was, it

Thomas Spiro

Yes.

right. much All luck. Okay. helpful. is very This Thanks most and good

Operator

Thanks Tom.

[ph] Dasha from line ahead. next go from your Please comes Pinnacle. open. question now is John Our John,

Unidentified Analyst

Good morning.

supplier-related of $XXX,XXX. That cost retrofit against any on question curious, do the the just any seems machines? issue retrofitting expense, sharing to are I'm And they have the recourse we a them? in quick and Just of be a

Gregory Woods

earlier. that Yes announced and actually we something yes, and it's that

So pricing there a and as some also was concessions restructuring there's financial well.

Unidentified Analyst

must I was have missed Sorry, that Where that. disclosed?

Gregory Woods

-- in. David, was it quarter ago? that two I That forgot was exactly out years, came years what X.X

David Smith

I can't really...

Gregory Woods

particular that supplier's a Recognize event limitation per contract. there's liability what in and that of was

Unidentified Analyst

Limitation of liability.

Okay.

Gregory Woods

that. the Yes, to payouts maximize Go on ahead.

Unidentified Analyst

so the I there's got no just really this point say, at Okay. supplier? to against recourse

Gregory Woods

No, reserved, not Yes. amount the we for no. that

Unidentified Analyst

Okay.

Gregory Woods

from term... Separate longer that,

David Smith

amount we... that The

Unidentified Analyst

ahead. Go

David Smith

This that amount that we on hit statement will is we have is amount income the The reported. that the us.

David Smith

that's If helpful. that's If helpful.

Unidentified Analyst

or here, the to on the obligation? what supplier understand, I guess Well, who's you supplier? trying matching that primarily is the hook Or I'm

Gregory Woods

don't amounts Well, because but we're shared of exact the we the -- the them. not a amount, it's release of negotiations, dollar between two

Unidentified Analyst

Okay.

Gregory Woods

we're we're probably disclose what to But going reserving for.

Unidentified Analyst

much. very right. Thanks All

Operator

John. Thanks

Our next from Rutabaga now line Capital Management. open. go your question comes Please Dennis from ahead. Dennis, is Scannell

Dennis Scannell

morning. Most answered. Good been Yes. my have questions of

a next be Maybe to full of expect savings, little though. when $X.X the leg quick, realignment of of kind kind the and about you few will realizing timing quarters talk in how actions? of that the in you benefit the million could real Just the bit over

Gregory Woods

Yes.

as take that's on up. but get ramp we So it $X.X time what expect the a will to million, as far basis, bit little to annualized of an

loaded. but then going period just kind fourth startup get it hit in a of quarter. fully ramp, So And back-end XX-month ongoing in really we will it's amount. and an not the there's It's it to QX course. full the within it's the to that QX benefit, of to But expect

Dennis Scannell

Right. Yes.

So in Is fiscal 'XX, 'XX year? benefit then? January full annualized that your fiscal

David Smith

Certainly. Yes.

Gregory Woods

the Probably quarters. also in four next

Operator

Samir have Patel you're a Please question now Askeladden ahead go follow-up We from when from ready. Dennis. Thanks, Capital.

Samir Patel

follow-ups. it, of site, just you didn't of about is early kind the any briefings missed couple One I talk, A unless there? e-commerce

Gregory Woods

Sure. Yes.

we customers to there. So add continue

don't been but and that's I linked it and if and you've getting So more there's added off, on -- it things more into it. to

to it whenever customer faster, and to encourage growing. that's more we So got bit it. to talking like grow we've but use people, it's uptake, they're an We'd service our them our customers, a see

But party the else, them number bought fair from -- we us somebody site. customers, call of where but buying a a e-commerce picked material third up printer label from also via they're third-party they

Samir, getting number our in in a Internet nice results, we're The uptick that higher higher is inquiries. marketing search other of benefit, seeing up and from a

Samir Patel

based have get how impact you before, the Got those you not Put offline did see it. in or of with that are selling? retrofits, retrofits the you the figure million are much Where quarter, any revenue done, take. like, then where the supply you of your around $XX give this and PI once of sort we've that those you're kind talked now -- with segment? is I And of on an the there are supplies printers right sizing know to that you about differently, issues this would do

Gregory Woods

Yes.

is guidance revenue. ones We are program. And that that generate halfway are a primarily What that there's the -- about upgrade of in on through $XX,XXX neighborhood the haven't that. have two-two given can impacted tell you typically we're year that. Cs highest that They I in volume by I the the roughly think

touched. units are So as far as that

in that they So we supplies label the it, use in-house once to need is buy more. upgrade they to and/or mind, ink supplies one then keep before have thing they too,

a of So ramp-up there's process. in that bit a

David Smith

to -- decision this, The it, it's we Samir, that. Yes. spend faster it. step do rapidly I this on money to pretty expecting the do that, And cash good like we're flow a David. moving high from we to we a and return are all pretty just perspective. think we a economic back where take I'll think it's comment obviously, we'll money, It's a are endeavor faster, high-return get it's a

Samir Patel

Okay. That makes sense. That's helpful.

Operator

At this questions further Samir. have Thanks, no we time, registered.

Greg to for that, with final remarks. Woods will back I So hand

Gregory Woods

for of thank our Well, to Great. here now. you, the day. forward joining we rest and keeping everyone, this Bye progress. you a look morning, Have good us on updated

Operator

your This for concludes call. today's Thank you participation.

disconnect now your may You lines.

AstroNova (ALOT) 6 Sep 232024 Q2 Earnings call transcript