Q1 2025 AstroNova Inc Earnings Call
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Speaker Change: Good morning, and welcome to the Astro now you bought fiscal first quarter 2025 financial results Conference call. Today's call is being recorded all the time like to turn the conference call I got Scott Solomon of the company's Investor Relations fun.
Operator: Sharon Merrill, Advisor. Please go ahead, sir.
Speaker Change: Sharon Merrill Advisors. Please go ahead Sir.
Speaker Change: Thank you Candice and good morning, everyone by.
Sharon Merrill: Thank you, Candice, and good morning, everyone. By now, you should have received a copy of the earnings release issued this morning. If you have not received a copy, please go to the investors page of the AstroNova website, www.astronovainc.com. You can also access the deck that follows along with our prepared remarks in the investors section of our website under events and presentations. Turning to slide two in that deck.
Speaker Change: By now you Should've received a copy of the earnings release issued this morning.
Speaker Change: You have not received a copy. Please go to the investors page of the Astronautical website www dot astronauts in Dot Com you can also access the deck that follows along with our prepared remarks on the investors section of our website under events and presentations.
Speaker Change: Turning to slide two in the deck statements made on today's call that are not statements of historical fact are considered forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Sharon Merrill: Statements made on today's call that are not statements of historical fact are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These four forward-looking statements are based on a number of assumptions that could involve risks and uncertainty. Accordingly, actual results could differ materially, except as required by law.
Speaker Change: These forward looking statements are based on a number of assumptions that could involve risks and uncertainties. Accordingly actual results could differ materially except as required by law.
Sharon Merrill: Any forward-looking statements speak only as of today, June 6, 2024, and AstroNova undertakes no obligation to update these forward-looking statements. For other information regarding these forward-looking statements and the factors that may cause differences, please see the risk factors in AstroNova's annual report on Form 10-K and other filings that the company makes with the Securities and Exchange Commission. On today's call, management will refer to non-GAAP financial measures. AstroNova believes that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results and also helps investors who wish to make comparisons between AstroNova and other companies on both a GAAP and a non-GAAP basis. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure is available in today's earnings.
Speaker Change: Any forward looking statements speak only as of today June six 2024.
Speaker Change: <unk> undertakes no obligation to update these forward looking statements.
Speaker Change: Other information regarding the forward looking statements and the factors that may cause differences.
Speaker Change: Please see the risk factors at Astro. This annual report on Form 10-K, and other filings the company makes with the Securities and Exchange Commission.
Speaker Change: On today's call management will refer to non-GAAP financial measures Astro Nova believes that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the Companys core operating results and also helps investors who wish to make comparisons between Astro Nova and other companies on both a GAAP and a non-GAAP basis.
Speaker Change: Conciliation of the non-GAAP financial measures to their most directly comparable GAAP measures is available in today's earnings release.
Sharon Merrill: Turning to slide three. Joining us on the call this morning are Greg Woods, AstroNova's President and Chief Executive Officer, and David Smith, Vice President and Chief Financial Officer. Greg will discuss the company's first quarter operating highlights, and David will take you through the financial results at a high level. Greg will make some concluding comments, and then management will be happy to take your questions. Now, please turn to slide four as I turn the call over to you.
Speaker Change: Turning to slide three joining us on the call. This morning are Greg Woods, Astro Novas, President and Chief Executive Officer, and David Smith, Vice President and Chief Financial Officer.
Greg will discuss the Companys first quarter operating highlights and David will take you through the financial results at a high level.
Speaker Change: Greg will make some concluding comments and then management will be happy to take your questions.
Gregory A. Woods: Now please turn to slide four as I turn the call over to Greg.
Speaker Change: Yeah.
Gregory A. Woods: Thank you Scott.
Gregory A. Woods: And good morning, everyone. Q1 was a profitable yet challenging quarter for us, primarily because we had to navigate a couple of temporary component shortages that delayed the shipment of certain legacy printers in our aerospace product. These suppliers were unable to deliver the necessary components on time. That delay, which we expect to be fully rearmed this fiscal year, meant we were unable to ship more than $3 million of aerospace printers in As we noted in this morning's earnings release, Longer term, we are well underway on our transition program to upgrade most AstroNova aerospace customers from Legacy Products to our newer, more advanced Puff Writer branded printers. Today
Speaker Change: Good morning, everyone.
One was a profitable yet challenging quarter for us primarily because we had to navigate a couple of temporary component shortages that delayed the shipment of certain legacy printers in our aerospace product line.
Speaker Change: These suppliers were unable to deliver the necessary components on time.
That's the way, which we expect to be fully remedied this fiscal year.
Speaker Change: But we were unable to ship more than $3 million of aerospace printers in the or.
Speaker Change: As we noted in this morning's earnings release.
Speaker Change: Longer term, we are well underway on our transition program to upgrade most astro the aerospace customers from legacy products to our newer more advanced tough further branded printers.
Speaker Change: Today tougher.
Gregory A. Woods: Toughwriter printers account for approximately 36% of our total aerospace printer shipments; completing this transition will result in a more efficient supply chain, lower manufacturing costs, and a streamlined parts and services experience for our OEM and airline customers in our product identification segment. Last September, we unveiled next-generation flat pack and mail-related printing solutions from our AstroMachines subsidiary at the Printing United Expo in this year's first quarter. We needed to push out the shipment of a very large order we had received for that equipment.
Tough writer printers accounted for approximately 36% of our total aerospace printer shipments.
Speaker Change: Leading this transition.
Speaker Change: It will result in a more efficient supply chain lower manufacturing cost and <unk>.
Speaker Change: Streamline parts and services experience for our OEM and airline customers.
Speaker Change: And our product identification segment.
Speaker Change: Last September we unveiled next generation flat pack and mail related printing solutions from our Astro machine subsidiary at the printing United Expo.
Speaker Change: And this year's first quarter we.
Speaker Change: We needed to push outs shipment of a very large order we had received for that equipment.
Gregory A. Woods: Just in order to make sure that we are able to do some customer-requested enhancements that were required by that customer. We now expect the majority of that order to be shipped in the fiscal second and third quarters of this year. Despite the challenges caused by component deliveries and order delays, we remain on track to achieve our fiscal full year 2025 expectations for Organic Revenue Growth in the Mid-Single Digits and Adjusted EBITDA Margin in the range of 13 to 14 percent. Turning to slide five.
Speaker Change: Just in order to make sure that we were able to do some customer requested enhancements.
Speaker Change: It required by that customer.
Speaker Change: We now expect the majority of that order to be shipped in the fiscal second and third quarter of this year.
Speaker Change: Despite the challenges caused by component deliveries and order delays.
Speaker Change: On track to achieve our fiscal full year 2025 expectation for organic revenue growth in the mid single digits and adjusted EBITDA margin in the range of 13% to 14%.
Speaker Change: Turning to slide five.
Speaker Change: In may we significantly strengthened our position in the colored digital label and packaging printing verticals with the acquisition of Portugal based Ametek's N S.
Gregory A. Woods: In May, we significantly strengthened our position in the color digital label and packaging printing verticals with the acquisition of Portugal-based Emtex NF. MTEX provides us with complementary market adjacencies that expand our addressable markets and broaden our global footprint, opening up significant top and bottom line growth opportunities. We continue to expect the MTEX acquisition to generate $8 to $10 million of revenue in this fiscal year.
Speaker Change: <unk> provides us with complementary market adjacencies that expand our addressable markets and broaden our global footprint opening up significant top and bottom line growth opportunities.
Speaker Change: We continue to expect the <unk> acquisition to generate $8 million to $10 million of revenue in this fiscal year.
Speaker Change: <unk> is not only an innovator, but a technology disruptor.
Gregory A. Woods: MTEX is not only an innovator but a technology disruptor, with New Industrial Printing Solutions that have been exceptionally well received in the market. Emtex operates a sophisticated engineering and manufacturing center at its headquarters near Porto, Portugal. The high level of vertical integration at this facility has made it a model of cost efficiency, reducing M-Texas' dependence on outside suppliers.
Speaker Change: With new industrial printing solutions that have been exceptionally well received in the market.
Speaker Change: <unk> operates a sophisticated engineering and manufacturing center at its headquarters near Port of Portugal.
Speaker Change: The high level of vertical integration at this facility has made it a model of cost efficiency.
Speaker Change: Reducing I'm, Texas dependence on outside suppliers.
Speaker Change: Less than a month into the acquisition, we're more excited than ever about a couple of hundred and nature of ametek's dennises product offerings.
Gregory A. Woods: Less than a month into the acquisition, we're more excited than ever about the complementary nature of Emtex NS's product offering. MTEX moves us further up the value chain with products that generally carry higher ASPs with large recurring revenue streams and strong customer loyalty, and the initial response to EmTech's newest products bears that out.
Speaker Change: <unk> moves us further up the value chain with products that generally carry higher asps.
Speaker Change: With large recurring revenue streams and strong customer loyalty.
Speaker Change: And the initial response to <unk>, Texas newest products bears that out.
Speaker Change: Turning to slide six.
Gregory A. Woods: I just returned from the Drupa 2024 trade show in Dusseldorf, Germany. Drupa, which began on May 28th and runs through tomorrow, is the world's leading trade fair for printing technology. A large combined AstroNova mTeX booth at Drupal was the perfect venue to showcase the broad range of groundbreaking products and solutions. Congratulations to our marketing teams for pulling out all the stops and coordinating the design and implementation of this integrated booth in record time.
Speaker Change: I just returned from the drip of 'twenty 'twenty four trade show in Dusseldorf, Germany.
Speaker Change: <unk>, which began on May 28, and runs through tomorrow is the world's leading trade fair for printing technologies.
Speaker Change: The large combined Astro, Nova amtech booths at Trouba.
Speaker Change: Was the perfect venue to showcase the broad range of groundbreaking products and solutions.
Speaker Change: Congratulations to our marketing teams for pulling out all the stops and according to design and limitation of this integrated booth in record time.
Gregory A. Woods: They pulled it off in just a few weeks from when we closed this acquisition, together with the full array of our Quick Label, Trojan Label, and Astro Machine products. MTEK is exhibiting several of their latest color printing products for labeling, overprinting on rigid products, and industrial flexible packaging solutions for both paper and film materials. The Emtex products at the show featured their unique high-quality printhead and ink systems that significantly lower the cost of the total cost of ownership for our customers. Printers cover a wide range of printing widths, from the atom at 8 inches wide to the new aquaflux at 42 inches wide.
Speaker Change: They pulled it off in just a few weeks from when we closed this acquisition.
Speaker Change: Together with the full array of our quick label Trojan label, and Astro machine products, and Texas exhibiting several of their latest color printing products for labeling over printing on rigid products and industrial flexible packaging solutions for both paper and film materials.
Speaker Change: The <unk> products at the show featured their unique high quality printhead and ink systems that significantly lower the cost the total cost of ownership for our customers.
Speaker Change: The printers cover a wide range of printing with from the atom at eight inches wide to the new Equifax at 42 inches wide.
Gregory A. Woods: The AquaFlux was by far the largest printer in our booth. This is a high-volume commercial printing solution developed for industrial flexible packaging that can print on both untreated and treated paper. Aquaflex represents the next generation of industrial flexible packaging printing for high-volume customers. The system uses multiple 5-liter ink tanks of either pigment or dye-based ink to produce full-color wide-format output used in paper bag production and other high-volume packaging applications.
Speaker Change: The eco flex was by far the largest printer in our booth.
Speaker Change: This is a high volume commercial printing solution developed for industrial flexible packaging that can print on both untreated and treated papers.
Speaker Change: <unk> represents the next generation of industrial flexible packaging printing for high volume customers.
Speaker Change: Some uses multiple five liter, inc tanks of either pigment or diabetes things to produce full color wide format output Houston paper bag production and other high volume packaging applications.
Speaker Change: Since the drip or show opens on May 28th attendees have been flocking to the booth to see the actual flips and action along with the other new products from Ametek's and Astra and Elba.
Gregory A. Woods: Since the DRIPA show opened on May 28th, attendees have been flocking to the booth to see the Aquaflex in action, along with the other new products from Emtex and AstroNova. We collected hundreds of high-quality leads, as well as several orders at the show. We even closed deals to sell some of the printers right off the floor in our booth, including the two you see in slide six, the Trojan T2 Pro that we previously announced for high-performance label printing and the AquaFlex printing system. For more information on AquaFlex and the other Emtex and AstroNova products featured at our Drupal booth, including pictures and videos, check out the Drupal press release on our website, astronovainc.com.
Speaker Change: We collected hundreds of high quality leads as well as several orders at the show.
Speaker Change: We even closed deals to sell some of the printers right off the floor in our booth, including the two you see in slide six.
Speaker Change: The Trojans T. Two pro that we previously announced for high performance label printing and <unk> printing system.
Speaker Change: For more information on the Aqua flex and the other amtech and asking them what products do you see that our drip a booth, including pictures and videos checkout. The drip a press release on our website Astro Nova Inc. Dot com.
Speaker Change: Beyond the timely trade show integration for Drupal, our overall integration of M, Texas proceeding well.
Gregory A. Woods: Beyond the timely trade show integration for Drupal, our overall integration of Emtex is proceeding well. Another recent step was the formation of an integrated engineering steering committee that is already in place and working on plans to ensure that we are leveraging the fantastic engineering strengths of both organizations to further extend our leadership position in the industry. Let me briefly touch on the developments in our TNM segment. As I mentioned, we are gradually upgrading OEM and direct airline customers to our more advanced Tuff Reuter branded printers from the other three brands in our portfolio.
Speaker Change: Another recent step was the formation of an integrated engineering steering committee that is already in place and working on plans to ensure that we are leveraging the fantastic engineering strengths of both organizations to further extend our leadership position in the industry.
Speaker Change: On slide seven.
Speaker Change: Let me briefly touch on the developments in our T N N segment.
Speaker Change: As I mentioned, we are gradually upgrading OEM and direct airline customers, who are more advanced tough rader branded printers from the other three brands in our portfolio.
Gregory A. Woods: Tough Raider upgrades are taking place in both the commercial and defense verticals within our aerospace product line. Reducing the number of brands that we offer will allow us to significantly lower our overall manufacturing costs, including royalty payments, thereby driving higher margins. By the end of fiscal 2027, we estimate that about 9 of every 10 printers we ship will be a Toughwriter, compared with a little less than 4 in 10 today. In addition to our momentum in the aerospace market, our test and measurement segment continues to win contracts with Air Force bases that are upgrading their missile programs with legacy equipment from legacy systems to our latest technology. And now, with that, I'll turn the call over to David for the financial review.
Speaker Change: Tough radar upgrades are taking place in both the commercial and defense verticals within our aerospace product line.
Speaker Change: Reducing the number of brands that we offer will allow us to significantly lower our overall manufacturing costs, including royalty payments.
Speaker Change: Thereby driving higher margins.
Speaker Change: By the end of fiscal 2027, we estimate that about nine of every 10 printers, we shipped will be a tough writer compared with a little less than four in 10 today.
Speaker Change: In addition to our momentum in the aerospace market, our test and measurement segment.
Speaker Change: Continues to win contracts with Air force bases that are upgrading their missile programs with legacy from legacy systems to our latest technologies.
Speaker Change: And now with that I'll turn the call over to David for the financial review.
David Smith: Thanks, Greg.
David Smith: And good morning, everybody. Let me begin by reviewing our first quarter financial results, taking a look at slide 8. Revenue for the quarter was $33 million. It was down 7% from the prior year period due to lower sales in both T&I and the TNM segments. Greg touched on some of that.
David Smith: And good morning, everybody.
David Smith: Let me begin by reviewing our first quarter financial results, taking a look at slide eight.
David Smith: Despite the decrease, gross margining increased to 36.3%, up 130 basis points from the same period last year, with higher margins in both segments, reflecting favorable mix and cost trends. A quick comment on operating expenses, which are, you know, under control and in good shape. We have done some minor and, I think, immaterial reallocations of expenses in our income statement segment reporting in response to the new and more rigorous accounting rules on segment reporting.
David Smith: Revenue for the quarter was $33 million it was down 7% from the prior year period due to the lower sales.
David Smith: And both P&I and the T N M segments.
Gregory A. Woods: Greg touched on some of that.
Gregory A. Woods: The decrease gross margin increased to 36, 3% up 130 basis points from the same period last year.
Gregory A. Woods: With higher margins in both segments, reflecting.
Gregory A. Woods: Favorable mix and cost trends.
Gregory A. Woods: A quick comment on operating expenses.
Gregory A. Woods: Which are you know.
Gregory A. Woods: Under control and in good shape, we have done some minor and I think immaterial reallocations of expenses in our income statement segment reporting in response to the new and more rigorous accounting rules on segment reporting.
David Smith: So in the first quarter, operating expenses were down about $300,000, but or approximately 3% year-over-year to 10.6 million. But under the recasting we did for this new compliance requirement, about 250 of that was reallocated manufacturing expenses.
Gregory A. Woods: So in the first quarter operating expenses were down about $300000, but.
Gregory A. Woods: Or approximately 3% year over year to $10 6 million.
Speaker Change: But under the recasting, we did well for this new compliance requirement about 250 of that was.
Speaker Change: Allocated manufacturing expenses. So the total expenses were only down slightly if you look at the prior expense allocation.
David Smith: So the total expenses were only down slightly. If you look at the prior expense allocation, selling and marketing would have been down about 200,000, R&D up about 200,000 due to product development, G&A about flat, and gross profit would have been about 250 higher. We're not going to report on these before and after comparisons and changes after this quarter because these already small differences between methods are expected to decline substantially in future quarter comparisons. And the new method, frankly, is more representative of the underlying economics.
Speaker Change: Selling and marketing would have been down about 200000, R&D up about 200000 due to product development.
Speaker Change: They are about flat gross profit would have been about $2 50 higher.
Speaker Change: We're not going to report on these before and after.
Speaker Change: Comparisons in changes.
Speaker Change: After this quarter because.
Speaker Change: These already small differences between methods are expected decline substantially in future quarter comparisons and the new massive frankly is more representative of the underlying economics.
David Smith: Overall, though, total company spending, operating, and manufacturing, is over a million dollars lower than the first quarter of last year, which is a result primarily of our prior restructuring and an overall focus on spending. When we announced the restructuring last August, we projected an anticipated annual cost savings of about $2.4 million. As our business has developed since then, it's becoming a little bit harder to track those cost savings down to reportable detail for you, but we're clearly going in the right direction and will meet or exceed those targets.
Speaker Change: Overall, though total company spending operating again manufacturing it was over $1 million lower than the first quarter last year, which is a result, primarily of our prior restructuring and an overall focus on spending.
Speaker Change: When we announced the restructuring last August we projected an anticipated annual cost savings of about $2 4 million.
Speaker Change: As our business has developed since then it's becoming a little bit harder to attract those cost savings down to reportable detailed for you, but we're clearly going in the right direction and will meet or exceed those targets and that's a major reason we were able to maintain the.
David Smith: And that's a major reason we're able to maintain the 4.1% margin despite the two and a half million decline in revenue on a year over year basis, which, as Greg explained, was depressed due to what we think are temporary issues. (Inaudible) Two and a half million was. Seven and a half percent of revenue in the quarter was down just under 600,000 or 19% from last year when EBITDA margin was 8.6%. Again, primarily due to what we think are temporary revenue issues.
Speaker Change: Four 1% margin despite the two and a half million decline on revenue on a year over year basis, which is Greg explained was depressed due to what we think are temporary issues.
Speaker Change: Adjusted EBITDA is.
Two and a half million was seven.
Speaker Change: Seven 5% of revenue in the quarter was down.
Speaker Change: Just under 600000 or 19% from last year when the EBITDA margin was eight 6% again, primarily due to what we think are the temporary revenue issues.
David Smith: Despite the lower revenue. We get began the year with a profitable first quarter reporting diluted EPS of 15 cents compared to 11 cents in the first quarter last, Bookings in the quarter were $33.1 million compared 38.4 million last year, but I've cautioned repeatedly about relying too heavily on this metric as an indicator of, short-term performance because of the lumpy nature of the order intake in our T&M segment, which is what explains most of the difference in the quarterly comparisons, though we did see lower backlog in our PI segment relating to supplies for inkjet printers, in turn, related to the previously discussed retrofit program, involving some printers affected by one supplier's quality and reliability issue. Turning to slide 9.
Speaker Change: The lower revenue.
Speaker Change: We began the year with a profitable first quarter reporting diluted EPS of <unk> 15 cents compared to 11 in the first quarter of last year.
David Smith: Unknown AttendeeYes, segment revenue was $23.2 million in the first quarter compared with $25.1 million in the fiscal 24 first quarter. primarily Due to the delayed shipments of the significant PI order resulting from the customer specification change that Greg talked about in his remarks, but those shipments will flow through soon, segment operating profit in PI was $3 million or 12.9% of segment revenue compared with $2.5 million or 10% of segment revenue last year. The increase in operating margin is due to a more favorable mix and expense control.
Speaker Change: Bookings in the quarter were $33 1 million compared to $38 4 million last year, but I've cautioned repeatedly about relying too heavily on this metric as an indicator of.
Speaker Change: Short term.
Speaker Change: Performance because of the lumpy nature of the order intake in our <unk> segment, which is what explains most of the difference in the quarterly comparisons, though we did see lower backlog in our <unk> segment relating to supplies for inkjet printers in turn related to the previously discussed retrofit program.
Speaker Change: Following some printers affected by one suppliers quality and reliability issues.
Speaker Change: Turning to slide nine.
Speaker Change: Segment revenue was 20.
Speaker Change: $23 2 million in the first quarter compared with 25.
Speaker Change: One in the fiscal 'twenty for first quarter.
Speaker Change: Primarily.
Speaker Change: Due to the delayed shipments of the significant Ti order.
Speaker Change: Resulting from the <unk> specification change that.
Speaker Change: <unk> talked about in his remarks, but those shipments will flow through soon.
Segment operating profit NPI was $3 million.
Speaker Change: Or 12, 9% of segment revenue compared with $2 5 million or 10% of segment.
Speaker Change: Revenue last year.
Speaker Change: The increase in operating margin.
Speaker Change: There is more favorable mix and expense control.
David Smith: In the test and measurement segment, first quarter revenue was $9.8 million compared to $10.3 million last year. However, demand remains strong and trends positively in Q1. As Greg said, we were able to ship over $3 million in orders from commercial airspace customers as a result of the supplier shortages of printheads used in some White Legacy Products. It hurt OEM printer shipments but also noticeably delayed some profitable repair volume as well. We're working closely with those suppliers and expect to have the shortages resolved by the third quarter of this year, but beginning in Q2. Longer term, as Greg noted, the way these sorts of issues get sorted out is through the transition of most of the AstroNova aerospace customers to the new or more stuff writer product.
Speaker Change: In the test and measurement segment first quarter revenue was $9 6 million excuse me $9 8 million compared to $10 3 million last year.
Gregory A. Woods: Although demand remains strong and trends positively in Q1, as Greg said, we were able to able to ship.
Gregory A. Woods: Over $3 million in orders from commercial aerospace customers as a result of the supplier shortages.
Gregory A. Woods: Print heads used in some.
Gregory A. Woods: Quite legacy products.
Gregory A. Woods: It hurt OEM printer shipments, but also noticeably delayed some profitable repair volume as well.
Gregory A. Woods: We're working closely with our suppliers and expect to have the shortages are resolved by the third quarter of this year, but beginning in Q2.
Gregory A. Woods: Longer term as Greg noted the way these sorts of issues get sorted out is through the transition.
Gregory A. Woods: To the.
Gregory A. Woods: Most of the Astra and over there.
Speaker Change: Aerospace customers to the newer more stuff right or products.
Speaker Change: With those factors is explanation segment operating profit was $1 7 million or 17, 6% of segment revenue compared to segment operating profit of $2 1 million or 21% of segment revenue in the first quarter of last year.
David Smith: With those factors as an explanation, segment operating profit was $1.7 million or 17.6% of segment revenue compared to segment operating profit of $2.1 million or 20.1% of segment revenue in the first quarter last year. Turning to slide 10, which I won't read, supplies accounted for 57% of revenue in the first quarter versus 54% in Q1 last year. Hardware accounted for about 27% of revenue, down 6 points from last year, stemming in large part from a supply shortage and order deferral issues.
Speaker Change: Turning to slide 10, which I won't read supplies okay.
Speaker Change: At 457% of revenue in the first quarter versus 54% in Q1 last year hardware accounted for about 27% of revenue down six points from last year.
Speaker Change: Stemming in large part from a supply shortage and order deferral issues.
David Smith: The service other category made up just over 16% of revenue in the quarter, up from 13.2% in Q1 of last year, and that was primarily due to the T&M segment. I'll conclude my remarks by talking about our balance sheet and cash flow highlights that are outlined on slide 11. Cash and equivalents at the end of the first quarter were $4 million, down from about $500,000 higher at the end of the prior fiscal year.
Speaker Change: The service and other category made up just over 16% of revenue in the quarter up from <unk> from 13, 2% in Q1 of last year and that primarily due to the T N M. Sarah.
Speaker Change: I'll conclude my remarks by.
Sarah: Talking about our balance sheet and cash flow highlights that are.
Sarah: Outlined on slide 11.
Speaker Change: Cash and equivalents at the end of the first quarter.
Speaker Change: $4 million down from about 500000 higher.
Speaker Change: At the end of the prior fiscal year and that range is about where we are likely to remain at quarter ends as long as we have debt outstanding it's close to the minimum levels. We're currently comfortable having after accounting for the needs of our various operating subsidiaries globally.
David Smith: And that range is about where we're likely to remain at quarter ends as long as we have debt outstanding. It's close to the minimum levels we're currently comfortable with after accounting for the needs of our various operating subsidiaries globally. We generated $6.9 million in cash from operations during the quarter, and we reduced the revolving debt by $5.5 million. The cash balance at the end of the quarter was $15.6 million, and our bank calculated debt trailing 12-month EBITDA to debt ratio was just a hair under 1.
We generated $6 9 million a cash from operations during the quarter and we reduced our revolving debt by $5 5 million.
Speaker Change: Debt at the end of the quarter was $15 6 million and our bank calculated.
Speaker Change: <unk> trailing 12 months EBITDA to debt ratio was just a hair under one.
David Smith: That ratio will likely still be significantly below our covenant limits at the end of Q2, even after the acquisition. As is detailed in the 10-Q we're about to file later today, post-quarter end, we took on an additional $19.4 million in debt to consummate the M-Tax acquisition. To do this, we increased our credit capacity by amending our credit facility with Bank of America. Post-acquisition, we still have sufficient committed revolving credit capacity to support our operating needs, and together with the banking relationship, we believe it will also support non-organic growth opportunities that fit our acquisition criteria should the opportunities arrive.
Speaker Change: That ratio will likely still be significantly below.
Speaker Change: Our covenant limits at the end of Q2, even after the acquisition.
Speaker Change: As this is all detailed in the 10-Q or about to file later today.
Speaker Change: Quarter end, we took on an additional 919 point.
Speaker Change: $4 million in debt to consummate the <unk> acquisition.
Speaker Change: To do this we increased our credit capacity by amending our credit facility with Bank of America.
Speaker Change: Post acquisition, we still have sufficient committed revolving credit capacity to support our operating needs.
Speaker Change: And together with a banking relationship. We believe also support nonorganic growth opportunities that fit our acquisition criteria should the opportunities arise.
David Smith: That said, our primary focus in the near term is debt reduction. I guess I should say we have the goal of repaying all of the revolving credit debt by the end of the year. I should note that the availability under the bank revolving credit does decline by $5 million from $30 to $25 million at the end of the fiscal year, but we really don't expect to need it. So with that, I'll turn the call back to Greg for closing comments.
Speaker Change: That said.
Speaker Change: Our primary focus in the near term is debt reduction.
Speaker Change: We expect.
Speaker Change: I guess I should say, we have the goal of repaying most of the revolving credit debt are we're paying all.
Speaker Change: All of the Republic revolving credit debt by the end of the year.
Speaker Change: I should note that the availability under the bank revolving credit does declined by $5 billion from $30 million to $25 million at the end of the fiscal year, but we really don't expect to meet it.
Speaker Change: So with that I'll turn the call back to Greg.
Gregory A. Woods: For closing comments.
Gregory A. Woods: Thanks, David.
Gregory A. Woods: Turning to slide 12. Looking ahead, we're excited about the prospects for both segments of our business over the balance of fiscal 2025 and beyond. While revenues were pressured by supplier issues, the shipment delay of a major order, and the transition to higher-margin products across both segments. We believe the move to higher-end, higher-margin products will yield profitability benefits both this fiscal year and over the long term. We remain on track to achieve our fiscal full year 2025 expectations for Organic Revenue Growth in the Mid-Single Digits and Adjusted EBITDA Margin in the range of 13% to 14%.
Gregory A. Woods: Turning to slide 12.
Gregory A. Woods: Looking ahead, we're excited about the prospects for both segments of our business over the balance of fiscal 2025 and beyond.
Gregory A. Woods: While revenues were pressured by a supplier issues the shipment delay of a major order.
Gregory A. Woods: And the transition to higher margin products across both segments.
Gregory A. Woods: We believe the move to higher and higher margin products will yield profitability benefits. Both this fiscal year and over the long term.
Gregory A. Woods: We remain on track to achieve our fiscal full year 2025 expectation for organic revenue growth in the mid single digits and adjusted EBITDA margin in the range of 13% to 14%.
Gregory A. Woods: Summarizing on slide 13.
Gregory A. Woods: Summarizing on slide 13. We have well-respected brands across our businesses, and we continue to launch innovative products that satisfy our customers' most challenging needs and strengthen our leading market position. This sets us up to capitalize on strong secular trends in both our product identification and test and measurement segment, including the increasing demand for a wide range of printing solutions to satisfy mass customization of packaging for consumer goods, as well as the resurgent airline industry.
Gregory A. Woods: We are well respected brands across our businesses and we continue to launch innovative products that satisfy our customers' most challenging needs and strengthen our leading market positions.
Speaker Change: This sets us up to capitalize on strong secular trends in both our product identification and test <unk> measurement segments, including the increasing demand for a wide range of printing solutions to satisfy mass customization of packaging for consumer goods as.
Speaker Change: As well as the resurgent airline industry.
Gregory A. Woods: Now, with that, David and I will take your questions. Operator, please open the line for Q&A. Thank you. If you would like to register a question, please press star followed by one on your telephone keypad, ensuring that your line is unmuted.
Speaker Change: Now with that David and I will take your questions. Operator, Please open the line for Q&A.
Speaker Change: Thank you if you would like to register a question. Please press star followed by one on your telephone keypad, ensuring your line is on mute Luckily.
Operator: Candace, I don't believe we have any questions in the queue, so we'll be happy to turn it back to Mr. Woods.
Operator: Thank you. If you would like to register a question, please press star followed by one on your telephone keypad, ensuring that your line is unmuted locally. If for any reason you'd like to withdraw your question, you can do so by pressing star followed by two to do so. So as a reminder to ask your question, it's star followed by one. We'll just pause here briefly to compile a Q&A list. Thank you for standing by.
Speaker Change: Any reason you'd like to withdraw your question you can do some quick questions I'll ask Mike to take shape.
Speaker Change: As a reminder to ask a question.
Speaker Change: Well, let's just pause briefly to compile the Q&A roster.
Speaker Change: Thank you for standing by.
Speaker Change: And this I don't believe we have any questions in the queue.
Speaker Change: So we'll be happy to turn it back to Mr. Watson.
Speaker Change: Thanks, Steve.
Steve: Okay, well with that thank you all for joining US here. This morning, we look forward to keeping you updated on our progress and have a good rest of the day.
Gregory A. Woods: Okay. Well, with that, thank you all for joining us here this morning. We look forward to keeping you updated on our progress. And have a good rest of the day. Bye now.
Speaker Change: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your line.
Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect your line.
Speaker Change: [music].