Q2 2026 AstroNova Inc Earnings Call
<unk> answer session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Debbie Pawlowski. Thank you you may begin.
Thank you and good morning, everyone. We certainly appreciate your interest and afternoon and thank you for sharing your time with us today.
I'm pleased to introduce you to you York at men, who was appointed President and Chief Executive Officer of Astral Noga effective August 15th this year.
Also joining us is Tom the bile, our chief Financial Officer.
Who should be familiar to most of you.
You should have the earnings release that crossed the wires earlier this morning, as well as the slides that will accompany our conversation today. If not you can find these documents on the Investor Relations segment of our website Astro Nova Inc.
Please turn to slide two to review cautionary statements.
As you are likely aware during the formal presentation as well as the Q&A session management may make some forward looking statements about our current plans beliefs and expectations.
These statements apply to future events that are subject to risks uncertainties and other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as in other documents filed by the company with Securities and Exchange Commission.
These documents can be found on our website or at SEC Gov.
Also as noted on the slide management will refer to some non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP you can find.
Reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides.
Now if you will turn to slide three I will turn the call over to Europe.
Europe.
Thank you Debbie good morning, everyone and thank you for joining us today.
That it could take almost new leadership role and confident in the future of <unk>.
We have a leading market position in aerospace with a loyal customer base and long term contracts as a first tier supplier to major aircraft manufacturers.
Our product identification segment, our new commercial print technologies have begun to ship as these new print solutions are validated by our customers, we expect to be able to address the full funnel of interest we have been generating to drive sales.
No we have a lot of work to do to get our growth and profitability on track.
On slide three you will see more priority scratched Ronaldo.
Starting first with our product I'd segment, we began the restructuring of our sales team earlier this year to be much more customer centric company.
Speaker #3: Greetings, and welcome to AstroNova's second quarter fiscal year 2026 financial results. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation.
The company has been losing customers over the last number of years and I believe it's because of how we went to market and our sales organization was compensated.
Speaker #3: If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Debbie Pulowski.
<unk> organized sales into two teams customer acquisition and customer retention.
This is reorient our focus on taking care of our current customers and winning back those we have lost while gaining new customers ultra.
Speaker #3: Thank you. You may begin.
Also working to change the skills of our sales team to align with our new product offerings.
Speaker #4: Thank you, and good morning, everyone. We certainly appreciate your interest in AstroNova and thank you for sharing your time with us today. I am pleased to introduce you to Joric Itman, who was appointed president and chief executive officer of AstroNova effective August 15th this year.
Our new print solutions, especially the significantly larger and harder failure print solutions, we're now offering our capital projects for our customers.
This is a very different sales process from how we have sold our legacy capable tabletop printers.
Speaker #4: Also joining us is Tom DeByle, our chief financial officer, who should be familiar to most of you. You should have the earnings release that crossed the wires earlier this morning, as well as the slides that will accompany our conversation today.
The sales cycle is longer and customers' needs are more specific.
We've been making progress with our new go to market strategy and believe results will begin to demonstrated over the next several quarters. Our success is also dependent upon a couple of other hurdles. We are currently addressing.
Speaker #4: If not, you can find these documents on the Investor Relations segment of our website, AstroNova Inc. Please turn to slide 2 to review cautionary statements.
Speaker #4: If you are likely aware, during the formal presentation, as well as the Q&A session, management may make some forward-looking statements about our current plans, beliefs, and expectations.
First we have to validate with customers that the upgrades, we have made to the amtech product line meets their needs, including print quality speed reliability durability and lower operating costs we.
Speaker #4: These statements apply to future events that are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from what is stated here today.
We have shipped several of the models with another to be on the way this week.
Speaker #4: These risks and uncertainties, along with other factors, are provided in the earnings release as well as in other documents filed by the company with the Securities and Exchange Commission.
If results come out as we expect we can drive more sales if not we will have to rethink that portfolio.
Speaker #4: These documents can be found on our website or at fdc.gov. Also, as noted on the slide, management will refer to some non-GAAP financial measures.
Second as this might be news to you we have a different kind of problem with our product line for our partners who serve the mill in sheet printer line.
<unk> had a hard time keeping up with demand.
Speaker #4: We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
We have redesigned products for that market and we have excellent partners serving those customers.
Our partners and their customers like the products.
Speaker #4: You can find reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides. Now, if you will turn to slide 3, I will turn the call over to Joric.
We just haven't been able to make enough of these products.
Our leadership team is actively engaged now in order to capitalize on this opportunity.
Turning to aerospace now, even though revenue declined compared with last year's second quarter. We believe that business is performing on key metrics such as transitioning to our top writer flight deck printers from legacy equipment.
Speaker #4: Joric?
Speaker #5: Thank you, Debbie. Good morning, everyone, and thank you for joining us today. I'm excited to take on this new leadership role and confident in the future of Astronova.
Speaker #5: We have a leading market position in aerospace with a loyal customer base and long-term contracts as a first-tier supplier to major aircraft manufacturers. In our product identification segment, our new commercial print technologies have begun to ship.
During the quarter, we began shipping the top right of $6 42, a major aircraft OEM.
As a result, there were tough rider represented 50% of second quarter shipments and we remain on track to reach our target of over 80% by fiscal year end.
Speaker #5: As these new print solutions are validated by our customers, we expect to be able to address the full funnel of interest we have been generating to drive sales.
Aerospace can be a lumpy business from quarter to quarter, nearly 45% of the segments.
Speaker #5: But I know we have a lot of work to do to get our growth and profitability on track. On slide 3, you see my priorities for Astronova.
Revenue is for aftermarket sales and service and roughly 10% of hardware sales are available spirit replacement machines.
Speaker #5: Starting first with our product ID segment, we began the restructuring of our sales team earlier this year to be much more customer-centric. The company has been losing customers over the last number of years, and I believe it's because of how we went to market and how our sales organization was compensated.
However for new build aircraft, we lack the long term tailwind provided by growth in commercial aircraft build rates.
We're also making changes in the culture of extra Nova we are a great talent within the organization that needs to be unleashed yet held accountable.
Speaker #5: I have reorganized sales into two
Speaker #5: teams. Customer acquisition and
I am working to create a more collaborative culture that puts the customer first.
Speaker #5: customer retention. This
Speaker #5: reorients our focus on
Im excited on how the team has embraced change and believe we can develop into an organization that delivers.
Speaker #5: taking care of our current customers and winning back those we have lost
Speaker #5: while gaining new customers.
Speaker #5: We also work to change the skills of our sales team to align with our new product offerings.
We have to execute our plan to regain trust with our key stakeholders.
Including customers employees and not least investors I.
Speaker #5: Our new print solutions,
Speaker #5: especially the significantly larger
Speaker #5: and higher-value print solutions, were now offering our
I believe that if we can demonstrate astro Nova can make progress in our markets with our customers strengthened.
Speaker #5: capital projects for our
Speaker #5: customers. This is a very
Strengthening the earnings power and be straightforward and transparent while delivering on our promises we will build credibility with you Tom.
Speaker #5: different sales process from
Speaker #5: how we have sold our
Speaker #5: legacy tabletop
Speaker #5: printers. The sales cycle is
Speaker #5: longer, and customers' needs are
Tom I will turn it to you now to review the financials.
Speaker #5: more specific. We have been making
Thank you Europe and good morning, everyone on slide four you can see the second quarter revenue of $36 1 million declined 10, 9% year over year and sequentially four 2%.
Speaker #5: progress with our new go-to-market
Speaker #5: strategy and believe the result
Speaker #5: will begin to demonstrate it over the next
Speaker #5: several quarters. Our
Speaker #5: success is also dependent customers.
Speaker #5: upon a couple of other hurdles we are currently addressing. First, we have to validate with
70% of this quarter's revenue was reoccurring.
Speaker #5: customers that the upgrades we have made to
By segment product I'd and aerospace.
Speaker #5: the MTeX product line meet their
Speaker #5: needs. Including print
Space decreased eight 9% and 15, 1% respectively.
Speaker #5: quality, speed,
Speaker #5: reliability, durability, and
Speaker #5: lower operating costs.
Lower sales in product identification in the quarter were primarily driven by $2 6 million decline in recurring supply parts and service from customer attrition.
Speaker #5: We have shipped several of the models
Speaker #5: with another to be on the way this
Speaker #5: week. If results come
Speaker #5: out as we expect, we can drive more sales; if
Speaker #1: First, we have to validate
This was partially offset by higher demand for the mail in sheet flat pack products.
Speaker #1: with customers that the upgrades we have
Speaker #1: made to the MTeX product line
Speaker #1: meet their needs. Including
In July we began shipping our new professional label printers, the QL $4 25, and $4 35 model.
Speaker #1: print quality, speed,
Speaker #1: reliability, durability,
Speaker #1: and lower operating
Speaker #1: Costs. We have shipped several of the
Speaker #1: models with another to be on the
And in August we ship the AAJ 800, a new direct to package printer line that was upgraded from the former <unk> model.
Speaker #1: way this week. If
Speaker #1: results come out as we expect,
Speaker #1: we can drive more sales;
Speaker #1: if not, we will have to rethink
For aerospace the year over year decline was the result of a tough comparison against last year's second quarter, which benefited from a $1 3 million an unusually large spare printer shipments to both the airlines and the defense customer as well as nonrecurring engineering revenue from an OEM project.
Speaker #1: that portfolio.
Speaker #1: Second, as this might be news to
Speaker #1: you, we have a different kind of problem with
Speaker #1: our product line for our
Speaker #1: partners who serve the mill and sheet printer line. We have had a hard time keeping up with
Speaker #1: demand. We have redesigned
Speaker #1: products for that market, and we
Speaker #1: have excellent partners serving those
For the first half of fiscal 2026 revenue of $73 8 million increased marginally year over year due to higher hardware sales offsetting the decline in reoccurring supplies parts and service revenue.
Speaker #1: customers. Our
Speaker #1: partners and their customers like the
Speaker #1: products, we just
Speaker #1: I haven't been able to make enough of these.
Speaker #1: products. Our PI
Speaker #1: leadership team is actively
Speaker #1: engaged now in order to
Speaker #1: capitalize on this opportunity. Turning to aerospace
Turning to slide five gross profit in the second quarter was $11 6 million down $2 7 million year over year, reflecting lower sales and unfavorable mix primarily related to the decline in aerospace volumes.
Speaker #1: now, even though revenue declined
Speaker #1: compared with last year's second
Speaker #1: quarter, we believe that
Speaker #1: Business is performing on key metrics, such as transitioning.
Speaker #1: to our top rider flight
Speaker #1: deck printers from legacy
Speaker #1: equipment. During the quarter, we began shipping the top rider 640 to a major aircraft OEM. As a result, there were top rider represented 50% of second quarter shipments, and we remain on track to reach our target of over 80% by fiscal year end.
Speaker #1: equipment. During the quarter, we began shipping the top rider 640 to a major aircraft OEM. As a result, there were top rider represented 50% of second quarter shipments, and we remain on track to reach our target of over 80% by fiscal
For the first half of fiscal 2026 gross profit was $24 3 million or 32, 9% of sales a $2 million decline from the same period last year as a result of less favorable product mix, primarily in the aerospace segment.
Speaker #1: Aerospace can be a lumpy business from
For the second half of the year, we expect aerospace gross margin to improve on similar volume since we began shipping the tough rider to a major OEM in June.
Speaker #1: 45% of the segment's
Speaker #1: revenue is for aftermarket
Speaker #1: sales and service and
Speaker #1: roughly 10% of
Speaker #1: hardware sales are dependent
Volume and improved mix in the product I D should drive margins as well.
Speaker #1: upon spare replacement
Speaker #1: machines. However, for new
Speaker #1: build aircraft, we lack
Looking at slide six product operating income for the quarter declined <unk> 4 million or 18% and was partially offset by $1 5 million reduction in operating costs.
Speaker #1: the long-term tailwind
Speaker #1: provided by growth in commercial
Speaker #1: aircraft build rates.
Speaker #1: We're also making changes in the culture
Speaker #1: of AstroNova. We have a great
Speaker #1: talent within the organization that
In the first six months of fiscal 'twenty six GAAP operating income also declined.
Speaker #1: needs to be unleashed yet
Speaker #1: held accountable. I am working to
Speaker #1: create a more collaborative culture
We expect improvements in sales and with the impact of our cost reductions, we should see improving margins for the segment.
Speaker #1: that puts the customer first.
Speaker #1: I'm excited on how the team has
Speaker #1: embraced change and
Speaker #1: believe we can develop into an
Speaker #1: organization that delivers.
Looking at slide seven.
Speaker #1: We have to execute our plan to
Aerospace operating income for the quarter was down $1 4 million or 37% due to sales volume and unfavorable mix.
Speaker #1: regain trust with our key
Speaker #1: stakeholders. Including
Speaker #1: least, investors. I believe that if we can
This was partially offset by <unk> 3 million and cost reductions.
Speaker #1: demonstrate AstroNova can make progress
Speaker #1: in our markets with our
Speaker #1: customers, strengthen earnings
For the first half of fiscal 2026% GAAP and adjusted operating income declined due to weak second quarter results.
Speaker #1: power, and be straightforward and
Speaker #1: transparent while delivering on our
Speaker #1: promises, we will build
Speaker #1: credibility with you.
Turning to slide eight our net loss was $1 2 million or <unk> 16.
Speaker #1: Tom, I will turn it to you now to review the
Speaker #1: financials.
<unk> per share, reflecting lower volume, partially offset by $1 5 million tax benefit.
Speaker #2: Thank you,
Speaker #2: York. And good morning,
Speaker #2: everyone. On slide four, you can see the
Speaker #2: second quarter revenue of
Speaker #2: $36.1 million declined
Adjusted EBITDA was $2 1 million down $1 8 million compared with the prior year period.
Speaker #2: 10.9% year over
Speaker #2: year and sequentially
Speaker #2: 4.2%.
Adjusted EBITDA margin for the second quarter was five 7%.
Speaker #2: 70% of this quarter's revenue was
Speaker #2: reoccurring. By
Speaker #2: segment, product ID and
Moving to slide nine cash provided from operations in the first half of fiscal 'twenty six was $4 6 million and down from the prior year based on everything we have covered here.
Speaker #2: aerospace decreased
Speaker #2: 8.9% and
Speaker #2: 15.1%,
Speaker #2: respectively. Lower sales and product
Speaker #2: identification in the quarter
Speaker #2: were primarily driven by
As George mentioned, we are rethinking, how we operate the business and are driving a stronger focus on cash generation through improved operational performance.
Speaker #2: $2.6 million decline in
Speaker #2: recurring supplies parts and
Speaker #2: service from customer
Speaker #2: attrition. This is partially offset
Speaker #2: by higher demand for the mail and
Speaker #2: sheet flat pack
We are carefully managing our capital and as a result, our Capex was $1 1 million in the first six months of the year, we have been constraining our capital investments and I expect capex for the fiscal year to be less than a half a million dollars.
Speaker #2: products. In July, we
This is partially offset by higher demand for the mail-in sheet flat pack products.
In July, we began shipping our new professional label printers, the ql, 425, and 435 models.
In July, we began shipping our new professional label printers, the QL, 425, and 435 models.
We paid down $5 1 million in debt through the first half of fiscal 'twenty six and as of July 31, 2025, we have $10 $4 million in total liquidity, including $3 9 million in cash $5 9 million available on our revolver and an untapped 6 million.
For Aerospace. The year-over-year decline was the result of a tough comparison against last year's second quarter, which benefited from a 1.3 million and unusually large spare printer shipments to both the airline and a defense customer as well as non-recurring engineering revenue from an oem project,
For aerospace, the year-over-year decline was the result of a tough comparison against last year's second quarter, which benefited from 1.3 million unusually large spare printer shipments to both the airline and a defense customer, as well as non-recurring engineering revenue from an OEM project.
And in August, we shipped the AHA 800, a new direct-to-package printer line that was upgraded from the former mtex model.
The first half of fiscal 2026 revenue of 73.8 million. Increased marginally year-over-year due to higher Hardware Sales. Offsetting the decline and reoccurring supplies parts and service Revenue.
The first half of fiscal 2026 revenue of 73.8 million. Increased marginally year-over-year due to higher Hardware Sales. Offsetting the decline in reoccurring, supplies parts and service Revenue.
Vinyl credit in Portugal.
Our leverage ratio of funded debt to adjusted EBITDA was three five times.
For Aerospace. The year-over-year decline was a result of a tough comparison against last year's second quarter, which benefited from a 1.3 million and unusually large spare printer shipments to both the airline and a defense customer as well as non-recurring engineering revenue from an oem project,
For Aerospace. The year-over-year decline was a result of a tough comparison against last year's second quarter, which benefited from a 1.3 million and unusually large spare printer shipments to both the airline and a defense customer as well as non-recurring engineering revenue from an oem project,
The bank waived our fixed charge coverage ratio for the second quarter, but we are in discussions regarding restructuring our debt, which we expect to have completed in the next 60 days.
Favorable mix primarily related to this client and aerospace volume.
Turning to slide 5 gross profit. In the second quarter was 11.6 million, down 2.7 million year-over-year reflecting lower sales. And on favorable mix primarily related to the decline in Aerospace volume.
Our objective with the turnaround of product I D and continued advancement of the aerospace segment is on a consolidated basis to grow sales drive product profitability generate cash and pay down debt.
The first half of fiscal 2026 revenue of 73.8 million. Increased marginally year-over-year due to higher Hardware Sales. Offsetting the decline and reoccurring supplies parts and service Revenue.
Revenue of 73.8 million increased marginally year-over-year due to higher Hardware Sales. Offsetting the decline and reoccurring supplies parts and service Revenue.
For the first half of fiscal 2026, gross profit was 24.3 million or 32.9% of sales. A $0 decline from the same period last year, as a result of less favorable product mix primarily in the Aerospace segment.
For the first half of fiscal 2026, gross profit was 24.3 million or 32.9% of sales. A 2 million dollar decline from the same period last year as a result of less favorable product mix primarily in the Aerospace segment.
Turning to slide 5 gross profit. In the second quarter was 11.6 million, down 2.7 million year-over-year reflecting lower sales. And on favorable mix primarily related to the decline in Aerospace volume.
Turning to slide 5, gross profit in the second quarter was $11.6 million, down $2.7 million year-over-year, reflecting lower sales and an unfavorable mix, primarily related to this client and Aerospace volume.
Now please turn to slide 10, I'll hand, the call back to yard.
Thanks, Tom we had orders of $35 9 million in the second quarter of fiscal 2026, which were relatively unchanged from the prior year period, but up $1 million sequentially as a solid improvements in aerospace more than offset a very weak order quarter for product IV as we discussed earlier.
For the second half of the year. We expect Aerospace growth from margin to improve on similar volume. Since we began shipping the Tuff Rider to a major, OEM in June.
For the second half of the year. We expect Aerospace gross margin to improve on similar volume. Since we began shipping the Tuff Rider to a major, OEM in June.
Higher volume and improved mix in the product ID should drive margins as well.
Higher volume and improved mix in the product ID should drive margins as well.
For the first half of fiscal 2026, gross profit was $24.3 million, or 32.9% of sales. This represents a $2 million decline from the same period last year, primarily as a result of a less favorable product mix in the Aerospace segment.
For the first half of fiscal 2026, gross profit was $24.3 million, or 32.9% of sales. This marks a $2 million decline from the same period last year, primarily due to a less favorable product mix in the Aerospace segment.
We have changed the team structure and are actively meeting with current and past and prospective customers.
Looking at slide 6 product ID, operating income for the quarter decline, 0.4 million, or 18%, and was partially offset by 0.5 million reduction in operating costs.
Looking at slide 6, product ID operating income for the quarter declined by $4 million, or 18%, and was partially offset by a $0.5 million reduction in operating costs.
For the second half of the year. We expect Aerospace growth margin to improve on similar volume. Since we began shipping the Tuff Rider to a major, OEM in June.
For the second half of the year. We expect Aerospace growth from margin to improve on similar volume. Since we began shipping the Tuff Rider to a major, OEM in June.
In the first 6 months of fiscal 26 Gap, operating income also declined.
In the first 6 months of fiscal 26 Gap, operating income also declined.
Aerospace orders were up $3 8 million for the trailing first quarter.
Higher volume and improved mix in the product ID should drive margins as well.
Higher volume and improved mix in the product ID should drive margins as well.
Im seeing how much variation this business can have from quarter to quarter, we do expect that as Boeing increases its build rates and inventories level out we should see steady growth in hardware sales related to new builds.
We expect improvements in sales and with the impact of our cost reductions, we should see improving margins for the segment.
We expect improvements in sales, and with the impact of our cost reductions, we should see improving margins for the segment.
Looking at site 7.
Looking at site 7.
Looking at slide 6, product ID, operating income for the quarter declined by $0.4 million, or 18%. It was partially offset by a $0.5 million reduction in operating costs.
Aerospace, operating income for the quarter was down 1.4 million or 37% due to sales volume, and unfavorable mix.
Aerospace operating income for the quarter was down $1.4 million, or 37%, due to sales volume and an unfavorable mix.
Backlog.
For the quarter was down $4 6 million year over year to $25 3 million and represented about 30% of expected shipments for the second half of the year at the midpoint of our guidance range.
In the first 6 months of fiscal 26 Gap, operating income also declined.
In the first 6 months of fiscal 26 Gap, operating income also declined.
This was partially offset by 0.3 million in cost reductions.
This was partially offset by 0.3 million in cost reductions.
We expect improvements in sales and with the impact of our cost reductions, we should see improving margins for the segment.
We expect improvements in sales, and with the impact of our cost reductions, we should see improving margins for the segment.
For the first half of fiscal, 2026 Gap and adjusted operating income declined. 22 weeks, second quarter results.
For the first half of fiscal, 2026 Gap and adjusted operating income declined, 222 weeks, second quarter results.
Looking at site 7.
Looking at site 7.
If you'll turn to slide 11.
And I will summarize the work we have to do to put <unk> on track to deliver stronger profitability.
Aerospace operating income for the quarter was down $1.4 million, or 37%, due to sales volume and unfavorable mix.
Aerospace, operating income for the quarter was down 1.4 million or 37% due to sales volume, and unfavorable mix.
Turning to slide 8, our net loss was 1.2 million or 16 cents. Per share reflecting lower volume partially offset by a 0.5 million tax benefit.
Turning to slide 8, our net loss was $1.2 million, or 16 cents per share, reflecting lower volume partially offset by a $0.5 million tax benefit.
And improved sales. They are unfortunately is not any single lever to pool to make this work we have to reengage with our customers and simplify our processes to improve our responsiveness.
This was partially offset by 0.3 million in cost reductions.
This was partially offset by 0.3 million and cost reductions.
Adjusted ebit. It was 2.1 million down 1.8 million compared with the prior year period.
Adjusted ebita was 2.1 million down 1.8 million compared with the prior year period.
Adjusted EBIT and margin for the second quarter was 5.7%.
Adjusted EBIT and margin for the second quarter was 5.7%.
For the first half of fiscal 2026, Gap and adjusted operating income declined. 22 weeks, second quarter results.
We need to measurably improve our customer retention rate, we have to evolve our sales approach for a new higher value printers.
Moving to slide 9.
Moving to slide 9.
Turning to slide 8, our net loss was 1.2 million or 16 cents. Per share reflecting lower volume partially offset by a 0.5 million tax benefits.
Turning to slide 8, our net loss was $1.2 million, or 16 cents per share, reflecting lower volume partially offset by a $0.5 million tax benefit.
We also are addressing production challenges in the mill and sheet flat pack printer operation.
Cash provided from operations in the first half of fiscal. 26 was 4.6 million and down from the prior year, based on everything we have covered here,
Cash provided from operations in the first half of fiscal. 26 was 4.6 million and down from the prior year, based on everything we have covered here,
Adjusted EBITDA was $2.1 million, down $1.8 million compared with the prior year period.
Adjusted ebita was 2.1 million down 1.8 million compared with the prior year period.
We need to streamline processes to take out cost.
And reduce our lead times were simplifying operations in Portugal, and better prioritizing and allocating our resources.
Adjusted ebit and margin for the second quarter was 5.7%.
Adjusted ebit and margin for the second quarter was 5.7%.
As York mentioned, we are rethinking how we operate the business and our driving a stronger focus on cash generation through improved operational performance.
As York mentioned, we are rethinking how we operate the business and are driving a stronger focus on cash generation through improved operational performance.
I remain encouraged as we move forward, we expect to see a full benefit of the $3 million.
And annualized cost reductions in the second half of the fiscal year, we will have a much better understanding of the potential of our new printers over the next few months and our aerospace business provides a stable base with a couple of <unk>, including increasing aircraft build rates and a benefit to profit margin we will realize.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference to your host, Deborah Pawlowski. Thank you. You may begin.
Speaker #1: For six months of the year. We have been constraining our capital investments. I expect CapEx for the fiscal year to be less than half a million.
In fiscal 2028, as Honeywell royalty rolls off I am looking forward to the challenge of improving the business and driving change third as turnover operator, let's open the line for questions.
Speaker #1: We've paid down 5.1 million in debt for the first half of fiscal 26, and as of July 31st, 2025, we have 10.4 million in total liquidity.
Thank you.
At this time, we'll be conducting a question and answer session.
Speaker #1: Including 3.9 million in cash, 5.9 million available on our revolver, and an untapped 0.6 million line of credit in Portugal. Our leverage ratio of funded debt to adjusted EBITDA was 3.5 times.
If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Deborah Pawlowski: Thank you, and good morning, everyone. We certainly appreciate your interest in AstroNova Inc., and thank you for sharing your time with us today. I am pleased to introduce to you Jorik Ittmann, who is appointed President and Chief Executive Officer of AstroNova Inc., effective August 15 this year. Also joining us is Thomas DeByle, our Chief Financial Officer, who should be familiar to most of you. You should have the earnings release that crossed the wires earlier this morning, as well as the slides that will accompany our conversation today. If not, you can find these documents on the Investor Relations segment of our website, AstroNova Inc. Please turn to slide two to review cautionary statements. As you are likely aware, during the formal presentation, as well as the Q&A session, management may make some forward-looking statements about our current plans, beliefs, and expectations.
You May press star two if you'd like to remove your question from the queue.
Speaker #1: The bank waived our fixed charge coverage ratio for the second quarter and we are in discussions regarding restructuring our debt, which we expect to have completed in the next 60 days.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker #1: Our objective with the turnaround of product ID and continued advancement of the aerospace segment is, on a consolidated basis, to grow sales, drive product profitability, generate cash, and pay down debt.
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Speaker #1: Now, please turn to slide 10 and I'll hand the call back to York.
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Speaker #2: Thanks, Tom. We had ordered $35.9 million in the second quarter of fiscal 2026, which was relatively unchanged from the prior year period but up $1 million sequentially, as solid improvements in aerospace more than offset a very weak order quarter for Product ID.
Deborah Pawlowski: These statements apply to future events that are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from what is stated here today. These risks, uncertainties, and other factors are provided in the earnings release, as well as in other documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at SEC.gov. Also, as noted on the slide, management will refer to some non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. You can find reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides.
Yeah.
Speaker #2: As we discussed earlier, we have changed the team structure and are actively meeting with current and past and prospective customers. Aerospace million for trailing first quarter, I'm seeing how much variation this business can have from quarter to quarter.
Speaker #2: We do expect that as Boeing increases its build rates, an inventory's level out, we should see steady growth in hardware sales related to new builds.
Speaker #2: Backlog for the quarter was down 4.6 million year over year. Orders were up 3.8 million to 25.3 million, which represents about 30% of expected shipments for the second half of the year, at the midpoint of our guidance range.
Deborah Pawlowski: Now, if you will turn to slide three, I will turn the call over to Jorik. Jorik?
Jorik Ittmann: Thank you, Debbie. Good morning, everyone, and thank you for joining us today. I'm excited to take on this new leadership role and confident in the future of AstroNova Inc. We have a leading market position in aerospace with a loyal customer base and long-term contracts as a first-tier supplier to major aircraft manufacturers. In our product identification segment, our new commercial print technologies have begun to ship. As these new print solutions are validated by our customers, we expect to be able to address the full funnel of interest we have been generating to drive sales. I know we have a lot of work to do to get our growth and profitability on track. On slide three, you see my priorities for AstroNova Inc. Starting first with our product identification segment, we began the restructuring of our sales team earlier this year to be much more customer-centric.
Speaker #2: If you will turn to slide 11, and I will summarize the work we have to do to put AstroNova on track to deliver stronger profitability and improved sales.
Speaker #2: There are, unfortunately, not any single lever to pull to make this work. We have to re-engage with our customers and simplify our processes to improve our responsiveness.
Speaker #2: We need to measurably improve our customer retention rate; we have to evolve our sales approach for a new, higher value printers. We also are addressing production challenges in the mill and sheet flat pack printer operation.
Speaker #2: We need to streamline processes to take out costs, and reduce our lead times. We are simplifying operations in Portugal and better prioritizing and allocating our resources.
Jorik Ittmann: The company has been losing customers over the last number of years, and I believe it's because of how we went to market and how our sales organization was compensated. I reorganized sales into two teams: customer acquisition and customer retention. This reorients our focus on taking care of our current customers and winning back those we have lost while gaining new customers. Also, working to change the skills of our sales team to align with our new product offerings. Our new print solutions, especially the significantly larger and higher-value print solutions, are now offering our capital projects for our customers. This is a very different sales process from how we have sold our legacy tabletop printers. The sales cycle is longer, and customers' needs are more specific. We've been making progress with our new go-to-market strategy and believe results will begin to demonstrate it over the next several quarters.
Speaker #2: Our remaining courage, as we move forward, is that we expect to see the full benefit of the $3 million in annualized cost reductions in the second half of the fiscal year.
Speaker #2: We will have a much better understanding of the potential of our new printers over the next few months. Our aerospace business provides a stable base with a couple of tailwinds, including increasing aircraft build rates and a benefit to profit margin we will realize in fiscal 2028, as the Honeywell royalty rolls off.
Speaker #2: I'm looking forward to the challenge, of improving the business and driving change toward AstroNova. Operator, let's open the line for questions.
Speaker #3: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press *1 on your telephone keypad.
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Jorik Ittmann: Our success is also dependent upon a couple of other hurdles we're currently addressing. First, we have to validate with customers that the upgrades we have made to the MTEX product line meet their needs, including print quality, speed, reliability, durability, and lower operating costs. We have shipped several of the models, with another to be on the way this week. If results come out as we expect, we can drive more sales. If not, we will have to rethink that portfolio. Second, as this might be news to you, we have a different kind of problem with our product line for our partners who serve the mill and sheet flat-pack printer line. We have had a hard time keeping up with demand. We have redesigned products for that market, and we have excellent partners serving those customers. Our partners and their customers like the products.
Speaker #3: As a reminder, if you'd like to ask a question, please press *1 on your telephone keypad. One moment while we poll for questions.
Jorik Ittmann: We just haven't been able to make enough of these products. Our PI leadership team is actively engaged now in order to capitalize on this opportunity. Turning to aerospace now, even though revenue declined compared with last year's second quarter, we believe that business is performing on key metrics such as transitioning to our ToughWriter flight deck printers from legacy equipment. During the quarter, we began shipping the ToughWriter 640 to a major aircraft OEM. As a result, the ToughWriter represented 50% of second-quarter shipments and remains on track to reach our target of over 80% by fiscal year end. Aerospace can be a lumpy business from quarter to quarter. Nearly 45% of the segment's revenue is for aftermarket sales and service, and roughly 10% of hardware sales are dependent upon spare replacement machines.
Jorik Ittmann: However, for new build aircraft, we like the long-term tailwind provided by growth in commercial aircraft build rates. We're also making changes in the culture of AstroNova Inc. We have great talent within the organization that needs to be unleashed yet held accountable. I am working to create a more collaborative culture that puts the customer first. I'm excited on how the team has embraced change and believe we can develop into an organization that delivers. We have to execute our plan to regain trust with our key stakeholders, including customers, employees, and not least, investors. I believe that if we can demonstrate AstroNova Inc. can make progress in our markets with our customers, strengthen earnings power, and be straightforward and transparent while delivering on our promises, we will build credibility with you. Tom, I will turn it to you now to review the financials.
Thomas DeByle: Thank you, Jorik, and good morning, everyone. On slide four, you can see the second quarter revenue of $36.1 million declined 10.9% year over year and sequentially 4.2%. 70% of this quarter's revenue was recurring. By segment, product identification and aerospace decreased 8.9% and 15.1%, respectively. Lower sales in product identification in the quarter were primarily driven by a $2.6 million decline in recurring supplies, parts, and service from customer attrition. This was partially offset by higher demand for the mill and sheet flat-pack products. In July, we began shipping our new professional label printers, the QL 425 and QL 435 model. In August, we shipped the AHA 800, a new direct-to-package printer line that was upgraded from the former MTEX model.
Thomas DeByle: For aerospace, the year-over-year decline was a result of a tough comparison against last year's second quarter, which benefited from $1.3 million in unusually large spare printer shipments to both the airline and the defense customer, as well as non-recurring engineering revenue from an OEM project. For the first half of fiscal 2026, revenue of $73.8 million increased marginally year over year due to higher hardware sales, offsetting the decline in recurring supplies, parts, and service revenue. Turning to slide five, gross profit in the second quarter was $11.6 million, down $2.7 million year over year, reflecting lower sales and unfavorable mix primarily related to the decline in aerospace volume. For the first half of fiscal 2026, gross profit was $24.3 million, or 32.9% of sales, a $2 million decline from the same period last year as a result of less favorable product mix, primarily in the aerospace segment.
Thomas DeByle: For the second half of the year, we expect aerospace gross margin to improve on similar volume since we began shipping the ToughWriter 640 to a major OEM in June. Higher volume and improved mix in product identification should drive margins as well. Looking at slide six, product identification operating income for the quarter declined $0.4 million, or 18%. It was partially offset by a $0.5 million reduction in operating costs. In the first six months of fiscal 2026, GAAP operating income also declined. We expect improvements in sales, and with the impact of our cost reductions, we should see improving margins for the segment. Looking at slide seven, aerospace operating income for the quarter was down $1.4 million, or 37%, due to sales volume and unfavorable mix. This was partially offset by $0.3 million in cost reductions.
Thomas DeByle: For the first half of fiscal 2026, GAAP and adjusted operating income declined due to weak second quarter results. Turning to slide eight, our net loss was $1.2 million, or $0.16 per share, reflecting lower volume, partially offset by a $0.5 million tax benefit. Adjusted EBITDA was $2.1 million, down $1.8 million compared with the prior year period. Adjusted EBITDA margin for the second quarter was 5.7%. Moving to slide nine, cash provided from operations in the first half of fiscal 2026 was $4.6 million and down from the prior year based on everything we have covered here. As Jorik mentioned, we are rethinking how we operate the business and are driving a stronger focus on cash generation through improved operational performance. We are carefully managing our capital, and as a result, our CapEx was $0.1 million in the first six months of the year.
Speaker #5: not, we will have to rethink that
Speaker #5: portfolio.
Speaker #5: Second, as this might be news to
Speaker #5: you, we have a different kind of problem with our
Speaker #5: product line for our
Speaker #5: partners who serve the mill and sheet printer
Speaker #5: We have had a hard time.
Speaker #5: keeping up with
Speaker #5: demand. We have redesigned products
Thomas DeByle: We have been constraining our capital investments and expect CapEx for the fiscal year to be less than half a million. We paid down $5.1 million in debt through the first half of fiscal 2026, and as of July 31, 2025, we have $10.4 million in total liquidity, including $3.9 million in cash, $5.9 million available on our revolver, and an untapped $0.6 million line of credit in Portugal. Our leverage ratio of funded debt to adjusted EBITDA was 3.5 times. The bank waived our fixed charge coverage ratio for the second quarter, and we are in discussions regarding restructuring of our debt, which we expect to have completed in the next 60 days. Our objective with the turnaround of product identification and continued advancement of the aerospace segment is, on a consolidated basis, to grow sales, drive product profitability, generate cash, and pay down debt.
Speaker #5: for that market, and we have
Speaker #5: excellent partners serving those
Speaker #5: customers. Our partners
Speaker #5: and their customers like the
Speaker #5: products. We just haven't been
Speaker #5: able to make enough of these
Speaker #5: products. Our PI
Speaker #5: leadership team is actively
Speaker #5: engaged now in order to capitalize on this opportunity. Turning to aerospace now,
Speaker #5: even though revenue declined compared
Speaker #5: with last year's second
Speaker #5: quarter, we believe that
Speaker #5: business is performing on key
Speaker #5: metrics such as transitioning to
Speaker #5: our top rider flight deck
Speaker #5: printers from legacy equipment.
Speaker #5: During the quarter, we began shipping
Speaker #5: the top rider 640 to a major
Speaker #5: aircraft OEM. As a
Speaker #5: result, there were top rider
Speaker #5: represented 50% of second
Speaker #5: quarter shipments, and we remain on
Speaker #5: track to reach our target of over 80% by fiscal year
Speaker #5: end. Aerospace
Speaker #5: can be a lumpy business from quarter
Speaker #5: to quarter, nearly
Speaker #5: 45% of the segment's
Speaker #5: revenue is for aftermarket sales and service and roughly 10% of hardware sales are dependent upon spare replacement machines. However, for new build aircraft, we, like the long-term tailwind, provided
Thomas DeByle: Now, please turn to slide 10, and I'll hand the call back to Jorik.
Jorik Ittmann: Thanks, Tom. We had orders of $35.9 million in the second quarter of fiscal 2026, which were relatively unchanged from the prior year period, but up $1 million sequentially as solid improvements in aerospace more than offset a very weak order quarter for product identification. As we discussed earlier, we have changed the team's structure and are actively meeting with current, past, and prospective customers. Aerospace orders were up $3.8 million for the trailing first quarter. I'm seeing how much variation this business can have from quarter to quarter. We do expect that as Boeing increases its build rates and inventories level out, we should see steady growth in hardware sales related to new builds. Backlog for the quarter was down $4.6 million year over year to $25.3 million and represented about 30% of expected shipments for the second half of the year at the midpoint of our guidance range.
Speaker #5: by growth in commercial aircraft
Speaker #5: build rates. We're also quarter to quarter, nearly making changes in the culture of
Speaker #5: Astronova. We have a great talent
Speaker #5: within the organization, that needs to
Speaker #5: be unleashed yet held
Speaker #5: accountable. I am working to create a
Speaker #5: more collaborative culture that puts the
Speaker #5: customer first. I'm
Speaker #5: excited on how the team has
Speaker #5: embraced change and believe
Speaker #5: we can develop into an organization
Speaker #5: that delivers. We have
Speaker #5: to execute our plan to
Speaker #5: regain trust with our key
Speaker #5: stakeholders. Including
Speaker #5: customers, employees, and not
Speaker #5: least, investors. I
Speaker #5: believe that if we can demonstrate
Speaker #5: Astronova can make progress in our
Speaker #5: markets with our
Speaker #5: customers, strengthen earnings power,
Speaker #5: and be straightforward and
Speaker #5: transparent while delivering on our
Speaker #5: promises, we will build credibility with
Speaker #5: you. Tom, I will
Speaker #5: turn it to you now to review the.
Speaker #5: financials.
Jorik Ittmann: If you will turn to slide 11, I will summarize the work we have to do to put AstroNova Inc. on track to deliver stronger profitability and improve sales. There unfortunately is not any single lever to pull to make this work. We have to re-engage with our customers and simplify our processes to improve our responsiveness. We need to measurably improve our customer retention rate. We have to evolve our sales approach for new higher-value printers. We also are addressing production challenges in the mill and sheet flat-pack printer operation. We need to streamline processes to take out costs and reduce our lead times. We're simplifying operations in Portugal and better prioritizing and allocating our resources. I remain encouraged as we move forward. We expect to see a full benefit of the $3 million in annualized cost reductions in the second half of the fiscal year.
Speaker #6: Thank you, Joric. And good morning, everyone.
Speaker #6: On slide 4, you can see the second customers, employees, and not
Speaker #6: quarter revenue of
Speaker #6: $36.1 million declined
Speaker #6: 10.9% year over
Speaker #6: year and sequentially
Speaker #6: 4.2%. 70% of
Speaker #6: this quarter's revenue was
Speaker #6: reoccurring. By
Speaker #6: segment, product ID and
Speaker #6: aerospace decreased
Speaker #6: 8.9% and
Speaker #6: 15.1%,
Speaker #6: respectively. Lower sales and product
Speaker #6: identification in the quarter were
Speaker #6: primarily driven by
Speaker #6: $2.6 million decline in recurring
Speaker #6: supplies parts and
Speaker #6: service from customer
Speaker #6: attrition. This is partially offset by
Speaker #6: higher demand for the mail and
Speaker #6: sheet flat pack
Speaker #6: products. In July, we began
Speaker #6: shipping our new professional label
Speaker #6: printers, the
Speaker #6: QL425 and 435
Speaker #6: models. And in August, we
Speaker #6: shipped the AHA 800
Speaker #6: on new direct-to-package
Speaker #6: printer line that was upgraded from the
Speaker #6: former MTeX
Speaker #6: model. For aerospace, the
Jorik Ittmann: We'll have a much better understanding of the potential of our new printers over the next few months. Our aerospace business provides a stable base with a couple of tailwinds, including increasing aircraft build rates and a benefit to profit margin we will realize in fiscal 2028 as Honeywell loyalty rolls off. I'm looking forward to the challenge of improving the business and driving change toward AstroNova Inc. Operator, let's open the line for questions.
Speaker #6: year-over-year decline was a result of
Speaker #6: a tough comparison against
Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. This concludes the question and answer session, and this concludes our conference for today. You may disconnect your lines at this time, and we thank you for your participation.