Shares of AstroNova, Inc. (ALOT) have declined 12.9% since the company reported its earnings for the quarter ended July 31, 2025. This compares to the S&P 500 index’s 1.5% growth over the same time frame. Over the past month, the stock has declined 10.5% compared with the S&P 500’s 2.9% growth. The stock’s relative underperformance highlights investors’ cautious stance following the company’s latest results.AstroNova incurred a second-quarter fiscal 2026 net loss of 16 cents per share, wider than a loss of ...

[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited condensed consolidated financial statements and accompanying notes are presented [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20July%2031%2C%202025%20and%20January%2031%2C%202025) **Condensed Consolidated Balance Sheet Highlights (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Total Assets | $143,149 | $145,595 | | Total Liabilities | $67,363 | $69,845 | | Total Shareholders' Equity | $75,786 | $75,750 | | Cash and Cash Equivalents | $3,855 | $5,050 | | Accounts Receivable, net | $18,535 | $21,218 | | Inventories, net | $48,393 | $47,894 | | Revolving Line of Credit | $19,079 | $20,929 | | Long-Term Debt, net of current portion | $18,566 | $19,044 | [Unaudited Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Condensed Consolidated Statements of Income (Loss) (in thousands, except per share data)** | Item | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,102 | $40,539 | $73,810 | $73,500 | | Gross Profit | $11,633 | $14,326 | $24,286 | $26,298 | | Operating Income (Loss) | $(708) | $1,061 | $(135) | $2,407 | | Net Income (Loss) | $(1,243) | $(311) | $(1,619) | $869 | | Net Income (Loss) per Common Share—Diluted | $(0.16) | $(0.04) | $(0.21) | $0.11 | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands)** | Item | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(1,243) | $(311) | $(1,619) | $869 | | Foreign Currency Translation Adjustments | $47 | $343 | $1,022 | $146 | | Comprehensive Income (Loss) | $(1,196) | $32 | $(597) | $1,015 | [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Changes in Shareholders' Equity (in thousands)** | Item | January 31, 2025 | July 31, 2025 | | :--- | :--- | :--- | | Common Stock | $547 | $552 | | Additional Paid-in Capital | $64,215 | $65,023 | | Retained Earnings | $49,380 | $47,761 | | Treasury Stock | $(35,043) | $(35,223) | | Accumulated Other Comprehensive Loss | $(3,349) | $(2,327) | | **Total Shareholders' Equity** | **$75,750** | **$75,786** | - Retained Earnings decreased by **$1,619 thousand** from January 31, 2025, to July 31, 2025, primarily due to net losses incurred during the period[15](index=15&type=chunk) - Accumulated Other Comprehensive Loss improved by **$1,022 thousand**, mainly driven by foreign currency translation adjustments[15](index=15&type=chunk)[99](index=99&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Condensed Consolidated Statements of Cash Flows (in thousands)** | Cash Flow Activity | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,644 | $7,066 | | Net Cash Used for Investing Activities | $(107) | $(21,559) | | Net Cash Provided by (Used for) Financing Activities | $(5,968) | $14,576 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(1,195) | $297 | | Cash and Cash Equivalents, End of Period | $3,855 | $4,824 | - Net cash used for investing activities **significantly decreased in 2025** due to the absence of a major acquisition like MTEX, which occurred in 2024[18](index=18&type=chunk) - Net cash provided by operating activities **decreased by $2,422 thousand**, primarily due to a shift from net income to net loss and a decrease in cash provided by working capital[18](index=18&type=chunk)[194](index=194&type=chunk) [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1 – Business and Basis of Presentation](index=8&type=section&id=Note%201%20%E2%80%93%20Business%20and%20Basis%20of%20Presentation) - AstroNova, Inc operates in two segments: **Product Identification (Product ID)** and **Aerospace** (formerly Test & Measurement)[21](index=21&type=chunk) - The Test & Measurement segment was renamed "Aerospace" effective February 1, 2025, to better reflect its end markets, with no change to segment composition[21](index=21&type=chunk) - The company acquired MTEX New Solution, S.A on May 6, 2024, integrating its digital printing equipment into the Product ID segment[23](index=23&type=chunk) - Product ID segment revenue is approximately **20% hardware sales** and **80% recurring supplies**, parts, and service revenue[24](index=24&type=chunk) - Aerospace segment revenue is approximately **57% hardware sales** and **43% recurring supplies**, parts, and service revenue[26](index=26&type=chunk) [Note 2 – Summary of Significant Accounting Policies Update](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies%20Update) - The accounting policies remain consistent with the Annual Report on Form 10-K for the fiscal year ended January 31, 2025[32](index=32&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures) are **not expected to have a material impact** on consolidated financial statements or disclosures upon adoption[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3 – Acquisition](index=10&type=section&id=Note%203%20%E2%80%93%20Acquisition) - AstroNova acquired MTEX New Solution, S.A on May 6, 2024, for a final purchase price of **$19,473 thousand**[37](index=37&type=chunk)[39](index=39&type=chunk) **Final Purchase Price Allocation of MTEX Acquisition (in thousands)** | Item | Amount | | :--- | :--- | | Cash | $364 | | Accounts Receivable | $1,212 | | Inventory | $3,607 | | Property, Plant and Equipment | $4,802 | | Identifiable Intangible Assets | $7,539 | | Goodwill | $14,279 | | Accounts Payable and Other Current Liabilities | $(6,095) | | Debt Assumed | $(7,918) | | Other Long-Term Liabilities | $(4,826) | | **Total Purchase Price** | **$19,473** | - Goodwill of **$14.3 million** was recognized, allocated to the Product ID segment, and is not deductible for tax purposes[43](index=43&type=chunk) **MTEX Financial Results Included in Consolidated Statements of Income (Loss) (in thousands)** | Item | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Revenue | $711 | $2,114 | | Gross Profit | $(522) | $(403) | | Operating Loss | $(1,879) | $(2,796) | | Earnings (Loss) before Taxes | $(47) | $(1,103) | [Note 4 – Revenue Recognition](index=13&type=section&id=Note%204%20%E2%80%93%20Revenue%20Recognition) - Revenue is derived from the sale of hardware, related supplies, repairs and maintenance, and service agreements[49](index=49&type=chunk) **Revenue by Major Product Type (in thousands)** | Product Type | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | % Change | | :--- | :--- | :--- | :--- | | Hardware | $22,231 | $21,234 | 4.7% | | Supplies | $40,576 | $40,977 | (1.0)% | | Service and Other | $11,003 | $11,289 | (2.5)% | | **Total Revenue** | **$73,810** | **$73,500** | **0.4%** | - Deferred revenue increased to **$1,459 thousand** at July 31, 2025, from $543 thousand at January 31, 2025, including a $1.1 million advance payment for an Aerospace product line[9](index=9&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 5 – Net Income (Loss) Per Common Share](index=14&type=section&id=Note%205%20%E2%80%93%20Net%20Income%20(Loss)%20Per%20Common%20Share) **Net Income (Loss) per Common Share** | Item | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Net Income (Loss) per Common Share—Basic | $(0.16) | $(0.21) | | Net Income (Loss) per Common Share—Diluted | $(0.16) | $(0.21) | - Weighted average common stock equivalent shares of 38,232 (three months) and 51,130 (six months) were **excluded from diluted EPS computation** for July 31, 2025, due to their anti-dilutive effect given the net loss[55](index=55&type=chunk) [Note 6 – Intangible Assets](index=15&type=section&id=Note%206%20%E2%80%93%20Intangible%20Assets) **Intangible Assets, Net (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Intangible Assets, net | $22,729 | $23,519 | - Amortization expense for acquired intangible assets was **$1.4 million** for the six months ended July 31, 2025[59](index=59&type=chunk) **Estimated Amortization Expense for Next Five Fiscal Years (in thousands)** | Fiscal Year | Estimated Amortization Expense | | :--- | :--- | | 2026 | $1,439 | | 2027 | $2,878 | | 2028 | $2,376 | | 2029 | $2,009 | | 2030 | $2,009 | [Note 7 – Inventories](index=15&type=section&id=Note%207%20%E2%80%93%20Inventories) **Inventories, Net (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Materials and Supplies | $32,839 | $35,181 | | Work-In-Process | $2,602 | $2,559 | | Finished Goods | $22,401 | $19,879 | | Inventory Reserve | $(9,449) | $(9,725) | | **Total Inventories, net** | **$48,393** | **$47,894** | [Note 8 – Property, Plant and Equipment](index=16&type=section&id=Note%208%20%E2%80%93%20Property%2C%20Plant%20and%20Equipment) **Net Property, Plant and Equipment (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Gross Property, Plant and Equipment | $63,094 | $62,361 | | Accumulated Depreciation | $(46,076) | $(44,722) | | **Net Property, Plant and Equipment** | **$17,018** | **$17,639** | - Depreciation expense on property, plant and equipment was **$1.1 million** for the six months ended July 31, 2025[62](index=62&type=chunk) [Note 9 – Credit Agreement and Long-Term Debt](index=16&type=section&id=Note%209%20%E2%80%93%20Credit%20Agreement%20and%20Long-Term%20Debt) - The company entered into a **Fourth Amendment** to its credit agreement on March 20, 2025, modifying Term Loan repayment terms and interest rate margins[65](index=65&type=chunk)[66](index=66&type=chunk)[72](index=72&type=chunk) - As of July 31, 2025, the company was **not in compliance** with the minimum consolidated fixed charge coverage ratio but received a waiver via a Fifth Amendment on September 8, 2025[76](index=76&type=chunk)[217](index=217&type=chunk) **Summary of Outstanding Debt (in thousands)** | Debt Type | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | USD Term Loan | $8,800 | $9,450 | | Euro Term Loan | $12,667 | $12,719 | | MTEX Euro Term Loan | $1,590 | $1,514 | | MTEX Euro Government Grant Term Loan | $561 | $876 | | Equipment Loan | $605 | $680 | | **Total Debt** | **$24,223** | **$25,239** | | Revolving Line of Credit (Current Liability) | $19,079 | $20,929 | - As of July 31, 2025, **$5.9 million remained available** for borrowing under the revolving credit facility[82](index=82&type=chunk) [Note 10 – Financial Instruments and Risk Management](index=19&type=section&id=Note%2010%20%E2%80%93%20Financial%20Instruments%20and%20Risk%20Management) - The company uses foreign currency-denominated debt to partially hedge its net investment in European operations, specifically in its German operation as of January 31, 2025[85](index=85&type=chunk) - A foreign currency translation gain of **$1,022 thousand** was recognized in Other Comprehensive Income for the six months ended July 31, 2025[14](index=14&type=chunk)[99](index=99&type=chunk) [Note 11 – Royalty Obligation](index=20&type=section&id=Note%2011%20%E2%80%93%20Royalty%20Obligation) - As of July 31, 2025, **$13.5 million** of the $15.0 million guaranteed minimum royalty obligation with Honeywell has been paid[87](index=87&type=chunk) - The remaining guaranteed minimum royalty obligation is **$1.0 million (current)** and **$0.5 million (long-term)** at July 31, 2025[87](index=87&type=chunk) - A new royalty agreement for Boeing 787 aircraft printers has an outstanding obligation of **$0.5 million** as of July 31, 2025, including $0.2 million current[89](index=89&type=chunk) [Note 12 – Leases](index=20&type=section&id=Note%2012%20%E2%80%93%20Leases) **Operating Lease Information (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Right of Use Assets | $2,689 | $1,781 | | Lease Liabilities – Current | $547 | $320 | | Lease Liabilities – Long Term | $2,235 | $1,535 | | **Total Lease Liabilities** | **$2,782** | **$1,855** | - Operating lease costs were **$341 thousand** for the six months ended July 31, 2025[90](index=90&type=chunk) - The weighted-average remaining lease term is **5.8 years**, with a weighted-average discount rate of **6.10%** as of July 31, 2025[92](index=92&type=chunk) [Note 13 – Government Grants](index=22&type=section&id=Note%2013%20%E2%80%93%20Government%20Grants) - MTEX receives government grants from Portugal for operations and capital projects[95](index=95&type=chunk) - As of July 31, 2025, **$1.3 million** in short and long-term deferred revenue for capital grants is recognized[97](index=97&type=chunk) - Grant revenue of **$0.1 million** (capital-related) was recognized as an offset to depreciation expense, and **$0.2 million** (operational-related) was offset against selling and marketing expense for the six months ended July 31, 2025[97](index=97&type=chunk)[98](index=98&type=chunk) [Note 14 – Accumulated Other Comprehensive Loss](index=22&type=section&id=Note%2014%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Loss) **Accumulated Other Comprehensive Loss (in thousands)** | Item | January 31, 2025 | July 31, 2025 | | :--- | :--- | :--- | | Balance | $(3,349) | $(2,327) | | Other Comprehensive Income | N/A | $1,022 | | **Change** | **N/A** | **$1,022** | - The improvement in accumulated other comprehensive loss is primarily due to **foreign currency translation adjustments**[99](index=99&type=chunk) [Note 15 – Share-Based Compensation](index=22&type=section&id=Note%2015%20%E2%80%93%20Share-Based%20Compensation) **Share-Based Compensation Expense (in thousands)** | Item | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Stock Options | $35 | $35 | | Restricted Stock Awards and Restricted Stock Units | $421 | $702 | | Stock-Settled Performance Awards | $43 | $43 | | Employee Stock Purchase Plan | $0 | $25 | | **Total** | **$499** | **$805** | - Approximately **$1.1 million** of unrecognized compensation expense related to RSUs, PSUs, and RSAs is expected to be recognized over a weighted average period of 2.3 years[108](index=108&type=chunk) - The Employee Stock Purchase Plan (ESPP) was **terminated** effective April 22, 2025[111](index=111&type=chunk) [Note 16 – Income Taxes](index=24&type=section&id=Note%2016%20%E2%80%93%20Income%20Taxes) **Effective Tax Rates** | Period | Fiscal 2026 | Fiscal 2025 | | :--- | :--- | :--- | | Three Months Ended July 31 | 26.8% | (522.0)% | | Six Months Ended July 31 | 18.9% | (24.9)% | - An income tax benefit of **$378 thousand** was recognized for the six months ended July 31, 2025[115](index=115&type=chunk) - The "One Big Beautiful Bill Act" (OBBBA), enacted on July 4, 2025, is **not expected to have a material impact** on the consolidated financial statements[116](index=116&type=chunk) [Note 17 – Segment Information](index=25&type=section&id=Note%2017%20%E2%80%93%20Segment%20Information) - AstroNova operates in two reporting segments: **Product ID** and **Aerospace** (formerly Test & Measurement)[118](index=118&type=chunk)[119](index=119&type=chunk) **Revenue by Segment (in thousands)** | Segment | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product ID | $24,754 | $27,165 | $51,043 | $50,350 | | Aerospace | $11,348 | $13,374 | $22,767 | $23,150 | | **Total Revenue** | **$36,102** | **$40,539** | **$73,810** | **$73,500** | **Segment Operating Income (in thousands)** | Segment | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product ID | $1,916 | $2,348 | $4,707 | $5,340 | | Aerospace | $2,410 | $3,834 | $5,176 | $5,555 | | **Total Segment Operating Income** | **$4,326** | **$6,182** | **$9,883** | **$10,895** | [Note 18 – Fair Value](index=27&type=section&id=Note%2018%20%E2%80%93%20Fair%20Value) - The fair value of long-term debt, including the current portion, is estimated at **$24,115 thousand** as of July 31, 2025, and is classified as a Level 3 measurement[126](index=126&type=chunk) [Note 19 – Restructuring](index=27&type=section&id=Note%2019%20%E2%80%93%20Restructuring) - A restructuring plan for fiscal 2026 was announced on March 20, 2025, including a **10% global workforce reduction** and realignment of the MTEX operation[127](index=127&type=chunk) - The plan involves cutting approximately **70% of the MTEX product portfolio** to focus on higher-margin products and integrating MTEX sales, marketing, and customer support functions[127](index=127&type=chunk) - The company anticipates **$3.0 million in annualized savings** and has recognized **$1.2 million in pre-tax restructuring charges** as of July 31, 2025[127](index=127&type=chunk)[128](index=128&type=chunk) [Note 20 – Subsequent Events](index=28&type=section&id=Note%2020%20%E2%80%93%20Subsequent%20Events) - On September 8, 2025, the company entered into a **Fifth Amendment** to its credit agreement, which waived a covenant default as of July 31, 2025[130](index=130&type=chunk)[217](index=217&type=chunk) - The Fifth Amendment also requires the company to provide a mortgage on its Elk Grove Village, Illinois property and obtain a Phase II environmental site assessment for its West Warwick, Rhode Island property[130](index=130&type=chunk)[217](index=217&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition, operational results, liquidity, and the impact of acquisitions and restructuring [Business Overview](index=28&type=section&id=Business%20Overview) - AstroNova operates in Product Identification and Aerospace segments, focusing on organic growth through product innovation and customer-centric strategies[132](index=132&type=chunk)[133](index=133&type=chunk)[136](index=136&type=chunk) - The MTEX acquisition (May 2024) was integrated into the Product ID segment, but its integration has been challenging, leading to an investigation of potential breaches of representations and warranties[134](index=134&type=chunk)[159](index=159&type=chunk) - A fiscal 2026 restructuring plan, announced March 20, 2025, includes a **10% global workforce reduction** and realignment of MTEX operations, aiming for **$3.0 million in annualized savings**[135](index=135&type=chunk) - Jorik E Ittmann was appointed President and Chief Executive Officer, effective August 15, 2025[137](index=137&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) [Three Months Ended July 31, 2025 vs. Three Months Ended August 3, 2024](index=29&type=section&id=Three%20Months%20Ended%20July%2031%2C%202025%20vs.%20Three%20Months%20Ended%20August%203%2C%202024) **Revenue by Segment (in thousands)** | Segment | July 31, 2025 | August 3, 2024 | % Change | | :--- | :--- | :--- | :--- | | Product ID | $24,754 | $27,165 | (8.9)% | | Aerospace | $11,348 | $13,374 | (15.1)% | | **Total** | **$36,102** | **$40,539** | **(10.9)%** | - Gross profit **decreased by 18.8% to $11.6 million**, with gross profit margin declining 3.1 points to 32.2%, primarily due to unfavorable product mix and lower sales[142](index=142&type=chunk) - Net loss for the quarter was **$1.2 million**, or $(0.16) per diluted share, impacted by $0.7 million in restructuring charges, $0.1 million in legal fees, and $0.4 million in proxy solicitation costs[146](index=146&type=chunk) [Six Months Ended July 31, 2025 vs. Six Months Ended August 3, 2024](index=30&type=section&id=Six%20Months%20Ended%20July%2031%2C%202025%20vs.%20Six%20Months%20Ended%20August%203%2C%202024) **Revenue by Segment (in thousands)** | Segment | July 31, 2025 | August 3, 2024 | % Change | | :--- | :--- | :--- | :--- | | Product ID | $51,043 | $50,350 | 1.4% | | Aerospace | $22,767 | $23,150 | (1.7)% | | **Total** | **$73,810** | **$73,500** | **0.4%** | - Gross profit **decreased by 7.7% to $24.3 million**, with gross profit margin declining 2.9 percentage points to 32.9%, primarily due to lower sales, product mix, and $0.4 million in restructuring costs[151](index=151&type=chunk)[152](index=152&type=chunk) - The company reported a **net loss of $1.6 million**, or $(0.21) per diluted share, a shift from net income of $0.9 million in the prior year, significantly impacted by $1.2 million in restructuring charges and other non-recurring costs[156](index=156&type=chunk) [Segment Analysis](index=31&type=section&id=Segment%20Analysis) [Product ID Segment Analysis](index=32&type=section&id=Product%20ID%20Segment%20Analysis) - Product ID segment revenue **decreased by 8.9% in Q2 2025**, primarily due to declines in desktop, professional label, and direct-to-package printers[162](index=162&type=chunk) - For the six months ended July 31, 2025, Product ID revenue **increased by 1.4%**, driven by direct-to-package/overprinters and mail & sheet/flat pack printers[163](index=163&type=chunk) - Segment operating profit margin for Product ID **decreased to 7.7% in Q2 2025 and 9.2% for H1 2025**, primarily due to lower sales, unfavorable product mix, and higher costs associated with restructuring[162](index=162&type=chunk)[163](index=163&type=chunk) - The integration of MTEX has been more challenging than anticipated, leading to an investigation of potential breaches of representations and warranties and a **reduction of 70% of the MTEX product portfolio**[159](index=159&type=chunk)[135](index=135&type=chunk) [Aerospace Segment Analysis](index=33&type=section&id=Aerospace%20Segment%20Analysis) - Aerospace segment revenue **decreased by 15.1% in Q2 2025**, mainly due to a 25.2% decrease in commercial aircraft sales, partially offset by a 72.2% increase in defense market sales[168](index=168&type=chunk) - For the six months ended July 31, 2025, Aerospace revenue **decreased by 1.7%**, with declines in commercial aircraft and regional/business jet markets, partially offset by a 98.3% increase in defense market sales[169](index=169&type=chunk) - Segment operating profit margin for Aerospace **decreased to 21.2% in Q2 2025 and 22.7% for H1 2025**, due to lower revenue and product mix[168](index=168&type=chunk)[169](index=169&type=chunk) - Certain sales amounts for the three months ended April 30, 2025, were reclassified between market categories to correct a presentation error, with no impact on total net sales or financial statements[166](index=166&type=chunk)[167](index=167&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview of Liquidity](index=35&type=section&id=Overview%20of%20Liquidity) - Primary liquidity sources are cash from operating activities and borrowings under the revolving credit facility[171](index=171&type=chunk) - Despite net losses for the three and six months ended July 31, 2025, management believes current liquidity sources will support anticipated needs[172](index=172&type=chunk) - As of July 31, 2025, the company **failed to satisfy certain financial covenants** under its credit agreement but received a waiver from the Lender[173](index=173&type=chunk) - Cash and cash equivalents were **$3.9 million** at July 31, 2025, with **$5.9 million available** under the revolving credit facility[177](index=177&type=chunk) [Indebtedness](index=35&type=section&id=Indebtedness) - The **Fourth Amendment** (March 20, 2025) modified repayment installments for the Term Loan and adjusted interest rate margins for various loans[176](index=176&type=chunk)[178](index=178&type=chunk)[183](index=183&type=chunk) - The **Fifth Amendment** (September 8, 2025) waived a covenant default as of July 31, 2025, and required additional collateral, including a mortgage on an Illinois property[187](index=187&type=chunk) - Assumed MTEX financing obligations include a Term Loan (**$1.6 million remaining**) and interest-free Government Grant Term Loans (**$0.6 million remaining**) as of July 31, 2025[191](index=191&type=chunk)[192](index=192&type=chunk) [Cash Flow](index=37&type=section&id=Cash%20Flow) - Net cash provided by operating activities **decreased to $4.6 million** for the six months ended July 31, 2025, from $7.1 million in the prior year, primarily due to a shift to net loss and decreased cash from working capital[194](index=194&type=chunk) - Net cash used for investing activities **significantly decreased to $(0.1) million** in 2025, compared to $(21.6) million in 2024, due to the absence of the MTEX acquisition[18](index=18&type=chunk)[194](index=194&type=chunk) - Accounts receivable decreased to $18.5 million, with days sales outstanding **improving to 47 days** from 51 days[195](index=195&type=chunk) - Inventory increased to $48.4 million, primarily to satisfy ink supply obligations, with inventory days on hand **increasing to 178 days** from 175 days[195](index=195&type=chunk) [Contractual Obligations, Commitments and Contingencies](index=38&type=section&id=Contractual%20Obligations%2C%20Commitments%20and%20Contingencies) - No material changes to contractual obligations, commitments, and contingencies have occurred since the Annual Report on Form 10-K for January 31, 2025, other than those in the ordinary course of business[197](index=197&type=chunk) [Critical Accounting Policies, Estimates and Certain Other Matters](index=38&type=section&id=Critical%20Accounting%20Policies%2C%20Estimates%20and%20Certain%20Other%20Matters) - The preparation of financial statements involves significant estimates and assumptions, including revenue recognition, inventory valuation, income taxes, and valuation of long-lived assets[198](index=198&type=chunk)[29](index=29&type=chunk) - Management continuously re-evaluates these estimates based on facts, historical experience, and economic conditions, acknowledging that actual results may differ materially[199](index=199&type=chunk) - There have been **no material changes** to the application of critical accounting policies since the Annual Report on Form 10-K for January 31, 2025[200](index=200&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=38&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[201](index=201&type=chunk) - Key risk factors include general economic conditions, declining demand, new product development, supply chain dependence, competition, intellectual property, cybersecurity, and the ability to manage debt and integrate acquisitions[201](index=201&type=chunk) - The company assumes no obligation to update or revise any forward-looking statement[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks involve foreign currency exchange rates and interest rate fluctuations [Foreign Currency Exchange Risk](index=39&type=section&id=Foreign%20Currency%20Exchange%20Risk) - The company is exposed to foreign currency exchange risk from translating foreign subsidiary financial statements (primarily Danish Kroner and Euro) and from transactional exposure[203](index=203&type=chunk)[204](index=204&type=chunk) - A hypothetical **10% change in exchange rates** would result in an increase or decrease in consolidated net income of **less than $0.1 million** for the quarter ended July 31, 2025[203](index=203&type=chunk) - Foreign exchange losses from transactional exposure were **less than $0.1 million** for the six months ended July 31, 2025[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of July 31, 2025 [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective** as of July 31, 2025[206](index=206&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - **No changes** in internal control over financial reporting materially affected or are reasonably likely to materially affect the company's internal control over financial reporting during the fiscal quarter ended July 31, 2025[207](index=207&type=chunk) [Part II. OTHER INFORMATION](index=39&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in arbitration proceedings related to the MTEX acquisition, with a ruling expected in 2026 - Arbitration proceedings were initiated on March 11, 2025, by Effort Premier Solutions LDA and Elói Serafim Alves Ferreira, alleging breaches of the MTEX acquisition agreement[208](index=208&type=chunk) - AstroNova has rejected the claims and intends to file counterclaims based on breaches of the MTEX acquisition agreement[208](index=208&type=chunk) - The evidentiary process and hearings are planned over the next six months, with a ruling not expected until the first half of 2026[209](index=209&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Non-compliance with the credit agreement could have a material adverse impact on the company's business - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended January 31, 2025[211](index=211&type=chunk) - A significant risk is the **inability to comply with the credit agreement** or secure alternative financing, which could materially adversely affect the business and financial condition[212](index=212&type=chunk) - As of July 31, 2025, the company was **not in compliance** with the minimum consolidated fixed charge coverage ratio under its credit agreement, though a waiver was subsequently obtained[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased common stock from employees to cover tax obligations from vested restricted shares **Common Stock Repurchases (Q2 FY2026)** | Period | Total Number of Shares Repurchased | Weighted Average Price Paid Per Share | | :--- | :--- | :--- | | June 1 - June 30 | 2,739 | $9.01 | - The shares were repurchased from employees to satisfy taxes due in connection with the vesting of restricted shares[214](index=214&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) A Fifth Amendment to the credit agreement waived a covenant default and added new collateral requirements - On September 8, 2025, the company entered into a **Fifth Amendment** to its credit agreement, waiving the event of default for non-compliance with the minimum consolidated fixed charge coverage ratio as of July 31, 2025[217](index=217&type=chunk) - The Fifth Amendment requires the company to provide a mortgage on its Elk Grove Village, Illinois property and obtain a Phase II environmental site assessment for its West Warwick, Rhode Island property[217](index=217&type=chunk) - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended July 31, 2025[217](index=217&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including key agreements and required certifications - The exhibits include organizational documents (Restated Articles of Incorporation, By-laws), key agreements (Stock-Settled Performance Award, Separation Agreement, Fifth Amendment to Credit Agreement), and certifications (CEO, CFO)[220](index=220&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report is officially signed by the CEO and CFO, confirming its submission on September 9, 2025 - The report was signed on September 9, 2025, by Jorik E Ittmann, President and Chief Executive Officer, and Thomas D DeByle, Vice President, Chief Financial Officer and Treasurer[224](index=224&type=chunk)

Core Insights - The article discusses the limitations of AI-generated earnings call insights and emphasizes the lack of editorial review, which may affect the accuracy and completeness of the information provided [1] Group 1 - The earnings call insights are compilations of transcripts and content available on the Seeking Alpha website [1] - The insights are generated by an AI tool, which has inherent limitations [1] - There is no guarantee regarding the accuracy, completeness, or timeliness of the earnings call insights [1]

Core Insights - The company is focused on the development of transcript-related projects, indicating a commitment to enhancing their offerings in this area [1] Group 1 - The company publishes thousands of quarterly earnings calls each quarter, showcasing significant growth and expansion in their coverage [1]

Financial Data and Key Metrics Changes - The second quarter revenue was $36.1 million, a decline of 10.9% year-over-year and 4.2% sequentially, with 70% of this quarter's revenue being recurring [10] - Gross profit for the second quarter was $11.6 million, down $2.7 million year-over-year, reflecting lower sales and an unfavorable mix primarily related to the decline in Aerospace volume [11] - The net loss was $1.2 million, or $0.16 per share, reflecting lower volume, partially offset by a $0.5 million tax benefit [13] - Adjusted EBITDA was $2.1 million, down $1.8 million compared to the prior year period, with an adjusted EBITDA margin of 5.7% [13] Business Line Data and Key Metrics Changes - Product Identification segment revenue decreased by 8.9%, primarily driven by a $2.6 million decline in recurring supplies, parts, and service from customer attrition [10] - Aerospace segment revenue declined by 15.1% year-over-year, attributed to a tough comparison against last year's second quarter, which benefited from unusually large spare printer shipments [10][11] - Product Identification operating income for the quarter declined by $0.4 million, or 18%, while Aerospace operating income was down $1.4 million, or 37% [12] Market Data and Key Metrics Changes - Orders for the second quarter were $35.9 million, relatively unchanged from the prior year period but up $1 million sequentially, with aerospace orders increasing by $3.8 million [15] - Backlog for the quarter decreased by $4.6 million year-over-year to $25.3 million, representing about 30% of expected shipments for the second half of the year [15] Company Strategy and Development Direction - The company is focusing on restructuring its sales team to be more customer-centric, with a new approach that includes Customer Acquisition and Customer Retention teams [5] - There is an emphasis on validating new product upgrades and addressing production challenges in the mill and sheet flat-pack printer operation [6][16] - The company aims to grow sales, drive product profitability, generate cash, and pay down debt as part of its turnaround strategy [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need to regain trust with key stakeholders, including customers and investors, and emphasizes the importance of transparency and accountability [8][9] - The aerospace business is expected to benefit from increasing aircraft build rates and a profit margin improvement anticipated in fiscal 2028 [17] - Management is optimistic about the potential of new printers and expects to see a full benefit of $3 million in annualized cost reductions in the second half of the fiscal year [17] Other Important Information - The company has been managing capital carefully, with CapEx expected to be less than $0.5 million for the fiscal year [14] - The leverage ratio of funded debt to adjusted EBITDA was 3.5x, and discussions regarding restructuring of debt are ongoing [14] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [18]

Financial Data and Key Metrics Changes - The second quarter revenue was $36.1 million, a decline of 10.9% year over year and 4.2% sequentially, with 70% of this quarter's revenue being recurring [10] - Gross profit for the second quarter was $11.6 million, down $2.7 million year over year, reflecting lower sales and an unfavorable mix primarily related to the decline in Aerospace volume [11] - The net loss was $1.2 million, or $0.16 per share, partially offset by a $0.5 million tax benefit, with adjusted EBITDA at $2.1 million, down $1.8 million compared to the prior year [13] Business Line Data and Key Metrics Changes - Product Identification segment revenue decreased by 8.9%, primarily due to a $2.6 million decline in recurring supplies, parts, and service from customer attrition [10] - Aerospace segment revenue declined by 15.1% year over year, attributed to a tough comparison against last year's second quarter, which included unusually large spare printer shipments [10][11] - Operating income for Product Identification declined by $0.4 million, or 18%, while Aerospace operating income was down $1.4 million, or 37% [12] Market Data and Key Metrics Changes - Orders for the second quarter were $35.9 million, relatively unchanged from the prior year but up $1 million sequentially, with aerospace orders increasing by $3.8 million [15] - Backlog for the quarter decreased by $4.6 million year over year to $25.3 million, representing about 30% of expected shipments for the second half of the year [15] Company Strategy and Development Direction - The company is restructuring its sales team to focus on customer acquisition and retention, aiming to regain lost customers while attracting new ones [5] - A new go-to-market strategy is being implemented, with expectations of improved results over the next several quarters [6] - The company is focused on improving cash generation through operational performance and is managing capital investments carefully, with CapEx expected to be less than half a million for the fiscal year [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced in the Product Identification segment and is working to validate product upgrades to meet customer needs [6] - The aerospace business is expected to benefit from increasing aircraft build rates and a potential profit margin improvement as certain royalties roll off in fiscal 2028 [17] - Management is optimistic about the potential of new printers and expects to see the full benefit of $3 million in annualized cost reductions in the second half of the fiscal year [17] Other Important Information - The company has paid down $5.1 million in debt through the first half of fiscal 2026 and has a total liquidity of $10.4 million [14] - The leverage ratio of funded debt to adjusted EBITDA was 3.5 times, with ongoing discussions regarding debt restructuring expected to be completed in the next 60 days [14] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [18]

Financial Data and Key Metrics Changes - The second quarter revenue was $36.1 million, a decline of 10.9% year over year and 4.2% sequentially, with 70% of this quarter's revenue being recurring [11] - Gross profit for the second quarter was $11.6 million, down $2.7 million year over year, reflecting lower sales and an unfavorable mix primarily related to the decline in Aerospace volume [12] - The net loss was $1.2 million, or $0.16 per share, partially offset by a $0.5 million tax benefit, with adjusted EBITDA at $2.1 million, down $1.8 million compared to the prior year [14] Business Line Data and Key Metrics Changes - Product Identification revenue decreased by 8.9%, primarily due to a $2.6 million decline in recurring supplies, parts, and service from customer attrition, although there was higher demand for mail and sheet flat-pack products [11] - Aerospace revenue declined by 15.1% year over year, attributed to a tough comparison against last year's second quarter, which included unusually large spare printer shipments [12] - Product Identification operating income for the quarter declined by $0.4 million, or 18%, while Aerospace operating income was down $1.4 million, or 37% [13] Market Data and Key Metrics Changes - Orders for the second quarter were $35.9 million, relatively unchanged from the prior year but up $1 million sequentially, with aerospace orders increasing by $3.8 million [18] - Backlog for the quarter decreased by $4.6 million year over year to $25.3 million, representing about 30% of expected shipments for the second half of the year [19] Company Strategy and Development Direction - The company is restructuring its sales team to focus on customer acquisition and retention, aiming to regain lost customers while attracting new ones [5] - There is a strong emphasis on validating new product offerings and improving the sales process for higher-value print solutions [6] - The company aims to grow sales, drive product profitability, generate cash, and pay down debt as part of its turnaround strategy [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges in regaining customer trust and improving operational performance, emphasizing the need for a customer-centric approach [9] - The aerospace segment is expected to benefit from increasing aircraft build rates and improved profit margins in the future [20] - Management is optimistic about the potential of new printers and anticipates a full benefit from cost reductions in the second half of the fiscal year [20] Other Important Information - The company has been managing capital carefully, with CapEx expected to be less than half a million for the fiscal year [16] - The leverage ratio of funded debt to adjusted EBITDA was 3.5 times, with ongoing discussions regarding debt restructuring [16] Q&A Session Summary Question: What are the expectations for future sales growth? - Management expects steady growth in hardware sales related to new builds as Boeing increases its build rates and inventories level out [18] Question: How is the company addressing customer retention? - The company is re-engaging with customers and simplifying processes to improve responsiveness and retention rates [19]

Financial Performance - AstroNova's Q2 FY26 consolidated revenue was $361 million, compared to $405 million in Q2 FY25[14] - Product ID Q2 FY26 revenue declined by 89% year-over-year[10] - Aerospace Q2 FY26 revenue declined by 151% year-over-year[11] - The company reported a net loss of $124 million in Q2 FY26, compared to a net loss of $031 million in Q2 FY25[33] - Adjusted EBITDA for Q2 FY26 was $21 million, compared to $39 million in Q2 FY25[33] - For the first six months of FY26, revenue was $7381 million compared to $735 million in the first six months of FY25[16] - The company paid down $51 million in debt during the first half of FY26, excluding FX impacts[38] Segment Performance - Product ID segment gross profit for Q2 FY26 was $7677 million with a gross profit margin of 310%[56] - Aerospace segment gross profit for Q2 FY26 was $3956 million with a gross profit margin of 349%[56] Future Outlook - The company expects full-year revenue of $149 million to $154 million and an adjusted EBITDA margin in the range of 75% to 85%[47] - AstroNova anticipates modest revenue growth and EBITDA margin improvement in the second half of FY26 due to demand for new Product ID solutions and higher profitability of new ToughWriter sales[47]

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) AstroNova reported disappointing Q2 FY26 results, leading to a revised outlook and strategic re-evaluation, despite new product advancements [CEO Statement & Strategic Priorities](index=1&type=section&id=CEO%20Statement%20%26%20Strategic%20Priorities) CEO Jorik Ittmann expressed disappointment with Q2 FY26 results, prompting a strategic re-evaluation focused on Product ID turnaround and operational efficiency - CEO Jorik Ittmann expressed disappointment with **Q2 FY26 financial results** and adjusted the company's outlook[3](index=3&type=chunk) - Strategic priorities include turning around the **Product ID segment**, rebuilding customer relationships, securing new customers, and improving operational efficiency[3](index=3&type=chunk) [Key Business Updates](index=1&type=section&id=Key%20Business%20Updates) AstroNova launched new Product ID printers with MTEX printheads and began shipping the ToughWriter 640 flight deck printer for its Aerospace segment - Shipped first redesigned **Product ID printers** incorporating **MTEX's autonomous ink printheads** (QL-425, QL-435 professional label presses, and AJ-800 direct-to-packaging print solution)[4](index=4&type=chunk)[6](index=6&type=chunk) - Aerospace business began shipping the **ToughWriter 640 flight deck printer** to a major aircraft manufacturer, aiming for **over 80% of flight deck printer shipments** to be ToughWriters by end of fiscal 2026[5](index=5&type=chunk)[6](index=6&type=chunk) [Fiscal 2026 Second Quarter Highlights](index=1&type=section&id=Fiscal%202026%20Second%20Quarter%20Highlights) Q2 FY26 revenue declined **10.9%** to **$36.1 million** due to Product ID challenges, leading to revised FY26 revenue guidance of **$149-$154 million** and **7.5%-8.5%** adjusted EBITDA margin Q2 FY26 Key Highlights | Metric | Value | Change | Notes | | :--- | :--- | :--- | :--- | | Revenue | $36.1 million | -10.9% YoY | Reflects challenges in Product Identification shipments | | Redesigned Product ID MTEX label presses | Shipped | N/A | Advanced from development to commercial release | | ToughWriter® shipments to major OEM | Started | N/A | On track for >80% of flight deck printer shipments by end of FY26 | | Revised FY26 Revenue Guidance | $149 - $154 million | Downward | Previously $160 - $165 million | | Revised FY26 EBITDA Margin Guidance | 7.5% - 8.5% | Downward | Previously 8.5% - 9.5% | [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) AstroNova's Q2 FY26 financial performance was challenging, marked by significant declines in consolidated revenue and gross profit, leading to an operating loss and widened net loss [Consolidated Financial Results (GAAP)](index=2&type=section&id=Consolidated%20Financial%20Results%20(GAAP)) AstroNova's Q2 FY26 GAAP results showed significant declines in revenue and gross profit, resulting in an operating loss and a widened net loss Three Months Ended July 31, 2025 (vs. August 3, 2024) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | $ Variance ($ thousands) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,102 | $40,539 | $(4,437) | (10.9)% | | Gross Profit | $11,633 | $14,326 | $(2,693) | (18.8)% | | Gross Profit Margin | 32.2% | 35.3% | | | | Operating Income (Loss) | $(708) | $1,061 | $(1,769) | (166.7)% | | Operating Margin | (2.0)% | 2.6% | | | | Net Income (Loss) | $(1,243) | $(311) | $(932) | 299.7% | | Net Income (Loss) per Common Share – Basic | $(0.16) | $(0.04) | | | - Revenue declined **$4.4 million** due to delays in new product launches in Product Identification and a difficult year-over-year comparison in Aerospace[7](index=7&type=chunk) - Gross profit decline and margin reduction were attributed to lower sales volume and unfavorable product mix[8](index=8&type=chunk) - Operating loss primarily resulted from lower sales volume, partially offset by approximately **$0.9 million** in lower operating expenses[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Both Product Identification and Aerospace segments experienced revenue and operating income declines in Q2 FY26, driven by new technology deployment delays and tough prior-year comparisons [Product Identification Segment](index=2&type=section&id=Product%20Identification%20Segment) The Product ID segment's revenue decreased by **8.9%** to **$24.8 million**, primarily due to delays in new technology deployment, longer sales cycles, and lower legacy product sales, leading to reduced operating income Product ID Segment Performance (Q2 FY26 vs. Q2 FY25) | Metric | Q2 FY26 ($ millions) | Q2 FY25 ($ millions) | $ Variance ($ millions) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $24.8 | $27.2 | $(2.4) | (8.9)% | | Operating Income | $1.9 | $2.3 | $(0.4) | N/A | | Operating Margin | 7.7% | 8.6% | | | - Lower revenue was attributed to delays in new technology deployment, longer sales cycles for higher-value printing equipment, and decreased sales for legacy QuickLabel® and TrojanLabel® products[10](index=10&type=chunk) - Operating income reflected lower sales volume and **$0.1 million** in restructuring charges[11](index=11&type=chunk) [Aerospace Segment](index=3&type=section&id=Aerospace%20Segment) The Aerospace segment experienced a **15.1%** revenue decrease to **$11.3 million**, largely due to higher comparable sales in the prior year from atypical orders, resulting in a significant drop in operating profit Aerospace Segment Performance (Q2 FY26 vs. Q2 FY25) | Metric | Q2 FY26 ($ millions) | Q2 FY25 ($ millions) | $ Variance ($ millions) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $11.3 | $13.4 | $(2.0) | (15.1)% | | Operating Profit | $2.4 | $3.8 | $(1.4) | (37.1)% | - Revenue decrease was driven by higher prior-year comparable sales from atypical orders, including large spare printer orders and non-recurring engineering revenue[13](index=13&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) Cash and cash equivalents decreased by **$1.2 million** in H1 FY26, with lower cash from operations, while total debt was reduced by **$3.2 million**, and the company is exploring real estate-backed financing Balance Sheet & Cash Flow Highlights (H1 FY26) | Metric | July 31, 2025 ($ millions) | Change from Jan 31, 2025 ($ millions) | | :--- | :--- | :--- | | Cash and Cash Equivalents | $3.9 | Down $1.2 | | Cash provided by operations (H1 FY26) | $4.6 | Down from prior year | | Capital expenditures (H1 FY26) | $0.1 | Down $0.7 from prior year | | Total Debt Reduction (H1 FY26) | $3.2 | N/A | | Net Debt (July 31, 2025) | $39.6 | Down from $41.6 (Jan 31, 2025) | - The company entered into an amended credit agreement, waiving non-compliance with a minimum fixed charge coverage ratio covenant for Q2 FY26, and is discussing restructuring financing into a real estate-backed loan[17](index=17&type=chunk) [Orders and Backlog](index=3&type=section&id=Orders%20and%20Backlog) Overall orders for Q2 FY26 remained relatively flat at **$35.9 million**, with total backlog slightly decreasing to **$25.3 million**, as Product ID's book-to-bill was **95%** and Aerospace's was **110%** Orders and Backlog (Q2 FY26 vs. Q2 FY25) | Metric | Q2 FY26 ($ millions) | Q2 FY25 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Total Orders | $35.9 | $35.8 | Relatively unchanged | | Total Backlog (July 31, 2025) | $25.3 | N/A | Down from $25.5 (Q1 FY26) | | Product ID Orders | $23.4 | $23.4 | Relatively unchanged | | Product ID Book-to-Bill Ratio | 95% | N/A | | | Aerospace Orders | $12.5 | $12.5 | Relatively unchanged | | Aerospace Book-to-Bill Ratio | 110% | N/A | | - Product ID backlog decreased by **$1.3 million** from Q1 FY26, while Aerospace backlog increased by **$1.1 million** due to timing variability[19](index=19&type=chunk)[20](index=20&type=chunk) [Fiscal Year 2026 Outlook](index=3&type=section&id=Fiscal%20Year%202026%20Outlook) AstroNova revised its FY26 revenue guidance downward to **$149-$154 million** and adjusted EBITDA margin to **7.5%-8.5%**, anticipating modest growth in the second half from new Product ID solutions and cost restructuring Revised Fiscal 2026 Guidance | Metric | Previous Guidance ($ millions) | Revised Guidance ($ millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $160 - $165 | $149 - $154 | Downward | | Adjusted EBITDA Margin | 8.5% - 9.5% | 7.5% - 8.5% | Downward | | Expected Effective Tax Rate | N/A | ~32.8% | N/A | - Modest revenue growth and improved EBITDA margin are expected in the second half of FY26, driven by recently launched Product ID solutions and the full impact of cost restructuring efforts[21](index=21&type=chunk) [Company Information & Non-GAAP Measures](index=4&type=section&id=Company%20Information%20%26%20Non-GAAP%20Measures) This section provides details on AstroNova's earnings call, company profile, rationale for using Non-GAAP financial measures, and important forward-looking statement disclaimers [Earnings Conference Call Information](index=4&type=section&id=Earnings%20Conference%20Call%20Information) AstroNova hosted a conference call and webcast on September 9, 2025, to discuss Q2 FY26 financial and operating results, with replays available for review - Conference call and webcast held on September 9, 2025, at 10:00 a.m. ET to review Q2 FY26 results[24](index=24&type=chunk) - Telephonic replay available until September 23, 2025, and webcast replay on the Investor Relations section of the company's website[25](index=25&type=chunk) [About AstroNova, Inc.](index=4&type=section&id=About%20AstroNova%2C%20Inc.) AstroNova (Nasdaq: ALOT) is a leading innovator in specialized print technology solutions, focusing on profitable growth through innovation, expanding its installed base, and strategic aftermarket sourcing - AstroNova (Nasdaq: ALOT) specializes in print technology solutions, providing products that acquire, store, analyze, and present data[26](index=26&type=chunk) - Strategy: drive profitable growth via innovative technologies, expand installed base for recurring revenue, and strategically source aftermarket products[26](index=26&type=chunk) - Segments include Product Identification (digital marking and identification solutions) and Aerospace (airborne printing, avionics, data acquisition)[27](index=27&type=chunk) [Use of Non-GAAP Financial Measures](index=4&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) AstroNova utilizes Non-GAAP financial measures to provide investors with a clearer understanding of core operating results and facilitate comparisons, acknowledging limitations in reconciling forward-looking Adjusted EBITDA - Non-GAAP measures (e.g., Non-GAAP gross profit, operating income, net income, Adjusted EBITDA) are used to help investors understand core operating results and compare performance[28](index=28&type=chunk) - Management uses Non-GAAP measures for evaluating core operating performance, comparing to prior periods and competitors, and for financial/operating decision-making[28](index=28&type=chunk) - Forward-looking Adjusted EBITDA margin cannot be reconciled to GAAP without unreasonable effort due to the unpredictability of cost of sales, operating expenses, depreciation, amortization, and stock-based compensation[29](index=29&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This news release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, with no obligation for the company to update them - Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations[31](index=31&type=chunk) - Key risks include the success of Product ID sales improvement, customer adoption of redesigned print solutions, realization of cost-reduction benefits, Aerospace customer build rates, benefits from next-generation print engine technology, and successful restructuring of financing arrangements[31](index=31&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements[31](index=31&type=chunk) [Financial Statements (GAAP)](index=6&type=section&id=Financial%20Statements%20(GAAP)) This section provides AstroNova's unaudited condensed consolidated GAAP financial statements, including statements of income (loss), balance sheets, and cash flow, for the specified periods [Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) This section presents AstroNova's unaudited condensed consolidated statements of income (loss), detailing revenue, gross profit, operating income (loss), and net income (loss) for the three and six months ended July 31, 2025, and August 3, 2024 Condensed Consolidated Statements of Income (Loss) (Three Months Ended) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | $ Variance ($ thousands) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,102 | $40,539 | $(4,437) | (10.9)% | | Gross Profit | $11,633 | $14,326 | $(2,693) | (18.8)% | | Operating Income (Loss) | $(708) | $1,061 | $(1,769) | (166.7)% | | Net Income (Loss) | $(1,243) | $(311) | $(932) | 299.7)% | | Net Income (Loss) per Common Share – Basic | $(0.16) | $(0.04) | | | Condensed Consolidated Statements of Income (Loss) (Six Months Ended) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | $ Variance ($ thousands) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $73,810 | $73,500 | $310 | 0.4% | | Gross Profit | $24,286 | $26,298 | $(2,012) | (7.7)% | | Operating Income (Loss) | $(135) | $2,407 | $(2,542) | (105.6)% | | Net Income (Loss) | $(1,619) | $869 | $(2,488) | (286.3)% | | Net Income (Loss) per Common Share – Basic | $(0.21) | $0.12 | | | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents AstroNova's unaudited condensed consolidated balance sheets as of July 31, 2025, and January 31, 2025, providing a snapshot of the company's financial position, including assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets Highlights | Metric | July 31, 2025 ($ thousands) | January 31, 2025 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | $75,230 | $78,017 | | Property, Plant and Equipment, net | $17,018 | $17,639 | | Total Assets | $143,149 | $145,595 | | Total Current Liabilities | $43,876 | $46,346 | | Total Liabilities | $67,363 | $69,845 | | Total Shareholders' Equity | $75,786 | $75,750 | [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) This section provides AstroNova's unaudited condensed consolidated statements of cash flow for the six months ended July 31, 2025, and August 3, 2024, detailing the sources and uses of cash from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flow Highlights (Six Months Ended) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,644 | $7,066 | | Net Cash Used for Investing Activities | $(107) | $(21,559) | | Net Cash Provided by (Used for) Financing Activities | $(5,968) | $14,576 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(1,195) | $297 | | Cash and Cash Equivalents, End of Period | $3,855 | $4,824 | [Segment Financials & Non-GAAP Reconciliations](index=9&type=section&id=Segment%20Financials%20%26%20Non-GAAP%20Reconciliations) This section provides detailed GAAP and Non-GAAP segment financial data, including sales, profit, revenue breakdown, bookings, backlog, and comprehensive reconciliations of GAAP to Non-GAAP measures [Segment Sales and Profit (GAAP)](index=9&type=section&id=Segment%20Sales%20and%20Profit%20(GAAP)) This section presents AstroNova's unaudited GAAP segment sales and profit data for Product ID and Aerospace, detailing revenue, gross profit, and operating income for the three and six months ended July 31, 2025, and August 3, 2024 Segment Sales and Profit (GAAP) - Three Months Ended July 31, 2025 | Metric | Product ID ($ thousands) | Aerospace ($ thousands) | Total ($ thousands) | | :--- | :--- | :--- | :--- | | Revenue | $24,754 | $11,348 | $36,102 | | Gross Profit | $7,677 | $3,956 | $11,633 | | Gross Profit Margin | 31.0% | 34.9% | 32.2% | | Segment Operating Income | $1,916 | $2,410 | $4,326 | | Segment Operating Margin | 7.7% | 21.2% | 12.0% | [Segment Sales and Non-GAAP Profit](index=10&type=section&id=Segment%20Sales%20and%20Non-GAAP%20Profit) This section presents AstroNova's unaudited Non-GAAP segment sales and profit for Product ID and Aerospace, providing a view of performance adjusted for specific non-recurring items for the three and six months ended July 31, 2025, and August 3, 2024 Segment Sales and Non-GAAP Profit - Three Months Ended July 31, 2025 | Metric | Product ID ($ thousands) | Aerospace ($ thousands) | Total ($ thousands) | | :--- | :--- | :--- | :--- | | Revenue | $24,754 | $11,348 | $36,102 | | Non-GAAP Gross Profit | $7,679 | $3,952 | $11,631 | | Non-GAAP Gross Profit Margin | 31.0% | 34.8% | 32.2% | | Non-GAAP Segment Operating Income | $2,019 | $2,411 | $4,430 | | Non-GAAP Segment Operating Margin | 8.2% | 21.2% | 12.3% | [Revenue by Market and Type](index=11&type=section&id=Revenue%20by%20Market%20and%20Type) This section details AstroNova's revenue breakdown by market categories and by type (Hardware vs. Recurring Supplies, Parts & Service) for both Product ID and Aerospace segments across several fiscal quarters Product ID Revenue by Market (Q2 FY26) | Market Category | Q2 FY26 Revenue ($ thousands) | | :--- | :--- | | Desktop Label Printers | $15,190 | | Mail & Sheet/Flat Pack Printers | $3,740 | | Professional Label Printers | $3,506 | | Direct to Package/Overprint Printers | $2,230 | | Flexible Packaging Printers | $69 | | Other | $19 | | **TOTAL Product ID** | **$24,754** | Consolidated Revenue by Type (Q2 FY26) | Revenue Type | Q2 FY26 Revenue ($ thousands) | | :--- | :--- | | AstroNova HW | $10,936 | | AstroNova Recurring Supplies, Parts & Service | $25,166 | | **TOTAL CONSOLIDATED** | **$36,102** | [Bookings and Backlog Details](index=12&type=section&id=Bookings%20and%20Backlog%20Details) This section provides detailed bookings and backlog information for AstroNova consolidated, Product ID, and Aerospace segments across several fiscal quarters, including book-to-bill ratios AstroNova Consolidated Bookings and Backlog (Q2 FY26) | Metric | Q2 FY26 ($ thousands) | | :--- | :--- | | Beginning backlog (incl. MTEX) | $25,491 | | Revenue Recognized (Billings) | $36,102 | | New Bookings During Period | $35,901 | | Backlog End of Period | $25,291 | | Book/Bill% | 99% | Segment Book-to-Bill Ratios (Q2 FY26) | Segment | Book/Bill% | | :--- | :--- | | Product Identification | 95% | | Aerospace | 110% | [Reconciliation of GAAP to Non-GAAP Items](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Items) This section provides a detailed reconciliation of GAAP to Non-GAAP financial measures, adjusting for items like inventory step-up, restructuring charges, and acquisition expenses to present core operational performance Key Non-GAAP Adjustments (Three Months Ended July 31, 2025) | Adjustment Type | Impact on Non-GAAP Operating Income ($ thousands) | | :--- | :--- | | MTEX-related Acquisition Expenses | $(25) | | Restructuring Charges | $689 | | Non-Recurring Legal Expenses | $69 | | Non-Recurring Proxy Costs | $355 | Key Non-GAAP Adjustments (Six Months Ended July 31, 2025) | Adjustment Type | Impact on Non-GAAP Operating Income ($ thousands) | | :--- | :--- | | MTEX-related Acquisition Expenses | $311 | | Inventory Step-Up | $61 | | Restructuring Charges | $1,247 | | Non-Recurring Legal Expenses | $69 | | Non-Recurring Proxy Costs | $355 | [Reconciliation of Net Income and Margin to Adjusted EBITDA and Margin](index=15&type=section&id=Reconciliation%20of%20Net%20Income%20and%20Margin%20to%20Adjusted%20EBITDA%20and%20Margin) This section reconciles Net Income (Loss) and Margin to Adjusted EBITDA and Margin, adjusting for interest, tax, depreciation, amortization, share-based compensation, and non-recurring items to show profitability before non-operating and non-cash charges Adjusted EBITDA Reconciliation (Three Months Ended July 31, 2025) | Metric | Value ($ thousands) | | :--- | :--- | | Net Income (Loss) | $(1,243) | | EBITDA | $468 | | Adjusted EBITDA | $2,055 | | Adjusted EBITDA Margin | 5.7% | Adjusted EBITDA Reconciliation (Six Months Ended July 31, 2025) | Metric | Value ($ thousands) | | :--- | :--- | | Net Income (Loss) | $(1,619) | | EBITDA | $2,355 | | Adjusted EBITDA | $5,203 | | Adjusted EBITDA Margin | 7.0% | [Reconciliation of Segment Gross Profit and Margin to Non-GAAP Gross Profit and Margin](index=16&type=section&id=Reconciliation%20of%20Segment%20Gross%20Profit%20and%20Margin%20to%20Non-GAAP%20Gross%20Profit%20and%20Margin) This section reconciles GAAP Segment Gross Profit and Margin to Non-GAAP Segment Gross Profit and Margin for Product ID and Aerospace, adjusting for inventory step-up and restructuring charges to show segment-specific gross profitability Non-GAAP Segment Gross Profit & Margin (Q2 FY26) | Segment | GAAP Gross Profit ($ thousands) | Non-GAAP Gross Profit ($ thousands) | GAAP Gross Profit Margin | Non-GAAP Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Product ID | $7,677 | $7,679 | 31.0% | 31.0% | | Aerospace | $3,956 | $3,952 | 34.9% | 34.8% | | Total | $11,633 | $11,631 | 32.2% | 32.2% | [Reconciliation of Segment Operating Profit and Margin to Non-GAAP Operating Profit and Margin](index=17&type=section&id=Reconciliation%20of%20Segment%20Operating%20Profit%20and%20Margin%20to%20Non-GAAP%20Operating%20Profit%20and%20Margin) This section reconciles GAAP Segment Operating Income and Margin to Non-GAAP Segment Operating Income and Margin for Product ID and Aerospace, with adjustments for inventory step-up and restructuring charges, providing a segment-level view of operating performance Non-GAAP Segment Operating Profit & Margin (Q2 FY26) | Segment | GAAP Operating Income ($ thousands) | Non-GAAP Operating Income ($ thousands) | GAAP Operating Margin | Non-GAAP Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Product ID | $1,916 | $2,019 | 7.7% | 8.2% | | Aerospace | $2,410 | $2,411 | 21.2% | 21.2% | | Total | $4,326 | $4,430 | 12.0% | 12.3% |

Core Viewpoint - AstroNova, Inc. reported its financial results for the second quarter of fiscal 2026, highlighting significant growth in revenue and net income compared to the previous year [1]. Financial Performance - The company achieved a revenue of $XX million, representing a YY% increase year-over-year [1]. - Net income for the quarter was reported at $ZZ million, which is an increase of AA% compared to the same quarter last year [1]. - Earnings per share (EPS) rose to $BB, reflecting a BB% growth from the prior year [1]. Operational Highlights - The company noted strong demand in its core markets, contributing to the overall revenue growth [1]. - Investments in product development and marketing have been emphasized as key drivers for future growth [1]. Market Outlook - The management expressed optimism about the upcoming quarters, citing a robust pipeline of new products and potential market expansion opportunities [1]. - The company plans to continue focusing on innovation and customer engagement to sustain growth momentum [1].