AstroNova(US:ALOT)2020-06-26 17:00Revenue Performance - Revenue for the first quarter of fiscal 2021 was $30.9 million, a 14.5% decrease compared to $36.2 million in the same quarter of the previous year[94]. - Product Identification segment revenue was $22.4 million, representing 72.4% of total revenue, while Test and Measurement segment revenue was $8.5 million, accounting for 27.6% of total revenue[94]. - Revenue from the Product Identification segment was $22.4 million, a 5.1% decrease compared to the same period last year, while segment operating profit increased to $3.1 million with a profit margin of 14.1%[103]. - The Test & Measurement (T&M) segment revenue was $8.5 million, a 32.2% decrease from $12.6 million in the prior year, resulting in a segment operating loss of $0.2 million and a negative profit margin of 1.8%[104]. Profitability and Expenses - Gross profit for the first quarter was $10.9 million, a 23.8% decrease from $14.2 million in the prior year, with a gross profit margin of 35.1%, down 430 basis points from 39.4%[96]. - Operating expenses decreased by 13.4% to $10.2 million, with selling and marketing expenses down 12.4% to $5.9 million[97]. - Research and development expenses were $1.9 million, a 3.3% decline from the previous year, but R&D spending as a percentage of revenue increased to 6.3%[97]. - The company reported a net income of $0.4 million or $0.06 per diluted share for the first quarter, a decrease from $1.7 million or $0.23 per diluted share in the prior year[101]. Impact of COVID-19 - The COVID-19 pandemic has significantly impacted demand for aerospace products, leading to reduced production rates and lower revenue expectations[85]. - The company is pursuing expense reduction and cash preservation initiatives due to the economic dislocation caused by the COVID-19 pandemic[90]. - The ongoing COVID-19 pandemic has adversely affected revenues and operational capacity, leading to delays and cancellations of orders, and difficulties in obtaining raw materials[138]. - The aerospace industry, which the company serves, has been significantly disrupted by COVID-19, impacting financial results and potentially leading to reduced demand for products[142]. - The company has maintained a substantial portion of manufacturing operational capacity while implementing health and safety protocols due to COVID-19[139]. Financial Position and Cash Flow - Cash and cash equivalents were reported at $11.1 million, with $6.0 million remaining available for borrowing under the revolving credit facility[109]. - Net cash provided by operating activities was $3.4 million for the first quarter of fiscal 2021, compared to $1.0 million for the same period in the previous year, primarily due to a decrease in cash used for working capital[125]. - Accounts receivable balance decreased to $18.5 million at the end of the first quarter, down from $19.8 million at year-end, reflecting a $1.3 million decrease related to lower sales[126]. - Inventory balance was $32.6 million at the end of the first quarter, down from $33.9 million at year-end, with inventory days on hand decreasing to 146 days from 151 days[127]. Debt and Financing - The company borrowed an additional $5.0 million on its revolving credit facility, with total borrowings outstanding at $11.5 million as of May 2, 2020[109]. - The company experienced a violation of a financial covenant in its Credit Agreement due to lower operating results, leading to negotiations for a restructuring of the agreement[106]. - The company intends to apply for forgiveness of a $4.4 million PPP Loan, which is subject to certain conditions[111]. - The company anticipates relying more on external financing sources due to a decline in demand for its products, particularly in the aerospace market[105]. - The company expects to maintain a minimum EBITDA of $9.5 million on a trailing twelve-month basis as per the credit agreement with Bank of America, but actual EBITDA dropped below this level due to reduced demand[143]. Agreements and Compliance - The company has entered into a Letter Agreement with Bank of America to waive noncompliance with certain financial covenants, but future compliance remains uncertain[124]. - The Letter Agreement requires a consolidated EBITDA of not less than $9.5 million on a trailing twelve-month basis as of June 30, 2020[146]. - The company is prohibited from making any dividend or stock repurchase payments through August 15, 2020, under the terms of the Letter Agreement[146]. - The company will not be permitted to request additional borrowings under the revolving line of credit until compliance with the credit agreement is achieved[146]. - The Letter Agreement allows for restricted payments only in compliance with the credit agreement after August 15, 2020[146]. Share Repurchase and Stock Transactions - During the first quarter of fiscal 2021, the company repurchased a total of 5,570 shares at an average price of $6.92 per share[144]. - The company delivered 402 shares of common stock to satisfy tax obligations related to restricted shares, valued at a weighted-average market value of $9.38 per share[144]. - An additional 5,168 shares were delivered by executives for tax obligations, valued at a weighted-average market value of $6.73 per share[144].