AstroNova(ALOT) - 2021 Q4 - Annual Report

Financial Performance - In fiscal 2021, revenue from customers outside the United States was $45.1 million, down from $49.8 million in 2020 and $53.0 million in 2019, indicating a decline of approximately 9.4% year-over-year[84]. - Net revenue for fiscal 2021 was $116.0 million, a 13.0% decrease from $133.4 million in fiscal 2020[91]. - Domestic revenue declined by 15.3% to $70.9 million, while international revenue decreased by 9.4% to $45.1 million[91]. - Gross profit for fiscal 2021 was $41.4 million, reflecting a 15.2% decline from $48.8 million in fiscal 2020[92]. - Net income for fiscal 2021 was $1.3 million, or $0.18 per diluted share, down from $1.8 million, or $0.24 per diluted share in fiscal 2020[92]. Revenue Breakdown - Hardware revenue fell by 30.3% to $34.1 million, primarily due to lower sales in the T&M segment related to aerospace printers[91]. - Revenue from the PI segment increased by 2.4% to $90.3 million, driven by demand for Trojan Label product supplies[96]. - T&M segment revenue decreased by 43.2% to $25.8 million, impacted by the Boeing 737 MAX grounding and COVID-19[97]. Research and Development - The company invested $6.2 million in research and development in fiscal 2021, a decrease from $8.1 million in 2020 and $7.8 million in 2019, reflecting a reduction of 23.5% year-over-year[84]. - Research & development costs decreased by 23.2% to $6.2 million, representing 5.3% of net revenue[92]. Operational Challenges - Sales of Product Identification hardware were negatively impacted by travel restrictions, with a shift towards digital advertising and remote demonstrations to mitigate losses[87]. - The production of Boeing 737 MAX aircraft was halted, leading to very low levels of new printer orders and shipments, with recovery expected to be prolonged[89]. - Demand for aerospace spare products, paper, parts, and repairs has significantly declined due to reduced air travel, impacting revenues and results of operations[89]. - The company has maintained most of its manufacturing operational capacity but faced reduced production capacity and longer order fulfillment lead times due to COVID-19[86]. - The company expects that the lasting presence of COVID-19 will continue to adversely impact operational capacity and financial results in the near term[86]. Cost Management - The company plans to continue reducing costs while maintaining sufficient capabilities to support customers and meet quality requirements[89]. - Operating expenses decreased by 16.0% to $38.9 million, with selling and marketing expenses down by 13.3%[92]. Liquidity and Financing - The company secured a $4.4 million PPP loan to address liquidity concerns during the COVID-19 pandemic[98]. - The company entered into an Amended and Restated Credit Agreement providing for a term loan of $10.0 million and a revolving credit facility of $22.5 million, expiring on September 30, 2025[100]. - As of January 31, 2021, the company had cash and cash equivalents of $11.4 million and $22.5 million available for borrowing under the Amended Credit Agreement[100]. - The company suspended its quarterly cash dividend beginning with the second quarter of fiscal year 2021 in response to the COVID-19 pandemic[100]. Inventory and Receivables - The accounts receivable balance decreased to $17.4 million at January 31, 2021, down from $19.8 million at January 31, 2020, reflecting lower full-year revenues[105]. - The year-end inventory balance decreased to $30.1 million at January 31, 2021, compared to $33.9 million at January 31, 2020, due to lower production demand[105]. Debt and Obligations - Total debt stands at $12,576,000, with $5,326,000 due in less than 1 year and $7,250,000 due in 1-3 years[108]. - Interest on debt is recorded at $648,000, with $496,000 due in less than 1 year and $152,000 in 1-3 years[108]. - The term loan requires quarterly installments starting at $187,500, increasing to $500,000 by fiscal 2025, with the entire remaining balance due on September 30, 2025[101]. Risk Management - Bad debt expense was less than 1% of net sales for both fiscal 2021 and 2020, indicating effective credit risk management[111]. - The company has established a reserve for warranty claims based on historical data, affecting future results if actual costs differ from estimates[111]. - A hypothetical 10% change in foreign currency translation rates would result in a consolidated net income change of approximately $0.3 million for the year ended January 31, 2021[116]. - Foreign exchange gains from transactional exposure amounted to $0.6 million for the year ended January 31, 2021[116]. - A 100 basis point change in interest rates on the outstanding balance of variable-rate debt would impact annual results by approximately $0.1 million[117].