AstroNova's Q2 Loss Widens Y/Y Amid Product ID Challenges

Core Viewpoint - AstroNova, Inc. reported disappointing financial results for the second quarter of fiscal 2026, leading to a significant decline in its stock price and highlighting ongoing challenges in its Product Identification segment [1][2][7]. Financial Performance - The company incurred a net loss of $1.2 million, or 16 cents per share, compared to a loss of $0.3 million, or 4 cents per share, in the prior-year period [2][3]. - Revenues fell 10.9% year over year to $36.1 million from $40.5 million [2]. - Gross profit dropped 18.8% to $11.6 million, with gross margin compressing to 32.2% from 35.3% [3]. Segment Performance - The Product Identification segment generated $24.8 million in revenue, down 8.9% year over year, with operating income falling to $1.9 million and operating margin slipping to 7.7% [4]. - The Aerospace segment posted revenues of $11.3 million, a 15.1% decline compared to last year's $13.4 million, with operating profit sliding 37.1% to $2.4 million [5]. Orders and Backlog - Orders for the quarter remained steady at $35.9 million, with a backlog of $25.3 million, slightly down from $25.5 million in the previous quarter [6]. Management Commentary - The CEO described the quarter's results as "disappointing," emphasizing the need to rebuild customer relationships and improve execution [7]. - The CFO noted expectations for modest revenue growth in the second half of the year, driven by an improving product mix and cost-cutting efforts [8]. Factors Influencing Results - The revenue decline was primarily due to shipment delays in the Product ID segment and challenging comparisons against last year's unusual Aerospace orders [9]. - Operating expenses were reduced by approximately $0.9 million, but these savings were insufficient to offset the impact of weaker sales and gross profit [9]. Guidance - Management revised fiscal 2026 revenue guidance downward to $149-$154 million, implying revenues to be roughly flat with fiscal 2025 [10]. - Adjusted EBITDA margin expectations were trimmed to 7.5-8.5% from a previous range of 8.5-9.5% [11]. Other Developments - The company shipped redesigned printers using MTEX's autonomous ink printheads and launched shipments of its ToughWriter 640 printer to a major aircraft manufacturer [12]. - AstroNova amended its credit agreement after breaching a covenant and is negotiating a restructuring into a real estate-backed loan expected within 60 days [12].