10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 1, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number

0-13200

AstroNova, Inc.

(Exact name of registrant as specified in its charter)


Rhode Island		05-0318215
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

600 East Greenwich Avenue, West Warwick, Rhode Island		02893
(Address of principal executive offices)		(Zip Code)

(401)

828-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.05 Par Value	ALOT	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes

☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act) Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock, $.05 par value per share, outstanding as of June 8, 2021 was

7,231,068.

Table of Contents

ASTRONOVA, INC.

INDEX


		Page No.
Part I.	Financial Information
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets – May 1, 2021 and January 31, 2021		3
	Unaudited Condensed Consolidated Statements of Income — Three Months Ended May 1, 2021 and May 2, 2020		4
	Unaudited Condensed Consolidated Statements of Comprehensive Income — Three Months Ended May 1, 2021 and May 2, 2020		5
	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity — Three Months Ended May 1, 2021 and May 2, 2020		6
	Unaudited Condensed Consolidated Statements of Cash Flows — Three Months Ended May 1, 2021 and May 2, 2020		7
	Notes to the Condensed Consolidated Financial Statements (unaudited)		8-20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20-29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		30
Item 4.	Controls and Procedures		30
Part II.	Other Information
Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30-31
Item 6.	Exhibits		32
Signatures			33

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Part I. FINANCIAL INFORMATION

Item 1.

Financial Statements

ASTRONOVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)


	May 1, 2021			January 31, 2021
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	11,414		$	11,439
Accounts Receivable, net		15,249			17,415
Inventories, net		29,474			30,060
Prepaid Expenses and Other Current Assets		2,072			1,807

Total Current Assets		58,209			60,721
Property, Plant and Equipment, net		12,124			12,011
Intangible Assets, net		20,496			21,502
Goodwill		12,730			12,806
Deferred Tax Assets		5,944			5,941
Right of Use Assets		1,302			1,389
Other Assets		1,251			1,103

TOTAL ASSETS	$	112,056		$	115,473

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable	$	5,639		$	5,734
Accrued Compensation		2,951			2,852
Other Liabilities and Accrued Expenses		3,448			3,939
Current Liability – Royalty Obligation		2,000			2,000
Current Portion of Long-Term Debt		813			5,326
Current Liability – Excess Royalty Payment Due		—			177
Deferred Revenue		330			285
Income Taxes Payable		260			655

Total Current Liabilities		15,441			20,968
Long-Term Debt, net of current portion		8,884			7,109
Royalty Obligation, net of current portion		5,711			6,161
Long-Term Debt – PPP Loan		4,422			4,422
Lease Liabilities, net of current portion		983			1,065
Other Long-Term Liabilities		680			681
Deferred Tax Liabilities		402			384

TOTAL LIABILITIES		36,523			40,790
SHAREHOLDERS’ EQUITY
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,479,139 shares and 10,425,094 shares at May 1, 2021 and January 31, 2021, respectively		524			521
Additional Paid-in Capital		58,576			58,049
Retained Earnings		50,678			50,085
Treasury Stock, at Cost, 3,312,687 and 3,297,058 shares at May 1, 2021 and January 31, 2021, respectively		(33,796	)		(33,588	)
Accumulated Other Comprehensive Loss, net of tax		(449	)		(384	)

TOTAL SHAREHOLDERS’ EQUITY		75,533			74,683

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	112,056		$	115,473

See Notes to condensed consolidated financial statements (unaudited).

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ASTRONOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Data)

(Unaudited)


	Three Months Ended
	May 1, 2021			May 2, 2020

Revenue	$	29,078		$	30,919
Cost of Revenue		18,190			20,064
Gross Profit		10,888			10,855
Operating Expenses:
Selling and Marketing		6,092			5,925
Research and Development		1,717			1,940
General and Administrative		2,344			2,327
Operating Expenses		10,153			10,192
Operating Income		735			663
Other Expense, net		369			349
Income Before Income Taxes		366			314
Income Tax Benefit		(227	)		(118	)
Net Income	$	593		$	432
Net Income per Common Share—Basic:	$	0.08		$	0.06
Net Income per Common Share—Diluted:	$	0.08		$	0.06
Weighted Average Number of Common Shares Outstanding:
Basic		7,145			7,073
Diluted		7,265			7,105

See Notes to condensed consolidated financial statements (unaudited).

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ASTRONOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

(Unaudited)


	Three Months Ended
	May 1, 2021			May 2, 2020

Net Income	$	593		$	432
Other Comprehensive Loss, Net of Taxes:
Foreign Currency Translation Adjustments		(81	)		(142	)
Change in Value of Derivatives Designated as Cash Flow Hedge		—			(46	)
Loss (Gain) from Cash Flow Hedges Reclassified to Income Statement		16			(33	)
Other Comprehensive Loss		(65	)		(221	)
Comprehensive Income	$	528		$	211

See Notes to condensed consolidated financial statements (unaudited).

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ASTRONOVA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

($ In Thousands, Except per Share Data)

(Unaudited)


	Common Stock				Additional Paid-in			Retained			Treasury			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Capital			Earnings			Stock			Income (Loss)			Equity
Balance January 31, 2020		10,343,610	$	517	$	56,130		$	49,298		$	(33,477	)	$	(1,093	)	$	71,375
Share-Based Compensation		—		—		495			—			—			—			495
Employee Option Exercises		4,456		—		32			—			—			—			32
Restricted Stock Awards Vested, net		23,638		1		(1	)		—			(54	)		—			(54	)
Common Stock – Cash Dividend - $0.07 per share		—		—		—			(497	)		—			—			(497	)
Net Income		—		—		—			432			—			—			432
Other Comprehensive Loss		—		—		—			—			—			(221	)		(221	)

Balance May 2, 2020		10,371,704	$	518	$	56,656		$	49,233		$	(33,531	)	$	(1,314	)	$	71,562


	Common Stock				Additional Paid-in			Retained		Treasury			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Capital			Earnings		Stock			Income (Loss)			Equity
Balance January 31, 2021		10,425,094	$	521	$	58,049		$	50,085	$	(33,588	)	$	(384	)	$	74,683
Share-Based Compensation		—		—		478			—		—			—			478
Employee Option Exercises		5,746		—		52			—		—			—			52
Restricted Stock Awards Vested, net		48,299		3		(3	)		—		(208	)		—			(208	)
Net Income		—		—		—			593		—			—			593
Other Comprehensive Loss		—		—		—			—		—			(65	)		(65	)

Balance May 1, 2021		10,479,139	$	524	$	58,576		$	50,678	$	(33,796	)	$	(449	)	$	75,533

See Notes to condensed consolidated financial statements (unaudited).

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ASTRONOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


	Three Months Ended
	May 1, 2021			May 2, 2020
Cash Flows from Operating Activities:
Net Income	$	593		$	432
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		1,425			1,568
Amortization of Debt Issuance Costs		25			12
Share-Based Compensation		478			495
Changes in Assets and Liabilities:
Accounts Receivable		2,165			1,220
Inventories		568			1,237
Income Taxes		(387	)		(90	)
Accounts Payable and Accrued Expenses		(552	)		(1,140	)
Other		(406	)		(314	)

Net Cash Provided by Operating Activities		3,909			3,420
Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment		(544	)		(626	)

Net Cash Used for Investing Activities		(544	)		(626	)
Cash Flows from Financing Activities:
Net Cash Proceeds from Employee Stock Option Plans		34			6
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan		18			26
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock		(208	)		(54	)
Borrowings under Revolving Credit Facility		—			5,000
Payment of Minimum Guarantee Royalty Obligation		(500	)		(500	)
Proceeds from Long-Term Debt Borrowings		10,000			—
Payoff of Long-Term Debt		(12,576	)		—
Principal Payments on Long-Term Debt		(187	)		—
Dividends Paid		—			(497	)

Net Cash Provided by (Used) for Financing Activities		(3,419	)		3,981

Effect of Exchange Rate Changes on Cash and Cash Equivalents		29			67

Net Increase (Decrease) in Cash and Cash Equivalents		(25	)		6,842
Cash and Cash Equivalents, Beginning of Period		11,439			4,249

Cash and Cash Equivalents, End of Period	$	11,414		$	11,091

Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for Interest	$	115		$	124
Cash Paid During the Period for Income Taxes, Net of Refunds	$	131		$	128

See Notes to condensed consolidated financial statements (unaudited).

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ASTRONOVA, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 – Business and Basis of Presentation

Overview

Headquartered in West Warwick, Rhode Island, AstroNova, Inc. leverages its expertise in data visualization technologies to design, develop, manufacture and distribute a broad r

nge of specialty printers and data acquisition and analysis systems. Our products are employed around the world in a wide range of applications in the aerospace, apparel, automotive, avionics, chemical, computer peripherals, communications, distribution, food and beverage, general manufacturing, packaging and transportation industries

Our business consists of two

segments, Product Identification (“PI”) and Test & Measurement (“T&M”). The PI segment includes specialty printing systems and related supplies sold under the QuickLabel®, TrojanLabel® and GetLabels™ brand names. The T&M segment includes our line of aerospace printers and test and measurement data acquisition systems sold under the AstroNova® brand name.

PI products sold under the QuickLabel, TrojanLabel and GetLabels brands are used in brand owner and commercial applications to provide product packaging, marketing, tracking, branding and labeling solutions to a wide array of industries. The PI segment offers a variety of digital color label tabletop printers, high-volume presses and specialty original equipment manufacturer (“OEM”) printing systems, as well as a wide range of label, tag and flexible packaging material substrates and other supplies, including ink and toner, allowing customers to mark, track, protect and enhance the appearance of their products. In the T&M segment, we have a long history of using our technologies to provide networking systems and high-resolution light-weight flight deck and cabin printers for the aerospace market. In addition, the T&M segment includes data acquisition recorders, sold under the AstroNova brand, to enable our customers to acquire and record visual and electronic signal data from local and networked data streams and sensors. The recorded data is processed and analyzed and then stored and presented in various visual output formats.

Our Product Identification products are sold by direct field salespersons as well as independent dealers and representatives, while our Test & Measurement products are sold predominantly through direct sales and manufacturers’ representatives. In the United States, we have factory-trained direct field salespeople located throughout the country specializing in Product Identification products. We also have direct field sales or service centers in Canada, China, Denmark, France, Germany, Malaysia, Mexico, Singapore, and the United Kingdom staffed by our own employees and dedicated third party contractors. Additionally, we utilize over 200 independent dealers and representatives selling and marketing our products in over 60 countries.

Unless otherwise indicated, references to “AstroNova”, “we,” “our,” and “us” in this Quarterly Report on

Form 10-Q

refer to AstroNova, Inc. and its consolidated subsidiaries.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods included herein. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with our Annual Report on Form

10-K

for the fiscal year ended January 31, 2021.

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes, including those that require consideration of forecasted financial information, in context of the unknown future impacts of

COVID-19

using information that is reasonably available to us at this time. Some of the more significant estimates relate to revenue recognition, the allowances for doubtful accounts, inventory valuation, income taxes, impairment of long-lived assets and goodwill, share-based compensation, accrued expenses, self-insurance liability accrual and warranty reserves. Management’s estimates are based on the facts and circumstances available at the time estimates are made, historical experience, risk of loss, general economic conditions and trends, and management’s assessments of the probable future outcome of these matters, including our expectations at the time regarding the duration, scope and severity of the

COVID-19

pandemic. Consequently, actual results could differ from those estimates.

Results of operations for the interim periods presented herein are not necessarily indicative of the results that may be expected for the full year.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year’s presentation.

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Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of AstroNova, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.

Note 2 – Summary of Significant Accounting Policies Update

The accounting policies used in preparing the condensed consolidated financial statements in this Form

10-Q

are the same as those used in preparing our consolidated financial statements included in our Annual Report on Form

10-K

for the fiscal year ended January 31, 2021.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued an ASU

2019-12,

“Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU

2019-12

is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We adopted ASU

2019-12

for the period beginning February 1, 2021. The adoption of this guidance did not have a material impact on our consolidated financial statements and accompanying disclosures.

No other new accounting pronouncements, issued or effective during the three months of the current year, have had or are expected to have a material impact on our consolidated financial statements.

Note 3 – Revenue Recognition

We derive revenue from the sale of (i) hardware, including digital color label printers and specialty OEM printing systems, portable data acquisition systems and airborne printers used in the flight deck and cabin of military, commercial and business aircraft, (ii) related supplies required in the operation of the hardware, (iii) repairs and maintenance of hardware and (iv) service agreements.

Revenues disaggregated by primary geographic markets and major product types are as follows:

Primary geographical markets:


	Three Months Ended
(In thousands)	May 1, 2021		May 2, 2020

United States	$	16,693	$	19,789
Europe		8,599		7,450
Canada		1,546		1,428
Asia		1,085		1,009
Central and South America		760		954
Other		395		289
Total Revenue	$	29,078	$	30,919

Major product types:


	Three Months Ended
(In thousands)	May 1, 2021		May 2, 2020

Hardware	$	7,647	$	8,914
Supplies		18,211		19,118
Service and Other		3,220		2,887
Total Revenue	$	29,078	$	30,919

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Contract Assets and Liabilities

We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time.

Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended warranties. Contract liabilities were $330,000 and $285,000 at May 1, 2021 and January 31, 2021, respectively, and are recorded as deferred revenue in the accompanying condensed consolidated balance sheet. The increase in the deferred revenue balance during the three months ended May 1, 2021

is primarily due to cash payments received in advance of satisfying performance obligations in the current period, offset by $

127,000

revenue recognized during the period that was included in the deferred revenue balance at January 31, 2021.

Contract Costs

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. These costs are deferred and amortized based on the forecasted number of units sold over the remaining benefit term, which we currently estimate to be approximately 5 years. The balance of these contract assets at January 31, 2021 was $

SEC Form 10-Q filed by AstroNova, Inc.