AstroNova (NASDAQ: ALOT) reported Q1 EPS of $0.06, $0.25 better than the analyst estimate of ($0.19). Revenue for the quarter came in at $30.9 million versus the consensus estimate of $29.75 million.

CEO Commentary

“Our performance improved from the fourth quarter of fiscal 2020 due to actions taken that reduced costs and realigned priorities. However, the broad economic disruption caused by the COVID-19 pandemic added additional constraints and weighed on our first-quarter financial performance,” said Greg Woods, AstroNova’s President and Chief Executive Officer. “The pandemic impact has been particularly acute in the Aerospace portion of our Test & Measurement segment. Despite the challenging conditions, our global team is doing an outstanding job supporting our customers throughout this pandemic. At AstroNova facilities around the world, we have maintained production while keeping the health and safety of our employees, customers, suppliers and communities at the forefront of our attention. The early actions we took to shift a significant number of our global team to working remotely while enhancing our cleaning and protection procedures at our production facilities have proven to be successful.

“In our Product Identification segment, which relies heavily on tradeshow participation, in-person sales calls and product demos, we’ve had to adapt, at least temporarily, to a new normal,” Woods said. “Our marketing team has done a good job on that front, enhancing our e-commerce and virtual demo initiatives with the creation of the recently launched new Product Identification website.

“In the first quarter, the Product Identification supplies portion of our business performed well and accounted for approximately 62% of total revenue compared with approximately 55% in the prior-year period,” Woods said. “In certain end markets, such as cleaning and sanitation, as well as chemical and medical supplies, demand was particularly strong from both new and existing customers. We expect a gradual improvement in printer sales beginning in the second half of the fiscal year as more businesses reopen and our sales teams can resume onsite customer visits.

“In our Test and Measurement segment, our Aerospace business remains heavily impacted by the 737 MAX production halt and the COVID-19 crisis, which has dramatically reduced air travel,” Woods said. “While airline travel appears to have bottomed, the pace and timing of recovery remains uncertain. One recent positive sign is the restart of the 737 MAX assembly line at the end of May. This bodes well for the longer-term and we still expect the 737 MAX to be highly successful, but current production plans call for what will likely be a prolonged recovery.

Business Outlook

“As disclosed last month, in order to better position the Company in these unprecedented times, we applied for and received a $4.4 million Payroll Protection Program loan and suspended the Company’s dividend. In addition, we continue to take steps to mitigate the financial impact of COVID-19 on our business while preserving liquidity,” Woods said. “These include ongoing cost-reduction measures in response to lower demand forecasts, especially in aerospace markets. Based on the current environment, we expect our results in the second quarter of FY 2021 to be weaker than the first quarter. However, we see early evidence of improving business investment and travel trends that could lead to better results in the second half of the year.”

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