AstroNova ALOT Q1 2026 Earnings Call Transcript

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SUMMARYAstroNova, Inc. 81%) reported broad-based topline expansion in Q1 FY2026, underpinned by double-digit year-over-year growth rates in both duct Identification and Aerospace segments, and highlighted a successful ramp in next-generation duct launches

Management stated that "Eighty-three percent of the quarter's revenue was recurring," The quarter marked the completion of $1. 9 million of annualized cost-saving actions as part of a $3 million cost reduction initiative, most of which will begin to be realized in the second quarter, with associated benefits expected to accelerate in future periods

Thomas DeByle highlighted, "ToughWriter aerospace ers were 42% of the first-quarter shipments," with a stated goal to double this by FY2026 year-end

Woods said, "We expect to launch six more disruptive solutions before the end of fiscal 2026. " indicating continued duct pipeline momentum

Tariff exposure was mitigated by strategic actions, including contract structures shielding aerospace shipments, practice of maintaining critical component inventories, and recent price and surcharge adjustments

INDUSTRY GLOSSARYEmtek: A duct line or nology associated with AstroNova's duct Identification solutions, referenced in relation to incremental sales

ToughWriter: AstroNova's prietary high-reliability cockpit er primarily serving aerospace and defense clients

Amazon Kuiper Systems: Amazon's low Earth orbit satellite gram, newly referenced as a data acquisition system customer for AstroNova

OEM: Original Equipment Manufacturer; in context, refers to major commercial aircraft manufacturers such as Boeing and Airbus

Full Conference Call TranscriptGregory Woods, our President and Chief Executive Officer, and Thomas DeByle, our Chief Financial Officer

You should have the earnings release that went out this morning as well as the slides that will accompany our conversation today

If not, you can find these documents on the Investor Relations section of our website at astronovainc

If you would turn to slide two, we'll discuss the cautionary statement

As you are ly aware, during the formal presentation, as well as the Q&A session, management may make some forward-looking statements our current plans, beliefs, and expectations

These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today

These risks, uncertainties, and other factors are vided in the earnings release as well as in other documents filed by the company with the Securities and Exchange Commission

These documents can be found on our website at sec

Also, as noted on the slide, management will refer to some non-GAAP financial measures

We believe these will be useful in evaluating our performance

However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP

You can find reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides

Now if you will please turn to slide three, I'll turn the call over to Greg

Gregory Woods: Thank you, Debbie

And good morning, everyone, and thank you for joining us

Before I get into the details of the quarter, I want to reiterate our strategy to drive long-term revenue growth and imve fitability

AstroNova has a unique position in the global data visualization market with deeply embedded relationships, high-performance nology, and a strong recurring revenue model

Our goal is to leverage our nologies and market position and our lined organization to der stronger growth with more predictable performance

Core to our strategy are three strategic drivers

First, our aerospace segment, which has a leading market in cockpit ers, is rapidly advancing the transition of customers from our legacy models to our high-performance and high-reliability ToughWriter ers

This transaction deepens our position with leading aerospace customers, decouples us from royalty costs associated with legacy ducts, and simplifies our duct portfolio, which reduces supply chain complexity and inventory levels, imving cash generation and margins

The transition also enables us to capture a larger percentage of aftermarket sales

Our ToughWriter nology enables us to better leverage the positive macro backdrop of the commercial aerospace market as both Boeing and Airbus continue to ramp up their build rate

The second strategic driver is the launch of highly disruptive next-generation duct identification solutions

These commercial-scale ing solutions unlock new end with large customers that have higher volume ing needs

They also allow us to better control the supply chain for our ink and critical engine components, lowering costs over time

This vides more avenues for growth, and we have already been gaining traction with both new and existing customers

And the third strategic driver is further lining operations through headcount reductions and restructuring while strengthening segment-level accountability

We are working to structure incentive compensation with key performance indicators, including growth, fitability, cash generation, and earnings per, to further imve alignment between management and holders

We are laser-focused on executing this strategy

With that, if you'll turn to slide four, let me touch on the quarterly highlights

We also accelerated our previously announced $3 million annualized cost reduction plan by completing $1. 9 million of annualized cost-saving actions in the quarter, most of which will begin to be realized in the second quarter

We plan to complete the remainder of the cost-saving actions in the second quarter

During Q1, we launched three next-generation duct identification solutions ahead of schedule

We are ahead of schedule with the rollout of two additional next-generation ducts that we have in our pipeline

These are expected to be launched in the second quarter

In Q1, we uptrained and upgraded our sales team, implemented a new targeted sales strategy under our recently appointed segment leadership, and restructured our go-to-market apach

We are pleased with the gress the team has made already and encouraged by the early interest and orders they have generated

In aerospace, at the end of the quarter, we announced a renewed $10 million multiyear contract win for the dery of our ToughWriter ducts over the next five years to a prime defense contractor

Shipments on this gram began late in Q1

The hard work and hard decisions we made over the past six months are imving results, but we still have more work to do

We expect our margin file and aftermarket sales to strengthen as the rollout of our new duct ID solutions gain market acceptance and our ToughWriter transition continues to advance

This is a critical juncture for AstroNova

We are confident in our ability to der long-term holder value through the focused execution of our strategy

Looking at Slide five, we will review orders and backlog and discuss the opportunities we are seeing in our

We secured a three-year label supply contract, which is a new account for us

We also captured a renewed, upsized contract from a large private label coffee grocer in the UK

This current customer also will be upgrading its entire fleet of QuickLabel ers

As we have previously pointed out, aerospace orders can vary quarter to quarter based on the timing of customer contracts

During the quarter, we did also further expand our space launch data acquisition

We secured an order from a new customer, Amazon Kuiper Systems, for our data acquisition systems to be used on their low Earth orbit satellite gram

Before I pass the call over to Tom, please turn to Slide six, and I will touch on what we are seeing regarding tariffs

The headline ary is that so far, the impacts have been negligible for our

Our aerospace shipments are insulated from many of the tariffs due to the contracts we have in place, which essentially hedge our exposure on the sales side

Most of our exposure comes from the component part

However, due to the expense and regulatory difficulties associated with making changes to aerospace avionics, we typically carry large inventories of the most critical components

This gives us multi-month tection from vendor and/or tariff issues

For duct ID, our next-generation engine allows us to source ink from across the world, viding flexibility on supply costs

Additionally, our global manufacturing presence in the United States, Europe, and Canada gives us more options for rerouting our shipments

To further combat tariffs, we implemented price increases on April first and tariff surcharges in the first week of May

We continue to remain agile and look for ways we can partner with and source from alternative suppliers to minimize cost impacts

I'll now hand the call over to Tom for the financial review

Thomas DeByle: Thank you, Greg

Good morning, everyone

Eighty-three percent of the quarter's revenue was recurring

Importantly, we unveiled three new du.