AstroNova Reports 7.7% Revenue Growth but Declines in Net Income for Third Quarter

AstroNova, Inc. reported its financial results for the third quarter and nine months ended November 2, 2024, revealing a revenue increase of 7.7% to $40.4 million compared to $37.5 million in the same period last year. The company's net income for the quarter was $240,000, or $0.03 per diluted share, a significant decline from the $2.8 million, or $0.37 per diluted share, reported in the prior year. The increase in revenue was driven by a 28.2% rise in the Test & Measurement (T&M) segment, which generated $14.1 million, while the Product Identification (PI) segment saw a slight decrease in revenue to $26.3 million.

In terms of profitability, AstroNova's gross profit for the third quarter was $13.7 million, down from $14.8 million a year earlier, resulting in a gross profit margin of 33.9%, a decrease of 5.5 percentage points. Operating expenses rose by 22.5% to $12.5 million, largely due to the integration costs associated with the acquisition of MTEX, a Portugal-based manufacturer of digital printing equipment, which was finalized on May 6, 2024. The acquisition is expected to enhance AstroNova's product offerings but has also contributed to increased operational costs.

AstroNova's balance sheet showed total assets of $166.5 million as of November 2, 2024, up from $133.3 million at the end of the previous fiscal year. This increase was primarily attributed to the acquisition of MTEX, which added $10.6 million in goodwill and $7.5 million in identifiable intangible assets. The company reported a total debt of $27.5 million, which includes a new term loan of EUR 14 million to finance the MTEX acquisition. The company has also increased its revolving credit facility from $25 million to $30 million to support its operational needs.

Operationally, AstroNova's customer base and geographic reach have expanded, with international revenue accounting for 41.9% of total revenue in the third quarter. The company reported a total of 7,528,838 shares outstanding as of December 6, 2024. The management indicated that they expect revenue growth to improve in the upcoming quarters as they address delays in product releases and continue to integrate MTEX into their operations.

Looking ahead, AstroNova aims to focus on inventory reduction and debt management while leveraging the synergies from the MTEX acquisition. The company remains optimistic about its growth prospects, particularly in the T&M segment, which is benefiting from increased demand in the aerospace market. However, management acknowledged the challenges associated with integrating MTEX and the need to enhance internal controls over financial reporting.