AstroNova, Inc. Q2 FY2026 earnings call

Product ID Segment - Restructured sales team into customer acquisition and customer retention to be more customer-centric. - Need to change sales team skills to align with new product offerings. New print solutions have longer sales cycles and specific customer needs. - Have to validate Emtek's product line upgrades with customers regarding print quality, speed, reliability, durability, and operating costs. - Facing production challenges with mail-in sheet printer line, redesigned products but haven't been able to produce enough. ### Aerospace Segment - Aerospace revenue declined year over year but ToughRider flight deck printers began shipping, with ToughRider representing 50% of second-quarter shipments and on track to reach over 80% target. - 45% of segment revenue from aftermarket sales and service, ~10% of hardware sales dependent on spare replacement machines. - Benefiting from long-term tailwind of growth in commercial aircraft build rates for new build aircraft. - Working to create more collaborative culture putting customer first to regain trust with stakeholders.

For the second quarter, total revenue was $36.1 million, down 10.9% year over year and 4.2% sequentially. Product ID segment revenue decreased 8.9%. The decline was primarily due to a $2.6 million drop in recurring supplies, parts, and service from customer attrition, but was partially offset by higher demand for mail-in sheet flat pack products. Aerospace segment revenue decreased 15.1%, driven by a tough comparison to the prior year's second quarter which had unusual spare printer shipments and nonrecurring engineering revenue. For 2026, total revenue was $73.8 million, marginally up year over year as higher hardware sales offset the decline in recurring supplies, parts, and service revenue. Product ID contributed a certain percentage to the total revenue, and aerospace contributed the remaining, with aerospace's 45% of revenue from aftermarket sales and service and roughly 10% from hardware spare replacements.

- 2026 orders were $35.9 million, relatively unchanged from prior year but up $1 million sequentially, with aerospace orders up $3.8 million for trailing first quarter. - Backlog for the quarter was $25.3 million, down $4.6 million year over year, representing about 30% of expected shipments for the second half of the year. - Expect to see full benefit of $3 million in annualized cost reductions in the second half of fiscal year. - Will have better understanding of new printers' potential over next few months. - Aerospace business has tailwinds including increasing aircraft build rates and profit margin benefit in fiscal 2028 as Honeywell royalty rolls off.

- Uncertainty regarding validation of Emtek's product line upgrades with customers. - Production challenges in mail-in sheet printer operation, not being able to produce enough. - Uncertainty around debt restructuring discussions. - Uncertainty regarding the effectiveness of sales team restructuring and new go-to-market strategy. - Aerospace business has significant quarter-to-quarter variation.

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