sidoti & company spring 2018 conference · oem equipment for converters and manufacturers...

Sidoti & Company Spring 2018 Conference

Greg Woods, President and CEO

David S. Smith, CFO

March 29, 2018

Information included in this presentation may contain forward-looking statements within the meaning of the

Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical

fact, but rather reflect our current expectations concerning future events and results. These statements may

include the use of the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “continues,”

“may,” “will” and similar expressions to identify forward-looking statements. Such forward-looking

statements, including those concerning growth through acquisitions, involve risks, uncertainties and other

factors, some of which are beyond the Company’s control, which may cause the Company’s actual results,

performance or achievements to be materially different from those expressed or implied by such forward-

looking statements. These risks, uncertainties, and factors include, but are not limited to, those factors set

forth in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2017 and

subsequent filings AstroNova makes with the Securities and Exchange Commission. The Company

undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of

new information, future events or otherwise. Investors are cautioned not to unduly rely on such forward-

looking statements when evaluating the information in this presentation.

©2018 AstroNova, Inc. all rights reserved. 2

Forward-looking Statements

NASDAQ: ALOT Investor Presentation – March 2018

In addition to financial measures prepared in accordance with generally accepted accounting principles

(GAAP), this presentation contains the non-GAAP financial measures non-GAAP net income and non-

GAAP net income per share. The Company believes that these non-GAAP financial measures help

investors to gain a meaningful understanding of changes in the Company's core operating results, and also

can help investors who wish to make comparisons between AstroNova and other companies on both a

GAAP and a non-GAAP basis. AstroNova’s management uses these non-GAAP measures, in addition to

GAAP financial measures, as the basis for measuring its core operating performance and comparing such

performance to that of prior periods and to the performance of its competitors. These measures are also

used by the Company’s management to assist with their financial and operating decision-making. Non-

GAAP financial measures are not a substitute for GAAP financial measures and may not be comparable to

similarly titled measures of other companies.

©2018 AstroNova, Inc. all rights reserved. 3

Use of Non-GAAP Financial Measures

NASDAQ: ALOT Investor Presentation – March 2018

4

Innovative, Differentiated Products

Aerospace Product Identification Test & Measurement

Unifying Core Technology – Data Visualization

AstroNova products convert analog and digital data into text, graphics, digital signals

• High recurring revenue stream

• Proprietary consumables

• Diverse global markets

NASDAQ: ALOT ©2018 AstroNova, Inc. all rights reserved.Investor Presentation – March 2018

5©2018 AstroNova, Inc. all rights reserved.NASDAQ: ALOT Investor Presentation – March 2018

A1 A2 A4

A3

5

AstroNova Financial Snapshot

6NASDAQ: ALOT ©2018 AstroNova, Inc. all rights reserved.Investor Presentation – March 2018

NASDAQ: ALOT Russell Microcap® Index(Stock price and yield as of 3/21/18)

Recent Price $15.50

52-Week Range $11.00 - $15.70

Market Capitalization $105.0 million

Common Stock Outstanding 6.8 million

Enterprise Value $116.7 million

Book Value per Share(1) $9.40

Annualized Dividend $0.28 per share

Yield 1.8%

Q4 FY 2018 Financial Highlights(2)

• Revenue: $32.7 million

• Net income: $0.8 million GAAP; $1.7 million Non-GAAP*

• Diluted EPS: $0.09 GAAP; $0.25 Non-GAAP*

FY 2018 Financial Highlights(3)

• Revenue: $113.4 million

• Net income: $3.3 million GAAP; $4.4 million Non-GAAP*

• Diluted EPS: $0.47 GAAP; $0.63 Non-GAAP*

(3)At 01/31/18

(2)Three months ended 01/31/18

(1)As of 01/31/18 *Please refer to reconciliation tables at the end of this presentation for a

reconciliation of GAAP to Non-GAAP financial results.

7©2018 AstroNova, Inc. all rights reserved.NASDAQ: ALOT Investor Presentation – March 2018

Five Year Revenue Growth

Recent Growth Drivers

8

Strategic M&A• Asset Purchase License Agreement: Honeywell Aerospace

• Integration of TrojanLabel into AstroNova

• Launched game-changing new products in both segments

• Increased demand for ink, labels and other supplies

Operational • Opened new EMEA hub in Germany

• Strengthened leadership team

Organic Initiatives


9

AstroNova Operating System (AOS)

Continuous Improvement Through operational excellence

and lean initiatives, we

consistently strive to increase

efficiency and enhance margins

InnovationStage-Gate methodology

accelerates and streamlines

product development process

Building Value

Our customer-centric philosophy

ensures we deliver superior

quality, delivery, cost and growth

One Global Team

We work as a unified organization

in a data-driven environment that

fosters mutual trust and respect


10

Revenue Per Employee

$226

$259

$286$310

$326

$0

$50

$100

$150

$200

$250

$300

$350

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

($ in thousands)

NASDAQ: ALOT

AOS Drives Productivity Improvements

©2018 AstroNova, Inc. all rights reserved.Investor Presentation – March 2018

11

Worldwide Reach

165 Dealers, Customers in 154 Countries

©2018 AstroNova, Inc. all rights reserved.NASDAQ: ALOT Investor Presentation – March 2018

12

Business Overview

Reporting

Segments

Business

Units


13

Product Identification Segment

Tabletop and Light Production Label Printers, Specialty Printers,

Software, Consumables, and Service

$43.6$49.1

$59.8

$67.1 $69.9

$81.7

10.0% 10.5% 12.1% 13.9% 14.1%

$0

$20

$40

$60

$80

$100

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

FY 2013-18 Revenue CAGR: 13.4%

($ in millions)

Segment Revenue and

Operating Profit Margin


14

Digital Package Printing:

Large, Attractive and Growing Market

Advantages of Digital

Package Printing

• Short-run

• On-demand

• Ease of data variability

• Personalization

• Lower cost


$13.2

$23.2

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

2017 2022

Projected Growth of Digitally Printed

Labels and Packaging

($ in b

illions)

Source: Smithers Pira, AstroNova

NASDAQ: ALOT

Labels represent ~ 15-20%

©2018 AstroNova, Inc. all rights reserved. 15Investor Presentation – March 2018

Digital Package Printing:

Disrupting the Packaging Industry

16

TrojanLabel

• Acquired in February 2017

• European manufacturer of digital color label presses and specialty printing systems

• Products focused on a broad range of end markets

• Strong presence in EMEA and Asia

• 50 dealer partners worldwide

• Profitable and growing

• Robust R&D pipeline


Expands Addressable Product ID Market


19

Commercial Production

Trojan T2-C

• World’s first affordable production digital label mini press

• Fast print speed – up to 12 inches per second

• Ideal for label converters print shops, contract packaging

Trojan T4

• Professional label press and finishing system for compact production

• Fast print speed – up to 12 inches per second

• Ideal for label converters print shops, contract packaging

NASDAQ: ALOT

New Products, Launched FY18-Q4


20

OEM Equipment for Converters and Manufacturers

Trojan T3-OP

• Digital professional packaging & converting overprinting system

• High quality, full-color printing directly onto ink-receptive surfaces

NASDAQ: ALOT

New Category IJP Technology


21

Test & Measurement Segment

Airborne Printers, Networking Hardware and

Data Acquisition Systems

$17.6$19.5

$28.6$27.5

$28.6

$31.7

17.6%13.6%

19.7%

13.3% 15.4%

$0

$5

$10

$15

$20

$25

$30

$35

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

FY 2013-18 Revenue CAGR: 12.5%

Segment Revenue and

Operating Profit Margin

NASDAQ: ALOT

FY18-up 11% over FY17


22

Aerospace Products: Significant Worldwide Opportunity

• Graphical flight deck and cabin printers

• Avionic networking products

• PMA certified products, parts, supplies

• Certified FAA repair facility

Growth Catalysts: Global Aircraft Demand

(Upgrades, Service, Supplies)

Military Commercial Business/

Regional Jet

In-flight

Entertainment

Leading Customers


23

Addressing the Top 3 Tiersof the Aerospace Value Chain

AirlineDirect

Aircraft OEMs

Tier 1 Systems Integrators


• ANI to manufacture Honeywell’s narrow-format commercial flight deck printers

• Primarily used on Boeing 737 and Airbus A320

• Covers production of new printers as well as repair, support services and supplies

• Expected to be accretive in first full year of ownership

Honeywell AerospaceProduct Line Acquisition:

Significant Growth Driver


14,300B737s and A320s currently in service

10,000Entering into service in next 10 years

25

Source: Customer estimates


26

B737 and A320 Estimated Annual Production Rate 2017-19

0 200 400 600 800 1000 1200 1400 1600

2017

2018

2019

B737 A320

1,032

1,210

1,402

Source: Customer estimates

NASDAQ: ALOT

B737 + A320 ~60% of all commercial deliveries


27

Real-time Data Acquisition & Analysis

Applications

• Aircraft equipment qualification and certification

• Monitoring rail and automotive performance

• Validating fixed plant control instrumentation

• Wireless remote monitoring and data acquisition

Growth Catalysts: Regulatory,

Safety Complianceand Quality Assurance

Primary Markets

Aerospace, transportation, energy, industrial, telemetry

New Products

Everest®EV-5000DDX100

SmartCorder®

Daxus® DX-100TMX ®


29

61.6%

38.4%

57.6%33.1%

9.4%

Revenue by Product Type

Supplies

$65.3M

Hardware

$37.5M

Service/Other

$10.6M

Revenue by Channel

Domestic

$69.8M

International

$43.6M

($ in millions) ($ in millions)

FY 2018 Revenue Profile

NASDAQ: ALOT

Large Recurring Revenue Expanding International Business


30

ANI FY19 Priorities

• Complete Honeywell & TrojanLabel Integrations

• Accelerated use of AOS to drive operating income improvements

• Transition to a unified Global IT and Logistics platform


31

Five-Year Growth Strategy (est. FY16)

Near-Term:

1-2 Years

Longer-Term:

3-5 Years

• Accelerate product launches and channel build out

• Innovate game-changing, technology-based products

• Automate key processes

• Build management team depth

• Pursue smaller bolt-on acquisitions

• Focus AOS on improving operating margins and FCF

• Broaden product lines and recurring revenue opportunities

• Increase global presence

• Pursue larger bolt-on acquisitions

FY17

FY18

FY19

FY20

FY21


32

Five-Year Operating Model

FY 2018 FY 2021 (targets)

Revenue $113.4M $250M

5-year CAGR 13.1% 17%

Operating Margin 4.8% 15%

Strategic Driving Force Data Visualization Technology

End Market Focus Aerospace, Data Acquisition, Industrial

Fast-Moving Consumer Goods

Growth Strategy (Organic growth of current platforms) + (bolt-on M&A)

Management Approach AstroNova Operating System

NASDAQ: ALOT

Long-range targets established in FY 2016


33

Reasons to Invest


Track record of successful M&A

Recurring revenue >50%

Robust product development pipeline

Expanding global footprint

Continuous improvement culture

Leading market positions and brands

High Barriers to Entry

36

Q4 and FY 2018 Financial Results Summary


In Thousands Except for Per Share Data

(Unaudited) Three Months Ended Twelve Months Ended

Jan. 31, 2018 Jan. 31, 2017 Jan. 31, 2018 Jan. 31, 2017

Revenue $32,699 $25,657 $113,401 $98,448

Gross Profit 12,642 10,071 44,002 39,489

Gross Profit Margin (%) 38.7% 39.3% 38.8% 40.1%

Operating Income 2,130 1,152 5,412 6,281

Net Income 628* 766 3,286* 4,228

Net Income per Common Share – Diluted $0.09* $0.10 $0.47* $0.56

Weighted Avg Number of Common Shares

Outstanding – Diluted 6,847 7,586 7,015 7,572

Dividends Declared per Common Share $0.07 $0.07 $0.28 $0.28

Results for the three and 12 months ended January 31, 2018 were negatively impacted by

$1.1 million, or $0.16 per share, in taxes due to the enactment of the Tax Cuts and Jobs Act.

37

Select Consolidated Balance Sheet Data


Amounts In Thousands

(Unaudited) January 31, 2018 January 31, 2017

Cash & Marketable Securities $11,688 $ 24,821

Current Assets $63,780 $61,423

Total Assets $122,313 $83,665

Current Liabilities $25,907 $11,985

Long-Term Debt $17,684 $‒

Royalty Obligation $11,760 $‒

Shareholders’ Equity $63,652 $70,537

38

Net Income and Diluted Earnings per Share GAAP to Non GAAP Reconciliation


Amounts In Thousands

(Unaudited)

Three Months Ended Twelve Months Ended

January 31,

2018

January 31,

2017January 31, 2018

January 31,

2017

Net Income - GAAP $628 $766 $3,286 $4,228

Tax Act Impact:

Revaluation of Deferred Tax Assets 1,010 - 1,010 -

Transition Tax 104 - 104 -

Adjusted Net Income - Non-GAAP $ 1,742 $ 766 $ 4,400 $ 4,228

Three Months Ended Twelve Months Ended

January 31,

2018

January 31,

2017January 31, 2018

January 31,

2017

Net Income per Common Share - Diluted - GAAP $0.09 $0.10 $0.47 $0.56

Tax Act Impact:

Revaluation of Deferred Tax Assets 0.15 - 0.14 -

Transition Tax 0.01 - 0.02 -

Adjusted Net Income per Common Share - Diluted - Non-GAAP $ 0.25 $ 0.10 $ 0.63 $ 0.56

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