Sidoti & Company Spring 2018 Conference Greg Woods, President and CEO David S. Smith, CFO March 29, 2018
Forward-looking Statements 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 forwardlooking 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 forwardlooking statements when evaluating the information in this presentation. 2
Use of Non-GAAP Financial Measures 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. 3
Innovative, Differentiated Products 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 Aerospace Product Identification Test & Measurement 4
A3 A1 A2 A4 5
AstroNova Financial Snapshot (Stock price and yield as of 3/21/18) Russell Microcap Index Recent Price $15.50 52-Week Range $11.00 - $15.70 Market Capitalization $105.0 million 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* (2) Three months ended 01/31/18 Common Stock Outstanding 6.8 million Enterprise Value $116.7 million FY 2018 Financial Highlights (3) Book Value per Share (1) $9.40 Revenue: $113.4 million Annualized Dividend $0.28 per share Net income: $3.3 million GAAP; $4.4 million Non-GAAP* Diluted EPS: $0.47 GAAP; $0.63 Non-GAAP* Yield 1.8% (3) At 01/31/18 (1) As of 01/31/18 *Please refer to reconciliation tables at the end of this presentation for a reconciliation of GAAP to Non-GAAP financial results. 6
Five Year Revenue Growth 7
Recent Growth Drivers Strategic M&A Asset Purchase License Agreement: Honeywell Aerospace Integration of TrojanLabel into AstroNova Organic Initiatives Launched game-changing new products in both segments Increased demand for ink, labels and other supplies Operational Opened new EMEA hub in Germany Strengthened leadership team 8
AstroNova Operating System (AOS) Continuous Improvement Innovation Through operational excellence and lean initiatives, we consistently strive to increase efficiency and enhance margins Stage-Gate methodology accelerates and streamlines product development process One Global Team Building Value We work as a unified organization in a data-driven environment that fosters mutual trust and respect Our customer-centric philosophy ensures we deliver superior quality, delivery, cost and growth 9
Revenue Per Employee ($ in thousands) $350 $300 $250 $226 $259 $286 $310 $326 $200 $150 $100 $50 $0 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 AOS Drives Productivity Improvements 10
Worldwide Reach 165 Dealers, Customers in 154 Countries 11
Business Overview Reporting Segments Business Units 12
Product Identification Segment Tabletop and Light Production Label Printers, Specialty Printers, Software, Consumables, and Service Segment Revenue and Operating Profit Margin FY 2013-18 Revenue CAGR: 13.4% $100 $80 $60 $40 $20 ($ in millions) $67.1 $69.9 $59.8 $49.1 $43.6 10.0% 10.5% 12.1% 13.9% 14.1% $81.7 $0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 13
Digital Package Printing: Large, Attractive and Growing Market Advantages of Digital Package Printing Short-run On-demand Ease of data variability Personalization Lower cost 14
($ in billions) Digital Package Printing: Disrupting the Packaging Industry Projected Growth of Digitally Printed Labels and Packaging $25.0 $20.0 $15.0 $10.0 $5.0 $13.2 $23.2 $0.0 2017 2022 Source: Smithers Pira, AstroNova Labels represent ~ 15-20% 15
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 16
Expands Addressable Product ID Market 17
Expands Addressable Product ID Market 18
Commercial Production New Products, Launched FY18-Q4 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 19
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 New Category IJP Technology 20
Test & Measurement Segment Airborne Printers, Networking Hardware and Data Acquisition Systems $35 $30 $25 Segment Revenue and Operating Profit Margin FY 2013-18 Revenue CAGR: 12.5% $28.6 $27.5 $28.6 $31.7 $20 $17.6 $19.5 $15 $10 17.6% 13.6% 19.7% 13.3% 15.4% FY18-up 11% over FY17 $5 $0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 21
Aerospace Products: Significant Worldwide Opportunity Growth Catalysts: Global Aircraft Demand (Upgrades, Service, Supplies) Graphical flight deck and cabin printers Avionic networking products PMA certified products, parts, supplies Certified FAA repair facility Military Commercial Business/ Regional Jet In-flight Entertainment Leading Customers 22
Addressing the Top 3 Tiers of the Aerospace Value Chain Airline Direct Aircraft OEMs Tier 1 Systems Integrators 23
Honeywell Aerospace Product Line Acquisition: Significant Growth Driver ANI to manufacture Honeywell s narrow-format commercial flight deck printers Primarily used on Boeing 737 and Airbus A320 Covers production of new printers as well as repair, support services and supplies Expected to be accretive in first full year of ownership 24
14,300 B737s and A320s currently in service 10,000 Entering into service in next 10 years Source: Customer estimates 25
B737 and A320 Estimated Annual Production Rate 2017-19 2019 1,402 2018 1,210 2017 1,032 0 200 400 600 800 1000 1200 1400 1600 B737 A320 B737 + A320 ~60% of all commercial deliveries Source: Customer estimates 26
Real-time Data Acquisition & Analysis Growth Catalysts: Regulatory, Safety Compliance and Quality Assurance New Products Primary Markets Aerospace, transportation, energy, industrial, telemetry Applications Aircraft equipment qualification and certification Monitoring rail and automotive performance Validating fixed plant control instrumentation Wireless remote monitoring and data acquisition Everest EV-5000 TMX DDX100 SmartCorder Daxus DX-100 27
Financial Highlights 28
FY 2018 Revenue Profile Revenue by Product Type Revenue by Channel ($ in millions) ($ in millions) Service/Other 9.4% $10.6M International 38.4% Hardware $37.5M 33.1% 57.6% Supplies $65.3M $43.6M 61.6% Domestic $69.8M Large Recurring Revenue Expanding International Business 29
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 30
Five-Year Growth Strategy (est. FY16) Near-Term: 1-2 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 FY17 FY18 Longer-Term: 3-5 Years Focus AOS on improving operating margins and FCF Broaden product lines and recurring revenue opportunities Increase global presence Pursue larger bolt-on acquisitions FY19 FY20 FY21 31
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 End Market Focus Growth Strategy Data Visualization Technology Aerospace, Data Acquisition, Industrial Fast-Moving Consumer Goods (Organic growth of current platforms) + (bolt-on M&A) Management Approach AstroNova Operating System Long-range targets established in FY 2016 32
Reasons to Invest Leading market positions and brands Continuous improvement culture Expanding global footprint Robust product development pipeline Recurring revenue >50% Track record of successful M&A High Barriers to Entry 33
THANK YOU 34
Financial Overview 35
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. 36
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 37
Net Income and Diluted Earnings per Share GAAP to Non GAAP Reconciliation Amounts In Thousands (Unaudited) January 31, 2018 Three Months Ended January 31, 2017 January 31, 2018 Twelve Months Ended 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 January 31, 2018 Three Months Ended January 31, 2017 January 31, 2018 Twelve Months Ended 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 38
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