Midwest IDEAS Investor Conferences2.q4cdn.com/797845863/files/doc_presentations/2018/08/ANI... ·...

Midwest IDEAS Investor Conference

Greg Woods, President and CEO

David S. Smith, CFO

August 30, 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, 2018 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 – August 2018

3

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 – August 2018

4©2018 AstroNova, Inc. all rights reserved.NASDAQ: ALOT Investor Presentation – August 2018

A1 A2 A4

A3

4

AstroNova Financial Snapshot

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

NASDAQ: ALOT Russell Microcap® Index(Stock price and yield as of 8/24/2018)

Recent Price $21.15

52-Week Range $11.00 - $21.95

Market Capitalization $143.7 million

Common Stock Outstanding 6.8 million

Enterprise Value $159.6 million

Book Value per Share(1) $9.55

Annualized Dividend $0.28 per share

Yield 1.34%

Q2 FY 2019 Financial Highlights

• Revenue: $33.8 million, up 23% y/y

• Operating income: $2.2 million, up 130% y/y

• Operating margin: 6.4%, up 300 bps y/y

• Diluted EPS: $0.17, up 55% y/y

• Bookings: $35.8 million, up 29% y/y

• Backlog: $24.5 million, up 30%(1)

(1)As of 7/28/2018 vs. 7/29/2017

(1)As of 07/28/18

Annual

$98.4$113.4

$127.0

FY 2017 FY 2018 TTM Q2FY19

$23.3$25.7

$24.5

$27.5$28.8

$32.7$31.5

$33.8

Q3 Q4 Q1 Q2

FY'17 FY'18 FY'19

Revenue Growth

6©2018 AstroNova, Inc. all rights reserved.

+23% +27% +29% +23%

Quarterly ($ in millions) ($ in millions)

Investor Presentation – August 2018

Recent Growth Drivers

7

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


8

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


9

Revenue Per Employee

$216

$259$286

$310$326

$356

$0

$50

$100

$150

$200

$250

$300

$350

$400

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY19 Q2

($ in thousands)

NASDAQ: ALOT

AOS Drives Productivity Improvements

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

10

Worldwide Reach

165 Dealers, Customers in 154 Countries

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

11

Business Overview

Reporting

Segments

Business

Units


12

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% 13.0%

$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


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

New Product - Kiaro!® QL-120Launched Worldwide in August 2018


• Professional tabletop digital label printer

• Compact design

• Highest throughput available in a desktop color label printer

• Exceptional color accuracy

• Wide range of capabilities

• Proprietary CQL Pro advanced labeling software

• Low total cost of ownership

User Friendly. Flexible and Productive. Cost Effective.

$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

illio

ns)

Source: Smithers Pira, AstroNova

NASDAQ: ALOT

Labels represent ~ 15-20%

©2018 AstroNova, Inc. all rights reserved. 15Investor Presentation – August 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 Q4 FY’18


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%11.8%

$0

$5

$10

$15

$20

$25

$30

$35

$40

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

59%

41%

53%38%

9%

Revenue by Product Type

Supplies

$17.9M

Hardware

$12.9M

Service/Other

$3.0M

Revenue by Channel

Domestic

$20.0M

International

$13.8M

($ in millions) ($ in millions)

Q2 FY 2019 Revenue Profile

NASDAQ: ALOT

Large Recurring Revenue International Revenue +34% y/y


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

Q2 and 1H FY 2019 Financial Results Summary


In Thousands Except for Per Share Data

(Unaudited) Three Months Ended Six Months Ended

July 28, 2018 July 29, 2017 July 28, 2018 July 29, 2017

Revenue $33,807 $27,483 $65,294 $51,941

Gross Profit 13,399 10,259 25,510 19,565

Gross Profit Margin (%) 39.6% 37.3% 39.1% 37.7%

Operating Income 2,165 942 3,429 1,649

Operating Margin (%) 6.4% 3.4% 5.3% 3.2%

Net Income 1,914 727 2,010* 1,238

Net Income per Common Share – Diluted $0.17 $0.11 $0.29* $0.17

Weighted Avg Number of Common Shares

Outstanding – Diluted 6,860 6,727 6,825 7,097

Dividends Declared per Common Share $0.07 $0.07 $0.14 $0.14

* Results for the three 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) July 28, 2018 January 31, 2018

Cash & Cash Equivalents $5,949 $11,688

Current Assets $60,160 $62,948

Total Assets $117,070 $122,313

Current Liabilities $22,884 $25,912

Long-Term Debt, net of current portion $15,249 $17,684

Royalty Obligation $10,901 $11,760

Shareholders’ Equity $65,488 $63,647

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