needham & company 20 annual growth conference · • avionic networking products • pma...

Needham & Company 20th Annual Growth Conference

Greg Woods, President and CEO

Joseph O’Connell, CFO

January 17, 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 Needham 20th Annual Growth Conference

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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.Needham 20th Annual Growth Conference

48-Year History of Innovation

4

1969

Company founded

1975First data acquisition

recorders

1983

Nasdaq listing

1986First barcode label printer

1994Grass Technology

acquired

1994First color

label printer2001

First Boeing printer

& networking

2004First Airbus

printer

2009TMX high-speed data acquisition

recorders

2012First color inkjet

label printer

2013Grass

Technologydivested

2013AOS

launched

2014Miltopeacquired

2015RITEC

acquired

2015AstroNovaREBRANDING

Calendar years

20165yr accelerated

growth plan

2017TrojanLabel

acquired

2017Honeywell

acquired

Needham 20th Annual Growth Conference ©2018 AstroNova, Inc. all rights reserved.NASDAQ: ALOT

5

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

NASDAQ: ALOT Needham 20th Annual Growth Conference ©2018 AstroNova, Inc. all rights reserved.

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Worldwide Reach

Innovation Technology Centers

165 Dealers, Customers in 154 Countries

Needham 20th Annual Growth Conference ©2018 AstroNova, Inc. all rights reserved.NASDAQ: ALOT

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Business Overview

Reporting

Segments

Business

Units


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

Product Identification

Tabletop and Light Production Label Printers, Specialty Printers,

Software, Consumables, and Service

$43.6$49.1

$59.8

$67.1$69.9

$59.9

10.0% 10.5% 12.1% 13.9% 14.1% 12.9%

$0

$20

$40

$60

$80

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 9 MOS FY18

FY 2013-17 Revenue CAGR: 12.5%

($ in millions)

Segment Revenue and

Operating Profit Margin


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Digital Package Printing: Large, Attractive and Growing

Advantages of Digital Package Printing

• Short-run

• On-demand

• Ease of data variability

• Personalization

• Lower cost


Digital Print: Disrupting the Packaging Industry

$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 billions)

Source: Smithers Pira, AstroNova

CAGR: 11.9%

NASDAQ: ALOT

Labels represent ~ 15-20%

Needham 20th Annual Growth Conference ©2018 AstroNova, Inc. all rights reserved. 11

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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

13NASDAQ: ALOT Needham 20th Annual Growth Conference ©2018 AstroNova, Inc. all rights reserved.

Expands Addressable Product ID Market


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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

Needham 20th Annual Growth Conference ©2018 AstroNova, Inc. all rights reserved.

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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


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Test & Measurement

Airborne Printers, Networking Hardware and

Data Acquisition Systems

$17.6$19.5

$28.6$27.5

$28.6

$20.8

17.6%13.6%

19.7%

13.3% 15.4%11.1%

$0

$5

$10

$15

$20

$25

$30

$35

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 9 MOSFY18

FY 2013-17 Revenue CAGR: 12.9%

Segment Revenue and

Operating Profit Margin

NASDAQ: ALOT

Q3

FY18-Q3 up 26% over Q2


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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


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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 Agreement: Significant Growth Driver


14,300B737s and A320s currently in service

10,000Entering into service in next 10 years

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Source: Customer estimates


22

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


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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 ®


Financial Highlights


25

62.8%

37.2%

57.7%32.7%

9.6%

Revenue by Product Type

Supplies

$16.6

Hardware

$9.4

Service/Other

$2.8

Revenue by Channel

Domestic

$18.1

International

$10.7

($ in millions) ($ in millions)

Q3 FY 2018 Revenue Profile

NASDAQ: ALOT

Large Recurring Revenue Expanding International Business


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62.8%

37.2%

71.0%

29.0%

Revenue

Product ID

$20.5

Test &

Measurement

$8.3

Operating Profit and Margin

Product ID

$2.7 – 13.0%

Test &

Measurement

$1.6 – 18.9%


Q3 FY 2018 Segment Breakdown

NASDAQ: ALOT

Improving T&M Profitability


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Revenue Per Employee

$226

$259

$286$310 $315

$0

$50

$100

$150

$200

$250

$300

$350

FY 2014 FY 2015 FY 2016 FY 2017 9 MOS FY 2018

($ in thousands)

NASDAQ: ALOT

AOS Drives Productivity Improvements


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ANI Near-Term Priorities

• Integration of Honeywell narrow-format printer business into R.I. operation

• Completion of TrojanLabel integration

• Grow supplies business through new EMEA Logistics Hub

• Opening of new Innovation Technology Centers (ITC)

• Continued international expansion

• Further build management and technical bench strength


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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

• Broaden product lines and recurring revenue opportunities

• Focus AOS on growing market share and operating margins

• Increase global presence

• Pursue larger bolt-on acquisitions

FY17

FY18

FY19

FY20

FY21


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Five-Year Operating Model

FY 2017 FY 2021 (targets)

Revenue $98.4M $250M

3-year CAGR 12.8% 17%

Operating Margin 6.4% 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


Financial Overview


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Q3 FY 2018 Financial Results Summary

In Thousands Except for Per Share Data

(Unaudited)Three Months Ended

October 28, 2017 October 29, 2016

Revenue $28,760 $23,342

Gross Profit 11,794 9,641

Gross Profit Margin (%) 41.0% 41.3%

Operating Income 1,632 1,834

Net Income 1,419 1,151

Net Income per Share – Diluted $0.21 $0.15

Weighted Avg Number of Common Shares

Outstanding – Diluted 6,821 7,594

Dividends Declared per Common Share $0.07 $0.07


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62.8%

37.2%

57.7%32.7%

9.6%

Revenue by Product Type

Supplies

$16.6

Hardware

$9.4

Service/Other

$2.8

Revenue by Channel

Domestic

$18.1

International

$10.7


Q3 FY 2018 Revenue Profile


35

62.8%

37.2%

71.0%

29.0%

Revenue

Product ID

$20.5

Test &

Measurement

$8.3

Operating Profit and Margin

Product ID

$2.7 – 13.0%

Test &

Measurement

$1.6 – 18.9%


Q3 FY 2018 Segment Breakdown


36

Revenue Per Employee

$226

$259

$286$310 $315

$0

$50

$100

$150

$200

$250

$300

$350

FY 2014 FY 2015 FY 2016 FY 2017 9 MOS FY 2018

($ in thousands)


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Select Consolidated Balance Sheet Data

Amounts In Thousands

(Unaudited) October 28, 2017 January 31, 2017

Cash & Marketable Securities* $11,750 $ 24,821

Current Assets $55,323 $61,696

Total Assets $110,320 $83,665

Current Liabilities $16,901 $11,985

Long-Term Debt, net of current portion $6,845 $‒

Royalty Obligation ‒ LT $8,200 $‒

Line of Credit ‒ LT $12,350 $‒

Shareholders’ Equity $62,241 $70,537

* Company repurchased 826,305 shares of common stock in Q2 FY 2018 for $11.2 million


THANK YOU


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