Shares of AstroNova, Inc. ALOT have declined 21.2% since the company reported its earnings for the quarter ended Jan. 31, 2025. This compares to the S&P 500 index’s 3.2% decline over the same time frame. Over the past month, the stock has fallen 25.1% compared with the S&P 500’s 3.8% decline.

AstroNova incurred a fourth-quarter fiscal 2025 non-GAAP net income of 6 cents per share, down from 33 cents per share in the prior-year period. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The company reported revenues of $37.4 million, down 5.6% from $39.6 million in the year-ago period. This decline was primarily due to lower sales across both the Product Identification (PI) and Test & Measurement (T&M) segments. 

GAAP net loss for the quarter was $15.6 million compared with net income of $2.7 million a year earlier. The sharp swing into negative territory was largely driven by a $13.4 million non-cash goodwill impairment charge tied to the MTEX acquisition. Excluding one-time items, non-GAAP net income was $0.4 million, compared to $2.5 million in the prior-year period.

Other Key Business Metrics

Segment-wise, PI revenues dropped 3.6% year-over-year to $25.7 million, despite the partial contribution from MTEX. In comparison, T&M revenues declined 9.9% to $11.7 million, impacted by a delayed defense order and deferred deliveries due to the Boeing strike. On a GAAP basis, the PI segment reported a steep operating loss of $11.2 million, versus a profit of $3.2 million a year ago, primarily due to the impairment charge. Adjusted non-GAAP PI segment operating profit came in at $2.3 million, down from $3 million in the year-ago quarter. T&M segment operating profit fell to $2.3 million from $3.7 million, reflecting lower volume and mix. Overall adjusted EBITDA for the quarter was $2.8 million compared with $5.2 million last year.

Management Commentary

CEO Greg Woods characterized fiscal 2025 as a “challenging year,” citing the complexities of integrating MTEX, the Boeing strike and timing issues with large defense orders. Despite these headwinds, the company advanced its internal AstroNova Operating System to drive accountability and efficiency across the organization. Improvements were made in leadership, HR systems and finance processes. The company also emphasized ongoing efforts to simplify its product portfolio and boost profitability through operational realignment and waste elimination.

Factors Influencing Results

The goodwill impairment charge was the most significant factor impacting results, driven by revised expectations for MTEX’s performance. Additionally, unfavorable product mix and deferred defense orders hurt margins and revenues. Gross margin declined to 34.1% from 37.2% year over year. Operating expenses surged due to the impairment, higher selling and administrative costs, and increased R&D spending. While revenue was in line with preliminary expectations, overall profitability was weighed down by structural inefficiencies and acquisition-related costs.

Fiscal 2025 Update

For the full fiscal year, revenue totaled $151.3 million, a modest 2.2% increase from $148.1 million in fiscal 2024. However, AstroNova incurred a GAAP net loss of $14.5 million, or $1.93 per share, against a net income of $4.7 million, or 63 cents per share, the previous year. On a non-GAAP basis, fiscal 2025 net income was $2.7 million, or 33 cents per share, down from $7.2 million, or 97 cents per share, in fiscal 2024. Adjusted EBITDA also declined to $12.3 million from $17.6 million a year earlier

Fiscal 2026 Guidance

AstroNova reaffirmed its fiscal 2026 outlook, projecting net revenue between $160 million and $165 million, a midpoint increase of 7% over fiscal 2025. The company also expects adjusted EBITDA margin to expand by 60 basis points to between 8.5% and 9.5%. Management cited new product launches and a shift toward higher-margin, recurring revenue streams as key drivers for margin expansion. Plans are underway to roll out next-generation print engine technologies and continue the transition to the ToughWriter printer family, which is expected to enhance working capital efficiency and reduce royalty obligations.

Other Developments

During the quarter, AstroNova continued integrating MTEX, which it acquired in May 2024. The company is leveraging MTEX’s facilities in Portugal to establish a Center of Manufacturing Excellence in Europe. This initiative is expected to provide strategic manufacturing flexibility and supply chain control. AstroNova also secured an amendment and waiver to its credit agreement with Bank of America, allowing for more favorable covenant terms and lower debt service payments in fiscal 2026. This restructuring aims to preserve liquidity as the company executes its operational overhaul and cost-reduction strategy.

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This article originally published on Zacks Investment Research (zacks.com).

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