AstroNova's Q2 2026: Contradictions Emerge on Sales Team Restructuring, Product ID Challenges, and Aerospace Performance

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 9, 2025

Financials Results

• Revenue: $36.1M, down 10.9% YOY and down 4.2% sequentially
• EPS: $(0.16) per share (net loss)
• Gross Margin: 32.9% of sales for the first half, down vs prior year due to less favorable Aerospace mix

Guidance:

• Aerospace gross margin to improve in H2 as ToughWriter mix ramps.
• Product ID margins to improve with higher volume and $3M annualized cost reductions realized in H2.
• ToughWriter to exceed 80% of shipments by fiscal year-end.
• FY26 CapEx expected to be < $0.5M.
• Debt restructuring expected to be completed within 60 days.
• Backlog of $25.3M equals ~30% of expected H2 shipments at midpoint of guidance.
• Expect steady growth in Aerospace hardware as Boeing build rates rise and inventories normalize.

Business Commentary:

* Sales Performance and Customer Attrition: - AstroNova's second quarter revenue was $36.1 million, declining 10.9% year-over-year and 4.2% sequentially. - The decline was primarily driven by $2.6 million decline in recurring supplies, parts, and service from customer attrition in the Product Identification segment, partially offset by higher demand for Mail & Sheet flat pack products.

• Aerospace Segment Performance:
• Aerospace segment revenue decreased by 15.1% year-over-year, despite transitions to ToughWriter printers and increased hardware sales.

• The decline was due to tough comparisons against last year's second quarter, which included unusually large spare printer shipments and non-recurring engineering revenue.

• Operating Income and Margins:

• Gross profit in the second quarter was $11.6 million, down $2.7 million year-over-year, primarily due to lower sales and unfavorable mix.

• Operating income for Product ID and Aerospace segments declined by 18% and 37% respectively, despite cost reduction efforts.

• Cash Flow and Debt Management:

• Cash provided from operations for the first half of fiscal '26 was $4.6 million, down from the prior year.
• The company paid down $5.1 million in debt and maintained a leverage ratio of funded debt to adjusted EBITDA at 3.5x, with plans for debt restructuring in progress.

Sentiment Analysis:

• Q2 revenue declined 10.9% YOY and 4.2% sequentially, and the company reported a net loss of $1.2M ($0.16/share). Management expects H2 improvement: “Aerospace gross margin [to] improve,” full benefit of “$3 million in annualized cost reductions” in H2, and ToughWriter shipments to exceed 80% by year-end. Backlog covers ~30% of expected H2 shipments.