AstroNova's Q2 Loss Widens Y/Y Amid Product ID Challenges

Shares of AstroNova, Inc. ALOT have declined 12.9% since the company reported its earnings for the quarter ended July 31, 2025. This compares to the S&P 500 index’s 1.5% growth over the same time frame. Over the past month, the stock has declined 10.5% compared with the S&P 500’s 2.9% growth. The stock’s relative underperformance highlights investors’ cautious stance following the company’s latest results.AstroNova incurred a second-quarter fiscal 2026 net loss of 16 cents per share, wider than a loss of 4 cents per share in the prior-year period. On a non-GAAP basis, the firm posted a net loss of 4 cents per share against a net income of 8 cents per share a year ago. Revenues fell 10.9% year over year to $36.1 million from $40.5 million.Gross profit dropped 18.8% to $11.6 million, as gross margin compressed to 32.2% from 35.3%. The company swung to a net loss of $1.2 million, wider than a loss of $0.3 million in the prior-year period. On a non-GAAP basis, the firm posted a net loss of $0.4 million against a net income of $0.6 million a year ago. Adjusted EBITDA declined 46.6% to $2.1 million, underscoring weaker profitability.AstroNova, Inc. Price, Consensus and EPS Surprise AstroNova, Inc. price-consensus-eps-surprise-chart | AstroNova, Inc. QuoteOther Key Business MetricsThe company’s Product Identification (Product ID) segment generated $24.8 million in revenue, down 8.9% year over year. This reflected delays in rolling out new technology, longer sales cycles tied to capital investment decisions for higher-value printers, and weaker sales of legacy QuickLabel and TrojanLabel products. Product ID operating income fell to $1.9 million from $2.3 million, with the operating margin slipping to 7.7% from 8.6%.The Aerospace segment posted revenues of $11.3 million, a 15.1% decline compared with last year’s $13.4 million. The drop stemmed from elevated prior-year sales driven by large, atypical orders. Aerospace operating profit slid 37.1% to $2.4 million, with margins narrowing to 21.2% from 28.7%.Orders for the quarter were steady at $35.9 million compared with the year-ago period, with the backlog standing at $25.3 million at the quarter's end, down slightly from $25.5 million in the previous quarter. Product ID’s book-to-bill ratio came in at 95%, while Aerospace maintained a healthier 110%.Management CommentaryPresident and CEO Jorik Ittmann described the quarter’s results as “disappointing,” acknowledging ongoing challenges in the Product ID segment. He emphasized the need to rebuild customer relationships, secure new clients, and improve execution. The CEO, appointed earlier in the year, stated he is prioritizing organizational change with a focus on urgency and accountability.CFO Thomas DeByle noted that while the first half of the year was pressured by weak sales and restructuring charges, the company expects modest revenue growth in the second half. He pointed to improving product mix and the benefits of cost-cutting efforts as potential drivers of margin recovery.Factors Influencing Headline NumbersAstroNova’s headline revenue decline was primarily due to Product ID shipment delays and a challenging comparison against last year’s unusual Aerospace orders. Gross margin compression reflected lower volumes and an unfavorable product mix. While operating expenses were reduced by roughly $0.9 million, these savings were insufficient to offset the impact of weaker sales and gross profit. Interest expenses remained flat year over year at $0.9 million, weighing further on the bottom line.GuidanceManagement revised fiscal 2026 revenue guidance downward to $149-$154 million, from a prior range of $160-$165 million. At the midpoint, this outlook implies revenues to be roughly flat with fiscal 2025. Adjusted EBITDA margin expectations were also trimmed to 7.5-8.5%, from a previous 8.5-9.5% range. The company also highlighted an expected effective tax rate of about 32.8% for the year.Other DevelopmentsDuring the quarter, AstroNova shipped redesigned printers using MTEX’s autonomous ink printheads, including the QL-425 and QL-435 professional label presses, and began shipping its AJ-800 direct-to-packaging solution in August. In Aerospace, the company launched shipments of its ToughWriter 640 printer to a major aircraft manufacturer, advancing its transition away from legacy flight deck printers. Additionally, AstroNova amended its credit agreement after breaching a covenant and is negotiating a restructuring into a real estate–backed loan expected within 60 days.One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. 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