ALOT AstroNova, Inc.

Management Discussion

• Three Months Ended November 2, 2019 vs. Three Months Ended October 27, 2018
• Revenue for the third quarter of the current year was $33.3 million, representing a decrease compared to the previous year third quarter revenue of $34.2 million. Revenue through domestic channels for the third quarter of the current year was $21.8 million, an increase of 1.3% over the prior year’s third quarter. International revenue for the third quarter of the current year was $11.5 million, representing 34.5% of AstroNova’s third quarter revenue and reflects a 9.2% decrease over the previous year third quarter primarily as a result of weaker demand from a few customers in Asia in the Product Identification segment and a global slowdown in demand for certain aircraft models in the T&M segment. Current year third quarter international revenue includes an unfavorable foreign exchange rate impact of $0.3 million.
• Hardware revenue in the current quarter was $12.2 million, a 7.1% decrease compared to the prior year’s third quarter revenue of $13.1 million. The current quarter decrease in hardware revenue is primarily due to the decline in aerospace printer sales related to the Honeywell product lines within the T&M segment. This decline is a result of the ripple effects of the Boeing 737 Max grounding, due in part to reductions in new aircraft shipments, as well as the delay of retrofit printer upgrade orders for earlier 737 models so that those planes could remain in service. The decline of aerospace printer hardware sales in the T&M segment was partly offset by an increase in sales of data acquisition recorders and increased sales for the ToughSwitch product line. The current quarter overall decline in hardware sales was also tempered by an increase in PI segment hardware sales as the product launch of the new QL-300 provided a significant contribution to third quarter revenue, as did sales of TrojanLabel printers, which experienced continued growth during the current quarter.