Good day and welcome to the AstroNova's First Fourth Quarter Fiscal 2022 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the conference over to David Calusdian of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead.
Thank you. Good morning, everyone and thanks for joining us. Hosting this morning's call are Greg Woods, AstroNova's President and CEO; and David Smith, the company's Chief Financial Officer. Greg will discuss the company's operating results, David will comment on the financials, Greg will make concluding comments and then management will be happy to take your questions. By now, you should have received a copy of the earnings release that was issued today.
If you do not have a copy, please go to the Investors section of the AstroNova website, www.astronovainc.com. Please note that statements made during today's call that are not statements of historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1934. These forward-looking statements are based on a number of assumptions that could involve risks and uncertainties. Accordingly, actual results could differ materially, except as required by law. Any forward-looking statements speak only as of today, June 10, 2021. The company undertakes no obligation to update these forward-looking statements.
For further information regarding the forward-looking statements and the factors that may cause differences, please see the risk factors in AstroNova's annual report on Form 10-K and the other filings the company makes with the Securities and Exchange Commission. On today's call, management will be referring to the non-GAAP financial measure, adjusted earnings before interest, taxes, depreciation, amortization and share-based compensation, or adjusted EBITDA.
AstroNova believes that the inclusion of this measure helps investors gain a meaningful understanding of the changes in the company's core operating results and also can help investors who wish to make comparisons between AstroNova and other companies on both a GAAP and non-GAAP basis. A reconciliation of this non-GAAP measure to its most directly comparable GAAP measure is available in today's earnings release. And with that, I'll turn the call over to Greg.
Thank you, David. Good morning, everyone and thank you for joining us.
For the first quarter of fiscal 2022 revenue came in at $29.1 million, down 6% from the prior year, as top-line growth in our product and edification segment, partly offset continued softness in the aerospace portion of our test and measurement segment, due to the effects of the pandemic and the slow recovery in 737 MAX shipments.
Although the global economy is still challenged, we're beginning to see signs of recovery in certain areas as economies begin to open up and air travel increases.
Our product diversification statement posted record bookings for the quarter and bookings for the aerospace portion of our test and measurement segment, were up 45% sequentially, delivering the first aerospace positive book to bill quarter since fiscal 2020.
On the cost side of our team, our team members have done an excellent job over the past year in bringing down our expenses as reflected in our higher margins and increased profitability in the quarter. Operating expenses were essentially flat from the prior year's first quarter and operating profit was up nearly 11%.
Turning to our Q1 performance by segment, product identification revenue was up 3% to $23.1 million with solid contributions across the product line. The T3-OPX are wide format durable, direct to package printing system continues to surpass expectations. Brand owners, OEMs and commercial printers are profiting from their product's many benefits in terms of greater efficiency and a high return on investment.
As a result, the T3-OPX continues to attract new customers in new markets around the world. From a geographic standpoint, the recent enhancements to our EMEA sales organization paced a nice uptick in international revenue in Q1, the international channel accounted for nearly 43% of total revenue up from 36% in the first quarter of fiscal 2021. Domestic sales accounted for 57% of total revenue in the quarter versus 64% in Q1 last year. On our year end call, I talked about our recent expansion in China with the addition of a new office in the Southern port city of Guangzhou. Since then, we have stepped up by hiring experienced sales and support team members for that location with sales locations.
Now in both Shanghai and Guangzhou, we're in a much stronger position to grow our business in the Asia Pacific region.
We are reinforcing our APEC investment with a stronger trade show presence, having recently participated in four regional shows in niche industries, including food and cosmetics.
Looking ahead to the fall, we will have a booth this year at the pack expo exposition in Las Vegas, where we will be demonstrating our latest product lineup and of course the continuing to invest in our digital marketing initiatives, expanding our eBooks, eStudies, support videos and other tools to attract new customers and help our existing customers optimize our technology.
Looking at our test and measurement segment.
First quarter revenue was down 30% from the same period in fiscal 2021 as the effects of the pandemic and the 737 MAX slow restart, continued to be felt across the commercial aerospace industry. I talked a moment ago about the positive indicators we are seeing. And while those may be improving a bit faster in certain areas, overall industry analysts say it will still take many months for commercial aerospace to return to the 2019 levels and correspondingly for us to see substantial benefits from that recovery. Since our products are designed engineered the full range of commercial and business jet aircraft use worldwide. We recently entered into a tier one supply agreement with Airbus to ship astronauts manufactured printers for the A320-family of passenger aircraft. The tier one designation enables us to supply flight printers directly to Airbus, rather than through a third party intermediary. A third party supply agreement has been in place since 2017. When we acquired an exclusive worldwide license from Honeywell International and manufacture the PTA-45B Narrow Format Cockpit Printer for the Airbus 320 Portfolio. This direct supplier status means that we have achieved all of Airbus's rigorous qualification standards across the areas of quality engineering, manufacturing and global aftermarket support.
As well as program management, we are honored to be part of the Airbus direct supplier network and look forward to expanding our relationship further in the future.
Now, let me turn the call over to David for the financial review.
Thanks Greg and good morning everybody. In the first quarter, we continued to manage our costs will while continuing to prudently invest in growing the business. Greg gave a comprehensive segment review.
So I'll just mention a few more items from the P&L and balance sheet. I'll also note that our Q1 10-Q will be filed today.
Looking at revenue by type, Hardware revenue was $7.6 million in the fiscal 2022 first quarter, compared to $8.9 million in the prior year period, reflecting the decline in the Test And Measurement segment. Supplies revenue was $18.2 million versus $19.1 million in the same period of fiscal 2021. Service and other revenue was $3.2 million up from $2.9 million a year ago. The year-over-year variance in supplies revenue reflected in part weaker aerospace industry demand in the first quarter of this fiscal 2022, associated with COVID-19 as compared to last year, as well as what we now think was some early pandemic supply stocking orders from some Product Identification Customers in the fiscal 2021. It's on the supply chain throughout the pandemic, we've experienced some challenges in obtaining raw materials and components from our, for our products and this continues.
So far, we've not really had shortages and I've managed this once with some additional costs for things like expedited shipping and express shipping fees and we don't think that these challenges that materially affected our financial results or relationships with our customers and our current view are that these issues will remain manageable, but it probably will take a couple of quarters before they're worked out of the system. We've been addressing potential supply shortages proactively throughout with long range planning and supplementing inventories as needed. To some extent these strategies have resulted in us carrying more inventory than the reason that inventory is at quarter end were down only modestly from the year end period and for the time being we planned to continue to err on the side of caution. Bookings for the first quarter, we're up 5% year over year and 12% sequentially to $32.8 million. Beginning in the fiscal 2021 fourth quarter, we began reporting adjusted EBITDA, which is EBITDA further adjusted just for share-based compensation and in Q1 adjusted EBITDA was $2.5 million or 8.6% of revenue compared to $2.6 million or 8.3% in the first quarter of fiscal 2021.
Turning to the balance sheet cash and equivalents at the end of the quarter, stood at $11.4 million unchanged from your end. But debt at the end of the quarter was $9.6 million down from $12.4 million at the end of the fiscal year, reflecting the reductions in debt we made when we closed the amended credit agreement, this quarter that we talked about on our last call; this excludes the PPP loan of $4.4 million, while our application for PPP loan forgiveness has been in for a while. We just don't know when the government will process it.
Before I turn the call back to Greg, I just want to let you know that next week we'll be participating in the Virtual East Coast Ideas Conference.
Our presentation is scheduled to be available on the investor segment of our website beginning at 8:00 AM, Wednesday, June 16 and with all that, I'll now turn the call back to Greg for closing comments.
We continue to focus on our Core Strategic Tenants, investing in innovation, expanding our global geographic footprint and delivering world-class products that enable our customers to achieve greater efficiency and profitability and test the measurement while the lingering effects with pandemic continue to create uncertainty for the commercial aerospace industry. Domestically, the market seems to be gradually turning a corner over the pace of recovery remains slow and probably the only indication our strategy of addressing adjacent market segments with unique solutions like the T3-OPX is paying off. And then for direct to package printing is growing across the industry. And as a player, we are well positioned to capitalize on that momentum in that segment.
Now, David, I'd be happy to take your questions. Operator?
Thank you. [Operator Instructions]. Yeah.
Our first question comes from Dick Ryan from Colliers
So Greg, you talked about the tier one status with Airbus, does that now mean you're not required to pay Honeywell anymore fees for their participation and how about on the Boeing side?
Yeah, the Boeing yeah, there are no fees with respect to Boeing. This year we were a tier one supplier for Boeing. With Airbus, yeah, with the completion of this agreement, we can now work to finalize that. There's still some negotiations going on in terms of the exact timing of wrapping up everything for Honeywell. It's kind of three people in that agreement there. It's us, Honeywell and Airbus.
So we get the Airbus piece which was the most difficult locked up and now we just need to wind down the Honeywell transition service agreement, piece of that, which we're working on right now.
Okay. The 737 backlog starts to flow. What, are you seeing there? It looks like obviously the booking strength was pretty much related to the 737 or was it across the spectrum?
Yeah, it was across the spectrum and it's still a very small piece that's coming from the MAX, but we are seeing that just start to ramp up now. It’s still a small number as compared to where we were in 2019. But we are seeing that checkup quarter-by-quarter. The latest information we have from Boeing is in line with what they have said in the past is that they should be getting up to kind of the low levels are at now to the 30, 31 kind of a level as we get into very beginning of 2022.
So that's good to hear as they're on track with that. And as of course, as they do that, they'll need more and more printers to support that ramp up in their manufacturing.
What does that, what is their inventory of printers look like? Can you give a sense of how much inventory they're sitting with?
Yeah, they typically don't keep a lot. They keep it because again, the 737, the airline is actually purchased directly from us and they drop ship it to Boeing in time for the production.
So they do keep a buffer. Obviously they don't want to slow it down in case an airline is slow on their delivery, but that's typically kind of the low tens kind of numbers that they keep on hand there in Seattle.
On the product ID side, you mentioned increased staffing in China, what the percent of revenues is APAC now and what's the opportunity working in that grow?
Yeah, we don't grow, we breakout specific percentage, but it is a very large economy in China and they've bounced back a lot quicker than most with the pandemic and they're kind of back to normal from what we can see in January.
So we just want to get, we have a lot of business, but in business potential, but in the South, we weren't very well-represented cause it's hard to get there from Shanghai.
So we expect that we don't publish the actual numbers, but we'd expect our China to double a year-over-year kind of from this point looking at next year as we ramp up that office. Yeah. Because the business in that area is nearly equal to the business we already have and the potential we have in the Northern part of the country.
Okay. I know you don't give a specific guidance, but can you give us a sense of how you see fiscal '20, '22 kind of flowing from first quarter as a base?
Yeah, we don't what I could say is maybe I just highlight the things that I already have said, which is we're seeing a nice pickup in orders on our Product Identification side and while the orders are still behind where they were obviously you know pre-pandemic level in the aerospace in Test Measurement portions of our Test And Measurement Segment that we're seeing that ramp up to.
So we see that as a positive indication and the macro drivers of the vaccines and the Country's recovering and open up that's great for us.
So in the aerospace business, its more and more planes are flying; we're seeing increases in our MRO portion of our business. But they all do things are driven by the international and international is still, it depends who you talk to, but it's kind of down, I saw this morning down 80% from April of last year to April of this year.
So we need that to bounce back to but there are positive signs there.
Again, [Operator Instructions]. Yeah, no additional questions at this time. I'd like to now turn it back to Mr. Woods for closing remarks.
Hey, well, thanks everyone for joining us this morning. We look forward to keeping you updated on our progress. And we'll talk to you next quarter. I know.
Thank you, ladies and gentlemen, this concludes today's presentation.
You may now disconnect.