sidoti & company emerging growth convention · 2016-03-31 · astronova in brief 11 nasdaq:...
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Sidoti & Company
Emerging Growth ConventionMarch 31, 2016Gregory A. Woods, President and CEO
Joseph P. O’Connell, SVP and CFO
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Forward-looking Statements
2AstroNova NASDAQ: ALOT
Information included in this presentation may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical
fact, but rather reflect our current expectations concerning future events and results. These statements may
include the use of the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “continues,”
“may,” “will,” and similar expressions to identify forward-looking statements. Such forward-looking
statements, as well as statements relating to future operating targets, involve risks, uncertainties, and other
factors, some of which are beyond the Company’s control, which may cause its actual results, performance,
or achievements to be materially different from those expressed or implied by such forward-looking
statements. These risks, uncertainties, and factors include, but are not limited to, those factors set forth in
the Company’s Annual Report on Form 10-K and subsequent filings AstroNova makes with the Securities
and Exchange Commission. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events, or otherwise. The reader
is cautioned not to unduly rely on such forward-looking statements when evaluating the information
presented in this presentation.
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Use of Non-GAAP Financial Measures
3AstroNova NASDAQ: ALOT
In addition to financial measures prepared in accordance with generally accepted accounting principles
(GAAP), this presentation contains the following non-GAAP financial measures: non-GAAP net income per
diluted share and free cash flow. The Company believes that the inclusion of these non-GAAP financial
measures in this presentation helps investors to gain a meaningful understanding of 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 a non-GAAP basis. AstroNova’s management uses
these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring its core
operating performance and comparing such performance to that of prior periods and to the performance of
its competitors. These measures are also used by the Company’s management to assist with their financial
and operating decision-making. Please see the reconciliation table on Slide 14 for a reconciliation of the
non-GAAP financial measures to the most directly comparable GAAP measures.
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4AstroNova NASDAQ: ALOT
Business Concept
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AstroNova Business Concept
5
Data Visualization Technology:
AstroNova NASDAQ: ALOT
Enables our products to process analog and/or digital data in an extremely fast, efficient, and often proprietary manner and then to convert it into useful human useable formats.
The engine that drives our growth is
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AstroNova Business Concept
6
Leverage our Data Visualization Technology:
• to provide differentiated solutions
Seek growth opportunities in niche markets:
• requiring high value products
• with significant recurring revenue
• where we can be the leader
Concentrate in geographic markets:
• where we can provide excellence in sales
and service support
AstroNova NASDAQ: ALOT
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One Core Technology, Multiple Business Platforms
7
AerospaceProduct
Identification
Test &
Measurement
Data Visualization Technology
Consumables and service > 50% of revenue
AstroNova NASDAQ: ALOT
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Building Competitive Advantage Through Operational Excellence
8AstroNova NASDAQ: ALOT
AstroNova
Operating
System
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AstroNova Business Concept
9AstroNova NASDAQ: ALOT
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10AstroNova NASDAQ: ALOT
Overview & Recent Performance
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AstroNova in Brief
11
NASDAQ: ALOT Russell Microcap® Index
Recent Price $14.91
52-Week Range $11.18 - $15.94
Market Capitalization $109.5 million
Shares Outstanding 7.3 million
Enterprise Value $87.0 million
Book Value per Share $9.12
Annualized Dividend $0.28 per share
Yield 1.9%
Price and market cap as of 3/22/2016
FY 2016 Financial Highlights1
• Net sales: $94.7 million
• Net income: $4.5 million
• Diluted EPS: $0.61 GAAP/$0.77 Non-GAAP*
• Free cash flow: $4.7 million*
• Debt: $0
1Three and twelve months ended 1/31/16.
Q4 FY 2016 Financial Highlights1
• Net sales: $23.8 million
• Net income: $0.8 million
• Diluted EPS: $0.11 GAAP/$0.17 Non-GAAP*
• Cash & Marketable Securities: $20.4 million
AstroNova NASDAQ: ALOT
*Please see Appendix for reconciliation of Non-GAAP results
to their most directly comparable GAAP results
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Annual Revenue and Net Income Performance
12AstroNova NASDAQ: ALOT
($ in millions) CAGR: 15.6%
$61.2$68.6
$88.3$94.7
$10.8
$3.2$5.1 $5.7
$0
$5
$10
$15
$20
$25
$30
$35
$40
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
FY 2013 FY 2014 FY 2015 FY 2016
Revenue Net Income
(2)(2)
(2) Non-GAAP net income.
Please see Appendix for reconciliation tables
(1) Includes sale of Grass operations
(1))
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Free Cash Flow*
13AstroNova NASDAQ: ALOT
*Free cash flow is a Non-GAAP metric which AstroNova defines as net cash from operating activities less capital expenditures. Please see
Appendix for reconciliation of Non-GAAP results to their most directly comparable GAAP results.
$(0.4)
$(1.3)$(0.8)
$4.7
-$2.0
-$1.0
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
FY 2013 FY 2014 FY 2015 FY 2016
($ in millions)
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46-Year History of Innovation
14
1969
Company founded
1975
First data acquisition
recorders
1983
Nasdaq listing
1986
First barcode
label printer
1994
Grass Technologies
acquired
1994
First color
label printer2001
First Boeing
printer
& networking
2004
First Airbus
printer
2010
TMX high-speed
data acquisition
system
2012
First color inkjet
label printer
2013
Grass Technologies
divested
2013
AOS Lean Program
launched
2014
Miltope
acquisition
2015
RITEC
acquisition
2015
REBRANDING
AstroNova NASDAQ: ALOT
Calendar years
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Global Reach 2015
15
AstroNova Locations
AstroNova NASDAQ: ALOT
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Representative Customers
16AstroNova NASDAQ: ALOT
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Investment Highlights
17
• Focused on three growth platforms
• Large addressable markets with global customer base
• Pursuing high-growth markets
Attractive End-Markets
• Continuous improvement initiatives driving higher margins
• Improved lead times, inventory turns, and on-time deliveries
Lean Transformation
• Organic growth through applied marketing and systematic R&D
• Bolt-on M&A: Miltope and RITEC acquisitions
• Recurring revenue exceeds 50% of net sales
Successful Growth Strategy
• $20.4 million in cash and securities on 1/31/16
• Capital resources and flexibility to execute strategic plan
Strong Balance Sheet
AstroNova NASDAQ: ALOT
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Recent Strategic Developments
18
AstroNova Operating System (AOS) - Lean Enterprise Tools
Strategic deployment process
Major IT systems upgrade completed
Direct offices established in China, Malaysia, and Singapore
Added sales personnel in the Americas, Asia, and Europe
Q4 2015: Four ink jet color label printers
Q2 2016: Two new data acquisition platforms
Q2 2016: Industry’s first AirPrint certified flight deck printer
Shanghai Technology Center
Systematic product development process using VOC
Increased R&D staffing, and improved technology tools
Operational
Excellence
Channel
Growth
Product
Innovation
Technology
Leadership
AstroNova NASDAQ: ALOT
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Productivity Improvements
19AstroNova NASDAQ: ALOT
$203
$226
$259
$288
$9.6
$4.6
$22.1
$26.6
$0
$5
$10
$15
$20
$25
$30
$35
$40
$0
$50
$100
$150
$200
$250
$300
$350
FY2013 FY2014 FY2015 FY2016
EBIT
/ E
mp
loye
e
Sale
s /
Emp
loye
e
Sales / Emp
EBIT / Emp
EBIT (Non-GAAP) / emp
($ in thousands)
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20AstroNova NASDAQ: ALOT
Business Segments
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AstroNova Business Segments
21
Product IdentificationQuickLabel Systems
Test & Measurement
Color Label Printers andConsumables
Data Recorders Ruggedized Airborne Printers
& Networking Electronics
AstroNova NASDAQ: ALOT
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Product Identification
22
$43.6$49.1
$59.8$67.1
10.0% 10.5% 12.1% 13.9%
$0
$10
$20
$30
$40
$50
$60
$70
$80
FY 2013 FY 2014 FY 2015 FY 2016
($ in millions)
Annual Revenue and Segment Operating Profit
Growth Drivers:Color Label Printers and
Consumables
AstroNova NASDAQ: ALOT
CAGR: 15.5%
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Broad Product LineAddresses Commercial, Industrial, and Medical Markets
23
Narrow and Wide Format Inkjets Light Emitting Diode-Toner Thermal
Leader in On-Demand Digital Color Label Printers
AstroNova NASDAQ: ALOT
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Typical Installed Color Label Printer Generates Recurring Revenue of $10K Per Year for Several Years
24
• Branded labels, toner, and ink supplies
• In-house development and laboratory testing
• Multiple production facilities
• Dedicated media sales and support team
AstroNova NASDAQ: ALOT
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Broad Range of Applications
25
Cosmetics Electrical Pharmaceutical
Food and Beverage FDA and GHS (Globally Harmonized System of Classification) Compliance
AstroNova NASDAQ: ALOT
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Test & Measurement
26
Growth Drivers:Aerospace Printers
and Data Acquisition
$17.6$19.5
$28.6 $27.5
17.6%13.6%
19.7%13.3%
$0
$5
$10
$15
$20
$25
$30
$35
FY 2013 FY 2014 FY 2015 FY 2016
AstroNova NASDAQ: ALOT
Annual Revenue and
Segment Operating Profit
($ in millions)CAGR: 16.0%
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Aerospace Products and Services
27
• Graphical flight deck printers
• Rugged Ethernet switches
• Aviation grade Thermal paper
• Certified FAA repair facility
ToughWriter 4® ToughWriter 5® Miltope Printers
Networking Electronics
ToughWriter 640
AstroNova NASDAQ: ALOT
Leader in Aerospace Printers
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Aerospace Products
Select Contracts
28
Military Transport& Tanker Aircraft Business Jet Commercial In-Flight
Entertainment C-130J – TW4
A400M – TW4
C-130T – TW4
KC-390 – TW5
Airbus A380 – TW4
Boeing 787 – TW4
Boeing 737NG – TW5
Confidential – TW5
Global 5000/6000 – TW5
Confidential – TW5
Confidential – TW5
Confidential – TW5
Panasonic Avionics – TW5
Zodiac Inflight Innov. – TW4
Thales Avionics – TW4
Deep Aerospace Relationships
AstroNova NASDAQ: ALOT
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Miltope & RITEC Acquisitions Significantly ExpandAerospace Printer Business
29
• Acquired Miltope business in January 2014
• Acquired RITEC business in June 2015
• Vaults AstroNova to No. 1 position in the
aerospace printer market
• Provides extensive airline-direct business
• Expands global customer base
• Adds narrow format printer technology
• Adds long-term contracts with multiple
commercial, business, and military customers
AstroNova NASDAQ: ALOT
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Data Acquisition Technology Real-Time Data Analysis
30
TMX
Daxus
Applications
• Aircraft equipment qualification and certification
• Monitoring rail and automotive performance
• Validating fixed plant control instrumentation
• Wireless remote monitoring and data acquisition
AstroNova NASDAQ: ALOT
Analog, Digital, and Video signal capture and analysis
• Historically heavily aerospace related
• Expanding into transportation and industrial markets
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Data Acquisition Technology A380 Qualification and Testing
31
Compliance testing
AstroNova NASDAQ: ALOT
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Data Acquisition Technology Daxus opens new markets: Factory and Utility Monitoring
32AstroNova NASDAQ: ALOT
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Operating Model
33AstroNova NASDAQ: ALOT
FY 2016 Targets
Revenue $94.7M $200M+
3-year CAGR 15.6% 15%
Operating Margin 6.3% 15%
Strategic Driving Force Data Visualization Technology
Market Focus Aerospace, Transportation,
Fast-Moving Consumer Goods
Growth Strategy (Organic growth of current platforms) + (bolt-on M&A)
Management Approach AstroNova Operating System
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FY 2017 Priorities
34AstroNova NASDAQ: ALOT
• Maintain sales momentum of current platforms through organic growth and
strategic acquisitions
• Use AOS to broaden competitive advantages
• Expand direct sales presence in Asia
• Continue to grow and top-grade global distribution channels
• Achieve double-digit growth and long-term shareholder returns well
above peer average
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35AstroNova NASDAQ: ALOT
Financial Highlights
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Annual Revenue Growth and Operating Income Margins
36AstroNova NASDAQ: ALOT
(1)Excludes discontinued operation
($ in millions)
$61.2$68.6
$88.3$94.7
4.8% 2.2%8.2% 6.3%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
FY 2013 FY 2014 FY 2015 FY 2016(1)
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Quarterly Revenue Growth
37
$20.8
$22.4
$23.1
$22.1$22.2
$23.9
$24.7
$23.8
Q1 Q2 Q3 Q4
FY 2015 FY 2016
($ in millions)
+7.0% +7.0% +7.0% +7.7%
AstroNova NASDAQ: ALOT
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Net Sales by Type Q4 FY 2016 vs. Q4 FY 2015
38
$ in millions (% of total sales)
Hardware38%
Q4 FY16: $9.1Q4 FY15: $9.6 44% Consumables
Q4 FY16: $12.8Q4 FY15: $10.8
54%49%
Service and other
Q4 FY16: $1.9Q4 FY15: $1.6
8%
7%
Q4 FY16: $23.8Q4 FY15: $22.1
Net Sales
AstroNova NASDAQ: ALOT
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Net Sales by Channel Q4 FY 2016 vs. Q4 FY 2015
39
70%
73%27% 30%
$ in millions (% of total sales)
Q4 FY16: $17.4Q4 FY15: $15.2
International
Q4 FY16: $6.4(1)
Q4 FY15: $6.9
Q4 FY16: $23.8Q4 FY15: $22.1
Domestic
Net Sales
31%
AstroNova NASDAQ: ALOT
(1) Includes unfavorable foreign exchange rate impact of $530,000
69%
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Net Sales by Segment Q4 FY 2016 vs. Q4 FY 2015
40
70%
QuickLabel
$16.7
Test & Measurement
$7.1
Q4 FY 2016
$ in millions (% of total)
$23.8
30%
67%
QuickLabel
$14.9
Test & Measurement
$7.2
Q4 FY 2015
$22.1
33%
AstroNova NASDAQ: ALOT
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Operating Profit by SegmentQ4 FY 2016 vs. Q4 FY 2015
41
63% 36%
QuickLabel
$1.7- ProfitMargin 10.2%
Test & Measurement
$1.0 - ProfitMargin 14.0%
$ in millions (% of total)
$2.7
37%QuickLabel
$0.9 - ProfitMargin 5.8%
$1.6 - ProfitMargin 21.5%
Q4 FY 2015
$2.5
64%
Test & Measurement
Q4 FY 2016
AstroNova NASDAQ: ALOT
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Annual Net Sales by Type FY 2016 vs. FY 2015
42
Hardware37%
FY16: $34.8FY15: $38.7
41% Consumables FY16: $51.8FY15: $43.6
53%
Service and other
FY16: $8.1FY15: $6.0
8%
6%
FY16: $94.7FY15: $88.3
Net Sales
$ in millions (% of total sales)
44%49%
7%
AstroNova NASDAQ: ALOT
55%
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Annual Net Sales by ChannelFY 2016 vs. FY 2015
43
70%
72%28% 30%
$ in millions (% of total sales)
FY16: $68.3FY15: $61.5
International
FY16: $26.4 (1)
FY15: $26.9
FY16: $94.7FY15: $88.3
Domestic
Net Sales
AstroNova NASDAQ: ALOT
(1) Includes unfavorable foreign exchange rate impact of $3,022,000
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Annual Net Sales by Segment FY 2016 vs. FY 2015
44
71%
Test & Measurement
$27.5
FY 2016
$94.768% $59.8
Test & Measurement
$28.5
FY 2015
$88.3
32%
QuickLabel
$67.2
QuickLabel
29%
$ in millions (% of total)
AstroNova NASDAQ: ALOT
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Annual Operating Profit by SegmentFY 2016 vs. FY 2015
45
56%72%
QuickLabel
$7.3 - ProfitMargin 12.1%
Test & Measurement
$5.6 - ProfitMargin 19.7%
FY 2015
$ in millions (% of total)
$12.944%QuickLabel
$9.3 - ProfitMargin 13.9%
$3.7 - ProfitMargin 13.3%
FY 2016
$13.028%
Test & Measurement
AstroNova NASDAQ: ALOT
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Financial Highlights
46
($ in thousands, except per share data) Three Months Ended
January 31, 2016 January 31, 2015
Net Sales $ 23,761 $ 22,070
Gross Profit $ 9,130 $ 8,601
Gross Profit Margin (%) 38.4% 39.0%
Operating Income $ 793 $ 793
Net Income $ 828 $ 543
Net Income Per Share – Diluted $ 0.11 $ 0.07
Weighted Avg Number of Common Shares Outstanding – Diluted 7,494 7,643
Cash Dividends Per Share $ 0.07 $ 0.07
Book Value Per Common Share(1) $ 9.18 $ 8.76
(1) Based on the number of shares outstanding at each quarter end
AstroNova NASDAQ: ALOT
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Selected Balance Sheet Data
47
($ in thousands)
As of
January 31, 2016
(Unaudited)
As of
January 31, 2015
(Audited)
Cash & Marketable Securities $20,419 $23,132
Current Assets $54,514 $59,289
Total Assets $77,963 $74,330
Current Liabilities $9,548 $9,569
Shareholders’ Equity $67,373 $63,511
AstroNova NASDAQ: ALOT
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Key Takeaways
48
• Focused on three growth platforms
• Large addressable markets with global customer base
• Pursuing high-growth markets
Attractive End-Markets
• Continuous improvement initiatives driving higher margins
• Improved lead times, inventory turns, and on-time deliveries
Lean Transformation
• Organic growth through applied marketing and systematic R&D
• Bolt-on M&A: Miltope and RITEC acquisitions
• Recurring revenue exceeds 50% of net sales
Successful Growth Strategy
• $20.4 million in cash and securities on 1/31/16
• Capital resources and flexibility to execute strategic plan
Strong Balance Sheet
AstroNova NASDAQ: ALOT
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49AstroNova NASDAQ: ALOT
Appendix
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Reconciliation of Non-GAAP Net Income
50AstroNova NASDAQ: ALOT
($ in thousands) Three Months Ended Twelve Months Ended
January 31, 2016 January 31, 2015 January 31, 2016 January 31, 2015
GAAP-based results:
Net income $ 828 $ 543 $ 4,525 $ 4,662
Add back – Non-GAAP adjustments (net
of taxes):
Rebranding Initiatives 123 - 181 -
RITEC Transaction/Transaction Costs 259 - 663 -
2016 Long-Term Incentive Plan Share-
Based Compensation96 - 357 -
Write-down of TSA Inventory- - - 168
Share Buyback Costs- 68 - 68
Write-down of Asset Held for Sale- 147 - 147
Non-GAAP Net Income $ 1,306 $ 758 $ 5,726 $ 5,045
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Reconciliation of Non-GAAP EPS
51AstroNova NASDAQ: ALOT
Three Months Ended Twelve Months Ended
January 31, 2016 January 31, 2015 January 31, 2016 January 31, 2015
GAAP-based results:
EPS Diluted $ 0.11 $ 0.07 $ 0.61 $ 0.60
Add back – Non-GAAP adjustments (net of
taxes):
Rebranding Initiatives 0.02 - 0.02 -
RITEC Transaction/Transaction Costs 0.03 - 0.09 -
2016 Long-Term Incentive Plan Share-Based
Compensation0.01 - 0.05 -
Write-down of TSA Inventory- - - 0.02
Share Buyback Costs- 0.01 - 0.01
Write-down of Asset Held for Sale- 0.02 - 0.02
Non-GAAP EPS – Diluted $ 0.17 $ 0.10 $ 0.77 $ 0.65
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Free Cash Flow
52AstroNova NASDAQ: ALOT
($ in thousands) Twelve Months Ended
January 31, 2016 January 31, 2015
Net Cash Provided by Operating Activities $7,727 $1,491
Capital Expenditures ($3,061) ($2,247)
Free Cash Flow $4,666 ($756)