ASTRONOVA, INC., 10-Q filed on 6/10/2021
Quarterly Report
v3.21.1
Cover Page - shares
3 Months Ended
May 01, 2021
Jun. 08, 2021
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date May 01, 2021  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Entity Registrant Name AstroNova, Inc.  
Entity Central Index Key 0000008146  
Current Fiscal Year End Date --01-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Shell Company false  
Trading Symbol ALOT  
Entity Small Business true  
Entity Emerging Growth Company false  
Title of 12(b) Security Common Stock  
Security Exchange Name NASDAQ  
Entity Incorporation, State or Country Code RI  
Entity File Number 0-13200  
Document Quarterly Report true  
Document Transition Report false  
Entity Tax Identification Number 05-0318215  
Entity Address, Address Line One 600 East Greenwich Avenue  
Entity Address, City or Town West Warwick  
Entity Address, Postal Zip Code 02893  
Entity Address, State or Province RI  
City Area Code 401  
Local Phone Number 828-4000  
Entity Common Stock, Shares Outstanding   7,231,068
v3.21.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
May 01, 2021
Jan. 31, 2021
CURRENT ASSETS    
Cash and Cash Equivalents $ 11,414 $ 11,439
Accounts Receivable, net 15,249 17,415
Inventories, net 29,474 30,060
Prepaid Expenses and Other Current Assets 2,072 1,807
Total Current Assets 58,209 60,721
Property, Plant and Equipment, net 12,124 12,011
Intangible Assets, net 20,496 21,502
Goodwill 12,730 12,806
Deferred Tax Assets 5,944 5,941
Right of Use Assets 1,302 1,389
Other Assets 1,251 1,103
TOTAL ASSETS 112,056 115,473
CURRENT LIABILITIES    
Accounts Payable 5,639 5,734
Accrued Compensation 2,951 2,852
Other Liabilities and Accrued Expenses 3,448 3,939
Current Liability – Royalty Obligation 2,000 2,000
Current Portion of Long-Term Debt 813 5,326
Current Liability – Excess Royalty Payment Due 200 177
Deferred Revenue 330 285
Income Taxes Payable 260 655
Total Current Liabilities 15,441 20,968
NON CURRENT LIABILITIES    
Long-Term Debt, net of current portion 8,884 7,109
Royalty Obligation, net of current portion 5,711 6,161
Long-Term Debt – PPP Loan 4,422 4,422
Lease Liabilities, net of current portion 983 1,065
Other Long-Term Liabilities 680 681
Deferred Tax Liabilities 402 384
TOTAL LIABILITIES 36,523 40,790
SHAREHOLDERS' EQUITY    
Common Stock, $0.05 Par Value, Authorized 13,000,000 shares; Issued 10,479,139 shares and 10,425,094 shares at May 1, 2021 and January 31, 2021, respectively 524 521
Additional Paid-in Capital 58,576 58,049
Retained Earnings 50,678 50,085
Treasury Stock, at Cost, 3,312,687 and 3,297,058 shares at May 1, 2021 and January 31, 2021, respectively (33,796) (33,588)
Accumulated Other Comprehensive Loss, net of tax (449) (384)
TOTAL SHAREHOLDERS' EQUITY 75,533 74,683
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 112,056 $ 115,473
v3.21.1
Condensed Consolidated Balance Sheets (parenthetical) - $ / shares
May 01, 2021
Jan. 31, 2021
Statement of Financial Position [Abstract]    
Common Stock, Par Value $ 0.05 $ 0.05
Common Stock, Shares Authorized 13,000,000 13,000,000
Common Stock, Shares Issued 10,479,139 10,425,094
Treasury Stock, Shares 3,312,687 3,297,058
v3.21.1
Condensed Consolidated Statements of Income - USD ($)
3 Months Ended
May 01, 2021
May 02, 2020
Income Statement [Abstract]    
Revenue $ 29,078,000 $ 30,919,000
Cost of Revenue 18,190,000 20,064,000
Gross Profit 10,888,000 10,855,000
Operating Expenses:    
Selling and Marketing 6,092,000 5,925,000
Research and Development 1,717,000 1,940,000
General and Administrative 2,344,000 2,327,000
Operating Expenses 10,153,000 10,192,000
Operating Income 735,000 663,000
Other Expense, net 369,000 349,000
Income Before Income Taxes 366,000 314,000
Income Tax Benefit (227,000) (118,000)
Net Income $ 593,000 $ 432,000
Net Income per Common Share—Basic: $ 0.08 $ 0.06
Net Income per Common Share—Diluted: $ 0.08 $ 0.06
Weighted Average Number of Common Shares Outstanding:    
Basic 7,144,697 7,073,278
Diluted 7,265,329 7,104,643
v3.21.1
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended
May 01, 2021
May 02, 2020
Statement of Comprehensive Income [Abstract]    
Net Income $ 593 $ 432
Other Comprehensive Loss, Net of Taxes:    
Foreign Currency Translation Adjustments (81) (142)
Change in Value of Derivatives Designated as Cash Flow Hedge   (46)
Loss (Gain) from Cash Flow Hedges Reclassified to Income Statement 16 (33)
Other Comprehensive Loss (65) (221)
Comprehensive Income $ 528 $ 211
v3.21.1
Consolidated Statements of Changes in Shareholders' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Jan. 31, 2020 $ 71,375 $ 517 $ 56,130 $ 49,298 $ (33,477) $ (1,093)
Beginning Balance, Shares at Jan. 31, 2020   10,343,610        
Share-Based Compensation 495   495      
Employee Option Exercises 32   32      
Employee Option Exercises, Shares   4,456        
Restricted Stock Awards Vested, net (54) $ 1 (1)   (54)  
Restricted Stock Awards Vested, net, Shares   23,638        
Common Stock - cash dividend (497)     (497)    
Net Income 432     432    
Other Comprehensive Loss (221)         (221)
Ending Balance at May. 02, 2020 71,562 $ 518 56,656 49,233 (33,531) (1,314)
Ending Balance, Shares at May. 02, 2020   10,371,704        
Beginning Balance at Jan. 31, 2021 74,683 $ 521 58,049 50,085 (33,588) (384)
Beginning Balance, Shares at Jan. 31, 2021   10,425,094        
Share-Based Compensation 478   478      
Employee Option Exercises $ 52   52      
Employee Option Exercises, Shares 3,775 5,746        
Restricted Stock Awards Vested, net $ (208) $ 3 (3)   (208)  
Restricted Stock Awards Vested, net, Shares   48,299        
Net Income 593     593    
Other Comprehensive Loss (65)         (65)
Ending Balance at May. 01, 2021 $ 75,533 $ 524 $ 58,576 $ 50,678 $ (33,796) $ (449)
Ending Balance, Shares at May. 01, 2021   10,479,139        
v3.21.1
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical)
3 Months Ended
May 02, 2020
$ / shares
Statement of Stockholders' Equity [Abstract]  
Cash dividend per share $ 0.07
v3.21.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
May 01, 2021
May 02, 2020
Cash Flows from Operating Activities:    
Net Income $ 593 $ 432
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:    
Depreciation and Amortization 1,425 1,568
Amortization of Debt Issuance Costs 25 12
Share-Based Compensation 478 495
Changes in Assets and Liabilities:    
Accounts Receivable 2,165 1,220
Inventories 568 1,237
Income Taxes (387) (90)
Accounts Payable and Accrued Expenses (552) (1,140)
Other (406) (314)
Net Cash Provided by Operating Activities 3,909 3,420
Cash Flows from Investing Activities:    
Additions to Property, Plant and Equipment (544) (626)
Net Cash Used for Investing Activities (544) (626)
Cash Flows from Financing Activities:    
Net Cash Proceeds from Employee Stock Option Plans 34 6
Net Cash Proceeds from Share Purchases under Employee Stock Purchase Plan 18 26
Net Cash Used for Payment of Taxes Related to Vested Restricted Stock (208) (54)
Borrowings under Revolving Credit Facility   5,000
Payment of Minimum Guarantee Royalty Obligation (500) (500)
Proceeds from Long-Term Debt Borrowings 10,000  
Payoff of Long-Term Debt (12,576)  
Principal Payments on Long-Term Debt (187)  
Dividends Paid   (497)
Net Cash Provided by (Used) for Financing Activities (3,419) 3,981
Effect of Exchange Rate Changes on Cash and Cash Equivalents 29 67
Net Increase (Decrease) in Cash and Cash Equivalents (25) 6,842
Cash and Cash Equivalents, Beginning of Period 11,439 4,249
Cash and Cash Equivalents, End of Period 11,414 11,091
Supplemental Disclosures of Cash Flow Information:    
Cash Paid During the Period for Interest 115 124
Cash Paid During the Period for Income Taxes, Net of Refunds $ 131 $ 128
v3.21.1
Business and Basis of Presentation
3 Months Ended
May 01, 2021
Business and Basis Of Presentation [Abstract]  
Business and Basis of Presentation
Note 1 – Business and Basis of Presentation
Overview
Headquartered in West Warwick, Rhode Island, AstroNova, Inc. leverages its expertise in data visualization technologies to design, develop, manufacture and distribute a broad r
a
nge of specialty printers and data acquisition and analysis systems. Our products are employed around the world in a wide range of applications in the aerospace, apparel, automotive, avionics, chemical, computer peripherals, communications, distribution, food and beverage, general manufacturing, packaging and transportation industries
Our business consists of two
 segments, Product Identification (“PI”) and Test & Measurement (“T&M”). The PI segment includes specialty printing systems and related supplies sold under the QuickLabel®, TrojanLabel® and GetLabels™ brand names. The T&M segment includes our line of aerospace printers and test and measurement data acquisition systems sold under the AstroNova® brand name. 
PI products sold under the QuickLabel, TrojanLabel and GetLabels brands are used in brand owner and commercial applications to provide product packaging, marketing, tracking, branding and labeling solutions to a wide array of industries. The PI segment offers a variety of digital color label tabletop printers, high-volume presses and specialty original equipment manufacturer (“OEM”) printing systems, as well as a wide range of label, tag and flexible packaging material substrates and other supplies, including ink and toner, allowing customers to mark, track, protect and enhance the appearance of their products. In the T&M segment, we have a long history of using our technologies to provide networking systems and high-resolution light-weight flight deck and cabin printers for the aerospace market. In addition, the T&M segment includes data acquisition recorders, sold under the AstroNova brand, to enable our customers to acquire and record visual and electronic signal data from local and networked data streams and sensors. The recorded data is processed and analyzed and then stored and presented in various visual output formats.
Our Product Identification products are sold by direct field salespersons as well as independent dealers and representatives, while our Test & Measurement products are sold predominantly through direct sales and manufacturers’ representatives. In the United States, we have factory-trained direct field salespeople located throughout the country specializing in Product Identification products. We also have direct field sales or service centers in Canada, China, Denmark, France, Germany, Malaysia, Mexico, Singapore, and the United Kingdom staffed by our own employees and dedicated third party contractors. Additionally, we utilize over 200 independent dealers and representatives selling and marketing our products in over 60 countries.
Unless otherwise indicated, references to “AstroNova”, “we,” “our,” and “us” in this Quarterly Report on
Form 10-Q
refer to AstroNova, Inc. and its consolidated subsidiaries.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods included herein. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with our Annual Report on Form
10-K
for the fiscal year ended January 31, 2021.
The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes, including those that require consideration of forecasted financial information, in context of the unknown future impacts of
COVID-19
using information that is reasonably available to us at this time. Some of the more significant estimates relate to revenue recognition, the allowances for doubtful accounts, inventory valuation, income taxes, impairment of long-lived assets and goodwill, share-based compensation, accrued expenses, self-insurance liability accrual and warranty reserves. Management’s estimates are based on the facts and circumstances available at the time estimates are made, historical experience, risk of loss, general economic conditions and trends, and management’s assessments of the probable future outcome of these matters, including our expectations at the time regarding the duration, scope and severity of the
COVID-19
pandemic. Consequently, actual results could differ from those estimates.
Results of operations for the interim periods presented herein are not necessarily indicative of the results that may be expected for the full year.
Certain amounts in the prior year financial statements have been reclassified to conform to the current year’s presentation.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of AstroNova, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation.
v3.21.1
Summary of Significant Accounting Policies Update
3 Months Ended
May 01, 2021
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Update
Note 2 – Summary of Significant Accounting Policies Update
The accounting policies used in preparing the condensed consolidated financial statements in this Form
10-Q
are the same as those used in preparing our consolidated financial statements included in our Annual Report on Form
10-K
for the fiscal year ended January 31, 2021.
Recently Adopted Accounting Pronouncements
Income Taxes
In December 2019, the FASB issued an ASU
2019-12,
“Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU
2019-12
is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We adopted ASU
2019-12
for the period beginning February 1, 2021. The adoption of this guidance did not have a material impact on our consolidated financial statements and accompanying disclosures.
No other new accounting pronouncements, issued or effective during the three months of the current year, have had or are expected to have a material impact on our consolidated financial statements.
v3.21.1
Revenue Recognition
3 Months Ended
May 01, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 3 – Revenue Recognition
We derive revenue from the sale of (i) hardware, including digital color label printers and specialty OEM printing systems, portable data acquisition systems and airborne printers used in the flight deck and cabin of military, commercial and business aircraft, (ii) related supplies required in the operation of the hardware, (iii) repairs and maintenance of hardware and (iv) service agreements.
Revenues disaggregated by primary geographic markets and major product types are as follows:
Primary geographical markets:
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
United States
   $
 
 16,693      $
 
 19,789
 
Europe
     8,599        7,450  
Canada
     1,546        1,428  
Asia
     1,085        1,009  
Central and South America
     760        954  
Other
     395        289  
Total Revenue
   $ 29,078      $ 30,919  
Major product types:
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
Hardware
   $ 7,647      $ 8,914  
Supplies
     18,211        19,118  
Service and Other
     3,220        2,887  
Total Revenue
   $ 29,078      $ 30,919  
Contract Assets and Liabilities
We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time.
Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended warranties. Contract liabilities were $330,000 and $285,000 at May 1, 2021 and January 31, 2021, respectively, and are recorded as deferred revenue in the accompanying condensed consolidated balance sheet. The increase in the deferred revenue balance during the three months ended May 1, 2021
is primarily due to cash payments received in advance of satisfying performance obligations in the current period, offset by $
127,000
of
revenue recognized during the period that was included in the deferred revenue balance at January 31, 2021. 
Contract Costs
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. These costs are deferred and amortized based on the forecasted number of units sold over the remaining benefit term, which we currently estimate to be approximately 5 years. The balance of these contract assets at January 31, 2021 was $917,000. We amortized $9,000 of direct costs for the three months ended May 1, 2021 and the balance of deferred incremental direct costs net of accumulated amortization at May 1, 2021 was $908,000, of which $74,000 is reported in other current assets and $834,000 is
reported in other assets in the accompanying condensed consolidated balance sheet. 
v3.21.1
Net Income Per Common Share
3 Months Ended
May 01, 2021
Earnings Per Share [Abstract]  
Net Income Per Common Share
Note 4 – Net Income Per Common Share
Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of shares and, if dilutive, common equivalent shares, determined using the treasury stock method for stock options, restricted stock awards and restricted stock units outstanding during the period.
 
A reconciliation of the shares used in calculating basic and diluted net income per share is as follows:
 
 
  
Three Months Ended
 
 
  
May 1,
2021
 
  
May 2,
2020
 
 
  
 
 
 
  
 
 
 
Weighted Average Common Shares Outstanding – Basic
     7,144,697        7,073,278  
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units
     120,632        31,365  
Weighted Average Common Shares Outstanding – Diluted
     7,265,329        7,104,643  
For the three months ended May 1, 2021 and May 2, 2020, the diluted per share amounts do not reflect common equivalent shares outstanding of 622,020 and 865,157,
respectively, because of their anti-dilutive effect.
v3.21.1
Intangible Assets
3 Months Ended
May 01, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Note 5 – Intangible Assets
Intangible assets are as follows:
 
    
May 1, 2021
    
January 31, 2021
 
(In thousands)
  
Gross

Carrying

Amount
    
Accumulated

Amortization
   
Currency

Translation

Adjustment
    
Net

Carrying

Amount
    
Gross

Carrying

Amount
    
Accumulated

Amortization
   
Currency

Translation

Adjustment
    
Net

Carrying

Amount
 
Miltope:
                                                                     
Customer Contract Relationships
   $ 3,100      $  (2,342   $  —        $ 758      $ 3,100      $  (2,284)     $  —        $ 816  
RITEC:
                                                                     
Customer Contract Relationships
     2,830        (1,507     —          1,323        2,830        (1,423     —          1,407  
TrojanLabel:
                                                                     
Existing Technology
     2,327        (1,497     186        1,016        2,327        (1,405     196        1,118  
Distributor Relations
     937        (422     84        599        937        (396     89        630  
Honeywell:
                                                                     
Customer Contract Relationships
     27,243        (10,443     —          16,800        27,243        (9,712     —          17,531  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
Intangible Assets, net
   $
 
 
 
36,437
     $
 
 (16,211
  $  270      $  20,496      $  34,437      $  (15,220   $  285      $
 
 21,502  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
There were
 
no impairments to intangible assets during the periods ended May 1, 2021 and May 2, 2020.
With respect to the acquired intangibles included in the table above, amortization expense of $1.0 
million has been included in the condensed consolidated statements of income for each of the three months ended May 1, 2021 and May 2, 2020.
Estimated amortization expense for the next five fiscal years is as follows:
 
(In thousands)
  
Remaining
2022
 
  
2023
 
  
2024
 
  
2025
 
  
2026
 
Estimated amortization expense
   $ 2,968      $ 3,976      $ 4,075      $ 3,420      $ 3,026  
v3.21.1
Inventories
3 Months Ended
May 01, 2021
Inventory Disclosure [Abstract]  
Inventories
Note 6 – Inventories
Inventories are stated at the lower of cost
(first-in,
first-out)
and net realizable value and include material, labor and manufacturing overhead. The components of inventories are as follows:
 
(In thousands)
  
May 1, 2021
    
January 31, 2021
 
Materials and Supplies
   $  19,553      $  20,265  
Work-In-Process
     1,989        2,076  
Finished Goods
     16,641        16,371  
    
 
 
    
 
 
 
       38,183        38,712  
Inventory Reserve
     (8,709      (8,652
    
 
 
    
 
 
 
     $ 29,474      $ 30,060  
    
 
 
    
 
 
 
v3.21.1
Credit Agreement and Debt
3 Months Ended
May 01, 2021
Debt Disclosure [Abstract]  
Credit Agreement and Debt
Note 7 – Credit Agreement and Debt
On March 24, 2021, we entered into a First Amendment to Credit Agreement (the “Amendment”) to our Amended & Restated Credit Agreement (the “A&R Credit Agreement,” as amended by the Amendment; the “Amended Credit Agreement”) with Bank of America, N.A., as lender (the “Lender”), and our subsidiaries, ANI ApS and TrojanLabel. The A&R Credit Agreement, which we entered into on July, 30, 2020, amended and restated the Credit Agreement dated as of February 28, 2017 (the “Prior Credit Agreement”) by and among us, ANI ApS, TrojanLabel and the Lender. Immediately prior to the closing of the Amendment, we repaid
 
$
2.6
 million in principal amount of the term loan outstanding under the A&R Credit Agreement, resulting in an outstanding balance of the term loan of $
10.0
 million and
no
amount drawn and outstanding under the revolving credit facility under the A&R Credit Agreement.
The Amended Credit Agreement provides for (i) a term loan in the principal amount of $10.0 million, and (ii) a $22.5 million revolving credit facility available for general corporate purposes. At the closing of the Amendment, we borrowed the entire $10.0 million term loan which was used to refinance, in full, the outstanding term loan under the A&R Credit Agreement. Under the Amended Credit Agreement, revolving credit loans may continue to be borrowed, at our option, in U.S. Dollars or, subject to certain conditions, Euros, British Pounds, Canadian Dollars or Danish Kroner.
The Amended Credit Agreement r
e
quires that the term loan be paid as follows: the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about April 30, 2021 through January 31, 2022 is $187,500; the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about April 30, 2022 through January 31, 2023 is $250,000; the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about April 30, 2023 through January 31, 2025 is $312,500; the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about April 30, 2025 and July 31, 2025 is $500,000; and the entire remaining principal balance of the term loan is required to be paid on September 30, 2025. We may voluntarily prepay the term loan, in whole or in part, from time to time without premium or penalty (other than customary breakage costs, if applicable). We may repay borrowings under the revolving credit facility at any time without premium or penalty (other than customary breakage costs, if applicable), but in any event no later than September 30, 2025, at which time any outstanding revolving loans will be due and payable in full, and the revolving credit facility will terminate. We may reduce or terminate the revolving line of credit at any time, subject to certain
thresholds and conditions, without premium or penalty. 
The Amended Credit Agreement includes an uncommitted accordion provision under which the term loan and/or revolving credit facility commitments may be increased in an aggregate principal amount not exceeding $10.0 million, subject to obtaining the agreement of the Lender and the satisfaction of certain other conditions.
The interest rates under the A&R Credit Agreement were modified in the Amended Credit Agreement as follows: the term loan and revolving credit loans bear interest at a rate per annum equal to, at our option, either (a) the LIBOR Rate as defined in the Amended Credit Agreement (or in the case of revolving credit loans denominated in a currency other than U.S. Dollars, the applicable quoted rate), plus a margin that varies within a range of 1.60% to 2.30% based on our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal fund rate plus 0.50%, (ii) Bank of America’s publicly announced prime rate, (iii) the LIBOR Rate plus 1.00% or (iv) 0.50%, plus a margin that varies within a range of 0.60% to 1.30% based on our consolidated leverage ratio. In addition to certain other fees and expenses that we are required to pay to the Lender, we are required to pay a commitment fee on the undrawn portion of the revolving credit facility that varies within a range of 0.15% and 0.30%
based on our
consolidated leverage ratio.
As under the A&R Credit Agreement, the loans under the Amended Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.
Amounts repaid under the revolving credit facility may be reborrowed, subject to continued compliance with the Amended Credit Agreement. No amount of the term loan that is repaid may be reborrowed.
We must comply with various customary financial and
non-financial
covenants under the Amended Credit Agreement. The financial covenants under the Amended Credit Agreement consist of a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The primary
non-financial
covenants limit our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on their capital stock, to repurchase or acquire their capital stock, to conduct mergers or acquisitions, to sell assets, to alter their capital structure, to make investments and loans, to change the nature of their business, and to prepay subordinated indebtedness, in each case subject to certain exceptions and thresholds as set forth in the Amended Credit Agreement, certain of which provisions were modified by the Amendment.
The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment under the Amended Credit Agreement upon the occurrence of any of various customary events of default, which include, among other events, the following (which are subject, in some cases, to certain grace periods): failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of our covenants or representations under the loan documents, default under any other of our or our subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to us or any of our subsidiaries, a significant unsatisfied judgment against us or any of our subsidiaries, or a change of control.
Our obligations under the Amended Credit Agreement continue to be secured by substantially all of our personal property assets (including a pledge of the equity interests held in ANI ApS, in our wholly-owned German subsidiary AstroNova GmbH, and in our wholly-owned French subsidiary AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island.
Long-Term Debt
Long-term debt in the accompanying condensed consolidated balance sheets is as follows:
 
(In thousands)
  
May 1, 2021
    
January 31, 2021
 
USD Term Loan (2.60% as of May 1, 2021); maturity date of September 30, 2025
   $  9,813      $ —    
USD Term Loan (4.65% as of January 31, 2021) maturity date of June 15, 2022
     —          12,576  
    
 
 
    
 
 
 
     $ 9,813      $  12,576  
Debt Issuance Costs, net of accumulated amortization
     (116      (141
Current Portion of Term Loans
     (813      (5,326
    
 
 
    
 
 
 
Long-Term Debt
   $ 8,884      $ 7,109  
    
 
 
    
 
 
 
During the three months ended May 1, 2021 and May 2, 2020, we recognized $115,000 and $79,000 of interest expense, respectively, which was included in other income (expense) in the accompanying condensed consolidated income statement.
The schedule of required principal payments remaining during the next five years on long-term debt outstanding as of May 1, 2021 is as follows:
 
(In thousands)
      
Fiscal 2022, remainder
   $ 563  
Fiscal 2023
     1,000  
Fiscal 2024
     1,000  
Fiscal 2025
     1,250  
Fiscal 2026
     6,000  
    
 
 
 
     $ 9,813  
    
 
 
 
 
v3.21.1
Paycheck Protection Program Loan
3 Months Ended
May 01, 2021
Debt Disclosure [Abstract]  
Paycheck Protection Program Loan
Note 8 – Paycheck Protection Program Loan 
On May 6, 2020, we entered into a loan agreement with, and executed a promissory note in favor of Greenwood Credit Union (“Greenwood”) pursuant to which we borrowed $4.4 million (the “PPP Loan”) from Greenwood pursuant to the Paycheck Protection Program (“PPP”) administered by the United States Small Business Administration (the “SBA”) and authorized by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020. The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020 (the “PPP Flexibility Act”) which was enacted on June 5, 2020.
The PPP Loan, which will mature on May 6, 2022, is unsecured and bears interest at a rate of 1.0% per annum, accruing from the loan date, and is payable monthly. No
payments are due on the PPP Loan until the date on which the SBA determines the amount of the PPP Loan that is eligible for forgiveness, so long as we apply for forgiveness within the ten months from the end of the twenty-four week period following the date of loan disbursement, but interest will continue to accrue during the deferral period. We have accrued interest for the PPP Loan in the amount of
$11,000, which is included in other expense in the accompanying condensed consolidated statements of income for the three month period ended May 1, 2021. A total of $44,000
of interest has been accrued on the PPP Loan and is included in other liabilities and accrued expenses in the accompanying condensed consolidated balance sheet as of May 1, 2021.
The PPP Loan may be prepaid at any time without penalty. The loan agreement and promissory note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or repurchase of shares of our stock while the PPP Loan remains outstanding. The loan agreement and promissory note also include events of default relating to, among other things, payment defaults, breaches of the provisions of the loan agreement or the promissory note, and cross-defaults on other loans.
Subject to the limitations and conditions set forth in the CARES Act, the PPP Flexibility Act, and the regulations and guidance provided by the SBA with respect to the PPP, a portion of the PPP Loan may be forgiven in an amount up to the amount of the PPP Loan proceeds that we spent on payroll, rent, utilities and interest on certain debt during the twenty-four-week period following incurrence of the PPP Loan. Interest accrued on the forgiven portion of the principal amount of the PPP Loan is also forgiven. The amount of the PPP Loan to be forgiven in respect of rent, utilities and interest on certain debt will be capped at 40%
of the forgiven amount, with the remaining forgiven amount allocated to payroll costs. We have fully utilized the PPP Loan proceeds for qualifying expenses during fiscal year 2021 and in the first quarter of this current year we have applied for forgiveness of the PPP Loan (including all associated accrued interest) in accordance with the terms of the CARES Act, as amended by the PPP Flexibility Act. Whether our application for forgiveness will be granted and in what amount is subject to approval by the SBA and may also be subject to further requirements in any regulations and guidelines the SBA may adopt. The PPP Loan is classified as long-term debt in the condensed consolidated balance sheet until the
forgiveness determination has been made by the SBA. 
v3.21.1
Derivative Financial Instruments and Risk Management
3 Months Ended
May 01, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Risk Management
Note 9 – Derivative Financial Instruments and Risk Management
In 2017, we entered into a cross-currency interest rate swap to manage the interest rate risk and foreign currency exchange risk associated with the floating-rate foreign currency-denominated term loan borrowing by our Danish Subsidiary and an interest rate swap to manage the interest rate risk associated with our variable rate term loan borrowing. Both swaps were designated as cash flow hedges of floating-rate borrowings.
Our cross-currency interest rate swap agreement effectively modified our exposure to interest rate risk and foreign currency exchange rate risk by converting our floating-rate debt denominated in U.S. Dollars on our Danish subsidiary’s books to a fixed-rate debt denominated in Danish Kroner for the term of the loan, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap involved the receipt of floating rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Kroner, as well as exchanges of principal at the inception spot rate, over the life of the term loan.
The interest rate swap agreement eff
e
ctively modified our exposure to interest rate risk by effectively converting our floating-rate term-loan debt to fixed-rate debt, thus reducing the impact of interest-rate changes on future interest expense. This swap involved the receipt of floating rate amounts in U.S. Dollars in exchange for fixed rate payments in U.S. dollars over the life of the term loan.
As a direct result of the terms of the Lender’s conditions for entry into the A&R Credit Agreement, on July 30, 2020, we terminated these two swaps. The terms of the A&R Credit Agreement caused those swaps to cease to be effective hedges of the underlying exposures. 
The termination of the swaps was contracted immediately prior to the end of the second quarter of fiscal 2021 at a cash cost of approximately
 
$
0.7
 million which was settled in the third quarter of fiscal 2021. Upon termination, the remaining balance of $
58,000
in accumulated other comprehensive loss related to the cross-currency interest rate swap was reclassified into earnings as the forecasted foreign currency interest payments will not occur. The remaining balance in accumulated other comprehensive loss related to the interest rate swap of $ 
0.2
 million is being amortized into earnings through the original term of the hedge relationship as the underlying floating interest rate debt still exists.
The following table presents the impact of our derivative instruments in our condensed consolidated financial statements for the three months ended May 1, 2021 and May 2, 2020:
 
    
Three Months Ended
 
    
Amount of Gain (Loss)

Recognized in OCI

on Derivative
   
Location of

Gain (Loss)

Reclassified

from Accumulated

OCI into

Income
    
Amount of Gain (Loss)

Reclassified from

Accumulated OCI

into Income
 
Cash Flow Hedge
(In thousands)
  
May 1,

2021
    
May 2,

2020
    
May 1,

2021
   
May 2,

2020
 
Swap contracts
   $ —        $  (58     Other Expense      $  (20 )   $  43  
    
 
 
    
 
 
            
 
 
   
 
 
 
At May 1, 2021, we expect to reclassify approximately $0.1 million of net losses on the frozen OCI balance associated with the terminated interest rate swap from accumulated other comprehensive loss to earnings during the next 12 months due to the payment of variable interest associated with the floating interest rate debt.
v3.21.1
Royalty Obligation
3 Months Ended
May 01, 2021
Royalty Obligation Disclosure [Abstract]  
Royalty Obligation
Note 10 – Royalty Obligation
In fiscal 2018, we entered into an Asset Purchase and License Agreement with Honeywell International, Inc. (“Honeywell”) to acquire an exclusive, perpetual, world-wide license to manufacture Honeywell’s narrow-format flight deck printers for two aircraft families along with certain inventory used in the manufacturing of the licensed printers. The purchase price included a guaranteed minimum royalty payment of $15.0 million, to be paid over ten years, based on gross revenues from the sales of the printers, paper and repair services of the licensed products. The royalty rates vary based on the year in which they are paid or earned, and product sold or service provided, and range from single-digit to mid double-digit percentages of gross revenue.
The guaranteed minimum royalty payment obligation was recorded at the present value of the minimum annual royalty payments using a present value factor of 2.8%, which is based on the estimated
after-tax
cost of debt for similar companies. As of May 1, 2021, we had paid an aggregate of $6.0 million of the guaranteed minimum royalty obligation. At May1, 2021, the current portion of the outstanding guaranteed minimum royalty obligation of $2.0 million is to be paid over the next twelve months and is reported as a current liability and the remainder of $5.7 million is reported as a long-term liability on our condensed consolidated balance sheet. We did not incur any excess royalty expense for the three month period ended May 1, 2021. A total of $0.2 
million in excess royalties was paid in the first quarter of the current fiscal year and there are no excess royalty payables due as a result of this agreement for the period ended May 1, 2021.
v3.21.1
Leases
3 Months Ended
May 01, 2021
Leases [Abstract]  
Leases
Note 11 – Leases
We enter into lease contracts for certain of our facilities at various locations worldwide. Our leases have remaining lease terms of 1 to 6 years, some of which include options to extend the lease term for periods of up to five years when it is reasonably certain that we will exercise such options.
Balance sheet and other information related to our leases is as follows:
 
Operating Leases
(In thousands)
  
Balance Sheet Classification
    
May 1,

2021
    
January 31,

2021
 
Lease Assets
     Right of Use Assets      $ 1,302      $  1,389  
Lease Liabilities – Current
     Other Liabilities and Accrued Expenses        366        372  
Lease Liabilities – Long Term
     Lease Liabilities        983        1,065  
Lease cost information is as follows:

         
Three Months Ended
 
Operating Leases
(In thousands)
  
Statement of Income Classification
  
May 1,
2021
    
May 2,
2020
 
Operating Lease Costs
   General and Administrative Expense    $ 136      $ 120  
Maturities of operating lease liabilities are as follows:
 
(In thousands)
  
May 1,

2021
 
2022, remaining
   $ 279  
2023
     317  
2024
     290  
2025
     182  
2026
     162  
Thereafter
     267  
    
 
 
 
Total Lease Payments
     1,497  
Less: Imputed Interest
     (148
    
 
 
 
Total Lease Liabilities
   $ 1,349  
    
 
 
 
As of May 1, 2021, the weighted-average remaining lease term and weighted-average discount rate for our operating leases are 5.0 years and 4.0%, respectively. We calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.
Supplemental cash flow information related to leases is as follows:
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
Cash paid for amounts included in the measurement of lease liabilities:
  
     
  
     
Operating cash flows for operating
leases
  
$
92
 
  
$
106
 
v3.21.1
Accumulated Other Comprehensive Loss
3 Months Ended
May 01, 2021
Equity [Abstract]  
Accumulated Other Comprehensive Loss
Note 12 – Accumulated Other Comprehensive Loss
The changes in the balance of accumulated other comprehensive loss (“AOCL”) by component are as follows:
 
(In thousands)
  
Foreign Currency

Translation

Adjustments
    
Cash

Flow

Hedges
    
Total
 
Balance at January 31, 2021
   $  (275    $  (109    $  (384
Other Comprehensive Loss before reclassification
     (81      —          (81
Amounts reclassified from AOCL to Earnings
     —          16        16  
 
  
 
 
 
  
 
 
 
  
 
 
 
Other Comprehensive Income (Loss)
     (81      16        (65
 
  
 
 
 
  
 
 
 
  
 
 
 
Balance at May 1, 2021
   $  (356)      $ (93    $ (449
    
 
 
    
 
 
    
 
 
 
The amounts presented above in other comprehensive loss are net of taxes except for translation adjustments associated with our German and Danish subsidiaries.
v3.21.1
Share-Based Compensation
3 Months Ended
May 01, 2021
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
Note 13 – Share-Based Compensation
We have one equity incentive plan from which we are authorized to grant equity awards, the AstroNova, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for, among other things, the issuance of awards, including incentive stock options, non-qualified stock options, stock appreciation rights, time-based restricted stock units (“RSUs”), or performance-based restricted stock units (“PSUs”) and restricted stock awards (“RSAs”). The 2018 Plan
a
uthorizes the issuance of up to
 950,000 shares of common stock, plus an additional number of shares equal to the number of shares subject to awards granted under previous equity incentive plans that are forfeited, cancelled, satisfied without the issuance of stock, otherwise terminated (other than by exercise), or, for shares of stock issued pursuant to any unvested award, that are reacquired by us at not more than the grantee’s purchase price (other than by exercise). Under the 2018 Plan, all awards to employees generally have a minimum vesting period of one year. Options granted under the 2018 Plan must be issued at an exercise price of not less than the fair market value of our common stock on the date of grant and expire after ten years. Under the 2018
Plan, there were 
145,534
 
unvested RSUs; 75,926 unvested PSUs; 48,000 unvested RSAs and options to purchase an aggregate of
 135,500
 
shares outstanding as of May 1, 2021. 
In addition to the 2018 Plan, we previously granted equity awards under our 2015 Equity Incentive Plan (the “2015 Plan”) and our 2007 Equity Incentive Plan (the “2007 Plan”). No new awards may be issued under either the 2007 or 2015 plans, but outstanding awards will continue to be governed by those plans. As of May 1, 2021, options to purchase an aggregate of 327,418 shares were outstanding under the 2007 Plan and 3,750
unvested RSUs and options to purchase an aggregate of 
141,375
shares
were outstanding under the 2015 Plan.
We also have a
Non-Employee
Director Annual Compensation Program (the “Program”), under which each of our
non-employee
directors automatically receives a grant of restricted stock on the date of their
re-election
to our board of directors. The number of whole shares granted is equal to the number calculated by dividing the stock component of the director compensation amount determined by the compensation committee for that year by the fair market value of our stock on that day. The value of the restricted stock award for fiscal 2022 is $60,000. Shares of restricted stock granted under the Program become vested on the first anniversary of the date of grant, conditioned upon the recipient’s continued service on our board of directors through that date.
Share-based compensation expense was recognized as follows: 
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
Stock Options
   $  105      $  133  
Restricted Stock Awards and Restricted Stock Units
     370        357  
Employee Stock Purchase Plan
     3        5  
Total
   $ 478      $ 495  
Stock Options
There were no stock options granted during the three months ended May 1, 2021 and May 2, 2020.
Aggregated information regarding stock option activity for the three months ended May 1, 2021 is summarized below:
 
 
  
Number of
Options
 
  
Weighted Average
Exercise Price
 
Outstanding at January 31, 2021
     622,083      $  14.63  
Granted
     —          —    
Exercised
     (3,775      8.84  
Forfeited
     (14,015      14.96  
Canceled
     —          —    
 
  
 
 
 
  
 
 
 
Outstanding at May 1, 2021
     604,293      $ 14.66  
    
 
 
    
 
 
 
Set forth below is a summary of options outstanding at May 1, 2021:
 
Outstanding
 
  
Exercisable
 
Range of
Exercise prices
  
Number
of
Shares
 
  
Weighted-
Average
Exercise
Price
 
  
Weighted-
Average
Remaining
Contractual Life
 
  
Number
of
Shares
 
  
Weighted-
Average
Exercise
Price
 
  
Weighted
Average
Remaining
Contractual
Life
 
$5.00-10.00
     37,244      $ 7.97        1.2        37,244      $ 7.97        1.2  
$10.01-15.00
     349,299      $  13.62        4.6        337,299      $  13.61        4.5  
$15.01-20.00
     217,750      $ 17.47        6.6        165,492      $ 17.21        6.4  
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
       604,293      $ 14.66        5.1        540,035      $ 14.32        4.9  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
As of May 1, 2021, there was approximately $0.1 million of unrecognized compensation expense related to stock options which is expected to be recognized over a weighted average period of approximately 0.7 years.
Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs)
Aggregated information regarding RSU and RSA activity for the three months ended May 1, 2021 is summarized below: 
 
 
 
  
RSAs & RSUs
 
  
Weighted Average
Grant Date Fair Value
 
Outstanding at January 31, 2020
     197,413      $ 9.96  
Granted
     124,096        14.26  
Vested
     (48,299      10.26  
Forfeited
     —          —    
 
  
 
 
 
  
 
 
 
Outstanding at May 1, 2021
     273,210      $  11.86  
    
 
 
    
 
 
 
As of May 1, 2021, there was approximately $2.5 million of unrecognized compensation expense related to RSUs and RSAs which is expected to be recognized over a weighted average period of 1.1 years.
Employee Stock Purchase Plan
We have an Employee Stock Purchase Plan allowing eligible employees to purchase shares of common stock at a 15% discount from fair value on the first or last day of an offering period, whichever is less. A total of 247,500 shares were reserved for issuance under this plan. During the three months ended May 1, 2021 and May 2, 2020, there were 1,813 and 3,755 shares, r
e
spectively, purchased under this plan.
As of May 1, 2021, 
8,561
shares remain available for purchase under our Employee Stock Purchase Plan.
v3.21.1
Income Taxes
3 Months Ended
May 01, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14 – Income Taxes
Our effective tax rates are as follows:
 
 
  
First Quarter
Ended
 
Fiscal 2022
     (62.0 )% 
Fiscal 2021
     (37.6 )% 
We determine our estimated annual effective tax rate at the end of each interim period based on full-year forecasted
pre-tax
income and facts known at that time. The estimated annual effective tax rate is applied to the
year-to-date
pre-tax
income at the end of each interim period with the cumulative effect of any changes in the estimated annual effective tax rate being recorded in the fiscal quarter in which the change is determined. The tax effect of significant unusual items is reflected in the period in which they occur.
During the three months ended May 1, 2021, we recognized an income tax benefit of approximately $227,000. The effective tax rate in this period was directly impacted by a $276,000 tax benefit related to the expiration of the statute of limitations on a previously uncertain tax position and a $37,000 tax benefit arising from windfall tax benefits related to the Company’s stock. During the three months ended May 2, 2020, we recognized an income tax benefit of approximately $118,000. The effective tax rate in this period was directly impacted by a reduction in forecasted operating results for fiscal 2021 and a $78,000 tax benefit related to the reversal of previously uncertain tax positions due to the finalization of an IRS audit.
Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial reporting purposes. As of May 1, 2021, our cumulative unrecognized tax benefits totaled $221,000 compared to $384,000 as of January 31, 2021. Besides the expiration of the statute of limitations on a previously uncertain tax position, there were no
 
other developments affecting unrecognized tax benefits during the quarter ended May 1, 2021.
v3.21.1
Segment Information
3 Months Ended
May 01, 2021
Segment Reporting [Abstract]  
Segment Information
Note 15 – Segment Information
We report two segments: Product Identification (“PI”) and Test & Measurement (“T&M”). We evaluate segment performance based on the segment profit (loss) before corporate expenses.
Summarized below are the Revenue and Segment Operating Profit (Loss) for each reporting segment:
 
 
  
Three Months Ended
 
 
  
Revenue
 
  
Segment Operating Profit
(Loss)
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
  
May 1,
2021
 
 
May 2,
2020
 
Product Identification
  
$
23,098
 
  
$
22,380
 
  
$
2,729
 
 
$
3,146
 
T&M
  
 
5,980
 
  
 
8,539
 
  
 
350
 
 
 
(156
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
Total
  
$
29,078
 
  
$
30,919
 
  
 
3,079
 
 
 
2,990
 
 
  
 
 
 
  
 
 
 
  
     
 
     
Corporate Expenses
  
     
  
 
2,344
 
 
 
2,327
 
 
  
     
  
 
 
 
 
 
 
 
Operating Income
  
     
  
 
735
 
 
 
663
 
Other Expense, Net
  
     
  
 
369
 
 
 
349
 
 
  
     
  
 
 
 
 
 
 
 
Income Before Income Taxes
  
     
  
 
366
 
 
 
314
 
Income Tax Benefit
  
     
  
 
(227
 
 
(118
 
  
     
  
 
 
 
 
 
 
 
Net Income
  
     
  
$
593
 
 
$
432
 
 
  
     
  
 
 
 
 
 
 
 
 
v3.21.1
Fair Value
3 Months Ended
May 01, 2021
Fair Value Disclosures [Abstract]  
Fair Value
Note 16 – Fair Value
Assets and Liabilities Not Recorded at Fair Value
Our long-term debt, including the current portion of long-term debt not reflected in the financial statements at fair value, is reflected in the table below:
 
    
May 1, 2021
 
    
Fair Value Measurement
        
(In thousands)
  
Level 1
    
Level 2
    
Level 3
    
Total
      
Carrying
Value
 
 
Long-Term debt and related current maturities
   $  —        $  —        $  9,821      $  9,821      $ 9,813  
    
January 31, 2021
 
    
Fair Value Measurement
        
(In thousands)
  
Level 1
    
Level 2
    
Level 3
    
Total
      
Carrying
Value
 
 
Long-Term debt and related current maturities
   $  —      $  —      $ 12,586      $ 12,586      $ 12,576  
The above table does not include the PPP loan, as the fair value of the PPP loan approximates its carrying value.
The fair value of our long-term debt, including the current portion, is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings and is classified as Level 3.
v3.21.1
Summary of Significant Accounting Policies Update (Policies)
3 Months Ended
May 01, 2021
Accounting Policies [Abstract]  
Income Taxes
Income Taxes
In December 2019, the FASB issued an ASU
2019-12,
“Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU
2019-12
is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We adopted ASU
2019-12
for the period beginning February 1, 2021. The adoption of this guidance did not have a material impact on our consolidated financial statements and accompanying disclosures.
No other new accounting pronouncements, issued or effective during the three months of the current year, have had or are expected to have a material impact on our consolidated financial statements.
v3.21.1
Revenue Recognition (Tables)
3 Months Ended
May 01, 2021
Revenue from Contract with Customer [Abstract]  
Summary of Revenues Disaggregated by Primary Geographic Markets and Major Product Type
Primary geographical markets:
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
United States
   $
 
 16,693      $
 
 19,789
 
Europe
     8,599        7,450  
Canada
     1,546        1,428  
Asia
     1,085        1,009  
Central and South America
     760        954  
Other
     395        289  
Total Revenue
   $ 29,078      $ 30,919  
Major product types:
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
Hardware
   $ 7,647      $ 8,914  
Supplies
     18,211        19,118  
Service and Other
     3,220        2,887  
Total Revenue
   $ 29,078      $ 30,919  
v3.21.1
Net Income Per Common Share (Tables)
3 Months Ended
May 01, 2021
Earnings Per Share [Abstract]  
Summary of Basic and Diluted Net Income Per Share A reconciliation of the shares used in calculating basic and diluted net income per share is as follows:
 
 
  
Three Months Ended
 
 
  
May 1,
2021
 
  
May 2,
2020
 
 
  
 
 
 
  
 
 
 
Weighted Average Common Shares Outstanding – Basic
     7,144,697        7,073,278  
Effect of Dilutive Options, Restricted Stock Awards and Restricted Stock Units
     120,632        31,365  
Weighted Average Common Shares Outstanding – Diluted
     7,265,329        7,104,643  
v3.21.1
Intangible Assets (Tables)
3 Months Ended
May 01, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Fair Value of Acquired Identifiable Intangible Assets and Related Estimated Useful Lives
Intangible assets are as follows:
 
    
May 1, 2021
    
January 31, 2021
 
(In thousands)
  
Gross

Carrying

Amount
    
Accumulated

Amortization
   
Currency

Translation

Adjustment
    
Net

Carrying

Amount
    
Gross

Carrying

Amount
    
Accumulated

Amortization
   
Currency

Translation

Adjustment
    
Net

Carrying

Amount
 
Miltope:
                                                                     
Customer Contract Relationships
   $ 3,100      $  (2,342   $  —        $ 758      $ 3,100      $  (2,284)     $  —        $ 816  
RITEC:
                                                                     
Customer Contract Relationships
     2,830        (1,507     —          1,323        2,830        (1,423     —          1,407  
TrojanLabel:
                                                                     
Existing Technology
     2,327        (1,497     186        1,016        2,327        (1,405     196        1,118  
Distributor Relations
     937        (422     84        599        937        (396     89        630  
Honeywell:
                                                                     
Customer Contract Relationships
     27,243        (10,443     —          16,800        27,243        (9,712     —          17,531  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
Intangible Assets, net
   $
 
 
 
36,437
     $
 
 (16,211
  $  270      $  20,496      $  34,437      $  (15,220   $  285      $
 
 21,502  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
Summary of Estimated Amortization Expense
Estimated amortization expense for the next five fiscal years is as follows:
(In thousands)
  
Remaining
2022
 
  
2023
 
  
2024
 
  
2025
 
  
2026
 
Estimated amortization expense
   $ 2,968      $ 3,976      $ 4,075      $ 3,420      $ 3,026  
v3.21.1
Inventories (Tables)
3 Months Ended
May 01, 2021
Inventory Disclosure [Abstract]  
Components of Inventories The components of inventories are as follows:
(In thousands)
  
May 1, 2021
    
January 31, 2021
 
Materials and Supplies
   $  19,553      $  20,265  
Work-In-Process
     1,989        2,076  
Finished Goods
     16,641        16,371  
    
 
 
    
 
 
 
       38,183        38,712  
Inventory Reserve
     (8,709      (8,652
    
 
 
    
 
 
 
     $ 29,474      $ 30,060  
    
 
 
    
 
 
 
v3.21.1
Credit Agreement and Debt (Tables)
3 Months Ended
May 01, 2021
Debt Disclosure [Abstract]  
Schedule of Long Term Debt in the Accompanying Condensed Consolidated Balance Sheets
Long-term debt in the accompanying condensed consolidated balance sheets is as follows:
 
(In thousands)
  
May 1, 2021
    
January 31, 2021
 
USD Term Loan (2.60% as of May 1, 2021); maturity date of September 30, 2025
   $  9,813      $ —    
USD Term Loan (4.65% as of January 31, 2021) maturity date of June 15, 2022
     —          12,576  
    
 
 
    
 
 
 
     $ 9,813      $  12,576  
Debt Issuance Costs, net of accumulated amortization
     (116      (141
Current Portion of Term Loans
     (813      (5,326
    
 
 
    
 
 
 
Long-Term Debt
   $ 8,884      $ 7,109  
    
 
 
    
 
 
 
Schedule of Required Principal Payments Remaining on Long Term Debt Outstanding
The schedule of required principal payments remaining during the next five years on long-term debt outstanding as of May 1, 2021 is as follows:
 
(In thousands)
      
Fiscal 2022, remainder
   $ 563  
Fiscal 2023
     1,000  
Fiscal 2024
     1,000  
Fiscal 2025
     1,250  
Fiscal 2026
     6,000  
    
 
 
 
     $ 9,813  
    
 
 
 
 
v3.21.1
Derivative Financial Instruments and Risk Management (Tables)
3 Months Ended
May 01, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Impact of the Derivative Instruments in the Condensed Consolidated Financial Statements
The following table presents the impact of our derivative instruments in our condensed consolidated financial statements for the three months ended May 1, 2021 and May 2, 2020:
 
    
Three Months Ended
 
    
Amount of Gain (Loss)

Recognized in OCI

on Derivative
   
Location of

Gain (Loss)

Reclassified

from Accumulated

OCI into

Income
    
Amount of Gain (Loss)

Reclassified from

Accumulated OCI

into Income
 
Cash Flow Hedge
(In thousands)
  
May 1,

2021
    
May 2,

2020
    
May 1,

2021
   
May 2,

2020
 
Swap contracts
   $ —        $  (58     Other Expense      $  (20 )   $  43  
    
 
 
    
 
 
            
 
 
   
 
 
 
v3.21.1
Leases (Tables)
3 Months Ended
May 01, 2021
Leases [Abstract]  
Schedule Of Balance Sheet And Other Information Related To Operating Leases
Balance sheet and other information related to our leases is as follows:
 
Operating Leases
(In thousands)
  
Balance Sheet Classification
    
May 1,

2021
    
January 31,

2021
 
Lease Assets
     Right of Use Assets      $ 1,302      $  1,389  
Lease Liabilities – Current
     Other Liabilities and Accrued Expenses        366        372  
Lease Liabilities – Long Term
     Lease Liabilities        983        1,065  
Schedule Lease Cost Information
Lease cost information is as follows:

         
Three Months Ended
 
Operating Leases
(In thousands)
  
Statement of Income Classification
  
May 1,
2021
    
May 2,
2020
 
Operating Lease Costs
   General and Administrative Expense    $ 136      $ 120  
Schedule of Maturities Of Lease Liabilities
Maturities of operating lease liabilities are as follows:
 
(In thousands)
  
May 1,

2021
 
2022, remaining
   $ 279  
2023
     317  
2024
     290  
2025
     182  
2026
     162  
Thereafter
     267  
    
 
 
 
Total Lease Payments
     1,497  
Less: Imputed Interest
     (148
    
 
 
 
Total Lease Liabilities
   $ 1,349  
    
 
 
 
Supplemental Cash Flow Information Related To Leases
Supplemental cash flow information related to leases is as follows:
 
 
  
Three Months Ended
 
(In thousands)
  
May 1,
2021
 
  
May 2,
2020
 
Cash paid for amounts included in the measurement of lease liabilities:
  
     
  
     
Operating cash flows for operating
leases
  
$
92
 
  
$
106
 
v3.21.1
Accumulated Other Comprehensive Loss (Tables)
3 Months Ended
May 01, 2021
Equity [Abstract]  
Changes in Balance of Accumulated Other Comprehensive Loss
The changes in the balance of accumulated other comprehensive loss (“AOCL”) by component are as follows:
 
(In thousands)
  
Foreign Currency

Translation

Adjustments
    
Cash

Flow

Hedges
    
Total
 
Balance at January 31, 2021
   $  (275    $  (109    $  (384
Other Comprehensive Loss before reclassification
     (81      —          (81
Amounts reclassified from AOCL to Earnings
     —          16        16  
 
  
 
 
 
  
 
 
 
  
 
 
 
Other Comprehensive Income (Loss)
     (81      16    &#