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Acquisitions | 12 Months Ended
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Jan. 31, 2025
Business Combinations [Abstract] |
Acquisitions | Note 2—Acquisitions Fiscal 2025 MTEX Background On May 4, 2024, AstroNova, along with its wholly-owned Portuguese subsidiary, AstroNova Portugal, Unipessoal, Lda (the “Purchaser”) entered into a Share Purchase Agreement (the “Purchase Agreement”) with Effort Premier Solutions Lda., a private limited company incorporated under the laws of Portugal (the “Seller”) and Elói Serafim Alves Ferreira, as a guarantor (the “Guarantor”). In accordance with the terms and subject to the conditions set forth in the Purchase Agreement, the Purchaser acquired from the Seller, 100% of the issued and outstanding share capital of MTEX New Solution, S.A., a joint stock company with limited liability incorporated under the laws of Portugal (“MTEX”). The closing date for the acquisition was May 6, 2024. This transaction is a business combination and accounted for using the acquisition method as prescribed by ASC 805. The purchase price for this acquisition consisted of EUR 17,268,345 (approximately $18.7 million) paid by the Purchaser to the Seller on the closing date, and up to an additional EUR 731,655 (approximately $0.8 million) retained by the Purchaser to secure certain indemnification obligations of the Seller to be released by the Purchaser subject to resolution of such obligations. The Seller may be entitled to additional contingent consideration if specified revenue targets are achieved by MTEX as set forth in the Purchase Agreement for the three calendar year periods ending after the closing date. The contingent consideration consists of potential earn-out payments to the seller of EUR 1.0 million (approximately $1.1 million) if the specified revenue target is achieved in the full fiscal year of 2025, an additional EUR 1.5 million (approximately $1.6 million) if the specified revenue target is achieved in full fiscal year 2026, and an additional EUR 1.5 million (approximately $1.6 million) if the specified earnings targets are achieved in full fiscal year 2027, with a maximum of EUR 4.0 million (approximately $4.4 million) if all of the specified earnings targets are achieved over the three-year period. Also on May 4, 2024, the Purchaser, the Seller, the Guarantor and MTEX entered into a Transitional Management Agreement (the “Transitional Management Agreement”) pursuant to which the Guarantor will serve as MTEX’s Chief Executive Officer for a term of three years following the closing date. Under the terms of the Transitional Management Agreement, the Guarantor will receive a salary and grant of restricted stock units and will be entitled to participate in our incentive compensation programs on the same terms as our executive officers. The Transitional Management Agreement includes customary non-competition and confidentiality provisions. Following fiscal 2025, the Guarantor ceased to be employed by MTEX. Upon the closing of the transaction, MTEX became a wholly owned indirect subsidiary of AstroNova, Inc. Purchase Price Allocation A summary of the estimate of the fair value of the consideration transferred as of the acquisition closing date is presented in the table below:
(In thousands) |  | Preliminary Estimate |  |  | Measurement Period Adjustment |  |  | Revised Estimate |
Cash Paid at Closing |  | $ | 18,732 |  |  | $ | (1 | ) |  | $ | 18,731 |
Holdback Amount |  |  | 742 |  |  |  | — |  |  |  | 742 |
Fair Value of the Earnout |  |  | 1,619 |  |  |  | (1,619 | ) |  |  | — |
Total Purchase Price |  | $ | 21,093 |  |  | $ | (1,620 | ) |  | $ | 19,473 |
The approach to valuing the initial contingent consideration relating to the earn-out requires the use of unobservable factors such as projected revenues over the term of the earn-out periods, discounted for the period over which the initial contingent consideration is measured, and relevant volatility rates. Based upon these assumptions, the earn-out contingent consideration was valued using an option pricing model, which resulted in the estimated fair value being reduced to zero as of the acquisition closing date. The following table sets forth the preliminary purchase price allocation of the MTEX acquisition for the estimated fair value of the net assets acquired and liabilities assumed as of May 6, 2024:
(In thousands) |  | Preliminary Estimate |  |  | Measurement Period Adjustment |  |  | Revised Estimate |
Cash |  | $ | 364 |  |  | $ | — |  |  | $ | 364 |
Accounts Receivable |  |  | 3,989 |  |  |  | (2,748 | ) |  |  | 1,241 |
Inventory |  |  | 3,807 |  |  |  | (200 | ) |  |  | 3,607 |
Prepaid Expenses and Other Current Assets |  |  | 301 |  |  |  | — |  |  |  | 301 |
Property, Plant and Equipment |  |  | 4,802 |  |  |  | — |  |  |  | 4,802 |
Other Long-Term Assets |  |  | 5,154 |  |  |  | 1,054 |  |  |  | 6,208 |
Identifiable Intangible Assets |  |  | 9,556 |  |  |  | (2,017 | ) |  |  | 7,539 |
Goodwill |  |  | 10,629 |  |  |  | 3,621 |  |  |  | 14,250 |
Accounts Payable and Other Current Liabilities |  |  | (4,225 | ) |  |  | (1,870 | ) |  |  | (6,095 | )
Debt Assumed |  |  | (7,918 | ) |  |  | — |  |  |  | (7,918 | )
Other Long-Term Liabilities |  |  | (5,366 | ) |  |  | 540 |  |  |  | (4,826 | )
Total Purchase Price |  | $ | 21,093 |  |  | $ | (1,620 | ) |  | $ | 19,473 |
Although we have made a number of adjustments to the opening balance sheet through January 31, 2025, as we continue to finalize our due diligence and accounting for this acquisition, the amounts above remain provisional and are based on information that is currently available. Management believes the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but is waiting to complete their financial due diligence necessary to finalize those fair values. Therefore, the provisional measurements of fair values reflected continue to be subject to changes that could be significant. Management anticipates there will be changes to the purchase price allocation as further information is collected and analyzed and pending the final completion of certain appraisals and valuation report. We expect to complete the final fair value determination of the assets acquired and liabilities assumed, resolutions of working capital, and any other purchase price adjustments identified as soon as practicable within the measurement period and, in any event, not later than one year from the acquisition closing date. The following table reflects the preliminary fair value of the acquired identifiable intangible assets and related estimated useful lives:
(In thousands) |  | Preliminary Fair Value |  |  | Measurement Period Adjustment |  |  | Revised Estimate |  |  | Useful Life (years) |
Customer Relations |  | $ | 8,786 |  |  | $ | (6,183 | ) |  | $ | 2,603 |  |  |  | 10 |
Internally Developed Technology |  |  | 488 |  |  |  | 4,231 |  |  |  | 4,719 |  |  |  | 6 |
Trademarks/Tradenames |  |  | 282 |  |  |  | (65 | ) |  |  | 217 |  |  |  | 3 |
Total |  | $ | 9,556 |  |  | $ | (2,017 | ) |  | $ | 7,539 |  |  |  |
The customer relations intangible asset represents relationships that will be maintained with certain historical customers of MTEX. The trademark/tradename intangible assets reflect the industry reputation of the MTEX name, and the registered trademarks held by MTEX for the use of several marks and logos. The internally developed technology intangible asset represents software used to collect a wide range of data on each piece of equipment and the ability to monitor customer ink usage and troubleshoot issues with customers. The fair value of the customer relations intangible asset acquired was estimated by applying the income approach using the Multi-Period Excess Earning Method. This fair value measurement is based on significant inputs that are not observable in the market and therefore represents a Level 3 measurement as defined in ASC 820, “Fair Value Measurement”. The fair value determined under this approach is a function of (i) future revenues expected to be generated by these assets and the profitability of the assets, (ii) identification of the contribution of other tangible and intangible assets to the cash flows generated by these asset to apply an appropriate capital charge against the cash flow, and (iii) a discount rate of 15.5% used to calculate the present value of the stream of anticipated cash flows. The fair value of the trademark intangible asset acquired was estimated by applying the income approach using the “relief-from-royalty” method. The value under the relief-from-royalty method is a function of (i) the concluded royalty rate of 0.75%, (ii) projected revenues generated by product sales under the asset being valued, and (iii) a discount rate of 15.5%. The fair value of the internally developed technology intangible asset acquired was estimated by applying the cost approach, which takes into consideration the internal development costs of the technology and a hypothetical developer’s profit margin to build the software, the opportunity costs the buyer avoids by not having to reproduce this asset and any duplicative or unproductive efforts, as well as functional obsolescence of the technology. Purchased goodwill of $14.3 million, which is not deductible for tax purposes, represented the excess of the purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired and liabilities assumed from MTEX. The goodwill recognized under ASC 805 was attributable to the expected earnings potential of the business, synergies which are expected to enhance and expand our overall product portfolio, opportunities in new and existing markets, and MTEX's assembled workforce. The carrying amount of the goodwill was allocated to the PI segment. During the fourth quarter of the current year, based on the results our quantitative test of goodwill in the PI segment, a goodwill impairment of $13.4 million was recognized. Refer to Note 4, “Intangible Assets and Goodwill” for further details. We incurred $1.2 million of acquisition-related costs for this transaction which are included in general and administrative expenses in our consolidated statements of income (loss) for year ended January 31, 2025. The operating results and earnings before taxes attributable to MTEX included in our consolidated statements of income (loss) for the year ended January 31, 2025 were as follows:
(In thousands) |  | 2025 |
Revenue |  | $ | 4,163 |
Gross Profit |  |  | 511 |
Operating Expenses: |  |  |
Selling Expenses |  |  | 2,485 |
Research and Development Expenses |  |  | 309 |
General and Administrative Expenses |  |  | 1,194 |
Goodwill Impairment |  |  | 13,403 |
Total Operating Expenses |  | $ | 17,391 |
Operating Income (Loss) |  |  | (16,880 | )
Other Income (Expenses) |  |  | (862 | )
Earnings (Loss) before Taxes |  | $ | (17,742 | )
MTEX results are reported as part of the PI segment. Pro forma results as if the acquisition was closed on February 1, 2024 are not provided, as such amounts were impractical to determine. Fiscal 2023 Astro Machine On August 4, 2022, we acquired Astro Machine LLC (“Astro Machine”), an Illinois-based manufacturer of printing equipment, including label printers, tabbers, conveyors, and envelope feeders, for aggregate consideration of $17.1 million. The purchase included 100% of the issued and outstanding equity interests of Astro Machine for a purchase price of $15.6 million and certain real estate assets comprised of a 34,460 square foot industrial manufacturing and office building on 1.26 acres of land, which is Astro Machine’s principal place of business for a purchase price of $1.5 million. Upon the closing of the transaction, Astro Machine became a wholly owned subsidiary of AstroNova, Inc. This transaction is a business combination and was accounted for using the acquisition method of accounting prescribed by ASC 805, “Business Combinations.” The following table sets forth the final purchase price allocation of the Astro Machine acquisition for the estimated fair value of the net asset acquired and liabilities assumed as of the date of acquisition:
(In thousands) |  |  |
Cash |  | $ | 91 |
Accounts Receivable |  |  | 3,393 |
Inventory |  |  | 5,715 |
Property, Plant and Equipment |  |  | 4,200 |
Identifiable Intangible Assets |  |  | 3,480 |
Goodwill |  |  | 2,730 |
Accounts Payable and Other Current Liabilities |  |  | (2,484 | )
Total Purchase Price |  | $ | 17,125 |
The fair value of the intangible assets acquired was estimated by applying the income approach. This fair value measurement is based on significant inputs that are not observable in the market and therefore represent a Level 3 measurement as defined in ASC 820, “Fair Value Measurement.” Key assumptions in estimating the fair value of the intangibles include (1) remaining useful life of the tradename/trademarks and customer relations (2) the royalty rate of 0.75%, (3) customer attrition rate of 18.0%, (4) discount rate of 19.0% and (5) a range of revenue and net income projections for the fiscal years 2023 through 2026. The following table sets forth the fair value of the acquired identifiable intangible assets and related estimated useful lives:
(In thousands) |  | Fair Value |  |  | Useful Life (years) |
Customer Relations |  | $ | 3,060 |  |  |  | 5 |
Trademarks/Tradenames |  |  | 420 |  |  |  | 5 |
Total |  | $ | 3,480 |  |  |  |
The Customer Relations intangible asset represents the relationships that will be maintained with certain historical customers of Astro Machine. The trademark/tradename intangible assets reflect the industry reputation of the Astro Machine name recognition and the registered trademarks for the use of several marks and logos held by Astro Machine. Goodwill of $2.7 million, which is not deductible for tax purposes, represents the excess of the purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired and liabilities assumed from Astro Machine and is attributable to synergies which are expected to enhance and expand our overall product portfolio, opportunities in new and existing markets, future technologies that have yet to be determined and Astro Machine’s assembled work force. The carrying amount of the goodwill was allocated to the PI segment. Total acquisition-related costs for Astro Machine of $0.7 million are included in general and administrative expenses in our consolidated statement of income for the year ended January 31, 2023. The amounts of revenue and earnings before taxes attributable to Astro Machine and included in our consolidated statement of income were as follows:
(In thousands) | 2025 |  |  | 2024 |  |  | 2023 |
Revenue | $ | 18,497 |  |  | $ | 18,147 |  |  | $ | 12,515 |
Earnings before Taxes | $ | 1,476 |  |  | $ | 2,616 |  |  | $ | 1,571 |
Astro Machine results are reported as part of the PI segment. Proforma results are not provided, as disclosure of such amounts was impractical to determine as the acquired business had insufficient financial records and no audit history prior to the transaction.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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