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Acquisition | 9 Months Ended
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Oct. 31, 2025
Business Combination [Abstract] |
Acquisition | Note 3 – Acquisition 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 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. The closing date for the acquisition was May 6, 2024. This transaction was a business combination and accounted for using the acquisition method as prescribed by ASC 805, “Business Combinations.” 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. Purchase Price Allocation A summary 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 |  |  | Final |
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 |
In accordance with the terms of the Purchase Agreement, the Seller may have been entitled to additional contingent consideration of potential earn-out payments if specified revenue targets were achieved by MTEX for the three calendar year periods ending after the closing date. 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. Since the initial preliminary estimates, we have adjusted certain amounts for the fair value of the assets acquired and liabilities assumed as a result of obtaining additional information that allowed us to determine the final purchase price allocation. Measurement period adjustments were recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date. As of the end of the first quarter of fiscal 2026, we completed our final fair value determination of the assets acquired and liabilities assumed. The following table sets forth the final 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 |  |  | Adjustment* |  |  | Final |
Cash |  | $ | 364 |  |  | $ | — |  |  | $ | — |  |  | $ | 364 |
Accounts Receivable |  |  | 3,989 |  |  |  | (2,777 | ) |  |  | — |  |  |  | 1,212 |
Inventory |  |  | 3,807 |  |  |  | (200 | ) |  |  | — |  |  |  | 3,607 |
Prepaid Expenses and Other Current Assets |  |  | 301 |  |  |  | — |  |  |  | — |  |  |  | 301 |
Property, Plant and Equipment |  |  | 4,802 |  |  |  | — |  |  |  | (1,928 | ) |  |  | 2,874 |
Other Long-Term Assets |  |  | 5,154 |  |  |  | 1,054 |  |  |  | — |  |  |  | 6,208 |
Identifiable Intangible Assets |  |  | 9,556 |  |  |  | (2,017 | ) |  |  | — |  |  |  | 7,539 |
Goodwill |  |  | 10,629 |  |  |  | 3,650 |  |  |  | 1,928 |  |  |  | 16,207 |
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 |
*During the third quarter of fiscal 2026, we identified an error related to the MT EX acquisition. In September 2025 we determined that Euro 1.8 million (approximately $1.9 million as of the opening balance sheet date of May 6, 2024) in assets recorded at acquisition were either non-existent or obsolete at the acquisition date. Accordingly, the net book value of these assets was written off in the third quarter of fiscal 2026, with a corresponding increase to goodwill acquired in the acquisition. This error correction had no impact on net assets in the MTEX opening balance sheet and the correction is reflected in this table. Refer to Note 1, “Business and Basis of Presentation” under the section “Correction of Immaterial Error in Prior Period Financial Statements” for additional details. The following table reflects the preliminary fair value of the acquired identifiable intangible assets and related estimated useful lives:
(In thousands) |  | Fair Value |  |  | Measurement Period Adjustment |  |  | Final |  |  | 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 the 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. The purchased goodwill of $16.2 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 MTEX. The goodwill recognized under ASC 805 was attributable to the expected earnings potential of the business synergies which were 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 Product ID segment. In the fourth quarter of fiscal 2025, we recognized a $13.4 million impairment charge related to the MTEX goodwill. The valuation model was updated as of January 31, 2025 to incorporate the impact of the write-off of PP&E identified in the third quarter of the current year and resulted in the recognition of an additional $0.3 million impairment charge in the third quarter of the current year. Refer to Note 1, “Business and Basis of Presentation” under the section “Correction of Immaterial Error in Prior Period Financial Statements” for additional details. During the first nine months of the current year, we incurred an additional $0.3 million of acquisition-related costs which were included in general and administrative expenses in our condensed consolidated statements of income for the nine months ended October 31, 2025. Total acquisition-related costs through October 31, 2025 were $1.5 million, including $1.2 million recognized in fiscal 2025. The amounts of revenue and earnings before taxes attributable to MTEX and included in our consolidated statements of income (loss) for the three and nine months ended October 31, 2025 and November 2, 2024 were as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 31, 2025 |  |  | November 2, 2024 |  |  | October 31, 2025 |  |  | November 2, 2024 |
Revenue |  | $ | 1,328 |  | (1) | $ | 1,738 |  |  | $ | 3,442 |  | (2) | $ | 2,506 |
Gross Profit (Loss) |  |  | (102 | ) |  |  | 234 |  |  |  | (506 | ) |  |  | 166 |
Operating Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Selling Expenses |  |  | 634 |  |  |  | 840 |  |  |  | 2,093 |  |  |  | 1,755 |
Research and Development Expenses |  |  | 354 |  |  |  | 209 |  |  |  | 872 |  |  |  | 111 |
General and Administrative Expenses |  |  | 299 |  |  |  | 272 |  |  |  | 716 |  |  |  | 783 |
Total Operating Expenses |  | $ | 1,287 |  |  | $ | 1,321 |  |  | $ | 3,681 |  |  | $ | 2,649 |
Operating Loss |  |  | (1,389 | ) |  |  | (1,087 | ) |  |  | (4,187 | ) |  |  | (2,483 | )
Other Income (Expense) |  |  | 1,170 |  |  |  | (193 | ) |  |  | 2,864 |  |  |  | (261 | )
Earnings (Loss) before Taxes |  | $ | (219 | ) |  | $ | (1,280 | ) |  | $ | (1,323 | ) |  | $ | (2,744 | )
(1) Includes $785,000 of MTEX revenue related to sales to third parties via intercompany sales at cost plus mark-up. (2) Includes $1,663,000 of MTEX revenue related to sales to third parties via intercompany sales at cost plus mark-up. MTEX no longer operates as an independent business, but rather our manufacturing operation in Portugal is treated as a cost center. The majority of MTEX sales are through intercompany operations. MTEX financial results are reported as part of the Product ID segment. Pro forma results as if the acquisition was closed on February 1, 2024 are not provided, as such amounts were difficult to determine and disclosure of such amounts was impractical.

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