AstroNova, Inc.

Good day and welcome to the AstroNova, Inc. fourth quarter and year-end fiscal 2020 financial results conference call. Today's conference is being recorded. At this time, I would now like to turn the call over to Mr. David Kalustyan. Please go ahead, sir.

Thank you, Carrie. Good morning, everyone, and thank you for joining us. Hosting this morning's call are Greg Woods, AstroNova's president and CEO, and David Smith, the company's chief financial officer. Greg will discuss the company's operating results, David will take you through the financials, Greg will make some concluding comments, and then management will be happy to take your questions. By now, you should have received a copy of the earnings release that was issued today. If you do not have a copy, please go to the investor section of the AstroNova website, www.astronovainc.com. Please note that statements made during today's call that are not statements of historical fact are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1934. These forward-looking statements are based on a number of assumptions that could involve risks and uncertainty. Accordingly, actual results could differ materially except as required by law. Any forward-looking statements speak only as of today, March 12, 2020. The company undertakes no obligation to update these forward-looking statements. For further information regarding the forward-looking statements and the factors that may cause differences, please see the risk factors in Astranova's annual report on Form 10-K and the other filings the company makes with the Securities and Exchange Commission. I'll now turn the call over to Greg.

Thank you, David. Good morning, everyone, and thank you for joining us today. During the fourth quarter, the 737 MAX grounding situation worsened as Boeing announced a complete production halt in December. This, combined with the product identification softness in Asia, continued to affect our revenue and margins to a greater extent than we had expected entering the quarter. As a result of the revenue shortfall, and particularly the impact of the uncertainty outlook of the 737 MAX, we have taken several actions to bring our costs more in line with near-term demand. I'll talk more about that in just a moment. But first, on the positive side, we were pleased to see the continued acceleration in bookings from our product identification segment this quarter. This led the way for our overall bookings to post double-digit quarter-over-quarter growth for the second quarter in a row. The favorable response to our product identification products at several trade shows in the fall was a key contributor to this bookings momentum, and we expect that momentum to continue firing further short-term impacts on demand in the wake of the COVID-19 virus situation. In addition to these positive demand trends, the secular trend towards digital label printing and the market growth for on-site color label printing position us well for long-term growth and profitability. Similarly, Our view is that the long-term trend for the global commercial aircraft market remains very strong despite the short-term MAX issues and the potential COVID-19 short-term impacts on air travel. As we streamline our operations and continue our focus on improving operational efficiencies throughout the company, we also continue to invest in new technologies and strengthen our global talent to achieve our long-term strategic objectives. We see significant growth opportunities in the future for both segments of our business. In the short term, our lower sales volume necessitated that we take action to improve the profitability of the business. As a result, we implemented a 5% headcount reduction and other cost reduction initiatives that we expect to save in the range of $1.5 to $2 million on an annualized basis. I'd like to emphasize that these cost reductions do not affect our investments in our key strategic initiatives. We continue to focus on those strategic initiatives that we believe will drive growth and profitability for AstraNova and generate value for our shareholders. Taking a closer look at our segments, as I mentioned, test and measurement continues to be impacted by the grounding of the 737 MAX. This has affected us both in terms of new installs as well as deferrals on optional maintenance and retrofit printer upgrades to aircraft. that are needed to fill the void until a 737 MAX returns to service. While Boeing is sticking to its prediction of a midyear return to service, we do not have clear visibility into the actual timing of the return to service, nor the post-ramp-up schedule. We therefore expect this will likely be a continued significant drag on results throughout the current fiscal year. On our past few calls, I've discussed the delay Thank you for joining us. be prepared to capitalize on these trends when the market returns. AstraNova's latest Tupperware products in particular offer the highest level of performance and functionality in the cockpit printer market. In our product identification segment, sales continue to be affected by the softness in Asia as a result of weaker demand from a few customers in that region. During the quarter, we completed the transition of our sales organization from a regional structure to an integrated global management organization with dedicated leaders for global hardware, global supplies, and global service. We now have greatly improved ability to provide a more effective and rapid response to our customers across the globe. Our products in this segment are performing quite well, and this has been a big help in driving improved bookings. Our new Trojan label T3 OPX is off to a great start with strong initial demand and very positive feedback. In fact, We sold out of our initial production run in January. The OPX is a next-generation overprinting system that features highly durable ink and allows customers to digitally print high-resolution color images directly on a broad range of products, including cardboard, boxes, postcards, paper bags, fabric bags, or even wooden planks. I encourage you to visit our website to view the video demonstration of this new breakthrough technology and its applications, taking us beyond the labeling market and into a direct packaging product identification space. Other new products such as the Quick Label QL300, QL120X, Trojan Label T2C and the T5 continue to gain traction in the marketplace. At the end of the fourth quarter, we announced the launch of Get Labels, a new product identification brand that provides blank label and thermal transfer ribbons for resellers and brand owners. Through Get Labels, We have developed hundreds of unique label materials engineered to cover the aesthetics, functionality, and durability requirements of a broad range of applications. This enables customers to produce their own labels and tags in-house to their specifications with just-in-time flexibility. Launching GetLabels as a standalone brand gives us a platform to feature all of the labeling options available to our customers. Before I turn the call over to David to review our financial results, I'd like to provide an update on our global IT upgrade program. We are on track with the hardware upgrade phase of this, and we expect to complete the company-wide updating of endpoint hardware, software and telephony, and related hardware products near the end of this quarter. We're also making good progress on our ERP conversion to cloud-based NetSuite software, and expect this to be completed domestically in the middle of the current fiscal year. We're excited by the potential of these initiatives, which we expect will result in a globally unified, state-of-the-art IT infrastructure designed to significantly improve our competitiveness, reaction time, and productivity in the fiscal year of 2021 and beyond. Now, let me turn the call over to David for his financial review.