AstroNova, Inc.

Good day and welcome to AstroNova's second quarter fiscal 2022 financial results conference call. Today's conference is being recorded. I would now like to turn the conference over to David Calustian of the company's investor relations firm, Sharon Rail Associates. Please go ahead, sir.

Thank you, Keith. Good morning, everyone, and thanks 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 comment on the financials. Greg will make 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 investors page 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 uncertainties. Accordingly, actual results could differ materially except as required by law. Any forward-looking statements speak only as of today, September 14, 2021. 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 Astronova's annual report on Form 10-K and the other filings the company makes with the Securities and Exchange Commission. On today's call... Management will be referring to non-GAAP financial measures, including non-GAAP net income, non-GAAP net income for diluted share, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP segment operating income, earnings before interest, taxes, depreciation, and amortization, or EBITDA, EBITDA excluding the CARES Act benefits, and adjusted EBITDA and adjusted EBITDA excluding the CARES Act benefits. Astronova believes that the inclusion of these measures helps investors gain a meaningful understanding of the chart changes in the company's core operating results and also can help investors who wish to make comparisons between Astronova and other companies on both a GAAP and non-GAAP basis. A reconciliation of this non-GAAP measure to its most directly comparable GAAP measures is available in today's earnings release. And with that, I'll turn the call over to Greg.

Thank you, David. Good morning, everyone, and thank you for joining us. We reported year-over-year and sequential revenue growth in the second quarter in both the test and measurement and credit identification segments as we capitalized on a positive demand picture across the business. Overall revenue of $29.8 million was up 8% from a year-ago quarter and up 3% from the sequential first quarter of this fiscal year. Our sales performance is even more impressive when you consider the various global supply chain constraints and COVID-19 headwinds. While supply chain issues did not have a major effect on our second quarter, we were nonetheless unable to fulfill all the demand we would have liked to have shipped. Addressing these supply chain issues has our logistics teams working overtime to ensure that we get the required items needed into our manufacturing facilities in a timely and efficient manner. Since we expect these conditions to persist on and off throughout the year, we are increasing certain inventory levels as a precaution I'm proud of the dedication and commitment of our team to operate as effectively as possible within this dynamic environment to get our product to our customers. Turning to our Q2 performance by segment, product identification revenue was up 9% to $23.1 million with solid contributions across the product line. We saw sales increases in the hardware, supplies, and service categories. Our T3 OPX wide format durable direct to package printing system continues to receive positive customer reviews and is performing well in markets around the world. Brand owners, commercial printers, and other customers are seeing the product's benefits in terms of greater efficiency and a high return on investment. From a geographic standpoint, we saw continued improvements in several markets from the realignment programs and additions that we have made to our global sales force in various regions. During the second quarter, we began to attend smaller regional trade shows again. And our sales teams have also begun meeting customers face-to-face when possible. We're thrilled to be attending in person two major trade shows later this month. Hack Expo in Las Vegas and the Fox Talk European Packaging Show in Germany. As we're able to increase our face-to-face meetings with customers and attend more trade shows, these high-quality interactions are an excellent addition to our expanded digital marketing lead generation programs that we deployed last year. As you've discussed on prior calls, we've made major improvements in the digital area since the beginning of the pandemic. We continue to invest in expanding our e-books, case studies, support videos, and other digital tools to enhance both our sales and customer support activities. Our product introduction plans in this segment have historically included one or more new products per year, and we're currently on track to meet that schedule. Looking at our test and measurement segment, second quarter revenue was up 5% from the same period in fiscal 2021 and up 6% from the sequential first quarter. Within our aerospace business, the market has been recovering a bit faster than we had originally expected, especially in some of the larger domestic markets like the U.S., Europe, and China. However, international travel is still far behind its pre-pandemic peak due to travel restrictions in various countries. During the quarter, sales of printers, supplies, parts, and repairs all increased. orders for our Toughwriter 640 flight deck printer continue to increase, demonstrating the progress we've gained in the marketplace with our newest printer. With its compact design and the lowest weight and power consumption in the industry, the Toughwriter 640 is a great example of the innovative sustainability solutions we are bringing to market. Another innovative sustainability solution was launched in the data acquisition side of our business. where we have begun to provide a solution to enhance the efficiency of solar farms. Our data acquisition products are able to analyze the cells that are not working up to capacity, enabling operators to more quickly make repairs or replacements in order to improve the energy efficiency and yield of the solar farm. In the aerospace and defense market, our sales team landed a new government program featuring some of our most advanced data acquisition equipment, This is a significant multi-year program with initial shipments starting already in the third quarter. Looking at the second half of the year, we're anticipating a good revenue trajectory for the test and measurement segment. We expect to report increased revenue on a sequential and year-over-year basis in the second half. Now let me turn the call over to David for the financial review.