AstroNova, Inc.

Good day and welcome to Astronova's fiscal fourth quarter and full year 2022 financial results conference call. Today's conference is being recorded. To ask a question on today's call, press start one. I would now like to turn the conference over to Scott Solomon of the company's investor relations firm, Sharon Merrill Associates. Please go ahead, sir.

Thank you, Diana. Good morning, everyone, and thanks for joining us. Hosting this morning's call are Greg Woods, Astronova's president and CEO, and David Smith, vice president and chief financial officer. Greg will discuss the company's operating highlights. David will take you through the financials at a high level. 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 don't have a copy, please go to the investor's 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, April 14, 2022. 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 other filings the company makes with the Securities and Exchange Commission. On today's call, management will be referring to non-GAAP financial measures. Astronova believes that the inclusion of these measures helps investors gain a meaningful understanding of changes in the company's cooperating results. It can also help investors who wish to make comparisons between Astronova and other companies on both a GAAP and a non-GAAP basis. A reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures is available in today's earnings release. With that, I'll turn the call over to Greg.

Thank you, Scott. Good morning, everyone, and thanks for joining us to review our fiscal fourth quarter and full year 2020 financial results. I want to start today by acknowledging the outstanding work of our more than 360 team members around the world. In what was an extremely challenging year, they worked tirelessly to keep themselves and those around them safe while continuing to provide outstanding service to our customers. While COVID-19 has gradually receded into the background in certain regions over the past several months, the economic consequences of the pandemic, including supply chain disruptions, price increases, and rising transportation costs, continue to have a pronounced effect on our business in the fourth quarter. In round numbers, we estimate that we would have shipped an additional $2 million in product during the quarter, but for delays in receiving the parts necessary to fill those orders. The backlog in our supplies business, which normally is about five days, has recently been running in the neighborhood of 15 to 20 days. And that's despite significantly beefing up our supplies inventory, in an effort to help mitigate any potential delays. We're also seeing steep increases in transportation costs. To put those increases into context, freight in-charges were up more than $600,000 on a sequential basis in Q4, and more than $700,000 year over year. We are taking steps to address these cost dynamics in a number of ways. including leveraging our pricing power to mitigate the impact of inflation and the increase in transportation costs. We expect to begin realizing benefits of these actions as we move into the second half of our fiscal year. With that as a backdrop, let me briefly review our results, which included higher total revenues for the quarter and full year periods, despite the macroeconomic challenges. Total revenue, was up approximately $260,000 for the fourth quarter to $29.7 million. As a 20% increase in test and measurement revenue more than offset a 4% decline in product identification. Total revenue for the year increased 1% to $117.5 million. Increases in supplies and service revenue were key drivers in both periods. In both the quarter and full year, we continued to deliver robust recurring revenue streams. Supplies accounted for approximately 62% of revenue for the fourth quarter and the full year. Hardware comprised 28 and 27% of revenue for the quarter and full year periods respectively, while our service slash other accounted for 10% of revenue for the quarter and 11% for the year. Bookings were strong at $32.9 million in the fourth quarter, up 12.4% from the fourth quarter of fiscal 2021. Bookings for the fiscal 22 came in at $128.6 million, up 13.2% year-over-year. Turning now to our segment, fiscal 2022 marks the product identification segment's ninth consecutive year of revenue growth. We continue to be very pleased with the strong performance of our direct-to-package printing solutions, such as the T3-OPX, which had a record year in fiscal 2022. Exponential growth of the e-commerce channel over the past two years plays directly into the strengths of the T3-OPX. With more and more goods being delivered to customers' doorsteps, the demand has increased for the use of secondary packaging, both to protect the goods during transport and to provide another branding opportunity for the retailer. The T3 OPX is a best-in-class system designed for overprinting or post-printing on a wide variety of materials and packaging substrates. By using renewable substrates, the T3 OPX also enables packaged printers to meet the customer's sustainable packaging preferences. Sustainability is a megatrend that is driving a sea change in the packaging industry. Trivium Packaging's 2021 Buying Green report found that 67% of consumers find recyclability of packaging important, while 73% are actually willing to pay more for eco-friendly packaging. Our T3 OPX system also plays directly into another megatrend influencing the direct-to-package printing market, and that is brand experience. Westrock's Pulse Packaging Survey shows that for a majority of consumers, packaging influences product satisfaction. The survey also demonstrates the importance of key sustainability features, such as environmentally friendly design and the ease of recycling. So there's a clear link between sustainability and brand experience. The third packaging megatrend that is relevant to our business is supply chain agility. Manufacturers want a package design that is not only e-commerce friendly, but also cost effective and rapidly adaptable to the changing regulatory environment and the rapid shifting in consumer preferences. Supply chain agility also requires packaging that is digitalization ready by enabling automation, real-time tracking, and other benefits that boost consumer confidence. We believe that the value proposition of our direct-to-package printing technology creates a sustainable competitive advantage for Astronova. Looking ahead in the PI segment, we expect to release two new products that build on our leadership in the label printing and direct-to-package printing markets in the next few months. We believe that these new products will make it even easier for our customers to develop full-color, high-quality labels and packaging that distinguishes their brands. Stay tuned for more. Pushing now to our test and measurement segment, with an ongoing rebound in the commercial air travel in the US, Europe, and other regions, the segment delivered improved results. Revenue increased 20% in the fourth quarter and 3% in the full year versus the same periods of fiscal 2021. T&M segment operating margins also were up nicely. particularly in light of the higher manufacturing and transportation costs that we've experienced. One need only look at the daily TSA checkpoint travel numbers to see the significant improvement in passenger traffic from calendar 2021. And while domestic passenger traffic has rebounded faster than other routes, the airline industry expects to see a return to pre-pandemic level in 2023 and 2024. Consistent with the ramp-up in air traffic, we are seeing an increase in both printer supply sales as well as repair services. At the same time, the multi-year backlogs for the Boeing 737 MAX and Airbus A320 aircraft are growing, which both pretend well for the sales of our aerospace products in the future. With that, I'll turn the call over to David.