AstroNova, Inc.

Good day and welcome to Astronova's third quarter fiscal year 2023 financial results conference call. Today's conference is being recorded. If you would like to ask a question during today's presentation, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. 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, Drew. 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 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 this morning. If you do not have a copy, please go to the investor 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 1995. 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, December 7, 2022. Astronova 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 that 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 financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results. It also helps investors who wish to make comparisons between Astronova and other companies on both a GAAP and a non-GAAP basis. A reconciliation of the non-GAAP financial measures to their 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, Scott. Good morning, everyone, and thank you for joining us. Let me begin by saying that we are pleased with our Q3 performance, particularly considering the still challenging macroeconomic environment. On the top line, we delivered record revenue of $39.4 million. The year-over-year increase of 37% was primarily driven by our August acquisition of Astra Machine. Coupled with another strong quarter in test and measurement, and mid single-digit growth in our base product identification business. Inflation, supply chain shortages, and geopolitical volatility have continued to make things tough for businesses in many industries, including ours. But I'm extremely proud of the way our team has continued to navigate those challenges to deliver for our customers. Turning to our segment results, product identification revenue grew 36% in the quarter to $29 million, largely reflecting the addition of Astra Machine. To give you some perspective, on our acquisition call in August, we noted that Astra Machine's revenue for the trailing 12 months ended June 30th was about $22 million, and we are tracking slightly ahead of that run rate. Astra Machine is a perfect fit for our product identification segment in two specific ways. First, it's a great complement to our label printer business. Label printers currently represent about a third of Astro Machines' revenue, and we can scale that portion of the business by expanding the distribution of those products through a much broader distribution channel. There are also cross-selling opportunities between our business bases as well as product development and acceleration advantages in our R&D efforts with the combined teams. AstroMachine expands our addressable market into the high-speed overprinting space, as well as mail and package printing applications. This market accounts for the other two-thirds of AstroMachine's revenue. And it is benefiting from the rapid expansion of e-commerce. While technologically similar, it has new customers and channels, as well as the opportunity to expand business with existing customers. And of course, The recurring revenue stream that runs through both the label printer and mail handling sides of the business is significant. Our engineering and product development teams are working well together, and we have already identified several exciting opportunities for product synergies. It is also advantageous to be adding a second engineering and manufacturing center based here in the US, located near Chicago's O'Hare International Airport. Of course, it's still early in the process, as we are now just four months into the acquisition. But so far, the integration is right on plan and the business synergies are exceeding our expectations. Elsewhere in our product identification segment, we continue to maintain a steady pace of new product innovation, highlighted by the launch of our entry-level QL-E100 full-color tabletop label printer, as well as several additional technology innovations. The QL-E100 which we introduced to great customer response at PacExpo International in October, is purpose-built for customers just beginning to capitalize on the benefits of in-house label printing, as well as larger organizations that need multi-unit, widespread distribution of their label printing. Turning to our test and measurement segment, the segment posted another solid quarter as revenue increased about 38% year-over-year to $9.5 million. The top line would have been even stronger, but for supply shortages, which resulted in about a $2 million of unfilled orders, most of which we expect to ship in the current fourth quarter. The aerospace component of our T&M segment posted its highest quarterly revenue since the first quarter of our fiscal 2021 year. That milestone is certainly consistent with the rebound of the commercial aviation market, which continues to ramp back up from the depths of the pandemic. Segment hardware and service revenue also grew nicely in the quarter. The growth in hardware relates chiefly to the higher production rate of key programs, such as the Boeing 737 MAX and the Airbus A320. The increase in service revenue is indicative of the greater number of planes in the sky and the increased demand for our aviation paper, as well as maintenance, repair, and overhaul services. The data acquisition portion of our T&M segment also performed well in the quarter, as we continue to see demand grow for our technology in areas such as rocket and missile telemetry and other defense-related applications. Now, let me turn the call over to David for the financial highlights.