AstroNova, Inc.

Good day and welcome to the Ashton Overs Fiscal Second Quarter 2023 Financial Results Conference Call. Today's conference is being recorded. 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, Carla. Good morning, everyone, and thanks for joining us on our Fiscal Second Quarter 2024 Earnings Call. Hosting this morning's call are Greg Woods, Astronova's President and Chief Executive Officer, 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 don't have a copy, please go to the Investors page of the Astronova website. www.astronovainc.com. Please note that statements made on 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 uncertainties. Accordingly, actual results could differ materially except as required by law. Any forward-looking statements speak only as of today, September 6, 2023. 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 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. At the beginning of August, we announced the strategic realignment of our product identification segment, an initiative designed to further capitalize on the synergies of last year's acquisition of Astra Machine. That restructuring is reflected in the second quarter financial results that we reported this morning. As a reminder, the specific actions we have taken to realign the segment include, first, Transitioning more of our PI printer manufacturing from Asia and our headquarters in West Fork, Rhode Island for our Astra Machine plant in Elk Grove Village, Illinois. Second, rationalizing our combined Astra Nova and Astra Machine PI product portfolios by exiting certain lower margin or low volume label printers to concentrate on higher margin product lines with advanced functionality and greater demand. And third, consolidating our international PI sales and distribution facilities, and streamlining our global channel partner network. These actions enable us to concentrate the segments manufacturing, marketing, and sales resources on the highest return opportunities. This, in turn, will provide the best products and services to our customers. Although the realignment had a negative effect on our GAAP performance in the second quarter, It puts us in a position to achieve an anticipated annualized cost savings of $2.4 million and create a stronger, more resilient business in the quarters to come. Beyond the restructuring impact, during the second quarter, we continued to make operating efficiency improvements and we posted double-digit year-over-year top-line growth. The key growth drivers, or astromachines, which we acquired in the fiscal Q3 of last year, and the continued momentum of the commercial aviation industry, which is served by our aerospace product line within our test and measurement segment. Looking at our performance by segment, product identification revenue was up 10 percent in the quarter, and excluding the restructuring charges, segment operating profit improved by 80 percent. Over the past several quarters, The performance of the PI segment has been tamped down as we worked through our program to retrofit a large number of high volume printers sidelined due to a supplier's ink quality issue. As an integral part of our restructuring effort to improve the PI segment, we established a reserve to account for the cost of an accelerated effort to rapidly repair or replace the infected printers in the field so they can more quickly be returned to full service. We expect to complete this retrofit program by the end of the current fiscal year. Product development continues to be and represent an important part of the growth engine for the PI business, enabling us to increase the breadth of our solutions for brand owners, OEMs, and commercial printers. This quarter, we plan to introduce four innovative new products to the market for applications, including labeling, direct-to-package overprinting, and high-speed mailing and addressing. Earlier this year, we introduced the QL900, a high-speed, high-performance label printer. Printing at speeds of up to 12 inches per second, the QL900 prints vibrant, wide-format color labels at a resolution of 1600 dots per inch, making it a robust solution for the most demanding applications. Our customers will have the opportunity to see these and other products in action at several major industry events taking place in the coming weeks. These events include Pack Expo in Las Vegas, Label Expo Europe in Brussels, and the Printing United Expo in Atlanta. Turning to our test and measurement segment, revenue also increased 10% year over year in the second quarter, reflecting the continued strong performance of the aerospace market. Robust airline passenger traffic and increased aircraft deliveries are driving stronger demand trends for our aerospace printers, supplies, and services. Segment operating profit was down year over year, however, due primarily to a higher-than-normal adverse mix of older-generation product shipments in the quarter. We continue to focus on upgrading and transitioning aerospace customers from these older-generation products to our newer, more advanced Tuffrader family of printers. As we gradually consolidate our product offerings into fewer, high-volume SKUs, we expect the resulting manufacturing efficiencies will positively impact segment margins. And with that, I'll hand it over to David for the financial review.