AstroNova, Inc.

Good morning and welcome to the Astranova fiscal first quarter 2025 financial results conference call. Today's call is being recorded. I would now like to turn the conference call over to Scott Solomon of the company's investor relations firm. Sharon Merrill, advisors, please go ahead, sir.

Thank you, Candice, and good morning, everyone. By now, you should have received a copy of the earnings release issued this morning. If you've not received a copy, please go to the investor's page of the Astronova website, www.astronovainc.com. You can also access the deck that follows along with our prepared remarks on the investor's section of our website under events and presentations. Turning to slide two in that deck, statements made on today's call that are not statements of historical fact are considered forward-looking statements within the meeting 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, June 6, 2024. AstraNova undertakes no obligation to update these forward-looking statements. For other 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 refer 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 and 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 measure to their most directly comparable GAAP measures is available in today's earnings release. Turning to slide three, joining us on the call this morning 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 first quarter operating highlights, and David will take you through the financial results at a high level. Greg will make some concluding comments, and then management will be happy to take your questions. Now, please turn to slide four as I turn the call over to Greg.

Thank you, Scott, and good morning, everyone. Q1 was a profitable yet challenging quarter for us, primarily because we had to navigate a couple of temporary component shortages that delayed the shipment of certain legacy printers in our aerospace product line. These suppliers were unable to deliver the necessary components on time. That delay, which we expect to be fully remedied this fiscal year, meant we were unable to ship more than $3 million of aerospace printers in the future. As we noted in this morning's earnings release, longer term, We are well underway on our transition program to upgrade most Astronova Aerospace customers from legacy products to our newer, more advanced, Tuffrider-branded printers. Today, Tuffrider printers account for approximately 36% of our total aerospace printer shipments. Completing this transition will result in a more efficient supply chain, lower manufacturing costs, and a streamlined parts and services experience for our OEM and airline customers. In our product identification segment, last September we unveiled next generation flat pack and mail related printing solutions from our Astra Machine subsidiary at the Printing United Expo. In this year's first quarter, we needed to push out shipment of a very large order we had received for that equipment. just in order to make sure that we are able to do some customer requested enhancements that were required by that customer. We now expect the majority of that order to be shipped in the fiscal second and third quarter of this year. Despite the challenges caused by component deliveries and order delays, we remain on track to achieve our fiscal full year 2025 expectation for organic revenue growth in the mid single digits and adjusted EBITDA margin in the range of 13 to 14 percent. Turning to slide five, in May, we significantly strengthened our position in the color digital label and packaging printing verticals with the acquisition of Portugal-based Emtex NS. Emtex provides us with complementary market adjacencies that expand our addressable markets and broaden our global footprint. opening up significant top and bottom line growth opportunities. We continue to expect the M-TEX acquisition to generate $8 to $10 million of revenue in this fiscal year. M-TEX is not only an innovator, but a technology disruptor with new digital industrial printing solutions that have been exceptionally well received in the market. M-TEX operates a sophisticated engineering and manufacturing center at its headquarters near Porto, Portugal. The high level of vertical integration at this facility has made it a model of cost efficiency, reducing Emtex's dependence on outside suppliers. Less than a month into the acquisition, we're more excited than ever about the complementary nature of Emtex NS's product offerings. Emtex moves us further up the value chain with products that generally carry higher ASPs with large recurring revenue streams and strong customer loyalty. And the initial response to Emtek's newest products bears that out. Turn to slide six. I just returned from the Drupa 2024 trade show in Dusseldorf, Germany. Drupa, which began on May 28th and runs through tomorrow, is the world's leading trade fair for printing technologies. The large combined Astronova Emtek booth at Drupa was the perfect venue to showcase the broad range of groundbreaking products and solutions. Congratulations to our marketing teams for pulling out all the stops and coordinating the design and implementation of this integrated booth in record time. They pulled it off in just a few weeks from when we closed this acquisition. Together with the full array of our Quick Label, Trojan Label, and Astra Machine products, EmTech is exhibiting several of their latest color printing products for labeling, overprinting on rigid products, and industrial flexible packaging solutions for both paper and film materials. The EmTech products at the show featured their unique high-quality printhead and ink systems that significantly lower the cost, the total cost of ownership for our customers. The printers cover a wide range of printing widths from the Atom at 8 inches wide to the new AquaFlex at 42 inches wide. The AquaFlex was by far the largest printer in our booth. This is a high-volume commercial printing solution developed for industrial flexible packaging that can print on both untreated and treated papers. AquaFlex represents the next generation of industrial flexible packaging printing for high-volume customers. The system uses multiple 5-liter ink tanks of either pigment or dye-based inks to produce full-color, wide-format output used in paper bag production and other high-volume packaging applications. Since the Drupa show opened on May 28, attendees have been flocking to the booth to see the Aquaflex in action, along with the other new products from Emtex and Astronova. We collected hundreds of high-quality leads, as well as several orders at the show. We even closed deals to sell some of the printers right off the floor in our booth, including the two you see in slide six, the Trojan T2 Pro that we previously announced for high-performance label printing, and the Aquaflex printing system. For more information on the Aquaflex and the other M-TEX and Astronova products featured at our Drupa booth, including pictures and videos, check out the Drupa press release on our website, astronovainc.com. Beyond the timely trade show integration for Drupa, our overall integration of MTEX is proceeding well. Another recent step was the formation of an integrated engineering steering committee that is already in place and working on plans to ensure that we are leveraging the fantastic engineering strengths of both organizations to further extend our leadership position in the industry. On slide seven, let me briefly touch on the developments in our T&M segment. As I mentioned, we are gradually upgrading OEM and direct airline customers who are more advanced Tuffrider branded printers from the other three brands in our portfolio. The Tuffrider upgrades are taking place in both the commercial and defense verticals within our aerospace product line. Reducing the number of brands that we offer will allow us to significantly lower our overall manufacturing costs, including royalty payments, thereby driving higher margins. By the end of fiscal 2027, we estimate that about nine of every 10 printers we ship will be a Tuffrider, compared with a little less than four in 10 today. In addition to our momentum in the aerospace market, our test and measurement segment continues to win contracts with Air Force bases that are upgrading their missile programs with legacy, from legacy systems to our latest technologies. And now with that, I'll turn the call over to David for the financial review.