AstroNova, Inc.

Good morning and welcome to the Astro Nova fiscal third 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, Astro, and good morning, everyone. Our Q3 fiscal 2025 earnings release on the slide presentation accompanying management's prepared remarks are posted to the investors' page of our website, www.astronovainc.com. Turning to slide two of that presentation, 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, December 12, 2024. Astronova 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 helps investors who wish to make comparisons between Astronova and other companies on both a GAAP and a non-GAAP basis. The non-GAAP financial measures are reconciled to the most directly comparable GAAP measures in today's earnings release. Turning to slide three, hosting this morning's call are Greg Woods, Astronova's President and Chief Executive Officer, and Tom DeBile, Astronova's VP and Chief Financial Officer. Greg will begin the call with an overview of the company's third quarter performance. Tom will discuss segment results. Greg will make some concluding comments, and then management will be happy to take your questions. please turn to slide four as I turn the call over to Greg.

Thank you, Scott. Good morning, everyone, and thank you for joining us today. Let me start by addressing our third quarter performance. Overall, the results were disappointing. We saw a significant decrease in consolidated margins and a notable year-over-year increase in our operating expenses. Much of this is tied to the ongoing integration of MTEX-NS, into our product identification segment, an integration that has proven to be far more time consuming and resource intensive than we anticipated when we completed the acquisition in May. In the third quarter, Emtex had an operating loss of 1.1 million on revenue of 1.7 million. While we did see some sequential revenue improvement, initial sales volumes, revenue contributions, and margins did not meet our expectations. We have been mobilizing quickly to rectify this situation. Our focus now is on accelerating M-Tex's path to profitability and ensuring its foundational capabilities are positioned to support stronger performance in the quarters ahead. To facilitate this, we recently completed a full realignment of M-Tex's organizational reporting structure. All of M-Tex's key functions, sales and marketing, manufacturing, technology, finance, and human resources now report directly to AstraNova leadership. This change aims to speed up the implementation of consistent best practices within EmTech's sales process, ensuring it aligns with our product identification segment standards and the broader operational excellence we strive for across our company. During the EmTech integration process, the AstraNova team discovered certain details that appear to be inconsistent with the information originally provided by the seller as part of our definitive agreements. We are continuing to research these matters and are seeking potential remedies from the seller under these agreements. Given the confidential nature of our customer relationships, we will not be taking questions on this topic on today's call. As part of the integration process, We have launched an AstraNova-wide cost reduction and product line rationalization initiative. This is a comprehensive effort aimed not only at reducing expenses, but also at refining our product portfolio to sharpen our competitive edge. Early progress is encouraging. We've closed some significant new orders that underscore the market's confidence in our evolving offerings. However, we anticipate that the full integration and optimization of M-TECH's operations will extend through mid-calendar year 2025. We recognize that this is a multi-phase journey, but we are committed to working through each step deliberately and strategically to drive sustainable long-term gains. One product launch update from our PI segment. In fiscal Q4, we began shipping a large inkjet printer order that had been delayed to allow some customer requested enhancements. We expect that the order will contribute several million dollars to our PI segments top line over the next several quarters. Moving to slide five, despite the integration-related challenges, I want to emphasize our continued confidence in MTAX's technology. Their inkjet printing solutions, combined with their unique real-time printer monitoring and management software, remain compelling. In the quarters ahead, And in conjunction with our product rationalization program, we intend to integrate M-Texas technology into most of our product lines. We also plan to retrofit several models within our large global installed base. We believe this approach will ultimately give our customers improved performance and a lower total cost of ownership. Turning to slide six. Our total revenue increased nearly 8% in the third quarter, driven largely by the momentum in the aerospace product line within our test and measurement segment. Our role as the leading supplier of flight deck printers and electronics for commercial, defense, and business aviation continues to provide strong competitive advantage for Astronova. The segment's performance would have been even stronger had it not been for the nearly two-month Boeing strike, which delayed shipments. With the strike now resolved, we're ramping shipments back up, and we expect stronger sales volume as we close out fiscal 2025. As shown in slide 7, when considering the longer-term outlook for our T&M segment, keep in mind two key factors that are expected to drive margin enhancement in the coming years. Today, about 43% of our aerospace printer shipments are represented by our proprietary Tuffrider brand. The remaining 57% of shipments are acquired flight direct printer brands. As we have discussed on prior calls, we are in the process of upgrading customers from the three acquired brands to our Tufrator branded wide and narrow format printers. By the end of fiscal 2027, we estimate that our Tufrator brand will account for approximately 89% of our shipments. We expect this Tufrator transition plan to be completed by the end of fiscal year 2027, resulting in enhanced technology experience and streamlined parts and services for our customers. By having fewer SKUs, the transition will reduce our overall manufacturing costs, thereby improving margins. In addition to those benefits, our projected royalty expenses, as shown on slide eight, dropped dramatically from over $4 million per year in fiscal 25 through 27 to just $375,000 in fiscal 2028. Now, let me turn the call over to Tom for the financial review. Tom?