Good morning, and welcome to the AstroNova 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, Candace, and good morning everyone. By now you should have received a copy of the earnings release issued this morning. If you have not received a copy, please go to the Investors page of the AstroNova website, www.astronovainc.com. You can also access the deck that follows along with our prepared remarks on the Investors section of our website under Events & Presentations. Turning to Slide 2 in that deck. 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, June 6, 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 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. Turning to Slide 3. 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 4, and 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 are unable to ship more than $3 million of Aerospace printers in the quarter. 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 ToughWriter branded printers. Today, ToughWriter 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 Astro 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%. Turning to Slide 5. In May, we significantly strengthened our position in the color digital…

Thanks, Greg and good morning everybody. Let me begin by reviewing our first quarter financial results taking a look at slide eight. Revenue for the quarter was $33 million it was down 7% from the prior year period due to the lower sales in both P&I and the T&M segments. Greg touched on some of that. Despite the decrease, gross margin increased to 36.3%, up 130 basis points from the same period last year, with higher margins in both segments reflecting favorable mix and cost trends. A quick comment on operating expenses, which are under control and in good shape. We have done some minor and I think, immaterial reallocations of expenses in our income statement segment reporting in response to the new and more rigorous accounting rules on segment reporting. So in the first quarter, operating expenses were down about $300,000 but were approximately 3% year-over-year to $10.6 million. But under the recasting we did for this new compliance requirement about $250,000 of that was reallocated manufacturing expenses. So the total expenses were only down slightly. If you look at the prior expense allocation, selling and marketing would have been down about $200,000, R&D up about $200,000 due to product development, G&A about flat, and gross profit would have been about $250,000 higher. We are not going to report on these before and after comparisons and changes after this quarter because these already small differences between methods are expected to decline substantially in future quarter comparisons, and the new method, frankly is more representative of the underlying economics. Overall though total company spending, operating and manufacturing, is over $1 million lower than the first quarter last year, which is a result primarily of our prior restructuring and an overall focus on spending. When we announced the restructuring last August…

Thanks, David. Turning to Slide 12. Looking ahead, we are excited about the prospects for both segments of our business over the balance of fiscal 2025 and beyond. Our revenues were pressured by supplier issues, the shipment delay of a major order and the transition to higher-margin products across both segments, we believe the move to higher end, higher margin products will yield profitability benefits both this fiscal year and over the long-term. 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%. Summarizing on Slide 13, we have well-respected brands across our businesses and we continue to launch innovative products that satisfy our customers' most challenging needs and strengthen our leading market positions. This sets us up to capitalize on strong secular trends in both our Product Identification and Test & Measurement segments, including the increasing demand for a wide range of printing solutions to satisfy mass customization of packaging for consumer goods, as well as the resurgent airline industry. And with that, Dave and I will take your questions. Operator please open the line for Q&A.

Candace, I don't believe we have any questions in the queue. So we'll be happy to turn the call back to Mr. Woods.

Thank you.

Okay. Well, with that thank you all for joining us here this morning. We look forward to keeping you updated on our progress, and have a good rest of the day. Bye now.

Ladies and gentlemen this concludes today's call. Thank you for joining. You may now disconnect your lines.