Good day, and welcome to the AstroNova conference call. Today's call is being recorded. I would like to now turn the conference over to Scott Solomon of the company's investor relations firm, Sharon Merrill Associates. Please go ahead, sir. Thank you, Rob. Good afternoon, everyone, and thanks for joining us. Hosting today's call are Greg Woods, AstroNova's President and CEO, and David Smith, the company's Chief Financial Officer. By now, you should have received a copy of the news 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. The slide presentation related to today's announcement also is available on the website. 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 uncertainties. Accordingly, actual results could differ materially. Except as required by law, any forward-looking statements speak only as of today, August ninth, 2022. The company 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. With that, I'll turn the call over to Greg. Thank you, Scott. Good morning. I should say good afternoon, everyone. I'm actually talking today from Astro Machine, where we just completed the acquisition that we announced today. As outlined in the press release, Astro Machine designs and manufactures printers and media handling equipment for labeling and mailing applications, primarily for OEM customers. The company was founded here in Elk Grove Village, Illinois, which is adjacent to O'Hare International Airport, in 1978. Over the ensuing 44 years, Astro Machine has established itself as a leading provider of printing solutions and automation equipment for direct mail and promotional marketing. As a result, this acquisition adds a key market adjacency to our product identification portfolio, further strengthening our leadership position. Importantly, Astro Machine ticks all the boxes of our acquisition strategy. First, it's a great fit with our existing product identification business. Astro Machine brings synergistic product design and material handling expertise. It expands our US manufacturing capabilities, reducing the reliance on overseas locations. The transaction also adds complementary channels to market that will enhance our ability to scale the combined business and capitalize on cross-selling opportunities. In addition, Astro Machine has a track record of strong performance. Its relationships with market-leading customers have enabled Astro Machine to deliver consistent revenue and earnings growth. The acquisition also is highly complementary from a skills perspective, adding an experienced team with capabilities closely aligned with our own. We're also ensuring management continuity by having Greg Selak, President of Astro Machine, continue to run the business as a wholly-owned subsidiary of AstroNova. Moreover, the acquisition meets our financial objectives. The aggregate purchase price is less than 1x revenue on both a full year 2021 and a trailing 12-month basis for the period ending June 30 of this year. The business has very attractive operating margins and a favorable operating expense profile. In summary, we're thrilled to welcome Greg Selak and the entire Astro Machine team to the AstroNova family. The addition of this business broadens our technical expertise and gives us a new market adjacency that introduces AstroNova to new customers and expands our relationships with existing accounts. Now, let me turn the call over to David for some additional information on the financial details of this transaction. Thanks, Greg, and good afternoon, everybody. I've just got a few quick comments to follow Greg's on the financial aspects of the transaction. The aggregate purchase price of $17.1 million was for the stock of the operating business and the 34,000 sq ft engineering, manufacturing, and office space that we're sitting in right now here. We funded it with senior debt borrowings under an amended version of our existing senior debt credit facilities with Bank of America. As we said in the slides, we expect the acquisition to be accretive to earnings in the current fiscal year that we're in currently. For 12 months ending at the end of June, the revenue here was about $22 million. In broad brushstrokes, the revenue from recurring revenue sources like inks and parts and print heads accounts for about 60% of Astro Machine's business on an annual basis, varying obviously from period to period with the hardware comprising the other roughly 40%. As Greg suggested, it's got a very favorable financial profile with, let's say, mid-teens% operating margin. The company's gross margins are a little bit lower than AstroNova's, but the operating expenses are also lower as a percentage of revenue combined for that kind of operating margin contribution. It's a very attractive business with significant upside potential as we marry the best of the two businesses together to capture some synergistic opportunities and drive efficiencies. Obviously, we'll take a few questions in a moment. Just quickly mention that we do plan to present next week and host one-on-ones at the Sidoti August Microcap Virtual Conference. If you're not on with that, obviously we'll be able to talk to people separately later. With that, Greg and I are happy to take any questions. Operator? At this time, in order to ask a question, press star, then the number one on your telephone keypad. Again, that is star one to ask a question. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Samir Patel from Askeladden Capital. Your line is open. Hey, guys. Congrats on the deal. Is the integration gonna be easier because the company's already named Astro something, and it's already run by someone named Greg? You knew we were gonna get that, right? Well, yeah, I figured something like that coming. Yeah, that was one of the hidden criteria in our selection process there, Samir. Yeah. Yeah. It worked out great, and they have some nice IP that we get with some Astro-type names, which is kinda nice. Jokes aside, I was wondering, maybe you could provide a little bit more clarification on the end markets. You know, like, it looks like it, like I read in there, it kinda looked like envelopes, packages, things like that, which wouldn't have naturally struck me as kind of a good growth area, you know, like your CPG, kinda e-commerce type exposures that you have, chemicals, all that. Maybe go a little bit more into, you know, you talked about OEM customers. Who exactly, I mean, not names, but what kind of customers are there, and what kind of industries do they play in? Sure. Yeah, so it is, you know, the majority of the sales are to what we call the mail handling business. The minority of it, and there's a good percentage that actually is in label business, and they, you know, they sell to some of our competitors. They actually manufacture machines for them, so they're in the labeling business as well. Primarily from the OEM perspective. They also do have a distribution channel that, you know, it complements ours. There's a few areas of overlap, but for the most part, it's complementary. Those channels, there's two different channels. One that's selling more mail handling type applications, the other one that's more labeling. It expands our label business. That's, you know, number one. The other part of the business, when I first got into it, I was, you know, digging a little bit deeper into that. It turns out that that business is actually growing. It's not growing at, you know, huge rates, but it's a consistently growing business in the mail handling business. During COVID, they had some nice upticks where, I mean, probably you're like everyone else, you get inundated with all this spam. What people and marketers are doing is going to these, you know, kinda large format flyers and things like that's actually caused the color part of the mail handling business to expand. In addition, they make a lot of, as we call it, mail, but so package handling equipment, so they're in the packaging business as well. In a few different areas, but very strong OEM customers that, you know, are related to those types of businesses. Most of the customers have been customers for many years, which we like to see in a business as well. Okay. That makes sense. It's not entirely reliant on like, you know, kinda paper mail. It sounds like it's in kinda areas that are growing as opposed to shrinking and that there's. Yeah, exactly. Okay. Yeah, one of them is the area that, you know, we created the OPX for the overprinting where you can put, you know, large mailers, you know, envelopes, paper bags through. So they're in that space as well. Okay. I wanted to talk a little bit more about the manufacturing footprint as well. I think you kinda mentioned maybe a nearshoring angle. Is there, I know you already have the facility in Rhode Island, but it sounds like you said something about reducing your reliance on kind of overseas manufacturing. I'm seeing here in the slide deck that they talk about some vertical integration. Are there- Yeah. Are there parts of your business that you think you can? You know, in terms of, I mean, you talked a little bit about the revenue synergies, but maybe talk a little bit about cost synergies. Are there potentially things that you're using third party to manufacture that you can kind of manufacture in the US now and have higher reliability and maybe also, you know, put some more margin on the bottom line? Sure. Yeah. It's kind of all of the above. You know, we do have some overlapping suppliers. You can, you know, guess. I mean, they use a lot of mono and color ink, you know, and some of those are coming from the same suppliers that we get, so we'll get some benefits from that. But on the manufacturing side, yeah, they're down. They have a very good machine shop here, extensive sheet metal fabrication capabilities, very large prototyping, like 3D printing, machinery. Things that we don't have at our facility. In Rhode Island, we're primarily, yeah, we do have PC board manufacturing, but beyond that, we're some, you know, primarily assembly and test. We buy a lot on the outside. Many of those things, you know, like the ones I mentioned are, you know, harnessing. A lot of that is made right here in this facility in a very economical way. If you're familiar with this area, it's loaded with tool shops. A lot of their subs are also local, so they don't purchase a lot offshore. All in all, it kinda shrinks our, you know, mutual supply chains. Okay, makes sense. I'll step back in the queue, but I'll probably have a few more follow-ups if no one else has any questions. Okay. Thanks, Samir. Again, if you would like to ask a question, press star then the number one on your telephone keypad. Your next question comes from the line of John Deysher from Pinnacle. Your line is open. Good afternoon. I was just curious how this deal came about. You know, what was the process that led to the transaction? Sure. Well, that's a trade secret. No, I'm kidding. You know, I've known George and this company for about eight years. Actually, Mikkel, who runs our global hardware sales, knew him for even longer. We're aware of them 'cause they're in the industry. They did some early work with Memjet and some of the people that we work with. That's how we knew them, and we kind of kept in touch. You know, during COVID, we kind of were bouncing back and forth on different items and actually looking for some material handling equipment that they supply that we could use with our overprinting. You know, one thing led to another and, you know, over the last several months, we decided, "Hey, why don't we just link up?" The timing was right, and that's how it came together. That makes sense. Were there any other bidders? Not that we're aware of. Okay. It was not an auction process or anything like that? I think, you know, I think what, George, you know, being a family business and, you know, knowing that our interests were aligned, we had similar technologies, similar values, you know, with our companies, I think he liked the fit and, you know, it was a good match for both companies. Okay, great. Would there be any 8-K filed with additional details on the transaction? Yes, that's already been filed. Oh, okay. Concurrently with the beginning of this call. Okay. Sorry, I haven't seen it yet. Okay, great. Thank you. Sure. As a reminder, it's star one to ask a question. Your next question comes from the line of Tom Spiro from Spiro Capital. Your line is open. Tom Spiro Capital. Good afternoon. Hi, Tom. Hi, Tom. Hey. So the revenues for the trailing twelve months are roughly $22 million. How has it been growing over the last few years? What were the revenues three, four years ago? What rate of growth has it enjoyed in the last three, four years? It's not a significant subsidiary. We don't have to file historical financials, but it's been growing very nicely. It had a very good 2019, fell off a little bit in 2020. 2021 and 2022 have been up pretty sharply. The business has been growing, you know, we dug into the financials really pretty deeply over the last six years. Except for a little down step in 2020 as a result of the start of COVID, it's been growing pretty nicely. I- It's got a very strong track record of steady improvements over quite a number of years. As I understand it, they were founded in 1978. Correct. Correct. They've been in business for about 44 years, and they've reached a level of sales of $22 million. That sort of sounds like a rather modest rate of growth over 44 years, unless perhaps the last few years have seen an acceleration. Am I missing something? Well, we didn't go back 44 years in our study of the business. We really only went back, you know, four or five or six years. It's been a family business that entire time. George's father started it with George back then. You know, it's been a successful family business for that entire time, but we haven't, you know, studied the last 44 years. Apart from this transaction, what rate of growth do you think they would enjoy going forward? If you folks hadn't stepped forward, what were they looking at over the next couple three years? Unlike ourselves, you know, they're a small private family company. They didn't have an elaborate, three- and five-year business plan. I think that this transaction was probably ultimately part of their business plan, which is to marry up with somebody like ours to take the business forward. We do think that their business is performing well with its customers now. The customers regard the firm very, very well and have aggressive plans themselves that we hope to be able to enable. We think there are some things that the two companies can do better together than they would have alone to further that growth rate. Can you give us the names of any of their customers? Um, they- The, the- They're really OEM customers. You can take a look at their website. You'll see some of the dealers there. That's kind of, you know, out in the public domain. If you take a look at the mailing industry, you'll probably get an idea of who their customers might be. You know, they have. Huh similar equipment there. I didn't have a clear understanding of the sort of the mail handling product. It's not an industry I know much about, and so I have kind of an outsider's perhaps a myopic view that, you know, mail is going the way of the dinosaurs. Obviously, you folks disagree, and I guess I'm wrong. Can you sort of educate me a little bit about why their involvement in mail handling is appealing? It's, you know, material handling piece of it. They're experts kind of in a variety of the material handling, and there's different pieces. As I mentioned, the, you know, kind of the targeted marketing segment, especially for color is a very nice and growing part of the business. You know, these mailers you get, you probably look at them and throw them away, but at least you remember who was on it or what color it was. That's a part of it. The larger packages, it's not so much, you know, like you're, you know, mailing for your bills or something. Not really too much involved in that. It's more the higher volume, you know, marketing type things and related business. I mean, if you look at Pitney Bowes and what they do, for example, that's a well-known name, and you can get an idea of equipment that's out there. I see. Lastly, does the company have any unusual capital needs, foreseeable over the next year or two? Something they need to replace or add to or that sort of thing? Not of any particular substance. You know, the company has been, as you might imagine, for a privately held company, it's been run very efficiently. You know, we recognize that we and have planned for the fact that there may be areas of opportunity for improvement from a capital investment standpoint. Nothing terribly substantial, though. It's not gonna be a major drag on capital investment. The company manages its working capital quite well. We expect, you know, to be able to continue that. Well, thanks much. Good luck. Thanks, Tom. Again, to ask a question, it is star one on your telephone keypad. Your next question comes from George Melas from MKH Management. Your line is open. Thank you. Hi, Greg and David. Hi, George. Hi. Trying to understand the expertise that these guys have. Do they design and manufacture printers, or do they basically buy printers and create sort of the material handling, mail handling sort of equipment with what they purchase? No. Actually, it's, you know, it's one of the great things that we liked about this business, is they design these things from the ground up. You know, I mentioned the sheet metal and that type of thing, but, you know, they're down into the software, the harnesses, the. Pretty much everything except for the print head, they're manufacturing here and designing it. You know, they have great, you know, 3D modeling. They've got people who've been in the business, you know, 20 and 30 years, in this kind of specialty material handling and printing. They're very much experts in the printing and data handling part of these. If you go online, take a look at the printers. you know, they manufacture these things and design them all in-house. They're very well-designed. They're very rugged. They're very, you know, foolproof and very well-regarded by the OEM customers and their customers. Part of the secret sauce is their expertise at managing the close relationships with the OEM customers and designing and delivering product for their needs in the marketplace. It's a very focused team that's very good at that. That expertise is something that, you know, we think will be additive to the work in that area that we do. Okay, great. Yeah. I'm on their website, and I see their printers. Maybe can you help us understand in a way what you guys can do better together? I mean, clearly you're in very adjacent areas of printing. I imagine, do you ever run into them as a competitor or not? Maybe tell us a little bit about that. Yes. You know, obviously their label printers, you know, we do run into those in the field because, you know, we're in that same space. In areas where, you know, they have dealers and, we also participate in those, geographic areas, you know, we've seen them over the years and, you know, they've got some unique products in there, which, you know, quite frankly in the short term, you know, we're gonna let them keep doing what they're doing, and our team will do what they're doing. There's, you know, a little bit of conflict out there. You know, now with this acquisition, we both kind of win no matter, you know, who gets the transaction. Besides that, there's technologies that we're both working on, and in some cases, we don't need to, you know, reinvent the wheel, right? We can share that, and that'll help us in product development, shorten those cycles. They've got some deeper expertise in certain disciplines than we do, you know, and vice versa. We just think it's gonna be a much better team that way. I already talked about the manufacturing synergies where we buy you know, a lot of things we buy offshore or from third parties even domestically could be produced right here in the Chicago area. Yeah. They've got a strong engineering culture, very close to the customers. The part of the trick here is gonna be to make sure that we continue to service and delight those customers even more than they have in the past, and we're pretty excited about it. Great. Maybe just one more question. Is there a way to assess what kind of market share they have in their particular space? No. I mean, you know, we said, as we said in the deck there, you know, they're a leader in kind of that tabletop area of mail handling. I mean, you know, if you look at that business, there's machines that are bigger than rooms, right, in the mail business. These are more what you see on their website, the tabletop space. Kind of analogous to our QuickLabel product line. You know, there's the tabletop label printers. They have tabletop label printers as well as the mail handling type of printing equipment. Okay, great. Okay, thank you. Good luck. Thanks, George. Your next question comes from the line of Dennis Scannell from Rutabaga Capital. Your line is open. Yes. Good afternoon, gentlemen. Most of my questions have been answered. I just had one other quick thing. Greg, I think you said that, you know, in their OEM relationships they actually do supply to some of your competitors. I mean, as you look out a few years, you know, I guess, kind of two things there. Do you think those revenues are at risk? You know, is that a significant part of the $22 million in sales that they generated kind of over the past 12 months? It's a smaller part of it, so I wouldn't call it significant. Yeah Actually, we did reach out to a number of customers already today, and we have, you know, some more to get to. We did talk to a few of those already today, and they're pretty much aligned that, you know, it's not a conflict in terms of how we're handling it. We expect their business actually to grow in certain cases, you know, some of the new products we have underway may work for both channels. Okay, good. Thinking about their OEM relationships, I mean, is the competition for their business internal capacity at, say, the Pitney Bowes and other of these OEMs, or is it other suppliers, you know, that are just focused on the printing technology kind of like you guys? I mean, so is it internal capacity that they're kind of going against, or is it other suppliers when they're competing for new business? I'm not sure I understand exactly what you're asking, but, you know, if you look at who they compete with in those scenarios. Well, first of all, they have, you know, multi-year relationships with some of these firms, right? You know, and typically when those firms need a new product for some application, they'll come to Astro Machine and say, "Here's what our idea is." You know, brainstorm with the tech, you know, technology team here. And then, it usually progresses from that into a design spec, and it's a sole source. Most of these things are sole source design specs. Okay, great. ... which is nice because you know when you build it, you know exactly where it's gonna go versus building it and hoping you get someone will buy it, you know? Yeah. Right. Okay, great. Thank you. Sure, Dennis. We have a follow-up question from the line of Samir Patel from Askeladden Capital. Your line is open. Hey, could you maybe provide some more specific examples of customer overlap, either way? Like examples of your existing customers who could benefit from Astro Machine's products or Astro Machine's customers who could benefit from your products. Kind of which way do you expect the cross-sell to be stronger? Like, do you think you can penetrate their customer base more, or do you think that they offer products that your customer base will come take up more? If that makes sense. Yeah. I mean, without going into a lot of detail, I mean, there's products they manufacture. For example, they make unwinders and rewinders, which we sell with a lot of our printers. You know, we buy them from third parties. They actually manufacture those. There's also, if you look at our overprinting business, you know, the T3-OPX business, you know, we have tables. When you do higher volume, you want specialty feeders to feed the paper bags or envelopes or whatever, pizza boxes, into those tables that we have. They actually make tables, but they also make the feeders, input and output feeders and handling equipment for that, which, you know, we typically don't supply to our customers or, you know, in some cases we'll buy it from a third party. That's an area where that's gonna be very helpful. You know, in the overprinting area, I think we have some advanced technologies that'll be a benefit to the, you know, existing customer base of Astro Machine. You know, that's kind of a couple examples. There's a lot of them. I mean, you know how the acquisition process works. You can't get into a deep dive with the technical people, you know, prior to today really. We're gonna be getting into more on that over the next several weeks and months. That makes sense. Thanks. Then, you know, their operating margins are actually pretty good already, but I'm curious, you know, having been a family business for a long time, and I think you kind of referenced maybe they didn't invest a whole lot in, say, automation or that kind of CapEx that might be a little expensive. You know, do you see an opportunity to apply kind of the AOS paradigm to the business and maybe get some more efficiencies out of it? Yeah, I think it'll happen as they grow. You know, I mean, right now there's some things that we can do and that we'll get into, which, you know, will be, you know, help them with the efficiencies and kind of, you know, like you said, some of the AOS tools would work really well here. We'll introduce those. You know, they are growing, so they're, you know, we'll look at, you know, ways to be able to handle that growth. 'Cause, you know, we'll give them business, as well from the, you know, manufacturing point of view. Yeah. We'll see that, you know, that'll take, you know, that's kind of a month kind of scenario for that to play out. Sure. Just one final one. The facility that they have, I mean, can you talk maybe about the utilization or the capacity of that facility? Is it set up to handle kind of the growth that you expect over the next few years? Yeah, I think over the next few years it's fine. If you're familiar with this area, I mean, there's buildings all over the place here. You know, where we are right now, you can't expand this particular building much further, but up and down the street there are a number of buildings that you know come and go on the market. We don't see that as too big of an issue. Okay. All right. Well, congrats again to both sides on the deal. Thanks. Thanks, Samir. We have a follow-up question from the line of George Melas-Kyriazi from MKH Management. Your line is open. Thank you. Just a clarification. On the hardware sales, what percentage is custom for one specific customer? Or how much is really sort of a, almost like a catalog sale? Because it seems like a lot of the product development is done specifically for certain customers, but how does that translate into the mix of sales? Yeah, I mean, I don't have the data in front of me right now. I probably don't wanna just say what the data is, but the majority of it are things that are designed for OEM customers, and there's derivatives of that. The technology's owned by Astro Machine. You know, regardless of what's going on, a particular custom designed OEM piece may be just that exact piece of equipment only sold to that OEM, but the foundation of it is always kept. The intellectual property belongs to Astro Machine. A derivative of that could be sold to someone else. In some cases it's restricted. A direct competitor couldn't buy the same exact thing. There's generally, you know, if you're looking at inkjet printing, there's a lot of variations on that. Some of those end up in products that goes through as a distributor product. You know, for example, in label printing, where they could sell it to anyone that, you know, needs labels. Okay. Is there a particular customer concentration? Yeah, in certain mail handling accounts, yes. Can you say like top three or top five, roughly what percentage of sales they may be? No, we wouldn't wanna disclose that. Okay, thanks. Sure, George. There are no further questions at this time. Mr. Woods, I turn the call back over to you for some closing remarks. Great. Well, thank you everyone for joining us here today, this afternoon, and we'll look forward to keeping you up to date on our progress. Stay well and enjoy the remainder of summer. Bye for now. This concludes today's conference call. Thank you for your participation. You may now disconnect.