Hello, everyone. Good afternoon. Welcome to the final day of the 26th Annual Needham Growth Conference. My name is Chris Grenga. I'm a research associate on the Advanced Industrial Technologies team at Needham. We're pleased today to have AstroNova with us. Through its product identification segment, AstroNova provides an array of product marking and identification solutions, including hardware, software, and supplies for OEMs, commercial printers, and brand owners. AstroNova's test and measurement segment also provides aerospace-grade products designed for airborne printing solutions, avionics, and data acquisition. The company was founded in 1969 and is headquartered in Rhode Island. Presenting from the company today is President and CEO Gregory Woods. Thank you for joining us, Gregory. Gregory will present an overview of the business, and then, time permitting, we will open it up for Q&A. You can submit your questions through the web portal, and I will transmit them to Gregory. Without further ado, Gregory, take it away. Great! Thanks a lot, Chris. And thanks, everyone, for joining us here today. Pleased to be with you. So this presentation, by the way, is available on the website for downloading. So some slides I might go a little bit quickly through, but feel free to download it at your discretion. And just a reminder of the safe harbor statement. There could be forward-looking statements in this presentation. So just some background on the company. As far as this presentation, we're a January 31 year-end, so we're actually just finishing up our Q4. So the data here will be Q3 data or trailing 12 months Q3, as far as our fiscal 2024 year is concerned. The company, you know, for the 2023, revenue was just under $150 million, just under 400 employees, and we do business over 150 countries around the world. To give you a feeling for the two segments that Chris referenced there, so our test and measurement business is about, runs in the 30%-33% of our business. Most recent, TTM was 29%, with the product ID being the much bigger segment, which is, was 71%. And then from a company-wide perspective, how that breaks down, and one of the things we really like about our business is that we have a very high recurring revenue piece. Our supplies is 54%, and the service and other contracts that we have, parts, et cetera, is another almost 20% from year to year, but typically 10%-13% as of late. And that leaves you about a third of our business, which is hardware, kind of new hardware sales. If I look at the growth playbook that we've been running, really, this really hasn't changed much in terms of the four key elements of our playbook as far as the last 10 years or so. The product innovation, you know, of course, new product introduction is a big part of what we do. We'll see some of this as we go through the deck. Strategic M&A, we do to a fairly good degree. We've got seven different transactions in the last 10 years, and that's how we augment growth and look for opportunities to expand our business market share, as well as new adjacencies. Operational excellence is a key piece of our operating philosophy, right from the strategic plan all the way through to the execution, and we call that the AstroNova Operating System. And finally, geographic expansion, we've done quite a bit over the last few years. As I referenced, we have business over 150 countries. And just take a look at those four elements here, and then we'll go into the segments. Okay, so the product identification segment is primarily label printing. So color label printing is our focus. You have primary labels, things that are gonna go on food and beverage, things you might see in a grocery store, drugstore, that type of thing. And we've got an overprinting part of that business we added about three years ago, where we can print directly to packages or directly on flat packages, you know, envelopes, things like that. The test and measurement segment has two product lines. One is aerospace, and the other one is called test and measurement, kind of where the company started back in 1969, which is data acquisition products to collect data from rocket telemetry and other sources. In the aerospace business, the main product line there are flight deck printers, and again, we'll talk about all of these as we get into the segments. Here's just a quick look at the more recent acquisitions that we've done to accelerate our growth and expand our market share. In the aerospace business, we acquired three different product lines from various companies, including most recently, Honeywell in 2017. And in the test and data acquisition business, you know, two different acquisitions. One was TrojanLabel for kind of a higher-end products and light commercial production. And then last year, we acquired a company called Astro Machine, based in Chicago. The Astro operating system I referenced is really how we do the long-term growth and planning of the company, from strategic plan right through the lean tools that you would typically see in our continuous improvement. And then product innovation, of course, is a part of that. From a geographic perspective, we have headquarters in Rhode Island, where the company was founded, and that is our Americas headquarters and production facilities. And then we've got EMEA covered out of Frankfurt, and then in Asia Pacific region, we've got Shanghai headquarters, but also aerospace support out of Singapore, and then a second sales and tech support office in Kuala Lumpur. So you can see how we're spread out geographically there. And then we also have our sales, our direct sales function with over 100 different reps and dealers. This map just gives you a quick idea of the countries that we're in. As you see, it's pretty geographically distributed amongst those 150 countries. So just taking a look at the segments now, starting out with the biggest, which is product identification. The great thing about this business for us, besides the high recurring revenue, is that we have a unique position in the marketplace. We're the leader in the on-site digital label printing business, and we actually invented that back in 1994 with the first digital color label printer that could be used on-site. Give you an idea of the four key elements that we have in that really make us unique. Of course, we have competitors that can make a printer, and they can make the ink or toner that goes into that printer, but that's pretty much where most of them fall away. Because we invented this industry, we actually created our own software that not only runs the machines and the interface to the machines but also takes care of the full label creation, library, and storage. So it's a great integrated package that comes with our machines, and it's only available for our printers. In addition, one of the things that makes us so unique in that business is the label media. So we're one of the largest consumers of inkjet-receptive label material in the world. We convert that down. We have over 100 types of raw material that we convert for our customers into the shapes and sizes and, you know, textures that they need, you know, including different types of adhesives. It's a pretty, you know, advanced manufacturing setup that we have, and we got a big... The biggest facility is in Rhode Island. We also have secondary facilities in Canada and in Germany to support customers worldwide. Typical deliveries, you know, seven-eight days from order to delivery. So it gives the customers everything they need, and then we have both front-end and back-end support, so to help with them making the right decision through our product lineup, we have a good array of products. But to give them the best label solution with the lowest total cost of ownership, and then after-sales support as well. If you look at the breadth of product, it's grown quite a bit over the last 10 years or so, you know, from our newest entry-level product, which just was introduced earlier in 2023. It's a little tabletop unit, a totally self-contained, nice 7-inch color display, very easy to operate. You can just put a USB stick in there with your files and start running it or put it on a network. It works great for standalone small applications. We've also found great homes for it in larger production facilities, you know, where people might have 20 or 30 production lines, and they wanna have a printer right at the end of each one but wanna keep the cost down. And then we go up into the tabletop business, up into the light production, and then medium production equipment. And we also added, three years ago, the overprinting solution, where we can print directly on packages, boxes, bags, those type of things. And you can take a look at this slide on your own. Just gives a little more detail on this newest E100 product. We brought in three new products in Q3, so a good expansion of our mid-level tabletop business was the QL-900. It sells very well. It's 8-inch wide printing, very high speed, and beautiful full-color, photographic-type color output on the labels. And then t mid and high high-end kind of printing solutions, the T2-PRO and the T3 Pro, designed for higher production runs, higher volumes. The T3 Pro also is used quite a bit in our newer OEM business. So a couple of years ago, we started an OEM focus, where we can design printing engines into our customers' machines, and then they, of course, sell that full machine. Great example of that is paper bag-making machines, where people wanna be able to print directly on the bag as they're making it. We have collaboration with a number of OEMs, where they've designed our print engines, like this T3 Pro we're showing here on the right, directly into that production machine. Again, just to kinda keep things moving along, I'll kind of skip over this slide, but it gives you an idea of the different types of products and different value propositions. The one thing I'll highlight that's not always obvious to people is the QL-300. It's four color but also white, and the benefit of that is you can print on multicolored materials, you know, black labels, for example, gold, silver. It kind of expands our range quite a bit. Let me give you an idea of, well, where are these labels used? 'Cause we get that question a fair amount. It's a wide variety of industries, so it's actually great 'cause we're always finding new places and new applicability of these printers in different industries. But still, by far, the biggest segment for us is food and beverage products. That was really big in COVID as well, with a lot of takeaway and smaller companies getting into that business. The next biggest segment for us is kinda what we call chemical and cleaning supplies. And then you have medical products, you know, things like, even, like, CBD products, e-liquid. And one of the key denominators amongst all those different businesses is it's a high mix, right? So high mix and medium to high volume, as opposed to, for example, a Tide bottle, where you're gonna make millions of the exact same label. This is for customers who have a wide variety. They're not exactly—can't predict exactly when they're gonna need which labels. But the beauty of the digital label printer, every label that comes out of the machine can be different. So it's... makes their life much easier. They don't have to stock a lot of different labels. If regulatory changes come through, the labels that they had pre-printed are junk, basically. So this way, it's a much lower total cost of ownership. With the Astro Machine integration that we did, we've owned them now—it was a year in August. They expanded into a nice adjacency, which is flat pack printing, also things for like for mailers, you know, things you get in the mail. Some people kind of call it junk mail, but, you know, a lot of things that come in color, those would be things that are printed on the machines that are made by Astro Machine. And also they made, about a third of their business was label printers that they made for some of our competitors. So that kind of helped us with our market position. And the third area that I highlighted earlier is this direct-to-package printing, which is really growing. And you see a few different examples here. There's some of the paper bags, so take away food. And wine has always been a big part of our business in terms of the labels themselves, but now we're printing directly on, you know, the cases. You know, they do a lot of customization, you know, for parties, year-end things, weddings. And they can customize not only the wine label itself, but the wine package. And I won't go through the details of this slide, but one of the big drivers that is accelerating this business is more and more people are getting into the e-commerce delivery of their products. And the best way to do that, the most economical way, is to have the package pre-labeled so you can actually push it right through, whether it's Amazon or some other source, even direct. It just reduces their costs. And we've seen a nice uptick driven by the e-commerce. And internally on e-commerce, we did launch last year our first e-commerce platform, so our customers can actually go browse products, buy them, kind of a, an Amazon-like type of experience, where you can select your products, you can go through our label inventory. We have over 5,000 SKUs of labels that are already existing, but also you can give us your parameters, and we'll design one just for you as well. Turning to the financials, you can see the history here of the business. A little bit of a slowdown during COVID, especially in our retail business, but that's coming back now. But one thing I'd like to highlight is the Q3 year-over-year. So even though the revenue was down, and it had to do with supplies, so the supply side of our business was impacted a bit by a thing we've talked about before, which was an ink quality issue with one of our suppliers. Caused us to have to go out and, you know, recover machines, get them back online. We've got through most of that now, but that did impact the revenue. But, you know, we'll see that we did make a significant improvement in our operating margin, with almost a doubling there from, you know, 9.9% to 18.1% Q3 over Q3. And some of that had to do with the restructuring, and I'll talk about that right here. So after owning Astro Machine for a year, you know, kind of our plan is, and usually it's about a year, that we take a look at well, how do we best rationalize this business? There was a fair amount of overlap in products and manufacturing capability and such. And in Q2, we announced the restructuring and called that out. We took a lot of manufacturing, consolidated it into our Astro Machine facility, which has great capability from a manufacturing perspective, very vertically integrated. Let us reduce outside suppliers and also a bit of a reduction in our Rhode Island facility, moving that production into Chicago's facility with Astro Machine. And also, you know, product line overlaps and dealer overlaps and, you know, some personnel reduction. So all of that combined with another thing when I mentioned this ink issue, we wanted to put that to bed quickly, so we did a very aggressive investment in the new equipment to get customers upgraded who have issues quickly into new products, so they can print and use more supplies. So all told, that was a $3.5 million charge. We expect, in a go-forward basis, starting in Q3, an annualized $2.4 million cost savings. And roughly in Q3, I think we're in the range of $450,000 of that already realized. So, we're kind of right on track for that. Switching to the other segment, test and measurement. So as I mentioned, the biggest part of that business is the AstroNova—basically what we call the aircraft flight deck printer business. That's in their aerospace product line. And I usually include this slide because a lot of people aren't even aware that there's a printer in the flight deck. Of course, you can't use ink or toner or things like that in a cockpit. So this is thermal paper. It's a very specialized, regulated paper that we supply the printers. You know, this output lasts for six years or more, typically. Not like your gas station receipts you can't read in two weeks. It's a whole different technology. And these printers are in the cockpits of almost all airplanes you'd ever fly in, and it's there for workload reduction for the pilots, as well as a safety feature. And the one kind of printout I had is fairly recent. I remember last year, we had that white balloon flying over the country. So this is with a flight deck printer, what ATC can do, or even the, you know, the company in American Airlines, United, whatever, they can send messages directly to the plane. It comes over the printer. Pilots hear it run, they rip it off, and they can see what it is. It's information they typically wanna keep and have hard copy of, even if there might be a way to get it electronically. They wanna keep their primary flight display and multifunction displays focused more on the workings of the airplane. The only other way you could do this in the past without printers is, you know, ATC. They have to call up each plane one by one. For example, in this case, it's, you know, talking about a sighting of a balloon between 40-50,000 feet, gives the coordinates and warns the pilots to be on the lookout for it. If you see it, call ATC. In basically one push of the button at air traffic control, they can send it to every plane that they want to within a certain sector or actually worldwide. So it's a fantastic feature, really cuts down on the communications traffic, and is very beneficial to both air traffic control and the pilots. So I mentioned we did three acquisitions in that space, and we've, you know, basically a roll-up and consolidated most of that industry. And the three big transactions there were Honeywell, Miltope, and RITEC. You know, we acquired those product lines, and you'll see in this pie shape here, the red ToughWriter, that's our brand, the AstroNova brand, and we're getting a bigger, bigger piece of that. We're trying to move as many aircraft platforms as possible to the ToughWriter brand, you know, both for operational efficiencies, which of course, as the volume goes up, it's a big help, and we started out with 50-some SKUs. But also profitability point of view, it's much more profitable for us to use a ToughWriter product. Yeah, we had over 50-some SKUs before, and we keep reducing that down. The biggest impact, and you see Honeywell disappearing completely here in this three-year window, this process we're going through. And that's especially important because with the Honeywell product line acquisition, there was a 10-year royalty agreement that went through that. So we pay $ millions a year to Honeywell. And as we reduce the printers that are Honeywell technology-based, you know, even though we're manufacturing all of these, you know, it's just which brand do we acquire? Anything that's came from that Honeywell product line, we do pay royalties on. So we've just end-of-lifed the Boeing 737 availability for that product, and we're going through and doing that for other platforms as well. And the Miltope and Rytec are smaller volume pieces, but we're doing the same thing across the board. So we think we'll be close to 90% of the products that we ship in 2027 will be the ToughWriter brand. And to give you an idea of this, you know, strategy that we had in this industry was really to cover the waterfront, or I should say air front, maybe. But we wanna cover the whole basic supply chain. So the aircraft OEMs are the people who make the planes, your Boeing and Airbus, Embraer, those people, and Gulfstream. The tier one integrators are Honeywell, you know, Thales, people like that, who supply to them, and then we have airline direct. So in each one of those phases, there's different price differences, obviously. So what we're gonna do is get as much as we can directly, you know, to the person who's actually writing the check. And because of that, we have over 200 airline contracts right now. We have tier one contracts, and most of the OEMs that make aircraft are our direct suppliers. So for a relatively small company like AstroNova, that's a fantastic achievement by our team to be able to do that. Yet there's a huge quality hurdles for that. We've invested many millions of dollars into our facilities over the last seven, eight years, and we've now got all of these certifications, which not only helps us with our existing customer base and the, you know, flight deck printers and Ethernet networking systems, but also puts us in a great shape to be able to do additional acquisitions and drop them in without any approval issues. The macro, as I'm sure anyone who's been flying, is very—you're very well aware of how great the macro trends are right now for aerospace. So it's back, the latest estimates are we're at 90% of where we were at the peak, and this year, in 2024, we'll get—we'll kind of blow through that peak and keep going. What I'm showing in this slide, just the 737 and A320, so the Airbus and the Boeing, you know, lead products, single-aisle products. These two airplanes make up roughly 60% of all commercial deliveries, so it's the most meaningful thing to take a look at. The other models typically follow a, you know, similar kind of trend here. They're trying to get planes built as quickly as they can, which is great for us. The next slide just gives you an idea of some of the different platforms that we're on, for reference, but it's, you know, it's commercial, regional business jets, military, military transport, and tankers, essentially. We also have some presence on in-flight entertainment systems. The other part of the test and measurement segment is the data acquisition business, which is where we started out with the rocket telemetry. Still today, most Air Force bases use our product. NASA does, SpaceX, so people launching rockets or missiles are the biggest customers there. So, just from an investor point of view, keep in mind that those contracts do make it a bit lumpy. We don't know exactly when they're gonna come in, but so that's something to kind of keep in mind. And there are other uses for this product. We have a small team that focuses on alternative uses, and we've made some good intros into power and energy, nuclear power plants, we've got a number of those, as well as solar plants. And then, you know, kind of, the resource centers, data centers, backup UPS monitoring has been a one that's worked out recently pretty good. Looking at the financials for the test and measurement segment quickly, you can see, you know, some decent revenue growth year-over-year, but again, a big improvement in our operating margins. With that, I'll just kind of wrap it up. I'll let you guys read through these, but coming back again to our four elements of our strategic plan here. Product innovation, you know, a lot of new product introductions. You'll see when we release our Q4 numbers in March, there'll be some additional new products that we'll let you know about that are already out in the market. And then we've got more M&A hopefully working on. We're always working on some deals. We hope to do one or two deals a year, but it really depends on the economics and the fit. We're fairly picky buyers, so we're very conservative from that perspective. Geographic expansion, we're located in the three different continental regions of the world, but within those, there's, you know, dealer opportunity, and we'll be adding, you know, direct sales force and tech support people as well. And finally, the operational excellence, you know, following our AstroNova operating system is how we run our business. So last slide, kind of key reason to invest both in the test and measurement segment and in the product identification segment. We've got lead market positions, well-known brands, high recurring revenue, which is fantastic, and then, capitalizing on the growth of these different secular trends, you know, markets coming back and our product identification, like retail I mentioned, was down, that's back. And, you know, people buying products with labels on it to just overall growth in that. And, of course, aerospace, it's well known what's going on, that nice growth curve there. And finally, M&A, you know, we're always on the lookout for, you know, good acquisitions. So with that, I'll take Q&A, and I also have my EA's email on here, nmitson@astronovainc.com. Anyone who'd like to have a follow-up call, you can contact her, and we can set up a call to follow up. But with that, take any questions you guys have. Thanks very much for that overview, Greg. I just wanna remind the audience that if they have any questions, they can use the web portal to submit them, and I will relay them to Greg. And while those are populating, I've got a few questions. Maybe with respect to the cockpit printers, are those regulated by law, and would there be a required change in law to displace those? It seems... It sounded like it's a pretty sticky purchase, and those are going to be embedded in aircraft platforms for some time. I'm just wondering if you could just talk about that. Sure. Yeah, a few things. So first of all, nothing happens fast in aerospace. You know, we first started out with, when I first, I'm a pilot also. So when I got the company, I go, "This is great. We'll just go, we have a low-cost product. It has all these great features. We're gonna sell it to everyone." But what I didn't realize is that, you know, they're averse to change, and they're like, "Well, if you wanna get in here, it's gonna take you three, four years, and you're gonna pay us, you know, pay the airline or pay the OEM to make the changes in all their documentation." So they just don't wanna do it. There's a huge amount of testing you have to do. So we did the M&A route instead. But the same thing kind of keeps us in there. And the way our contracts are, they're written, for the most part, till there's three aircraft flying anywhere in the world. So they're virtually kind of, you know, 20-year-type deals. And to answer your, well, would they, could they go away? Yeah, anything could happen, but I'd say as long as there's pilots in the cockpit, there's gonna be a printer in the cockpit, 'cause the pilots love them. It's, you know, like I said, it's a workload and safety feature. There are regulatory requirements as well as company, like company would be like a, you know, American Airlines, United, requirements to have the printer, especially if you're doing over-the-water flights, because it's a communications issue there, especially. You can't take certain routes if you don't have this. Also, certain countries have additional requirements that you have to have paper documentation that the pilots would sign off on. There's a lot of reasons why it's gonna be around for quite a while, but, you know, you know, fast in, in the aviation industry is, you know, they could do something different in 10 years from now, but, you know, unlikely anything before then. Got it. Thank you. On the product ID side, to what extent are the inks and the label media proprietary supplies, and are there any third parties that are supplying the devices themselves? Yeah. So to your last point, you know, no. So these are industrial products as opposed to, like, your home printer, where you can go on Amazon and buy a different ink for it. So it's, it's married to the print head manufacturer, and we don't make print heads. Those are, you know, big semiconductor devices. We need an extra $100 million fab probably to go make this, so, so we do buy those from third parties. And typically those third parties, there's a few that don't, but most of those require you to use their ink, and, you know, the two things come together. But once it gets rolled into our printer, regardless of how we get it, it's all locked to our printer, so you can't put any third-party device in there. Some people... Yeah, we have a lot of protections, even, like, the drill-and-fill people try, and then they end up ruining their printer. And of course, you void our warranty. So yeah, it's, it's sticky in the sense of, you know, you're gonna wanna- you don't wanna try and fool around and change the printer, 'cause you'll end up breaking it and then buy another $10,000 printer from it. Great. And could you maybe talk about the competitive landscape on the product ID side? Who are you coming up against, and maybe by each application or use case, if you could? Yeah. So the biggest competitor, you know, overall, so if you talk about that $3 billion pie of what, you know, this—what we can actually get data on, right? Digital printing, this label printing is about $3 billion globally. And the on-site digital label printing, which is what we do, you know, which is a small to medium-sized printers, that's roughly 10%-15% of that pie. It's hard to get an exact number on that. And then within that segment, you know, this on-site digital label printing, we're actually the leader in that piece of it. So the biggest competitors, of course, the guys who have, you know, 85% of the pie, you know, commercial printers. And that's where we get more than half of our new customers, is people that are just used to buying from a commercial printer, and whether they had a bad experience there or they don't wanna, you know, deal with the minimums that they have to deal with that or the longer lead times, then they typically contact us, and we get into negotiation. We do have, you know, competitors actually who make other, you know, printers that can be used on-site like that, but they're pretty much across the board. They're coming from Japanese companies that make copiers. That's kind of the biggest source of it. You think about, you know, Canon, Epson, OKI, people like that. But they sell those through their business machine networks, and then those networks then go out to different dealers. So you'll get a variety of different experiences out there, but like I was mentioning in the presentation, they're typically just gonna give you the printer and the ink or toner, whatever goes into it. So they wanna sell you those two things, but they're not gonna... You know, You know, the software, they'll direct you to a third-party software package. Service and support depends on how good is it from that dealer, and then the label media is a big part of it. You know, we have well over 100 types of raw materials, and I said, you know, over 5,000 SKUs, and quick delivery. There's no one else that has a setup like that for this business. So it really depends dealer to dealer what kind of results you're gonna get. So we typically win 70% of those head-to-head competitions when we're in against one of those business machine dealers. Great. And you had alluded to, perhaps an opportunity to streamline the channel. Could you just talk about the distribution network and maybe what the opportunity is there? Sure. Well, the initial streamlining we did when we did the kind of reorganization and rationalization of the PI business back in Q2. So we had overlap between the Astro Machine dealers and reps and some direct, as well as AstroNova. So we said, "Well, let's just pick the best of the bunch," and then, you know, where we had maybe non-performing dealers or dealer overlap, we kinda give the business to the better of the two dealers, for example, in that case. So that's mainly what we did. Now we're back into, it's a fully integrated, you know, sales force, and we're just looking at, well, where is there additional opportunity? You know, if we think, particular region demand is up beyond, you know, what three people can handle or whoever's in that region, you know, we'll add a fourth or a fifth. So that's kind of the mode that we're in now. Great. Well, thank you very much, Greg. Thank you for the overview of the business. I think, I think we'll leave it there, but appreciate you joining us today. Great. Yeah, thanks a lot, Chris, and everyone else who joined, and, yeah, if you have questions, feel free to reach out to us, and anyone who's in the kind of Boston, Rhode Island area, let us know if you'd like to stop in for a tour. Have a good day, guys. Thank you.