Good morning, and welcome to the AstroNova Fiscal Fourth Quarter and Full Year 2025 Financial Results Conference Call. Today's call is being recorded. My name is Ezra, and I will be your coordinator on today's call.

[Operator Instructions] 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, Ezra, and good morning, everyone. Our Q4 fiscal 2025 earnings release and the slide presentation accompanying management's prepared remarks are posted on the Investor Relations page of our website, www.astronovainc.com.

Turning to Slide 2 of the 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, April 14, 2025. 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 help 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 3. Hosting this morning's call are Greg Woods, AstroNova's President and Chief Executive Officer, and Tom DeByle, AstroNova's VP and Chief Financial Officer.

Greg will begin the call with management's -- an overview of management strategy to make AstroNova a stronger company. Tom will review financial results and pass it back to Greg for concluding comments. We'll follow the formal presentation with time for management to take your questions. Now, please turn to Slide 4 as I hand the call over to Greg..

enhanced versions of the MTEX's ATOM2 and ATOM3 label printers will be launched as the QuickLabel-425 and 435, respectively; the MULTI 800 and the MULTI 1300 industrial packaging printers will be launched this summer under the new VERSA-PRINT brand; and in the fall, we will introduce the VERSA-PRINT 1200, the next-generation of our MTEX's AQUAFLEX flexible packaging system.

The charts on Slide 11 depict how these next-generation products can increase consumables revenue through increased usage of label media and supplies. We anticipate a meaningful increase in average annual label media and revenue on a per installed unit basis for our next-gen mid-market printers.

Ink consumption is also projected to rise, reflecting both increased utilization and the flexibility of our new print engine technology.

In our packaging printer lineup, the next-generation systems feature wider formats and higher throughput, which naturally lead to greater ink usage per installed unit, further supporting our consumables-driven growth model. I'll now hand the call over to Tom for the financial review.

Tom?.

Thank you, Greg, and good morning, everyone. I'll begin with an overview of our financial performance on Slide 13. Net revenue for the fourth quarter was down 5.6% to $37.4 million on lower sales in both segments.

Gross profit was $12.7 million for the quarter, resulting in a gross profit margin of 34.1%, down from the prior-year period, compared with the gross profit of $14.7 million and a gross profit of 37.2% for the same period in fiscal 2024, reflecting lower revenue and less favorable product mix in the 2025 period.

Q4 FY '25 showed operating expenses of $25 million versus $10.8 million in Q4 of FY '24. As noted in our earnings release, our GAAP results included a $13.4 million non-cash goodwill impairment charge related to the PI segment, largely associated with the company's MTEX business.

Unless otherwise noted, I'll be discussing our non-GAAP results, which we believe help investors gain a meaningful understanding of the changes in the company's core operating results. Non-GAAP operating expenses for the fourth quarter were $11.4 million, up 4.8% or $0.5 million from the prior year. Excluding MTEX, operating expenses were down.

Non-GAAP operating income came in at $1.4 million for the fourth quarter versus $3.6 million in the year earlier period, primarily due to lower sales volume and a loss at MTEX. Adjusted EBITDA was $2.8 million for the fourth quarter of fiscal 2025 compared with the adjusted EBITDA of $5.2 million for the fourth quarter of fiscal 2024.

Order backlog was $28.3 million as of January 31, 2025, compared with $31.4 million at the end of fiscal 2024. Turning to our PI segment results on Slide 14, revenue was down 3.6% from the prior-year period to $25.7 million. Excluding MTEX, sales in PI were down 9.8%, primarily due to lower sales of hardware and supplies.

On a GAAP basis, our PI segment reported a loss of $11.2 million, primarily driven by MTEX and a lower unit volume. On a non-GAAP basis, the PI segment recorded an operating profit of $2.3 million or 8.9% of revenue compared with the segment operating profit of $3 million or 11.1% of segment revenue for the fourth quarter of fiscal 2024.

This segment is not expected to perform strongly out of the gate in fiscal 2026, but we expect that these actions we are taking on cost reductions and portfolio realignment will be demonstrated as we move through the second half of the fiscal year.

Moving to Slide 15, Test & Measurement, or now known to be as Aerospace segment, revenue was down 9.9% in the quarter from the prior-year period to $11.7 million The decline was primarily due to a delayed defense order and, to a lesser extent, deferred deliveries associated with the Boeing strike.

Segment operating profit was $2.3 million for Q4 2025 versus $3.7 million in the prior year. We have some benefits for the Aerospace segment as we advance through the fiscal 2026 to include the release of the $2.2 million military transport contract, a major OEM transition to the ToughWriter and easier comps as we lap the Boeing strike.

Looking at our balance sheet and leverage on Slide 16, cash and cash equivalents at the end of the quarter were $5.1 million, up $700,000 from the end of Q3. Funded debt decreased by $2.2 million to $46.7 million from $48.9 million at the end of Q3. Liquidity was $9.7 million at the end of the quarter, down from Q3 by $5 million.

The revolver in our fourth quarter was reduced from $30 million to $25 million on the existing bank agreement with Bank of America, causing a drop in liquidity by $5 million. Turning to cash flow on Slide 17, in fiscal 2025, we generated cash from operations of $4.8 million compared with $12.4 million for fiscal 2024.

Free cash flow was $3.7 million versus $11.5 million in the year-earlier period. Free cash flow for the fourth quarter was $2.4 million compared with $6.9 million in Q4 of fiscal 2024. This reflected lower net income from our legacy business, operating losses at MTEX and higher inventory in the 2025 period.

Turning to guidance on Slide 18, as we stated in our pre announcement of April 7, for fiscal '26, we are anticipating net revenue in the range of $160 million to $165 million, representing a year-over-year growth of 7.4% at the midpoint from fiscal 2025.

For the adjusted EBITDA margin, we are anticipating a range of 8.5% to 9.5%, representing a year-over-year growth of 60 basis points from fiscal '25 at the midpoint. There are two key drivers behind our growth assumptions.

First, the successful integration of our new print engine and ink technology in PI, which should begin to contribute to our results in the latter part of the fiscal year.

Second is our new Aerospace segment, the continued transition of the OEMs and airline direct customers to our ToughWriter branded family of printers from the other brands in our portfolio. Now, please turn to Slide 19, as I hand the call back to Greg for his closing comments..

Thanks, Tom. In summary, we are laser-focused on integrating MTEX's transformative technologies across multiple printer platforms, accelerating growth in supplies and service revenue and working to unlock new market synergies.

By leveraging the proven AstroNova Operating System, we are seeking to expand customer offerings, achieve operational excellence and drive strong returns on investment. In Aerospace, we're advancing the transition of the ToughWriter printer line.

In the quarters ahead, we also plan to grow the service and supplies portion of the Aerospace product line and drive sales of our new TMX-200 data acquisition recorder. Profitability remains the priority.

We aim to increase sales of higher-margin hardware and supplies while completing restructuring efforts to streamline operations, take out costs and position us for sustainable growth. Finally, we're taking decisive action to reduce debt and improve cash flow through an inventory reduction program.

These initiatives reflect our commitment to financial discipline and delivering value to our shareholders. We made solid progress this quarter, but still have work to be done and are excited about the opportunities ahead. Now, Tom and I would be happy to take your questions..

Thank you very much. [Operator Instructions] I will now hand back over to Mr. Woods for any closing remarks..

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Thanks, everyone, for joining the call today, and we look forward to keeping you updated on our progress. Have a good day..

Thank you very much. That concludes today's conference call. You may now disconnect your lines..