Good day and welcome to the AstroNova's Third Quarter Fiscal 2021 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the call over to David Calusdian, of the Company’s Investor Relations firm, Sharon Merrill Associates. Please go ahead, sir.

Thank you. Good morning everyone and thank you for joining us. Hosting this morning’s call are Greg Woods, AstroNova’s President and CEO; and David Smith, the Company’s Chief Financial Officer. Greg will discuss the Company’s operating results, David will make a few comments on the financials, Greg will make concluding comments and then management will be happy to take your questions. By now, you should have received a copy of the earnings release that was issued today. If you do not have a copy, please go to the Investors section of the AstroNova website, www.astronovainc.com. Please note that statements made during today’s call that are not historical statements of historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1934. 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 7, 2020. 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 the other filings the Company makes with the Securities and Exchange Commission. On today's call, management including risks being concerning to the non-GAAP financial measure earnings before interest, taxes, depreciation and amortization, or even EBITDA. AstroNova believes that the inclusion of this measure helps investors gaining meaningful understanding of the changes in the Company's core operating results and also can help investors who wish to make comparisons between AstroNova and other companies on both a GAAP and non-GAAP basis. A reconciliation of this non-GAAP measure to its more directly compatible GAAP measure is available in today's earnings release. And with that, I'll turn the car over to Greg.

Thank you, David, and good morning everyone. Thank you for joining us today. We performed in line with our expectations for the third quarter, particularly in light of the ongoing effects of COVID-19. In the Product Identification segment, revenue and operating margin increased sequentially and year-on-year, while in Test & Measurement our results continue to reflect the effects of the pandemic on the commercial aerospace industry. Let me touch on each of these segments. On the Product Identification side, we're seeing the benefits of our new and fully-updated product offerings combined with the expanding emphasis on digital, sales and marketing. Our enhanced digital presence highlighted by our new website at astronovaproductid.com has been very well-received. Earlier this quarter, we launched the new site globally, which integrates our QuickLabel, TrojanLabel and GetLabel brands into one comprehensive site with state-of-the-art interactive capabilities. This site includes digital educational content such as online demonstrations, eBooks, White Papers and blogs to help customers to make informed decisions. The response from the user community to all of the newly added digital thought leadership content has been very positive across the board. Product Identification revenue in the quarter of $22.9 million was up more than 5% year-over-year, nearly 6% on a sequential basis. Segment operating profit increased by 87% to $3.5 million due to the higher revenue as well as operating expense reductions. These results were driven by strong demand for our printers and suppliers through our new color label printers such as the QL-120X and the QL-850, as well as their recent release wide format, direct product and packaging printer, the T3-OPX, which continues to exceed our expectations. The rate of new customer acquisition was also favorable, which contributed to the segment's strong performance in Q3. Innovations in technology and applied marketing are cornerstones of our…

Thank you, Greg, and good morning everybody. Rather than repeating all the information on the earnings release, I'll just highlight a couple of key points about our P&L and balance sheet. In light of the ongoing economic impacts of COVID-19 and the 737 MAX impacts on us, in Q3we again remain focused on cost control initiatives as a result of actions that we've taken this year, including in the third quarter, operating expenses declined by about $2.5 million or 21% from the year earlier quarter. Through the first nine months of fiscal year '21, operating expenses are down $5.3 million or nearly 16%, which is about the same as a revenue percentage drop over that period. As a reminder, in the second quarter, we reduced executive compensation imposed across the board freeze on all other employee compensation in 2019 levels and reduced the host of expenses in professional and other services, travel and tradeshow expenses, and so forth. For fiscal 2021, we're still targeting in more than $7 million reduction in operating expenses compared with fiscal 2020. On a percentage basis, we're aiming to have the expense reduction exceed the decrease in revenue. One potential risk that targeted reduction is an uptick in COVID cases that is effective so that the past month and could result in higher personnel expenses in Q4. The operating margin in the quarter was 1.5%, up 20 basis points from the same period last year. As for non-cash charges, depreciation and amortization were $1.4 million and share-based compensation was 591,000. EBITDA in the quarter was 1.7 million or 6.1% of revenue. Through the first nine months of the year, EBITDA is 6.1 million or 7.1% of revenue. On the other expense line, we've reported expensive 436,000 in the quarter which primarily reflects interest expense and…

Thanks David. Looking ahead, we're optimistic that the third quarter momentum in our Product Identification business will continue in Q4, an exciting growing base of new customers and the ongoing ramp up of new products. On the Test & Measurement side, we're expecting fourth quarter revenue to be stronger than the third quarter based on anticipated contributions of shipments for defense applications. Now, David and I'd be happy to take your questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Dick Ryan with Colliers.

Greg, you mentioned on the Product ID side some new customer acquisitions. Can you give us a sense of how many new customers have come in? Or maybe just from a geographic standpoint, where are you seeing strength and weakness in the Product ID side with your new marketing initiative?

Sure. It's really pretty widespread, quite frankly, I mean, we still have some sectors like retail are not feeling well, but a lot of our segments now seem to be doing fairly well. The new customers North America, Europe and Asia, all have a good contribution of new customers. It's partly driven by new product because it's in the new market areas, as I highlighted. For example, the T3-OPX, which instead of printing labels, we shouldn't apply to a product. You can print directly onto packages, bags, would hold a variety of things. So that's opening up opportunities with, for example, commercial printers, as well as brand owners. So, they're new customer markets for us. And then even in the label business, we're getting more and more new customers as opposed that we always track percentage of upgrades, we were very high loyalty with our customer base, so that stays pretty consistent, but we keep a close eye on the actual new customers and new markets. One example I could try out there, which we pretty much see all across North America's CBD business. So, we're getting quite a few new customers there I think in a variety of states and territories.

Any COVID driven business creating opportunities for you?

We're still seeing that in terms of the janitorial cleaning supplies, chemical products that is actually still ramping, as well as medical products. At recent, we have several kind of PPE-type customers and actually medical tests companies too where you can label business. And recently, we've got few new customers and kind of the eye care area, which I don't that's really COVID related, but just a better penetration overall for our business within the medical industry.

On the T&M side, the sequential increase anticipated for the aero side, is that pretty much driven by these new military contracts? And maybe a bigger perspective on the 737 MAX issue, is there the printers inventory has have to be worked through as their production ramped kind of slowly improve? Or is that kind of a book and ship business with our level of production?

Yes. So, with the Boeing 737 MAX, it's a bit of a mix. I mean, Boeing does keep some inventory, but they don't keep a lot. It's mainly customer purchase printers, which we then directly shipped to Boeing for their aircraft assembly as is coming on the production line. And as you know, as we started, but it's kind of in the single digit type of numbers as far as installing aircraft production, but we are seeing increases and then we'll mention the extra aircraft models, but there are some of them that we went through a dry spell of very low to no orders for several months. We have started to see those orders come into, a good chunk of those won't get until next fiscal year, but it's a good sign that moving in the right direction. So, what I'd say is, it's a mix of a slow uptick in the commercial business versus the head that going in the other way. And then, we do have a few of these different defense contracts that are due to shift in actually December and January that should give us a bit of a bump here in the fourth quarter.

Okay, what does the Honeywell handoff? And I mean, obviously, it's you've got the COVID issues, but how much longer do you anticipate that impacting margins?

We're hopeful to wrap that up this quarter. I know we've been trying to get it done for a few quarters here, but COVID did have some impacts in terms of restructuring at other -- both at Airbus and Honeywell as well as our own organization. So that a little disruption to the contract negotiations, but we're certainly in the final stages right now. I would say, very high probability that we'll have it done in Q4. And then, that will -- the impact will start pretty much immediately from there.

Thank you. [Operator Instructions] At this time, I am showing no further questions. I would now like to turn the call back over to Mr. Woods for closing remarks.

Thank you all for joining us here this morning. And on behalf of everyone at AstroNova, have a wonderful safe and healthy holiday season, and we look forward to keeping you informed and updated on our progress. Goodbye.

Thank you, ladies and gentlemen. This concludes today's call. Thank you for your participation. You may now disconnect.