Good day and welcome to AstroNova's Second Quarter Fiscal 2022 Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the conference over to David Calusdian of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead sir.

Thank you, Keith. Good morning, everyone and thanks 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 comment 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 we've issued today. If you do not have a copy, please go to the Investors page of the AstroNova website, www.astronovainc.com. Please note that statements made during today's call that are not 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, September 14, 2021. 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 will be referring to non-GAAP financial measures including non-GAAP net income and non-GAAP net income per diluted share, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP segment operating income, earnings before interest, taxes, depreciation and amortization or EBITDA, EBITDA excluding the CARES Act benefits and adjusted EBITDA and adjusted EBITDA excluding the CARES Act benefits. AstroNova believes that the inclusion of these measures helps investors gain a 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 most directly comparable GAAP measures is available in today's earnings release. And with that, I'll turn the call over to Greg.

Thank you, David. Good morning, everyone and thank you for joining us. We reported year-over-year and sequential revenue growth in the second quarter in both the Test & Measurement and Product Identification segments, as we capitalized on our positive demand picture across the business. Overall revenue of $29.8 million was up 8% from a year ago quarter and up 3% from the sequential first quarter of this fiscal year. Our sales performance is even more impressive when you consider the various global supply chain constraints and COVID-19 headwinds. While supply chain issues did not have a major effect on our second quarter, we were nonetheless unable to fulfill all the demand we would have [indiscernible]. Addressing these supply chain issues has our logistic teams working overtime to ensure that we get the required items needed into our manufacturing facilities in a timely and efficient manner. Since we expect these conditions to persist on and off throughout the year, we are increasing certain inventory levels as a precaution. I'm proud of the dedication and commitment of our team to operate as effectively as possible within this dynamic environment to get out product to our customers. Turning to our Q2 performance by segment, Product Identification revenue was up 9% to $23.1 with solid contributions across the product line. We saw sales increases in the hardware, supply, and service categories. Our T3-OPX wide-format durable direct-to-package printing system continues to receive positive customer reviews and is performing well in markets around the world. Brand owners, commercial printers, and their customers have seen the product's benefits in terms of greater efficiency and a higher return on investments. From a geographic standpoint, we saw continued improvements in summer markets from the realignment programs and additions that we have made to our global salesforce in various regions.…

Thanks Greg and good morning everyone. In addition to the revenue Greg discussed, we reported another solid quarter on the operating and net income lines as we continue to effectively manage costs while prudently investing to grow the business. In the press release we issued this morning, we've discussed both our GAAP and non-GAAP financial results and I'll take a few minutes to make some comments on this distinction so that you can understand the results a little bit better. This quarter, we recorded a benefit of two CARES Act programs. These were the Payroll Protection Program loan forgiveness and the impact of the Employee Retention Tax Credit or ERC program. To remind you, last year we applied for and received the PPP loan. The cash in that loan has been on our balance sheet since we received it, but this quarter that loan, both principal and interest was forgiven under the terms of the program. Therefore we eliminated the loan and the interest accrual amounts on our balance sheet and recorded the benefit of that forgiveness in our income statement as other income. In addition this quarter, as a result of some enabling legislation after the CARES Act we have qualified for the Employee Retention Credit and we report that in the second quarter. We get it because our revenues decline more than 20% from the calendar 2019 first three months to the calendar 2021 first three months, and we expect to see those cash benefits through our payroll tax filings, where we put the impact of this credit now under the rules the tax refund is pending. It's a receivable on the balance sheet and will revert to cash at some point before the end of the year. Later on today we'll file our second quarter 10-Q which…

Thanks David. [Technical Difficulty] And we did this in a quarter [Technical Difficulty] to bring great innovative products to market, adapt to a new selling environment. [Technical Difficulty] Looking at the remainder of the year, we expect to report [Technical Difficulty] continue to improve demand in the Product Identification segment. [Technical Difficulty] We’re well positioned to capitalize on many growth [Technical Difficulty]. We continue to focus on our core strategic talents. Now Dave and I would be happy to take your questions.

[Operator Instructions] I'm going to take our first question; it comes from Dick Ryan of Colliers. Please go ahead.

Thank you. So Greg, I don’t know [indiscernible] was on my end or you, but when Dave threw the commentary back to you, you pretty much cut out, so that could be me or I don't know if that was the whole of the conference call. I can circle back with your closing comments, but how much on the supply chain issues? How much of revenue would you say was kind of pushed from those challenges?

Yes, it was not a significant amount, but it was, yes it would have made a little bit of a difference there, it wasn't like a huge delta there, but there were things that we had planned to move out, and just in the kind of final weeks of the quarter weren’t able to pull up everything together to move it out, but we have since done so.

Okay, and Dave I'm not sure I heard, what was the supply number sort of recurring revenue aspect for Q2?

Keep going with your questions while I look up the answer to your question okay?

You know Greg, Boeing just came out with their updated commercial transport outlook, obviously still calling for very strong multiyear growth in single aisle. What are you seeing with your Max and the A320 business may be on a more shorter-term level? Are they getting through any inventory issues that were out there or how does the rebounding airline delivery demand look for you?

Yes, so for us it's, again we have mentioned on previous calls, deliveries don't matter so much. I mean, they do matter from an operating point of view, because we get MRO [ph] benefits from that, but as far as new printers, so that's a function of their build rate. We do see good pull through on that, obviously the Airbus aircraft is ahead still. But Boeing seems to be hitting the marks that they've told us and what they have in their forecast. So, we seem to be tracking pretty close to what they're estimating right now. The bigger impact Dick, is the actual air travel, right? So the single [ph] aircrafts that are used in the domestic travel, which is kind of dominant traffic pattern right now.

Yes, can you give some more details on the new win on the A&D side?

Yes. It’s in our Test & Measurement segment, of course. And that we make a range of data acquisition equipment and we have some, you can take a look at our website. I want to kind of recall the exact product, but it would be in the higher range of those products, a bit more sophisticated data acquisition equipment that can handle a huge number of channels and data and present that in a bigger screen format as well as printed format. So it's something that we've been working on for a couple of years now, and like I mentioned, it's a multiyear program, so we should kind of enjoy the benefits of that hard work that the guys have put in over the past couple of years now, for I'd say at least a couple of years going forward and it’s a multi-location type of situation as well.

Okay.

And Dick, I was just going to jump in and answer your earlier question. The supplies revenue in the quarter was $18.7 million. It was up 9% from the prior year. And service and other was $3.3 million, up from $2.1 million in the same period last year.

Okay. And on your guidance for sequential and year-over-year second half performance, are you going to be seeing that in both segments?

We didn't call it out specifically, but yes at this point they both look good for the second half [indiscernible].

Okay great, thank you.

It appears we have no further questions at this time. I'd now like to hand the call back to Greg Woods for any additional comments or closing remarks.

Great, thank you. Well, thank you everyone for joining us here today. We look forward to speaking with you at our next call and enjoy the rest of the day.

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