Good morning, and welcome to the AstroNova Fiscal Third Quarter 2024 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions]. I would now like to turn the conference over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Advisors. Please go ahead, sir.

Thank you, Carla, and good morning, everyone. With me on this morning's call are Greg Woods, AstroNova's President and Chief Executive Officer; and David Smith, Vice President and Chief Financial Officer. Greg will discuss the company's segment operating highlights. David will take you through the financials at a high level. Greg will make some concluding comments, and then management will be happy to take your questions. If you've not received a copy of this morning's earnings release, please go to the Investors page of the AstroNova website, www.astronovainc.com. 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, December 6, 2023. 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 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 helps investors gain a meaningful understanding of the changes in the company's core operating results. and also helps investors who wish to make comparisons between AstroNova and other companies on both a GAAP and a non-GAAP basis. A reconciliation of the non-GAAP financial measures to their 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, Scott, and good morning, everyone. We began the second half of fiscal 2024 with a significantly more profitable third quarter. Where operating income increased more than threefold to $4.6 million. Operating margin improved 890 basis points to 12.3% and adjusted EBITDA hit an all-time record up 81% to $5.7 million or 15% of revenue. This profit improvement is a testament to the great agility, hard work and execution by our teams around the world. The increased profit generation was achieved despite an 11% year-over-year revenue decline in our Product Identification segment. This was primarily from the supply side of the business, or the lingering negative impact of an ink quality issue from one of our suppliers has decreased in utilization on some of our printers. To a lesser extent, the temporary effect of higher customer ink inventories ahead of a price increase from that same supplier, and to a degree, the impact of exiting certain product lines as part of the restructuring we announced last quarter. We believe the ink related slowdown issues will abate as we move through the next few quarters. Additionally, we expect to realize strong margins from several new product releases as they gain traction in the market. Meanwhile, the commercial aviation industry continues to experience robust demand closing in on and in some cases exceeding the 2019 highs. Both aircraft operating hours and new aircraft orders are up markedly. These trends are expected to continue and bode well for the aerospace product line within our Test and Measurement segment in the fourth quarter of fiscal 2024 and beyond. Now let's review our segment results in a bit more detail, starting with the PI segment. Operating profit increased 62% to $4.8 million, with margin up to 820 basis points to 18.1%. The vastly improved…

Thanks, Greg, and good morning, everybody. I'll reinforce and add some comments about the third quarter financial performance. As Greg said, total regular for the quarter was $37.5 million, down about 5% year-over-year with the lower revenue in the PI segment, partly offset by growth on the test and measurement side. Hardware revenue of $12.9 million was about 8% higher than last year's third quarter, and supplies revenue was about 13% to $20 million. While the service and other revenue grew about 4% to $4.7 million. Domestic revenue was $21.8 million for the third quarter, a 55.8% of the total compared to 57% in the year earlier period. International revenue was $16.6 million or 44% of revenue compared to 43% in the third quarter of fiscal 2023. Gross profit increased 770 basis points to 39.4% in the third quarter, driven by better product mix lower manufacturing expenses and better absorption and reduced period costs. Of the improvement, the directly trackable impacts on the PI segment restructuring benefits were approximately $450,000 in the fourth quarter -- third quarter rather, and that impacted both gross margin and operating expense. Operating expense declined about 9% in the third quarter to $10.2 million on a non-GAAP basis. This and the factors Greg outlined for why the operating income increased more than twofold to $3.6 million, while non-GAAP operating margin improved over 710 basis points to 12.3%. On the bottom line, we reported net income of $2.8 million or $0.37 per diluted share for this -- just the next quarter versus $289,000 or $0.04 per diluted share in the year earlier period. But keep in mind that the GAAP net income for the third quarter of fiscal '23 included transaction costs of $540,000 or $0.07 per diluted share associated with the August 22 acquisition of…

Our operational and financial momentum entering the final quarter of fiscal 2024 is strong. The recently completed strategic restructuring has significantly improved the cost structure and margin profile of the business and we expect both segments to perform in line with these results again in the fourth quarter. The restructuring of our PI segment allows us to focus on those products with the strongest volume and margin potential while continuing to drive demand through innovative new solutions, such as the QL-900, the T2 Pro and the T3 Pro, and we're very excited about the new OEM products in our Astro Machine pipeline. In the Test & Measurement segment, the key demand drivers are commercial air traffic, new aircraft orders and OEM market forecasts, all of which are pointing up and to the right. Based on strong demand, high barriers to entry and the extended nature of the contracts, we feel very good about the prospects for our Aerospace Products group over the long term. Now with that, I'll turn the call back to the operator for questions.

Well, thanks, everyone, for joining us here this morning. As always, we look forward to keeping you updated on our progress and hope you have a wonderful holiday. Bye now.

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