Acquisition and Segments - Astro Machine LLC, an Illinois-based manufacturer of printing equipment, was acquired on August 4, 2022, and is included in the PI segment starting Q3 fiscal 2023[9]. - The PI segment includes brands such as QuickLabel, TrojanLabel, GetLabels, and Astro Machine, providing a variety of digital color label printers and related supplies[11]. - The T&M segment includes high-speed data acquisition systems and airborne printers, serving industries such as aerospace, automotive, and energy[19]. Financial Performance and Backlog - The order backlog as of January 31, 2023, was $35.8 million, up from $27.8 million in 2022, indicating growth in demand[30]. - The company has a total indebtedness of $14.25 million in term loan variable-rate debt and $15.9 million outstanding on its revolving line of credit as of January 31, 2023[210]. - The weighted average interest rate on the company's variable rate debt was 4.77% during fiscal 2023, while the revolving line of credit had a weighted average interest rate of 6.71%[210]. - A hypothetical 10% change in foreign currency exchange rates would result in an increase or decrease in consolidated net income of approximately $0.2 million for the year ended January 31, 2023[208]. - Foreign exchange losses from transactional exposure amounted to $0.5 million for the year ended January 31, 2023[209]. Employee and Organizational Structure - The company employs 394 full-time employees as of January 31, 2023, including 40 from the Astro Machine acquisition[36]. - The company continuously assesses the risk of losing key employees and implements retention strategies focused on competitive compensation and professional development[37]. Company Strategy and Operations - The company maintains a leadership position in tabletop digital color label printing technology and flight deck printers, supported by proprietary technology and strong customer service[28]. - The company has a diverse manufacturing strategy, producing many products in-house while sourcing components from various suppliers[26]. - The company operates in over 150 countries, with no single customer accounting for 10% or more of net revenue in the last three fiscal years[29]. Corporate Culture and Values - The company is committed to diversity and inclusion, with targeted recruitment initiatives for women in technical and engineering roles[41]. - The company emphasizes a strong culture based on core values such as Customer First, Innovation, and Continuous Improvement[38]. - The AstroNova Operating System (AOS) is utilized to achieve continuous improvements in quality, delivery, cost, and growth[38]. Market Risks - The company’s revenue is impacted by the variable size of individual customer transactions, leading to fluctuations from quarter to quarter[42]. - The company’s primary financial market risks include foreign currency exchange rates and interest rate fluctuations affecting variable rate credit borrowings[205].

Financial Data and Key Metrics Changes - The company reported a 34% increase in revenue for Q4 2023, reaching a record $39.9 million, driven by growth in both segments [7] - Full year revenue grew by double digits across all major categories, with supplies revenue increasing 12% to $82.1 million, accounting for about 57% of total sales [14] - Fiscal 2023 gross profit increased by 10% in dollars but decreased by 380 basis points to 33.8% due to the mix impact of the Astro Machine's lower gross margins [15] Business Line Data and Key Metrics Changes - In the Product Identification segment, revenue increased by $5.7 million or 26% to $28.1 million, while the Test & Measurement segment saw a $4.4 million or 61% increase to nearly $11.8 million [7] - The operating profit for the Product Identification segment in Q4 2023 was $1.9 million compared to $1.5 million in the same period last year, while the Test & Measurement segment's non-GAAP operating profit for Q4 was $3.2 million compared to $0.5 million last year [16] Market Data and Key Metrics Changes - The Test & Measurement segment benefited from favorable pricing adjustments and greater cost efficiencies, particularly in the Aerospace product group [8] - The company noted improvements in supply chain reliability, which is expected to enhance on-time shipments as they move through fiscal 2024 [8] Company Strategy and Development Direction - The integration of Astro Machine is proceeding as planned, with expectations for a full year of revenue contribution in fiscal 2024 [20] - The company is focused on operational improvements and accelerated new product development to enhance growth and profitability in the Product Identification segment [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by high inflation and geopolitical tensions but expressed optimism about the recovery of the commercial aviation market and growth in fiscal 2024 [6][20] - The company is excited about the opportunities to grow across the markets served, supported by a healthy balance sheet and reduced leverage metrics [12][13] Other Important Information - The company plans to maintain tight control over operating expenses in fiscal 2024, expecting only modest increases [17] - The Astro Machine acquisition contributed $12.5 million in revenue since its acquisition on August 4, 2022 [14] Q&A Session Summary Question: Are inventories and accounts receivable expected to decrease? - Management is working on reducing inventories and accounts receivable, taking advantage of pricing efficiencies and improving supplier reliability [22][23] Question: Will excess cash flow be used to pay down existing debt? - Management confirmed that excess cash flow will be allocated to pay down existing debt [25] Question: Will the government contracts won in data acquisition be material to the income statement? - Management indicated that while the data acquisition segment is smaller, the contracts will have a significant impact on overall financials [26][27] Question: What caused the revenue issues in the Product Identification segment? - Management explained that supply issues from a supplier led to lower revenue, but they are working through the problem and expect improvements [28][29] Question: How many ink suppliers does the company have? - The company has more than 10 ink suppliers, with the issue stemming from just one supplier [37][38]

Financial Data and Key Metrics Changes - The company reported record revenue of $39.4 million for Q3 2023, representing a year-over-year increase of 37% [7] - Non-GAAP operating income grew to $2.1 million, or 5.2% of revenue, compared to $300,000, or 1% of revenue, in the same period last year [15] - Non-GAAP net income for the quarter was $830,000, or $0.11 per diluted share, compared to $103,000, or $0.01 per share, in the year-ago period [16] Business Line Data and Key Metrics Changes - Product Identification revenue grew 36% to $29 million, largely due to the acquisition of Astro Machine [8] - Test & Measurement segment revenue increased about 38% year-over-year to $9.5 million, with supply shortages impacting potential growth [11] - Hardware sales increased 57% for the quarter to $11.9 million, while supplies revenue was up 27% to $23 million [13] Market Data and Key Metrics Changes - Year-to-date, the US accounted for $65.5 million in revenue, or 63.8% of total sales, with international revenue at $37.2 million, or 36.2% [14] - Bookings in Q3 increased more than 8% year-over-year to $35 million, marking the highest quarterly total since Q1 of fiscal 2020 [17] - Backlog at the end of the quarter increased 46.6% to $39.3 million from $26.8 million in the same period last year [17] Company Strategy and Development Direction - The integration of Astro Machine is on track, with management expressing excitement about future potential from this transaction [19] - The company is focused on new product innovation, including the launch of the QL-E100 full-color tabletop label printer [10] - Management highlighted the importance of expanding distribution channels and cross-selling opportunities following the acquisition [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges such as inflation, supply chain shortages, and geopolitical volatility but expressed pride in the team's ability to navigate these issues [7] - The company is well-positioned to continue executing its growth strategy, supported by a record backlog and healthy order demand [19] - Management remains optimistic about the underlying fundamentals and secular trends shaping the business [19] Other Important Information - The company incurred $217 million in acquisition-related expenses during the quarter [14] - Inventory levels have grown due to supply chain challenges, and the company is taking measures to reduce inventory [18] Q&A Session Summary - No specific questions or answers were documented in the provided content, as the call concluded without a detailed Q&A segment [20]

Revenue and Profitability - Revenue for the three months ended October 29, 2022, was $39,405,000, representing a 37% increase from $28,857,000 for the same period in 2021[13] - Gross profit for the nine months ended October 29, 2022, was $34,594,000, compared to $33,988,000 for the same period in 2021, indicating a slight increase of 1.8%[13] - Net income for the three months ended October 29, 2022, was $289,000, compared to a net loss of $425,000 for the same period in 2021[13] - Operating income for the nine months ended October 29, 2022, was $3,346,000, down from $4,482,000 for the same period in 2021, a decrease of 25.3%[13] - Net income for the nine months ended October 29, 2022, was $1,298,000, a decrease of 82.0% compared to $7,187,000 for the same period in 2021[22] - The company reported a comprehensive loss of $192,000 for the three months ended October 29, 2022, compared to a comprehensive loss of $819,000 for the same period in 2021[15] Assets and Liabilities - Total current assets increased to $81,089,000 as of October 29, 2022, up from $63,778,000 as of January 31, 2022, reflecting a growth of 27%[10] - Total liabilities increased to $58,501,000 as of October 29, 2022, compared to $33,943,000 as of January 31, 2022, marking a rise of 72.5%[10] - Cash and cash equivalents decreased to $4,496,000 as of October 29, 2022, from $5,276,000 as of January 31, 2022, a decline of 14.8%[10] - Total shareholders' equity increased to $81,328,000 as of October 29, 2022, from $81,012,000 as of January 31, 2022, a growth of 0.4%[10] - Current liabilities increased to $41,443,000 as of October 29, 2022, from $20,035,000 on January 31, 2022, marking a rise of approximately 106.5%[10] Cash Flow and Operating Activities - Cash used in operating activities for the nine months ended October 29, 2022, was $(7,455,000), compared to cash provided of $3,848,000 for the same period in 2021[22] - The company reported a net cash decrease of $(780,000) for the nine months ended October 29, 2022, compared to $(2,712,000) for the same period in 2021[22] - Cash and cash equivalents at the end of the period on October 29, 2022, were $4,496,000, down from $8,727,000 at the end of the same period in 2021[22] Acquisitions and Investments - The company completed the acquisition of Astro Machine for $17.1 million on August 4, 2022, which is now part of the Product Identification segment[24] - The preliminary allocation of the purchase price includes $3.867 million for Property, Plant and Equipment and $6.567 million recorded as goodwill[37] - The acquisition of Astro Machine is expected to enhance the company's product identification segment and contribute to future revenue growth[35] Segment Performance - Revenue from hardware sales for the nine months ended October 29, 2022, was $29.885 million, up 29% from $23.147 million in the prior year[41] - The Product Identification segment generated $29.9 million in revenue for the three months ended October 29, 2022, compared to $21.9 million in the same period last year, reflecting a 36.4% increase[106] - The Test & Measurement segment reported revenue of $9.5 million for the three months ended October 29, 2022, up from $6.9 million in the prior year, marking a 37.5% increase[106] Debt and Financing - The company entered into a new term loan of $6.0 million and increased the revolving credit facility from $22.5 million to $25.0 million as part of the Second Amendment to the Amended Credit Agreement[55] - The weighted average interest rate on the outstanding revolving line of credit was 7.32% for the three months ended October 29, 2022, and 5.74% for the nine months ended October 29, 2022[63] - Long-term debt as of October 29, 2022, was $14.625 million, with a maturity date of August 4, 2027[65] Tax and Credits - The effective tax rate for the nine months ended October 29, 2022, was 22.8%, a significant decrease from 4.0% in the same period of the previous year[101] - The company recorded a refundable tax credit of $3.1 million under the Employee Retention Credit (ERC) for wages paid between December 31, 2020, and June 30, 2021, resulting in a reduction of expenses totaling $1.7 million in cost of revenue and $0.8 million in selling and marketing[78] Stock and Compensation - The company has 128,262 unvested restricted stock units (RSUs) and 128,793 unvested performance-based restricted stock units (PSUs) as of October 29, 2022, under the 2018 Equity Incentive Plan[90] - The total outstanding stock options as of October 29, 2022, were 554,099, with a weighted average exercise price of $15.10[97] - Share-based compensation for the nine months ended October 29, 2022, was $977,000, down from $1,345,000 in the same period of 2021[22] Inventory and Supplies - Total inventories increased to $49,992,000 as of October 29, 2022, from $34,609,000 as of January 31, 2022, representing a growth of approximately 44.4%[52] - The inventory reserve increased to $10,116,000 as of October 29, 2022, from $9,307,000 as of January 31, 2022, indicating a rise of approximately 8.7%[52] Other Financial Metrics - The company recognized interest expense of $266,000 and $384,000 for the three and nine months ended October 29, 2022, respectively, compared to $50,000 and $230,000 for the same periods in 2021[65] - The company recorded a total lease payment obligation of $910,000, with maturities scheduled over the next five fiscal years[85] - The company has a total accumulated other comprehensive loss of $(3,565,000) as of October 29, 2022, reflecting foreign currency translation adjustments and cash flow hedges[89]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents AstroNova, Inc.'s unaudited condensed consolidated financial statements for the quarter ended July 30, 2022, along with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20July%2030%2C%202022%20and%20January%2031%2C%202022) Total assets increased slightly to **$116.3 million** as of July 30, 2022, driven by higher inventories, with stable liabilities and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 30, 2022 | January 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $67,662 | $63,778 | | Inventories, net | $41,727 | $34,609 | | **Total Assets** | **$116,298** | **$114,955** | | **Total Current Liabilities** | $22,521 | $20,035 | | Revolving Line of Credit | $4,500 | $— | | **Total Liabilities** | **$35,202** | **$33,943** | | **Total Shareholders' Equity** | **$81,096** | **$81,012** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20%E2%80%94%20Three%20and%20Six%20Months%20Ended%20July%2030%2C%202022%20and%20July%2031%2C%202021) Q2 FY2023 revenue grew 8.1% to **$32.3 million**, but net income significantly declined to **$0.6 million** compared to the prior year's PPP loan benefit Statement of Income Summary (in thousands, except per share data) | Metric | Q2 2022 (3 Months) | Q2 2021 (3 Months) | H1 2022 (6 Months) | H1 2021 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $32,259 | $29,845 | $63,269 | $58,923 | | Gross Profit | $11,382 | $12,716 | $22,111 | $23,603 | | Operating Income | $1,235 | $3,452 | $1,999 | $4,186 | | Extinguishment of Debt – PPP Loan | $— | $4,466 | $— | $4,466 | | Net Income | $584 | $7,019 | $1,009 | $7,612 | | Diluted EPS | $0.08 | $0.96 | $0.14 | $1.04 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%94%20Six%20Months%20Ended%20July%2030%2C%202022%20and%20July%2031%2C%202021) Net cash used in operating activities was **$3.8 million** for the six months ended July 30, 2022, primarily due to increased inventories Cash Flow Summary (Six Months Ended, in thousands) | Cash Flow Activity | July 30, 2022 | July 31, 2021 | | :--- | :--- | :--- | | Net Cash (Used) Provided by Operating Activities | $(3,819) | $5,493 | | Net Cash Used for Investing Activities | $(163) | $(1,162) | | Net Cash Provided (Used) for Financing Activities | $3,089 | $(4,218) | | **Net Decrease in Cash** | **$(991)** | **$(50)** | | **Cash and Cash Equivalents, End of Period** | **$4,285** | **$11,389** | - The primary use of cash from operations was a **$7.5 million** increase in inventories and a **$2.3 million** increase in accounts payable and accrued expenses, partially offset by a **$3.1 million** Employee Retention Credit receipt[23](index=23&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes detail the company's business segments, accounting policies, debt, and significant events, including the Astro Machine LLC acquisition - The company operates in two segments: Product Identification (PI), including specialty printing systems, and Test & Measurement (T&M), including aerospace and data acquisition products[27](index=27&type=chunk) - On August 4, 2022, the company acquired Astro Machine LLC for **$17.1 million**, financed by a new **$6.0 million** term loan and an increased revolving credit facility[106](index=106&type=chunk) - In the prior fiscal year (FY2022), the company benefited from the forgiveness of a **$4.4 million** PPP loan and recognized a **$3.1 million** Employee Retention Credit, significantly impacting year-over-year comparisons[64](index=64&type=chunk)[75](index=75&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 FY2023 financial performance, highlighting strong T&M revenue growth, lower profitability due to prior-year benefits, and liquidity [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 FY2023 revenue increased 8.1% to **$32.3 million** driven by T&M growth, but gross margin and net income significantly declined Q2 FY2023 vs Q2 FY2022 Revenue by Segment (in thousands) | Segment | Q2 FY2023 Revenue | Q2 FY2022 Revenue | % Change | | :--- | :--- | :--- | :--- | | Product Identification | $23,382 | $23,492 | (0.5)% | | T&M | $8,877 | $6,353 | 39.7% | | **Total** | **$32,259** | **$29,845** | **8.1%** | - Q2 gross profit margin decreased to **35.3%** from **42.6%** year-over-year, primarily due to increased manufacturing costs and the absence of a **$1.7 million** Employee Retention Credit benefit in the prior-year quarter[124](index=124&type=chunk) - Q2 net income was **$0.6 million**, or **$0.08** per diluted share, compared to **$7.0 million**, or **$0.96** per diluted share, in the prior year, which included a **$4.5 million** PPP loan forgiveness gain and a **$3.1 million** Employee Retention Credit benefit[128](index=128&type=chunk) [Segment Analysis](index=29&type=section&id=Segment%20Analysis) PI segment revenue was flat with declining operating profit, while T&M revenue surged 39.7% due to aerospace recovery - Product Identification's Q2 operating profit declined to **$1.6 million** from **$4.4 million** year-over-year, attributed to the absence of a **$1.4 million** Employee Retention Credit benefit, unfavorable sales mix, and higher costs[139](index=139&type=chunk) - Test & Measurement's Q2 revenue grew **39.7%** due to a rebound in air travel, leading to higher volume of aerospace repairs, parts, and cockpit printer revenue, with operating profit increasing to **$2.2 million** despite higher component costs[141](index=141&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=30&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and a revolving credit facility, with cash used for inventory increases and a subsequent credit agreement amendment for acquisition financing - Net cash used by operating activities was **$3.8 million** for the first half of the year, compared to **$5.5 million** provided in the prior year, mainly due to a significant increase in working capital, particularly inventory[163](index=163&type=chunk) - Inventory increased by **$7.1 million** to **$41.7 million** at quarter-end, a strategic move to create buffer stock against supply chain difficulties and long lead times for components[165](index=165&type=chunk) - Subsequent to the quarter, the company amended its credit agreement, adding a new **$6.0 million** term loan and increasing its revolving credit facility from **$22.5 million** to **$25.0 million** to fund the Astro Machine acquisition[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's market risk disclosures since the Annual Report on Form 10-K for the fiscal year ended January 31, 2022 - There were no material changes to the company's market risk disclosures during the six months ended July 30, 2022[170](index=170&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of July 30, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of the end of the reporting period, the company's disclosure controls and procedures are effective[171](index=171&type=chunk) - No changes occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[172](index=172&type=chunk) [Part II. Other Information](index=35&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) There are no material pending or threatened legal proceedings against the company - There are no material pending or threatened legal proceedings against the company[173](index=173&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material updates have been made to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended January 31, 2022 - No material updates have been made to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended January 31, 2022[175](index=175&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares of its common stock during the second quarter of fiscal 2023 - The company did not repurchase any shares of its common stock during the second quarter of fiscal 2023[176](index=176&type=chunk)[177](index=177&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements for the Astro Machine LLC acquisition and required CEO/CFO certifications - Exhibits filed include the Equity Interest Purchase Agreement for Astro Machine LLC and the Second Amendment to the Amended and Restated Credit Agreement with Bank of America, N.A., both dated August 4, 2022[178](index=178&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[178](index=178&type=chunk) [Signatures](index=37&type=section&id=Signatures) The report is duly signed on September 8, 2022, by the President and CEO, and the VP, CFO, and Treasurer

Financial Data and Key Metrics Changes - Revenue for the second quarter of fiscal 2023 increased by 8% year-over-year, with total bookings reaching $67.3 million, just shy of the previous first half high in fiscal 2020 [6][12] - Revenue for the first half of fiscal 2023 was up approximately 7.4% to $63.3 million, driven by growth in the Test & Measurement (T&M) segment [12] - Operating income for the first half was $2.0 million, representing 3.5% of revenue, compared to $2.1 million or 3.5% of revenue in the same period last year [14] Business Line Data and Key Metrics Changes - The T&M segment saw a revenue increase of 47% to $18.2 million in the first half of fiscal 2023, primarily due to the ramp-up of the Boeing 737 MAX and the recovery of commercial air travel [12] - Service and other revenue in Q2 was up 36% year-over-year to $4.5 million, marking a quarterly record for the company [7] - Product Identification (PI) segment revenue was essentially flat year-over-year but increased nearly 8% from Q1 of fiscal 2023 [8] Market Data and Key Metrics Changes - U.S. revenue accounted for 61% of total business, with international revenue making up the remainder [14] - The company noted strong demand driven by increasing air travel and the growth of digital print for packaging [6] Company Strategy and Development Direction - The company is focused on leveraging favorable secular trends to drive growth and has confidence in its long-term strategy, including M&A and new product development [17] - The acquisition of Astro Machine is expected to enhance expertise in automation and material handling, expand color label printer offerings, and create cross-selling opportunities [10][17] Management Comments on Operating Environment and Future Outlook - Management highlighted that supply chain disruptions, higher component costs, and increased freight expenses continue to impact certain areas of the business [6] - The company is optimistic about returning to normal lead times in the PI segment as production rates improve [8] - Management expects the Astro Machine acquisition to be accretive to earnings in the second half of the year [16] Other Important Information - The company has implemented selective price increases to mitigate the impact of supply chain challenges [6] - Inventory has grown significantly, with a notable increase in T&M segment inventory to support higher demand and build buffer stocks [15][16] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without any additional inquiries [18][20]

Financial Data and Key Metrics Changes - Revenue increased by 6.6% to $31 million compared to the same quarter last year, while operating income rose by 4% to $764,000 [7] - Gross profit was $10.6 million, down 1.5% from the previous year, with a gross profit margin decline of 2.8% to 34.6% due to increased input costs [12][13] Business Segment Data and Key Metrics Changes - Product Identification segment revenue declined by 6% to $21.7 million, with operating income at $1.4 million, down from $2.7 million in the same period last year [7][12] - Test & Measurement segment revenue increased by 55% to $9.3 million, with operating income rising to $1.9 million or 20.6% of revenue, up from $350,000 or 5.9% in the prior year [9][12] Market Data and Key Metrics Changes - Domestic revenue accounted for 63% of total revenue, up from 57% a year earlier, while international revenue decreased to 37% from 43% [14] - The aerospace market is recovering, particularly in the domestic single-aisle aircraft segment, with signs of growth in long-haul dual-aisle aircraft [9][10] Company Strategy and Development Direction - The company is launching a new entry-level printer to expand its QuickLabel product line, targeting both small businesses and larger enterprises [8] - The company is addressing supply chain challenges by sourcing alternative components and increasing inventories, while also raising prices in areas with higher input costs [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain constraints and cost increases but expressed optimism about the recovery in the commercial aviation market and the strong new product pipeline [11][18] - The company expects to see improvements in financial results in the second half of the year as supply chain issues are addressed [11] Other Important Information - Cash and cash equivalents totaled $11.4 million as of April 30, with $19.5 million available for borrowing under the revolving credit facility [16] - The company plans to present at the East Coast IDEAS Virtual Conference in two weeks [17] Q&A Session Summary Question: On the Test & Measurement side, were there one-time transactions inflating revenues? - Management indicated that the revenue increase was driven by broad increases in Test & Measurement, particularly from aerospace recoveries, and is expected to continue [20] Question: Are the margins in the Test & Measurement segment sustainable? - Management stated that the margins are generally sustainable and are a function of better absorption as volume increases [22] Question: Will inventory levels continue to grow due to supply chain issues? - Management expects inventory levels to remain high for the next few quarters as they continue to secure components [25] Question: Are sales deferrals in the Product Identification segment increasing? - Management confirmed that deferrals are stabilizing, with improvements expected as supply chain issues are resolved [27] Question: Will the new QL-E100 product cannibalize existing products? - Management believes it will not likely cannibalize existing products, as it serves a different market segment [40]

Revenue Performance - Total revenue for the first quarter of the current year was $31.0 million, a 6.6% increase compared to $29.1 million in the prior year[110]. - Revenue from the Product Identification segment decreased by 5.9% to $21.7 million, while the Test & Measurement segment saw a 55.3% increase to $9.3 million[110][123]. - Current quarter service and other revenues increased by 16.9% to $3.8 million, primarily due to increased parts and repair revenue for the aerospace printer product line[113]. Profitability Metrics - Gross profit for the first quarter was $10.7 million, reflecting a gross profit margin of 34.6%, down from 37.4% in the prior year[114]. - Net income for the first quarter was $0.4 million, or $0.06 per diluted share, compared to $0.6 million, or $0.08 per diluted share, in the prior year[119]. Operating Expenses - Operating expenses decreased by 1.9% to $10.0 million, with selling and marketing expenses down by 3.4% to $5.9 million[115]. - Research and development expenses were $1.5 million, an 11.3% decrease compared to the prior year, representing 4.9% of revenue[115]. Tax and Financial Position - The effective tax rate for the current quarter was 12.4%, influenced by a $38,000 tax benefit related to the expiration of a previously uncertain tax position[118]. - As of April 30, 2022, cash and cash equivalents were $5.8 million, with an additional $19.5 million available for borrowing under the revolving credit facility[128]. Cash Flow and Working Capital - Net cash used by operating activities was $1.6 million for the first three months of fiscal 2023, a decrease from cash provided of $3.9 million in the same period of the previous year[136]. - Accounts receivable increased to $18.4 million at the end of the first quarter, with days sales outstanding rising to 50 days from 45 days at the prior year end[137]. - Inventory balance was $36.9 million at the end of the first quarter, with inventory days on hand increasing to 164 days from 156 days at the prior year end[137]. Credit and Financing - The Amended Credit Agreement includes a term loan of $10.0 million and a revolving credit facility of $22.5 million for general corporate purposes[127]. - The Amended Credit Agreement eliminates minimum adjusted EBITDA, asset coverage, and liquidity covenants, enhancing operational flexibility[126]. - The interest rates under the Amended Credit Agreement range from 1.60% to 2.30% based on the consolidated leverage ratio[132]. - The term loan requires quarterly payments with the final payment due on September 30, 2025, and allows for voluntary prepayment without penalty[129]. - The Amended Credit Agreement includes an uncommitted accordion provision allowing for an increase in loan commitments not exceeding $10.0 million[130]. Operational Challenges - The company is facing ongoing supply chain challenges, including increased costs and delays in obtaining raw materials and components[106]. - The aerospace product line in the T&M segment experienced a 91.9% increase in sales revenue due to rising demand for new aircraft as COVID-19 restrictions eased[112][123]. - The company has implemented expense reduction and cash preservation initiatives in response to the COVID-19 pandemic[128]. Legal Matters - There are no pending or threatened legal proceedings that are believed to be material to the company's financial position or results of operations[147].

Financial Data and Key Metrics Changes - Total revenue for Q4 2022 was $29.7 million, an increase of approximately $260,000 compared to the previous year, driven by a 20% increase in Test & Measurement revenue, which offset a 4% decline in Product Identification revenue [10][22] - For the full year, total revenue increased by 1% to $117.5 million, with supplies and service revenue being key drivers [10] - Gross margin for Q4 decreased by 450 basis points to 32.8% from 37.2% in the prior year, primarily due to higher costs of goods sold and unfavorable mix [17][18] - The company reported a net loss of $758,000 or $0.10 per share for Q4, compared to net income of $837,000 or $0.12 per share in the same quarter of the previous year [22] Business Line Data and Key Metrics Changes - The Product Identification segment reported a Q4 operating profit of $1.5 million, down from $3.1 million in the prior year, reflecting higher manufacturing and procurement costs [22] - The Test & Measurement segment saw a revenue increase of 20% in Q4 and an operating profit of almost $0.5 million, up from $282,000 a year earlier [15][23] - Bookings for Q4 were strong at $32.9 million, up 12.4% from the same quarter of fiscal 2021, with full year bookings at $128.6 million, up 13.2% year-over-year [11] Market Data and Key Metrics Changes - Domestic revenue accounted for 57.3% of total revenue in Q4, up from 55.9% a year ago, while international revenue decreased to 42.7% from 44.1% [20] - Revenue from Europe, Canada, and Asia increased by double digits, while U.S. revenue declined by 4% for the year [20] Company Strategy and Development Direction - The company aims to grow organically through new product development and complementary M&A to strengthen its leadership positions [25] - Upcoming product releases in the Product Identification segment are expected to enhance customer capabilities in label and packaging design [14] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions and inflationary pressures affecting operations, with expectations to realize benefits from pricing adjustments in the second half of the fiscal year [9][27] - The company is optimistic about the recovery in the aerospace sector, anticipating a return to pre-pandemic levels in air travel by 2023 and 2024 [15] Other Important Information - The new ERP system for domestic operations went live successfully, which is expected to enable efficient growth as the company scales [24] - Cash and equivalents at year-end totaled $5.3 million, down from $11.4 million, primarily due to increased inventory to counteract shortages [23] Q&A Session Summary Question: Inflation impact and timing for price adjustments - Management indicated that price increases depend on existing customer agreements, which may delay the ability to pass costs onto consumers [27] Question: Breakdown of $2 million in delayed orders - The delayed orders affected both Product Identification and Test & Measurement segments, with supply chain issues impacting various components [28][29] Question: Inventory status of the 737 MAX - Production for the 737 MAX is ramping up, with existing inventory being addressed in parallel [32][33] Question: Titanium supply concerns due to geopolitical issues - No current concerns were reported regarding titanium shortages affecting production schedules [34] Question: Performance of other printers in the Product Identification segment - While the T3-OPX had a record year, other products are improving but not as rapidly, with some sales activities still impacted by COVID-related restrictions [36][38] Question: Warranty charges in Product Identification - Higher warranty charges were attributed to poor quality products from suppliers, necessitating retrofitting and repairs [39][40] Question: Dividend reinstatement considerations - The board is discussing the potential reinstatement of dividends, with decisions expected to be announced following board meetings [45]

Revenue Performance - Total revenue for fiscal 2022 was $117.5 million, a 1.2% increase from $116.0 million in fiscal 2021[83]. - Revenue from the Product Identification segment was $90.9 million, accounting for 77.4% of total revenue, with a 0.7% increase from the previous year[84]. - Test and Measurement segment revenue was $26.6 million, representing 22.6% of total revenue, with a 3.1% increase compared to fiscal 2021[84]. - Domestic revenue decreased by 3.8% to $68.2 million, while international revenue increased by 9.2% to $49.3 million[84]. - Hardware revenue decreased by $2.6 million or 7.7% to $31.5 million, primarily due to a 10.1% decline in the T&M segment[84]. - Supplies revenue increased by 2.1% to $73.2 million, driven by higher demand for Trojan Label product supplies[84]. - Service and other revenue rose by 25.6% to $12.7 million, attributed to increased repair and parts revenue in both segments[84]. - Revenue from the PI segment increased by 0.7% to $90.9 million, while the T&M segment revenue rose by 3.1% to $26.6 million[89][90]. Profitability - Gross profit for fiscal 2022 was $43.7 million, a 5.8% increase from $41.4 million in fiscal 2021, with a gross profit margin of 37.2%, up 2.4 percentage points from 35.6%[85]. - The PI segment operating profit was $10.4 million with a profit margin of 11.5%, down from 14.3% in the prior year[89]. - The T&M segment achieved an operating profit of $3.4 million, a significant improvement from an operating loss of $1.0 million in the prior year, with a profit margin of 12.8%[90]. - Net income for fiscal 2022 was $6.4 million, or $0.88 per diluted share, compared to $1.3 million, or $0.18 per diluted share in the prior year[85]. Expenses and Investments - Operating expenses increased by 1.4% to $39.5 million in fiscal 2022, with selling and marketing expenses decreasing by 0.5% to $23.2 million[85]. - Research & development costs rose by 8.8% to $6.8 million, representing 5.7% of net revenue compared to 5.3% in the prior year[85]. - The company invested $6.8 million in research and development in fiscal 2022, up from $6.2 million in fiscal 2021[75]. Cash Flow and Debt - Net cash provided by operating activities decreased to $1.4 million in fiscal 2022 from $15.5 million in the previous year, primarily due to a decrease in cash provided by working capital of $11.3 million[96]. - The company recorded a $4.5 million gain on extinguishment of debt following the forgiveness of a $4.4 million PPP Loan[80]. - The effective tax rate for fiscal 2022 was 8.6%, a decrease from 41.1% in fiscal 2021, primarily due to PPP loan forgiveness tax-exempt income[85]. - The principal amount of quarterly installments for the term loan will increase from $187,500 to $500,000 over the fiscal years ending January 31, 2022, to January 31, 2025, with the entire remaining principal balance due by September 30, 2025[92]. - Total indebtedness included $9.25 million of term loan variable-rate debt as of January 31, 2022[108]. - The interest rate on variable-rate debt ranged from 2.35% to 4.65% during fiscal 2022[108]. Accounts and Inventory - The accounts receivable balance decreased slightly to $17.1 million at January 31, 2022, with days sales outstanding dropping to 45 days from 51 days in the previous year[96]. - Year-end inventory increased to $34.6 million at January 31, 2022, with days inventory on hand rising to 156 days compared to 147 days at the end of fiscal 2021[96]. Commitments and Obligations - The company had contractual obligations totaling $1.1 million in fixed lease payment obligations as of January 31, 2022, with $0.3 million due within 12 months[98]. - Purchase commitments totaled $37.5 million as of January 31, 2022, with $35.4 million due within 12 months, most of which are non-cancelable[99]. - The company is subject to a guaranteed minimum royalty payment obligation of $6.4 million, with $2.0 million due within 12 months[99]. Risk Management - The company actively monitors credit risk through credit approvals and limits, presenting accounts receivable net of reserves for doubtful accounts[101]. - Bad debt expense was less than 1% of net sales for both fiscal 2022 and 2021[101]. - Warranty costs are recorded as cost of revenue, and the reserve balance is recorded as an accrued expense, influenced by product failure rates[101]. - The company establishes a reserve for estimated warranty costs at the time product revenue is recognized, based on historical data[101]. Foreign Exchange - A hypothetical 10% change in foreign currency translation rates would result in a $0.2 million increase or decrease in consolidated net income for the year ended January 31, 2022[106]. - Foreign exchange losses from transactional exposure amounted to $0.3 million for the year ended January 31, 2022[107].