Executive Summary

Q1 FY26 revenue rose 14.4% YoY to $37.7M, with both segments growing double digits; GAAP operating income was $0.6M and GAAP net loss was $0.4M (-$0.05 per diluted share), while adjusted EBITDA improved 27.7% YoY to $3.1M and margin expanded 80 bps to 8.3% .
Management reaffirmed FY26 guidance: revenue $160–$165M and adjusted EBITDA margin 8.5%–9.5%; effective tax rate ~25% and D&A ~$5M; capex expected to be < $2M in FY26 .
Execution highlights: $1.9M annualized cost saves executed in Q1 toward a $3M plan; launched three next-gen Product ID solutions; won a renewed ~$10M five‑year defense contract with ~$1.7M expected in FY26 shipments; orders were $34.9M and backlog $25.5M .
Call commentary flagged improving mix (Tufrider 42% of Q1 shipments; aiming to double by FY-end), 83% recurring revenue, and limited tariff impact mitigated by surcharges and supply flexibility—catalysts for margin recovery through FY26 .

What Went Well and What Went Wrong

What Went Well

Double-digit growth in both segments: Product ID +13.4% to $26.3M and Aerospace +16.8% to $11.4M; aerospace operating profit rose 60.5% on higher volume .
Strategic wins and product momentum: three next-gen Product ID launches (QL425, QL435, AJ800/VP‑800) and renewed ~$10M defense contract with ~$1.7M FY26 shipments; plus new wins with a multinational beauty company and a large U.K. private-label grocer .
Cost actions underway: $1.9M of annualized savings executed in Q1; non‑GAAP operating income rose 13.4% YoY to $1.5M despite higher corporate costs; adjusted EBITDA up 27.7% YoY to $3.1M .
- Quote: “We implemented approximately $1.9 million of our previously announced $3 million annualized cost reduction plan…we expect to…substantially complete the full cost reduction plan” – CEO Greg Woods .

What Went Wrong

Margin pressure and higher corporate costs: gross margin fell to 33.6% (from 36.3% YoY) due to acquisition dilution and mix; corporate expenses increased ~$1.6M (healthcare and professional fees), compressing GAAP operating income to $0.6M (vs $1.3M YoY) .
Higher interest and GAAP loss: interest expense rose to $0.9M (from $0.5M YoY) tied to acquisition financing; GAAP net loss was $0.4M vs. $1.2M profit YoY .
Backlog down and legacy drag: backlog declined to $25.5M vs. $28.3M at FY25 year‑end, and a legacy aerospace contract weighed on margins (expected to complete by end of Q2 FY26) .

Financial Results

Consolidated results vs prior year/quarter and vs estimates (if available)

Metric	Q1 FY25 (Apr 27, 2024)	Q4 FY25 (Jan 31, 2025)	Q1 FY26 (Apr 30, 2025)	Consensus (Q1 FY26)
Revenue ($M)	$33.0	$37.4	$37.7	N/A*
Gross Profit Margin (%)	36.3%	34.1%	33.6%	N/A*
Operating Income ($M)	$1.35	$(12.31)	$0.57	N/A*
Operating Margin (%)	4.1%	(33.0%)	1.5%	N/A*
Net Income ($M)	$1.18	$(15.60)	$(0.38)	N/A*
Diluted EPS ($)	$0.15	$(2.07)	$(0.05)	N/A*
Adjusted EBITDA ($M)	$2.47	$2.79	$3.15	N/A*
Adjusted EBITDA Margin (%)	7.5%	7.5%	8.3%	N/A*
Non‑GAAP Operating Income ($M)	$1.35	$1.41	$1.53	N/A*
Non‑GAAP Net Income ($M)	$1.18	$0.42	$0.35	N/A*

*No S&P Global consensus available for Q1 FY26 EPS or revenue; values unavailable via GetEstimates.

Non‑GAAP adjustments in Q1 FY26 included: MTEX-related acquisition expenses ($0.34M), inventory step‑up ($0.06M), restructuring ($0.56M) → lifting Non‑GAAP operating income to $1.53M and Non‑GAAP net income to $0.35M .

Segment breakdown

Metric	Q1 FY25	Q4 FY25	Q1 FY26
Product Identification Revenue ($M)	$23.19	$25.68	$26.29
Aerospace/Test & Measurement Revenue ($M)	$9.78	$11.68	$11.42
Product ID Segment Op Income ($M)	$2.99	$(11.17)	$2.79
Product ID Segment Op Margin (%)	12.9%	N/A (impairment)	10.6%
Aerospace Segment Op Income ($M)	$1.72	$2.34	$2.76
Aerospace Segment Op Margin (%)	17.6%	20.0%	24.2%

Note: Q4 FY25 Product ID GAAP segment operating loss includes a $13.4M goodwill impairment largely associated with MTEX .

KPIs

KPI	Q1 FY25	Q4 FY25	Q1 FY26
Bookings ($M)	$33.12	$38.58	$34.89
Backlog ($M)	$31.56	$28.31	$25.49
Book-to-Bill (%)	100%	103%	93%
Recurring Revenue (% of sales)	N/A	N/A	83%
Cash from Operations ($M)	$6.90	N/A	$4.40
Cash ($M)	N/A	$5.05	$5.35

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue	FY26	$160–$165M (reaffirmed Apr 14, 2025)	$160–$165M (reaffirmed Jun 5, 2025)	Maintained
Adjusted EBITDA Margin	FY26	8.5%–9.5%	8.5%–9.5%	Maintained
Effective Tax Rate	FY26	~25%	~25%	Maintained
D&A	FY26	~$5M	~$5M	Maintained
Capex	FY26	N/A	< $2M	New disclosure
Restructuring Savings	FY26	$3M annualized target	$1.9M executed in Q1; plan complete by Q2	On track

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25, Q4 FY25)	Current Period (Q1 FY26)	Trend
Product ID technology/MTEX integration	Q3: Integration challenges; margin compression; cost reduction and product rationalization initiated . Q4: Launch next‑gen print engine in Q1 FY26; restructuring continues .	Three next‑gen launches (QL425, QL435, AJ800/VP‑800) ahead of schedule; expanded sales/distribution; early traction .	Improving
Aerospace Tufrider transition	Q4: ~40% complete; expected efficiency gains and reduced royalties .	42% of Q1 shipments; plan to double percent by FY-end; renewed $10M defense contract; ~$1.7M FY26 shipments .	Improving
Orders/Backlog	Q3: Bookings $37.6M; backlog $27.1M . Q4: Backlog $28.3M .	Orders $34.9M; backlog $25.5M; clearing delayed shipments; notable new wins (beauty, grocer; post-Q1 $1M order) .	Mixed (orders steady, backlog lower)
Margins	Q3: GM 33.9% with pressure from MTEX/mix . Q4: GM 34.1%; large impairment impacted GAAP .	GM 33.6% (mix/acquisition dilution); expecting improvement as mix shifts to Tufrider and new printers .	Stabilizing with upside
Tariffs/Macro supply	Q3: Boeing strike delayed deliveries . Q4: Restructuring and simplification .	Tariff impact negligible to date; actions: price increases April 1 and tariff surcharges in May; multi-source ink and global manufacturing flexibility .	Managed risk
Cost actions	Q3/Q4: Cost reduction program launched; restructuring ongoing .	$1.9M of $3M annualized saves executed; completion targeted in Q2 .	Executing

Management Commentary

“We delivered double‑digit growth in the quarter from both segments…implemented approximately $1.9 million of our previously announced $3 million annualized cost reduction plan.” – Greg Woods, CEO .
“We have made significant progress advancing the new foundational technology gained with the MTEX acquisition…more robust, next‑generation print engine solution designed to enhance our customer’s experience while reducing their total cost of ownership.” – Greg Woods .
“83% of the quarter’s revenue was recurring…We expect gross profit and margin to improve throughout fiscal 2026 as we increase the percentage of Tufrider sales and the next‑generation product ID printer sales and supplies.” – Tom DeByle, CFO .
“Tufrider aerospace printers were 42% of the first quarter shipments…we remain on track to double the percentage by the fiscal year end.” – Tom DeByle .

Q&A Highlights

There were no analyst questions on the call; management reiterated the strategy and reiterated FY26 guidance .
Clarifications provided in prepared remarks: ~$1.7M of the renewed $10M defense contract expected to ship in FY26; Tufrider mix to increase through FY26; tariff impacts minimal with pricing actions and sourcing flexibility .

Estimates Context

No S&P Global consensus was available for Q1 FY26 EPS or revenue; GetEstimates returned no values for Q1, so we cannot quantify beat/miss versus Street. Management’s FY26 guidance was reaffirmed, suggesting Street models likely maintain current revenue and EBITDA margin ranges .
With cost savings realized from Q2 and mix shift (higher Tufrider, next‑gen Product ID), the margin trajectory cited by management implies upward bias to H2 margin assumptions, but absent consensus, formal revision magnitude cannot be assessed .
Note: S&P Global consensus values were unavailable via GetEstimates for the relevant period.

Key Takeaways for Investors

Growth re-accelerated: Revenue +14.4% YoY with both segments contributing; adjusted EBITDA +27.7% YoY and margin +80 bps to 8.3%—evidence early restructuring and mix benefits are flowing through .
Mix catalysts: Tufrider at 42% of shipments in Q1 with a plan to double by FY-end, plus a renewed $10M defense contract and new customer wins position Aerospace for sustained margin leverage .
Product ID turnaround: Three next‑gen launches, expanded sales/distribution, and multi‑source ink strategy target higher-volume end markets and COGS control—supportive for recurring supplies growth and gross margin over FY26–27 .
Cost-downs on track: $1.9M of $3M annualized savings already executed; full program targeted by Q2, providing incremental operating leverage as volumes build .
Near-term watch items: Backlog decline to $25.5M and lingering legacy contract margin headwinds through Q2; monitor orders conversion, mix shift pace, and sequential margin expansion in Q2/Q3 .
Balance sheet and liquidity: Q1 operating cash flow $4.4M; cash $5.35M; liquidity $12.6M including revolver availability; interest expense up with acquisition debt—leverage targeted toward ~2x over time .
Guidance steady: FY26 revenue $160–$165M and adj. EBITDA margin 8.5%–9.5% reaffirmed; if execution stays on plan, margin upside in H2 could be a stock catalyst as mix/cost actions compound .

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