Nortech Systems Incorporated

Good afternoon, ladies and gentlemen, and welcome to the Nortec Systems Incorporated fourth quarter and full year 2023 earnings conference call. With me on the line today are Jay Miller, President and Chief Executive Officer, and Andrew LaFrance, Chief Financial Officer and Senior Vice President of Finance. All lines have been placed on a listen-only mode, and the call will be open for questions and comments following the management presentation. At this time, it is my pleasure to turn the call over to Andrew LaFrance.

Thank you, John. I'd also like to welcome everyone to today's conference call. Jay will begin the call with a review of our operations, recent developments, and business outlook. Then I will review Nortec's fourth quarter and full year 2023 financial results before turning it back over to Jay for his closing comments. Then we will open up the call for your questions. Before we continue, please note that statements made during this call may be forward-looking statements regarding expected net sales, earnings, future plans, opportunities, and other company expectations. These estimates, plans, and other forward-looking statements involve unknown and known risks and uncertainties that may cause actual results to differ materially from those expressed or implied on this call. These risks, including those that are detailed in our most recent Form 10-K filed today, may be amended or supplemented. The statements made during this call are based upon information known by NORTEC as of the date and time of this call, and we assume no responsibility or obligation to update the information in today's call. You can find NORTEC's complete safe harbor statement in our recent SEC filings. And now with that, I'll turn the call over to Jay for his opening comments.

Thank you, Andy, and good afternoon, everyone. We're glad you could join us today. Since this is Andy's first conference call with Nortec, I'd like to take a minute and officially welcome him. Andy joined us in December as CFO and Senior VP of Finance, bringing a wealth of knowledge and experience. He's held C-suite positions with several public and private companies and has served on a number of corporate and nonprofit boards. Andy also spent a number of years on the audit side as a partner at KPMG. Nortec is very fortunate to have Andy on the team. Along with overseeing Nortec's financial operations, Andy will assist our leadership team and board of directors with strategic planning. As I've mentioned on past calls, strategic planning at Nortec is an ongoing, iterative process integrated into our DNA. Our strategic plan is not something we just dust off every three years before filing it away. We work on it diligently every year and take the process very seriously. Foundational to Nortec's strategic planning is an employee-first mindset. Our employees are our most valuable assets and Nortec's strategic plan reflects that. We would not have delivered our strong 2023 financial results with our team members' outstanding contributions, and the whole Nortec team deserves our sincere appreciation. While financial and operational improvements are measured on income and cash flow statements, balance sheets, and spreadsheets, it's much harder to quantify Nortec's culture and values. But the whole team creates the right environment where such quantitative improvements can be realized. Everything starts and ends with how our employees live out Nortec's values of teamwork, excellence, commitment, innovation, and integrity every day. Touching briefly on our financial results now, we posted record net sales for the fourth quarter and the fiscal year 2023, along with continued improvements in gross margin. We work carefully with our customers as strategic partners to adjust pricing as needed to reflect market conditions and supply chain realities. Our EBITDA levels were also solid at $3.2 million for the fourth quarter and $8 million for the year. Overall, we're seeing encouraging normalization trends in supply chain and customer ordering practices, factors that had influenced our unusually high backlog levels a year ago. While we're not completely back to what was considered normal, we believe these situations have mostly stabilized. In supply chain dynamics, the concept of nearshoring is gaining attention recently. According to a January article by the Global Electronics Trade Association, IPC, last year Mexico surpassed China for the first time in 20 years by contributing the highest percentage of U.S. imports from any country. We have seen this trend at Nortec as well. Our three-tiered global strategy of manufacturing in the US, Mexico, and China gives Nortec customers flexibility in improving their own competitiveness. We can move production around based on factors like cost, operational requirements, quality control, and intellectual property concerns. Our customer teams and engineers evaluate each customer's needs to determine the most suitable location, which may also change over the course of a product's lifecycle. In terms of China, as I mentioned on past calls, much of our production work there is built in country for country, a nearshoring approach to better serve our customers in the global market, including reduced shipping costs. To support Nortec's global operations, including our work with large multinational customers, we started a commercial banking relationship with Bank of America in 2017. We appreciate the flexibility this line of credit has provided, as well as the endorsement of our strategic direction by a world banking leader. Recently, we made a change to the structure of that agreement in order to better support our operational needs. Annie will give you more details in a few minutes. On a final note, I'd like to recognize an important transition in our executive team. Congratulations and thank you to Kurt Steichen, who retired late last year after nearly 20 years at Nortec. most recently a Senior VP of Business Operations. During his tenure, Kurt played a key role in Nortec's growth, both the expansion of our full-service solutions offerings and significant increase in our medical market sales. Stepping in to fill Kurt's role is Corey Hancock, who joined us last spring as Vice President of Sales and Business Development. Previously, Corey is with Benchmark Electronics for nearly 24 years, most recently as Vice President of Strategic Accounts. Benchmark is a recognized world leader in our industry, operating multiple facilities across the Americas, Asia, and Europe. They were the 13th largest EMS provider in 2022. Given that background and his ability to build and lead sales teams, we are very pleased to have Corey join our leadership team. Next, I'll turn it over to Andy for a more in-depth look at our financial results. Andy? Thank you, Jay.