Nortech Systems Incorporated

Good afternoon, ladies and gentlemen, and welcome to the Q4 2021 Nortec Systems, Inc. Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris Jones. Sir, the floor is yours.

Thanks, John, and I'd also like to welcome everyone to Nortec Systems' fourth quarter 2021 conference call. After my introduction, Jay will begin with a brief review of our fourth quarter and full year accomplishments. And then I'll review our financial results before turning it back over to Jay for his closing comments and our business outlook for 2022. Then we'll open it up for your questions. Before we continue, please note that statements made during this call and Q&A session may be forward-looking regarding expected revenue, 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 in this call. These risks, including those that are detailed in our most recent annual report, Form 10-K, may be amended or supplemented. The statements made during this conference call are based upon information known by NORTEC as of the date and time of this call, and we assume no obligation to update the information in today's call. You can find NORTEC's safe harbor statements in our SEC filings. And with that, I'll turn it over to Jay for his opening comments.

Thank you very much, Chris. I'd like to begin the call today by recognizing some people who are very important to NORTEC's past and future success. First and foremost, it's critical to say thank you to our frontline workforce. They are the key people in the plant's building vital parts for our medical, defense, and industrial customers. Our entire Nortec team deserves enormous credit for their commitment to delivering mission-critical solutions to our customers despite ongoing COVID concerns and significant supply chain disruptions. I greatly appreciate their tireless efforts under these extremely challenging circumstances. Thanks to our customers for their confidence in us, our $95 million backlog at the end of 2021 is a testament to their trust that we will continue to do everything possible to deliver quality products to them on time despite unprecedented disruptions to the global supply chain. Thanks to our suppliers for partnering with Nortec to build more effective end-to-end fulfillment solutions to serve our customers. It's a team effort, and we sincerely appreciate their partnership and hard work. I also want to thank our board of directors for their constant support during a very difficult two years since Nortec first encountered COVID in China in late 2019. Our board never wavered from the guiding principle that the safety of our frontline workers is our highest priority. Finally, I want to thank our shareholders for their commitment to Nortec. We survived the most difficult part of the COVID downturn and our future has never been brighter. In a few minutes, Chris will review our financials, but first I'll outline just a few of our many accomplishments in 2021. We augmented our strong board of directors with key additions. Phil Smith and Danny Sachs joined in December 2020, and we welcomed Stacey Cruz in May 2021. All three new board members bring a wealth of experience. We're thrilled to have them join forces with our chairman, David Kunyan, as well as Steven Rosenstone, Ryan McManus, and myself as we guide and oversee Nortec's next phase of growth. We truly have a world-class board representing our shareholders. We utilize the CARES Act program, specifically the Paycheck Protection Program and Employee Retention Credit, to secure our workforce throughout 2020 and 2021. We added a number of new customers, including a strategic development partnership by signing a project funding agreement with Marpay Technologies of Israel for co-development of a teledermatology scanning system. We gained organizational efficiencies through the consolidation of our PCB operations in Mankato, Minnesota. Those transitions concluded in the third quarter. We also further established our centers of excellence in Bemidji, Malacca, Maple Grove, and Blue Earth, Minnesota, as well as in Monterey, Mexico, and Suzhou, China. Finally, we ended the year signing an extension of our $16 million Bank of America credit facility. Our B of A agreement was a key step in supporting our plans for future growth. In short, in 2021, we made progress on several important fronts. We strengthened our balance sheet extended our Bank of America agreement until 2026, restored revenue growth, and improved gross margins. We also tightened our focus on operational excellence and innovation for our customers. Creating shareholder value remains a top priority. We believe this is best accomplished by creating value for our diverse customer base. In today's problematic supply chain environment, our current and new customers increasingly recognize and appreciate Nortec as a key long-term partner offering complete fulfillment solutions. We believe that creating efficiencies for our customers and deepening these relationships will further improve Nortec's revenue, gross margin, and operating cash flow. Our customers also increasingly appreciate Nortec as a key partner building fulfillment solutions tailored to their unique regional needs. That regionalization trend includes serving Asia with in-country manufacturing and serving Europe and the Americas with both U.S. and Mexico operations. Now I'll ask Chris to review our financial results. Chris?