Nortech Systems Incorporated

Good afternoon, ladies and gentlemen, and welcome to NORTEC's third quarter 2022 earnings 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, CFO. Sir, the floor is yours.

Thanks, John. I'd also like to welcome everybody to NORTEC's third quarter 2022 conference call. So Jay will begin today's call with a brief review of our third quarter operational performance, and then I will review Nortec's Q3 financial results before turning it back over to Jay for his closing comments. And then we'll open up the call at the end 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, EBITDA, free cash flow, 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 10Q, may be amended or supplemented. The statements made during this conference call are based on 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 complete safe harbor statements in our SEC filings. And with that, I will turn it over to Jay for his opening comments.

Thanks, Chris, and good afternoon, everyone. We appreciate you taking the time with us today. On the subject of appreciation, I want to start by thanking our roughly 700 dedicated Nortec team members across our seven locations in Minnesota, Mexico, and China. Whenever I visit our facilities, I'm always impressed with the high level of commitment, care, and quality that our people exhibit on a daily basis. In my travels, I also meet with Nortec customers, and I know they certainly share my appreciation. I should thank our customers as well. They've been very patient with us as we've been working hard to manage through the current global supply chain crisis. Speaking of which, I want to thank our supplier partners who've been working very hard with us to get quality parts shipped to us as close to on time as possible. We really appreciate all of their hard work. Turning now to our third quarter results, we continued the trend of sequential and year-over-year improvements that we have seen over the past four quarters, both on the top and bottom lines. On the revenue side, we're pleased that demand from our diverse customer base remains solid. We posted strong double-digit sales growth for the third quarter and nine-month periods, both overall and in each of our three core markets, medical, industrial, and defense. Our third quarter and year-to-date results also benefited from selective pricing actions that we're taking to offset inflationary pressure on labor rates and material costs. We're seeing continued positive trends in our chosen markets. For example, our largest customer in the medical segment recently reported quarterly revenue up in the mid-single digits. They also cited solid spending trends on healthcare equipment, especially in Europe and Asia. Much of their current equipment innovation is aimed at productivity improvements, in large part driven by labor shortages, including highly skilled jobs like nurses and imaging techs. We collaborate closely with this customer in every facet of their growing business, including end-to-end supply chain optimization, advanced research and development, and cost improvement initiatives to move production to the lowest cost plant location. Nortec offers our customers a unique skill set of capabilities and strategic fulfillment solutions, truly a collaborative partnership. As such, our services deserve to be valued differently and more highly than if we operated merely as a transaction-based commodity business. I believe this partnership mindset shared by Nortec and our customers is a key reason why we've not experienced any significant order cancellations or push-outs from customers in any of our core markets thus far. We work hard to act as an extension of our customers' own operations as a trusted resource. In the third quarter, we were able to increase shipments due to continued supply chain improvements, fewer component shortages, and shorter component lead times. The lead time improvements are in sync with the latest industry outlook from the Electronic Components Industry Association announced last month. For the remainder of 2022, we are cautiously optimistic about finishing strong, with momentum also carrying over into 2023. Our backlog remains healthy. As Nortec has done constantly in recent quarters, we expect to outpace the overall economy by focusing on the things we can control. Executing with excellence, taking great care of our employees, listening carefully to our customers, innovating quickly with our new core technologies, and remaining disciplined with our cash. To explain our financials in more depth, I'll now turn it back over to Chris.