Nortech Systems Incorporated

Greetings and welcome to Nortec's fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. I will now turn the conference over to your host, Mr. Chris Jones. Please go ahead.

Hi, good morning, and thanks, operator, and happy St. Patrick's Day to everybody. I want to welcome everyone to our conference call today. First, Jay will begin with a review of our industry, our value proposition for customers, and operational performance. And then I'll review Nortec's Q4 and full-year financial results, and then turn it back over to Jay for his closing comments. And then we'll open up the call for your questions. Before we continue, though, please note that statements made during this call in the 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 on this call. These risks, including those that are detailed in our most recent 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 complete safe harbor statements in our SEC filings. And with that, I'll turn it over to Jay for his opening comments.

Thank you, Chris, and happy St. Patrick's Day, everyone. We're excited to discuss our 2022 results, and we'll do so shortly. But today, I want to take a little bit of time, take a step back, and answer a simple question. What is Nortec's value proposition? Though what we do here at Nortec is complex, the answer to this question is relatively simple. We engineer and manufacture complex, low-volume, high-mix, electromechanical systems, assemblies, and components for medical, industrial, and defense customers. And we do so on a global basis with plants in Minnesota, Monterey, Mexico, and Suzhou, China. Notably, we do not compete in the high volume, low mix space, which is dominated by larger companies like Benchmark and Plexus, admirable companies in their own right, whose factories churn out thousands of identical products every day, running multiple shifts. In contrast to those huge firms, Nortec will set up production lines that might run for a week or two, or maybe a month. We constantly take down lines and set up different lines. It's a fundamentally different business. And while we leverage some very sophisticated capital equipment in the production and testing, we primarily rely on our experienced, high-skilled, hands-on workforce to produce these very complex technical solutions. A $2 million to $5 million order is significant for us. And while larger contract manufacturers won't take that business, it's perfect for Nortec. Our largest customer accounts for roughly 25% of our revenue, but after that, our next largest customer is about 7%. We can effectively serve customers of any size that fit our global low-volume, high-mix, mission-critical business model. While Wall Street analysts may group all large and small EMS firms together, we do things that those larger firms cannot do or will not do. And candidly, they do things that we will not do. Occasionally, customers learn this fundamental difference in business philosophy the hard way. were currently negotiating with a medical customer that had first awarded their business to a large EMS firm. It was a relatively small contract for the relatively large EMS firm, and the customer was neglected. Consequently, quality and communication both suffered. The complicated, complex manufacturing process and supply chain was a poor fit for that large company's high-volume, low-mix model. Frustrated, that customer then pulled his manufacturing back in-house. but quickly recognizing and managing all the suppliers they've taken on, the cash implications of managing a lot of new inventory, and the complexity of their manufacturing process, that customer is now talking to us. And this situation fits Nortec perfectly. This simple story reflects what happens somewhat frequently. The Nortec team is very proud of what we do daily for our customers, and we feel we do it very well. It starts with taking great care of each other as Nortec employees and taking great care of our families. It's also very important to us that we take very good care of our supplier partners by communicating with them openly and honestly and paying them on time 100% of the time. It also means that we strive to be good corporate citizens locally, nationally, and globally. We know that if we take great care of all these critical stakeholders, employees and our families, customers, supplier partners, and our communities, we will also take great care of our shareholders. If there's a secret to our strong results in 2022, this is it. Now to explain our financials in more depth, we'll turn it over to Chris. Chris?