Nortech Systems Incorporated

Good morning, ladies and gentlemen, and welcome to the Nortec Systems Incorporated third quarter 2024 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 Andy LaFrance.

Thank you, Jenny. I would 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 third quarter 2024 fiscal 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 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 SEC filings, may be amended or self-amended. 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'll now turn the call over to Jay for his opening comments. Jay?

Thank you, Andy, and good morning, everyone. We're glad you could join us today. In our last earnings call, we noted customer order headwinds, which we expected to impact our near-term orders and revenue. Our third quarter net sales were impacted by a continuing pattern of customers delaying product purchases, customers' desire to reduce their own on-hand inventories and to shorten order-to-fulfillment timelines. These impacts have been a theme at many contract manufacturers over the past couple of quarters. Industry headwinds and our investments in future operating leverage have negatively affected our near-term earnings and EBITDA generation. The backdrop of the quarter has provided us with incremental opportunities to work closely with customers to provide solutions for the new norm of supply chain nearshoring. These discussions revolve around shorter lead time and on-time delivery strategies. along with deeper customer partnerships which are fundamental to our long-term growth strategy. As noted last quarter, we have chosen to address these clear market dynamics by making a number of short-term sacrifices in exchange for improved long-term growth and profitability. This includes facility consolidations and investment in business development. We recognize that it was a difficult and disappointing quarter. We're very pleased with the progress in the third quarter to consolidate our North American footprint, as well as moving customer programs to other manufacturing locations to better fit customers' needs. We're on track to complete the closure of our Blue Earth Minnesota facility in December and move its production to our Bemidji Minnesota facility. Regarding our cost structure, we continue to be very diligent managing operating costs. With an eye for long-term optimization of our facilities, in addition to the Blue Earth closure, we are rapidly progressing with a 30% reduction in our Maple Grove lease space. These facility optimization activities will result in at least $1.6 million in annual savings in 2025 and beyond. Over the past several years, we have taken a number of steps to invest in our core infrastructure and a world-class leadership team to drive our long-term growth strategy. We continued this investment and leadership in 2024 as we completed fully staffing our industry-specific business development team early in the year. This team is performing at a very high level and driving impressive business quotes and opportunities. Further, to align our organization with the expected accelerated new business growth, we recently completed a seamless realignment of our back office and plant operations. This realignment will allow the company to serve our customers better by delivering high quality products and services on time with shorter lead times. This process is a natural evolution of our business and entails changes in organizational structure to enhance customer intimacy. This is not a restructuring employee headcount. A key takeaway for this quarter, and I want to make this very clear, is that we're very bullish on the future in Nortec and continue to make investments to accelerate long-term growth. I continue to be impressed with how our employees live out Nortec's values of teamwork, excellence, commitment, innovation and integrity every day. Once again, the whole Nortec team deserves our sincere appreciation. Our three-tier global strategy of manufacturing in the US, Mexico, and China gives Nortec customers flexibility to improve their own competitiveness. We can move production among facilities based on factors like cost, intellectual property management, and operational requirements, including ever-improving on-time delivery of high-quality products with shorter lead times. Our customer and business development 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 lifetime. In terms of China, as I've mentioned on past calls, much of our production work there is built in-country for country, a near-shoring approach to better serve customers in the global market with reduced shipping costs, time, and risk. Fortunately, we had the foresight to start implementing this strategy faster than most of our competitors. Next, I'll turn it over to Andy for a more in-depth look at our financial results. Andy?