Nortech Systems Incorporated

Good afternoon ladies and gentlemen and welcome to the Nortech Systems Incorporated second quarter 2026 earnings conference call. With me on the line today are Jay Miller, President and Chief Executive Officer and Andrew LaFrence, 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 LaFrence.

Thank you, Jenny, and welcome, everyone. Jay will begin today's call with a review of our operations, recent developments, and business outlook. I will then review Nordtech's second quarter financial results before turning the call back to Jay for closing comments. After that, we will open up the line for questions. Before we continue, please note statements made during this call may be forward-looking statements regarding expected net sales, operating results, 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 detailed in our most recent SEC filings, 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 will turn it over to Jay for his opening comments. Jay?

Thank you, Andy, and good afternoon, everyone. We appreciate you joining us. The second quarter reflected continued execution across the business, with net sales increasing 9.3% year over year to $33.5 million, gross margin improving to 17%, and operating income of $623,000. Our results benefited from higher revenue levels, improved manufacturing cost absorption from increased production activity, and continued progress following the restructuring initiatives in late 2024 and early 2025. These improvements were partially offset by higher incentive compensation expense in 2026. Backlog remains one of the clearest and best forward-looking indicators that our strategy is gaining traction. As of June 30, 2026, our 90-day shipment backlog was $33.4 million, up 6.3% from the beginning of the quarter and up 25.8% from June 30, 2025. Our total Thank you for joining us. Successful program transfers and the value of our manufacturing footprint across the U.S., Mexico, and China. We continue to see strong coding activity as customers evaluate near-shore manufacturing strategies for North America and Asia. We believe our North American footprint positions us well with our Monterey, Mexico, Maquiladora operations and Minnesota facilities operating within the framework of the U.S.-Mexico-Canada agreement. While the tariff environment remains somewhat uncertain, we are actively monitoring developments and the picture is getting clearer. We are pursuing reimbursement and recovery of previously paid IEPA-related tariffs, and while we are confident we are making important progress, the timing and amount of any recoveries remain uncertain and no amounts have been recognized as of June 30th, 2026. We remain proactive in monitoring trade policy, geopolitical uncertainty, and Supply Chain Risk. In June 2026, we've strengthened our supply chain leadership with the addition of a new vice president of supply chain. This leadership addition comes at an important time as selected component constraints, longer lead times, allocation pressures and price volatility continue to affect many OEMs and EMS providers. We are working closely with customers and suppliers to plan ahead, secure critical materials and product protect production continuity. Next, I'll turn it over to Andy for a more in-depth look at our financial results. Andy.