Hammond Power Solutions Inc.

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Good morning, ladies and gentlemen. Welcome to the Hammond Power Solutions 2022 fourth quarter and year-end results conference call. Certain statements that will be discussed on this conference call will constitute forward-looking statements. The forward-looking information in statements included in the discussion or not guarantees a future performance that should not be unduly relied upon. Forward-looking statements will be based upon current expectations, estimates, and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risk uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. These factors include but are not limited to such things as the impact of general industry conditions, fluctuations of commodity prices, industry competition, availability of qualified personnel and management, stock market volatility, and timely cost-effective access to sufficient capital from internal and external sources. The risk just outlined should not be construed or exhaustive, although management of the company believes that the expectations reflected in such forward-looking statements are reasonable. It can give no assurance that such expectations will prove to have been correct. According lists should not place undue reliance upon any of the forward-looking information discussed in this call. I will now turn the call over to Bill Hammond, Chairman and CEO of Hammond Power. Please go ahead, Mr. Hammond.

Thank you, Operator, and good morning to everyone. Welcome to Hammond Power's fourth quarter and year-end financial results conference call. Joining me today is Richard Vollering, our Chief Financial Officer. For today's call, I'll start out with some high-level commentary on the year and our business. From there, I will hand it over to Richard for a review of our fourth quarter results and year-end financial highlights, after which I'll outline what we expect for 2023 before turning it over to any questions. The past three years have been the most challenging and uncertain time I have seen in my 45 years of being in the electrical industry. And despite all of the challenges we faced in 2022, Hammond Power Solutions performed admirably. In fact, we delivered the strongest financial performance of our 22 years of being a separate public company. I am very proud of our accomplishments and believe that three organizational capabilities in particular contributed to our success. And these are diversification, flexibility, and investment. Our advantage of broad diversification in terms of geography, channels, markets, and products helped to propel the biggest year over year of growth we have ever experienced. This robust growth came from a wide variety of markets including EV recharging, solar power generation, energy storage, data center expansions, oil and gas developments, mining equipment, silica chip manufacturing, as well as investments in public infrastructure like water treatment, hospitals, and public transit. Several new events also contributed to this growth momentum in 2022, which we expect will fuel continuing economic activity in the years ahead. The first one is the noticeable reshoring of certain manufacturing sectors to North America in light of increasing geopolitical uncertainty and risk. These include silica chip production, as well as batteries and other products related to manufacturing electric vehicles and their recharging systems. And an even bigger and unexpected boost to the U.S. economy came at the end of 2021 from the Infrastructure Investment and Jobs Act signed into law by President Biden, which has injected hundreds of billions of dollars into many sectors requiring transformers, including public transportation upgrades, clean water, the electric grid, renewable energy, and a nationwide network of EV recharging stations. While it is difficult to assess the direct impact on HPS, we believe this massive investment in infrastructure and electrification will lift our entire industry. Our biggest growth engine in terms of sales dollars in 2022 has been our US distributor channel, which serves many of these growing markets. In 2022, we expanded our distributor network by 280 new branches. And since 2020, we have added 989 new branches. Over the last six years, we have become the dominant dry transformer supplier to the U.S. distributor channel because of our broad portfolio of standard and custom products, the best training and support tools in our industry, superior stock availability from seven regional warehouses across the United States and our focus on building and maintaining strong personal relationships with our distributors. In addition to our distributor channel, an equally robust and important growth engine in 2022 was our OEM business. A combination of traditional as well as new OEM customers in Canada and the US serving sectors like data center power systems, oil and gas equipment, pipelines, mining, water treatment, energy storage, and electrical distribution systems experienced the biggest growth in over seven years with backlogs that stretch into 2024. During the year, we also expanded our sales organization based in Mexico to gradually give us the capabilities to serve dry transformer markets in Mexico, Central America and South America with the expectation of driving new sales growth of $30 million within the next five years. After three years of rebuilding our Indian management team and refocusing our business coming out of the pandemic on more profitable markets, we also delivered the best financial results we have ever seen in this rapidly developing country. Total sales almost doubled as we expanded our domestic business in industrial sectors like cement manufacturing, food and beverage, pharmaceuticals, steel production, marine power, hospitals, and solar power generation. We also expanded our export business in Bangladesh, Indonesia, Philippines, and the Pacific Islands. In addition, we enjoyed significant growth during our first full year of our most recent acquisition Mesta Electronics. We saw sales doubling due to the rapid expansion of silica chip production as well as electric battery manufacturing plants in the US. The active power filters that Mesta makes have also expanded our power quality products and capabilities that we sell both direct to OEMs as well as through our distributor channel. This relatively small but well-managed company serves as an ideal acquisition model for HPS to pursue in the future in order to add tuck-in companies that will expand their penetration of new and adjacent businesses, diversifying our sales and markets even more. Moving on to Hammond's manufacturing capacity, our distributed manufacturing footprint of eight plants across Canada, the US and Mexico played a pivotal role in 2022 as it enabled the company to absorb unexpected growth. Adding to this platform near the end of 2021, we converted one of our plants in India to build a limited range of low voltage distribution transformers for North America. This now global footprint gave us tremendous flexibility in moving products and customer orders from one plant to another in order to meet delivery dates and to reduce our lead times. But even our increased capacity hasn't been enough to serve the surging sales and future opportunities that our strategies, channels and industry reputation are bringing us. During 2022, we increased our investment in new equipment to expand our capacities at existing plants in all four countries. We are seeing this positive momentum continuing over the rest of this decade and announced in December last year, a capital investment program to invest more than $40 million in 2023 and 2024 to further increase our capacities, including the expansions of two plants, one in the US and one in Mexico, as well as building an entirely new plant in Mexico, which will focus on small products, including power quality magnetics. Our strong balance sheet gives us this flexibility and ability to invest in our organic business, which is not only less risky, but also generates better returns on our capital. Lastly, and subsequent to the quarter, our board of directors announced a succession plan for me to move from the CEO role into an executive chairman role. After 22 years as the CEO, building the company that has been in my family for more than a century, it is time for me hand over the day-to-day decision-making process to a leader that will continue to build the company with the same commitment to innovation and to our customers that Hammond Power is known for. I am extremely proud of the extended Hammond family and what we have accomplished together and I look forward to working closely with the next generation of leaders as we shape the strategy that will allow the Hammond brand to continue to grow globally. I will now hand the call over to Richard to provide some details on our financial progress. Richard.