Q3 2024 Nortech Systems Inc Earnings Call

November 7, 2024

With me on the line today are J, Miller, President and Chief Executive Officer, and Andrew The friends, Chief Financial Officer, and senior Vice President of Finance.

Speaker Change: All lines have been placed on a listen only mode on 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 to friends.

Speaker Change: 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 to France.

Speaker Change: 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 and recent developments and business outlook. Then I will review <unk> third quarter 2020 for fiscal results before I turn it back over to Jay for his closing comments then.

Andy DeFrance: 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 and recent developments and business outlook. Then I will review <unk> third quarter 2020 for fiscal results before I turn it back over to Jay for his closing comments.

Andy DeFrance: Then we will open up the call for your questions.

We'll open up the call for your questions.

Before we continue please note that statements made during this call may be forward looking.

Andy DeFrance: Before we continue please note that statements made during this call may be forward looking regarding the expected net sales earnings future plans opportunities and other company expectations.

Regarding the 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 are detailed in our most recent SEC filings may be amended or supplemented.

Andy DeFrance: 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 are detailed in our most recent SEC filings may be amended or supplemented.

The statements made during this conference call are based on information known by Nortek 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 <unk> complete safe Harbor statements in our SEC filings.

The statements made during this conference call are based on information known by <unk> 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 nor text complete safe Harbor statements in our SEC filings.

With that I'll now turn the call over to Jay for his opening comments Jay.

Andy DeFrance: With that I'll now turn the call over to Jay for his opening comments Jay.

Jay: Thank you Andy and good morning, everyone. We're glad you could join us today.

Jay: 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.

Jay: Customers desire to reduce their own on hand inventories and to shorten order to fulfillment timelines. These.

Jay: These impacts have been a theme at many contract manufacturers over the past couple of quarters.

Jay: Industry headwinds in our investments in future operating leverage have negatively affected our near term earnings and EBITDA generation.

Jay: 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 near shoring.

Jay: These discussions revolve around shorter lead time and on time delivery strategies, along with deeper customer partnerships, which we fund which are fundamental to our long term growth strategy.

Jay: 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.

Industry headwinds in our investments in future operating leverage have negatively affected our near term earnings and EBITDA generation.

Jay: This includes facility consolidations and investment in business development.

This includes facility consolidations and investment in business development.

The backdrop of the quarter has provided us with incremental opportunities to work closely with customers to provide solutions for the new norm ups supply chain near shoring.

Jay: We recognized that it was a difficult and disappointing quarter.

We're very pleased with the progress in the third quarter consolidate our 2024.

Jay: We're very pleased with the progress in the third quarter consolidated our 2024.

These discussions revolve around shorter lead time and on time delivery strategies, along with deeper customer partnerships, which we fund which are fundamental to our long term growth strategy.

Jay: To consolidate our north American footprint as well as moving customer programs to other manufacturing locations to better fit customers' needs.

Jay: 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.

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.

Regarding our cost structure, we continue to be very diligent managing operating costs.

Jay: 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.

This includes facility consolidations and investment in business development.

And I 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.

We recognize that it was a difficult and disappointing quarter.

We're very pleased with the progress in the third quarter consolidated our 'twenty to 'twenty four.

Jay: These facility optimization activities will result in at least $1 $6 million in annual savings in 2025 and beyond.

To consolidate our north American footprint as well as moving customer programs to other manufacturing locations to better fit customers' needs.

Jay: These facility optimization activities will result in at least $1 $6 million in annual savings in 2025 and beyond.

Jay: 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 continue this investment in leadership in 2024 as we as we completed fully staffing our industry specific business development team early in the year.

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 growth lease space.

Jay: This team is performing at a very high level and driving impressive business quotes and opportunities.

Jay: 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.

These facility optimization activities will result in at least $1.6 million in annual savings in 2025 and beyond.

Jay: 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.

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 continue this investment in leadership in 2024 as we as we completed fully staffing our industry specific business development team early in the year.

Jay: 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 change.

This process is a natural evolution of our business and entails changed.

Jay: Changes in organizational structure to enhance customer intimacy.

Jay: Okay.

Jay: This is not a restructuring and employee head count.

This team is performing at a very high level and driving impressive business quotes and opportunities.

Jay: Key takeaway for this quarter and I want to make this very clear is that we're very bullish on the future in nortek and continue to make investments to accelerate long term growth.

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.

I continue to be impressed with how our employees live out nor text values of teamwork excellence commitment innovation and integrity every day.

This realignment will allow the company to serve our customers better by delivering high quality products and services on time with shorter lead times.

Jay: Once again, the whole north tech team delivered deserves our sincere appreciation.

This process is a natural evolution of our business and entails.

Jay: Our three tiered global strategy of manufacturing in the U S, Mexico, and China. It gives more tech customers flexibility to improve their own competitiveness. We can move production amongst facilities based on factors like cost intellectual property management.

Jay: Our three tiered global strategy of manufacturing in the U S, Mexico, and China. It gives more tech customers flexibility to improve their own competitiveness. We can move production among facilities based on factors like cost intellectual property management.

Changes in organizational structure to enhance customer intimacy.

Okay.

This is not a restructuring and employee head count.

Key takeaway for this quarter and I wanted to make this very clear is that we're very bullish on the future in nortek and continue to make investments to accelerate long term growth.

Jay: And operational requirements, including ever improving on time delivery of high quality products with shorter lead times.

And operational requirements, including ever improving on time delivery of high quality products with shorter lead times.

I continue to be impressed with how our employees live out north, Texas values of teamwork excellence commitment innovation and integrity every day.

Jay: Our customer and business development teams and engineers evaluate each customers needs to determine the most suitable location, which may also change over the course of a product's lifetime.

Jay: Our customer and business development teams and engineers evaluate each customers needs to determine the most suitable location, which may also change over the course of Approx lifetime.

Once again, the whole north tech team delivered deserves our sincere appreciation.

Our three tiered global strategy of manufacturing in the U S, Mexico, and China. It gives nor tech customers flexibility to improve their own competitiveness. We can move production amongst facilities based on factors like cost intellectual property management.

Jay: In terms of China as I've mentioned on past calls much of our production work. There is built in country for country or near shoring approach to better serve customers in the global market with reduced shipping cost time and risk.

Speaker Change: In terms of China as I've mentioned on past calls much of our production work. There is built in country for country or near shoring approach to better serve customers in the global market with reduced shipping cost time and risk.

Jay: Fortunately, we had the foresight to start implementing this strategy faster, mostly faster than most of our competitors.

Speaker Change: Fortunately, we had the foresight to start implementing this strategy faster faster than most of our competitors.

And operational requirements, including ever improving on time delivery of high quality products with shorter lead times.

Jay: Next I'll turn it over to Andy for a more in depth look at our financial results Andy.

Andy DeFrance: Next I'll turn it over to Andy for a more in depth look at our financial results Andy.

Our customer and business development teams and engineers evaluate each customers needs to determine the most suitable location, which may also change over the course of Approx lifetime.

Andy: Thank you Jay and the next few minutes I'll provide certain details of our financial performance in the third quarter of 2024 I would encourage you to review our form 8-K containing our press release and non-GAAP measures as well as our quarterly report on 10-Q, both of which were filed earlier this morning with you.

Andy DeFrance: Thank you Jay and the next few minutes I'll provide certain details of our financial performance in the third quarter of 2024 I would encourage you to review our form 8-K containing our press release and non-GAAP measures as well as our quarterly report on 10-Q, both of which were filed earlier this morning with you.

In terms of China as I've mentioned on past calls much of our production work. There is built in country for country or near shoring approach to better serve customers in the global market with reduced shipping cost time and risk.

Jay: Securities.

Andy DeFrance: Securities.

Jay: <unk> Securities and Exchange Commission.

Andy DeFrance: <unk> Securities and Exchange Commission.

Fortunately, we had the foresight to start implementing this strategy faster, mostly faster than most of our competitors.

Jay: As a continued theme we have historically noted.

As a continued theme we have historically noted that our individual quarterly performance can be affected by outside factors. These might include timing fluctuations, including seasonable fluctuations customer shipments and supply chain issues any of these could materially impact a particular quarter.

Jay: That our individual quarterly performance can be affected by outside factors. These might include timing fluctuations, including seasonable fluctuations customer shipments and supply chain issues any of these could materially impact a particular quarter either positively or negatively.

Next I'll turn it over to Andy for a more in depth look at our financial results Andy.

Andy DeFrance: Positively or negatively.

Jay: Consequently, we believe it is a more appropriate to review our business on a 12 month basis, rather than focus on quarterly performance. This approach will hub normalize these potential anomalies and offer a better gauge of our strategies long term success. So today will focus most of my comments on the third quarter and year to date.

Andy DeFrance: Consequently, we believe it is a more appropriate to review our business on a 12 month basis, rather than focus on quarterly performance. This approach will hub normalize these potential anomalies and offer a better gauge of our strategies long term success. So today, we will focus most of my comments on the third quarter and year to date.

Speaker Change: Just curious as to Securities and Exchange Commission.

As a continued theme we had historically noted that our individual quarterly performance can be affected by outside factors. These might include timing fluctuations and clothing, seasonable fluctuations customer shipments and supply chain issues any of these could materially impact a particular quarter well either positively or.

Jay: 2024 results I will provide some comparisons for the 12 month period ended September 32024, compared with the same period ended September 32023.

Andy DeFrance: 2024 results I will provide some comparisons for the 12 month period ended September 32024, compared with the same period ended September 32023.

Jay: Net sales for the third quarter of 2024 totaled $31 4 million. This represents a five 9% decrease in net sales of $33 4 million in the third quarter of 2023.

Andy DeFrance: Net sales for the third quarter of 2024 totaled $31 4 million. This represents a five 9% decrease in net sales of $33 4 million in the third quarter of 2023.

Negatively.

Consequently, we believe it is a more appropriate to review our business on a 12 month basis, rather than focus on quarterly performance. This approach will help normalize these potential anomalies and offer a better gauge of our strategies long term success. So today well I'll focus most of my comments on the third quarter and year to date.

Jay: For the nine months ended September 32024, net sales were $99 $5 million as compared with $103 $3 million in the same prior year period.

For the nine months ended September 32024, net sales were $99 5 million as compared with $103 $3 million in the same prior year period.

'twenty 'twenty four results I will provide some comparisons for the 12 month period ended September 32024, compared with the same period ended September 32023.

Jay: A decrease of three 6%.

Andy DeFrance: A decrease of three 6%.

Jay: During 2024 and realized headwinds with our industrial customers as a result of softness in this market.

Andy DeFrance: During 2024 realized headwinds with our industrial customers as a result of softness in this market.

Net sales for the third quarter of 2024 totaled $31 4 million. This represents a 5.9% decrease in net sales of $33 4 million in the third quarter of 2023 for the nine months ended September 32024, net sales were $99 $5 million as <unk>.

Jay: Similar to the results published by other contract manufacturers as well as delayed product launches.

Andy DeFrance: The results published by other contract manufacturers as well as delayed product launches.

Jay: In 2024, we've also experienced revenue headwinds from our medical customers as they are aggressively reducing their inventory investments. We have also noted several medical product introductions introductions being pushed out we continue to see strong revenue growth in our aerospace and defense category and the year to date period.

Andy DeFrance: In 2024.

Andy DeFrance: Also experience revenue headwinds from our medical customers as they are aggressively reducing their inventory investments. We've also noted several medical product introductions introductions being pushed out we continue to see strong revenue growth in our aerospace and defense category and the year to date period.

Compared with $103 $3 million in the same prior year period.

Speaker Change: A decrease of three 6%.

Jay: Should.

Speaker Change: Further as Jay noted in his remarks customers have changed their purchasing patterns and are requesting short lead times with new orders. These factors drove a reduction in customer backlog as of the end of the third quarter of 2024.

Speaker Change: During 2024 and realized headwinds with our industrial customers as a result of softness in this market, which is similar to the results published by other contract manufacturers as well as delayed product launches.

In 2024, we've also experienced revenue headwinds from our medical customers as they are aggressively reducing their inventory investments. We've also noted several medical product introductions introductions being pushed out we continue to see strong revenue growth in our aerospace and defense category in the year to date.

Speaker Change: Third quarter of 2024 gross profit totaled $3 8 million or 12, 2% of net sales compared with gross profit of $5 $3 million or 15, 9% of net sales in the same prior year quarter for the first nine months of 2024, we realized gross profit of $13 9 million.

Speaker Change: Third quarter of 2024 gross profit totaled $3 8 million or 12, 2% of net sales compared with gross profit of $5 3 million or 15, 9% of net sales in the same prior year quarter for the first nine months of 2024, we realized gross profit of $13 9 million.

Good.

Speaker Change: Our 2014% of net sales as compared with.

Speaker Change: Our 14% of net sales as compared with $16 3 million or 15, 8% of net sales in the first nine months of 'twenty three the reduction in gross margin percentages in the 2024 periods is largely due to lower net sales and resulting in reduced the facility utilization.

Further as Jay noted in his remarks customers have changed their purchasing patterns and are requesting short lead times with new orders. These factors drove a reduction in customer backlog as of the end of the third quarter of 2024.

Speaker Change: With $16 3 million or 15, 8% of net sales in the first nine months of 'twenty three the reduction in gross margin percentages in the 2024 periods is largely due to lower net sales and resulting in reduced the facility utilization and to a lesser extent incremental training and other <unk>.

Third quarter point to a foreign gross profit totaled $3 $8 million or 12, 2% of net sales compared with gross profit of $5 $3 million or 15, 9% of net sales in the same prior year quarter for the first nine months of 'twenty 'twenty four we realized gross profit of $13 9 million.

Speaker Change: And to a lesser extent incremental training and other transition costs related to the movement of <unk> production to the mid <unk> by the end of 2024 as these costs are have ongoing benefit to the company. They are not included in our restructuring costs.

Speaker Change: In addition costs related to the movement of <unk> production to the mid <unk> by the end of 2024 as these costs have ongoing benefit to the company. They are not included in our restructuring costs.

Speaker Change: Operating expenses for the third quarter and the first nine months of 'twenty 'twenty four lower than the prior year periods. As a result of lower incentive compensation accruals and expense management with which offsets increased payroll related costs.

Speaker Change: Operating expenses for the third quarter and the first nine months of 'twenty 'twenty four lower than the prior year periods. As a result of lower incentive compensation accruals and expense management, with which offset increased payroll related costs.

Speaker Change: Year to date 2024, we have incurred $267000 of restructuring costs related to retention bonuses and other costs associated with the upcoming Blue Earth closure.

Speaker Change: Year to date 2024, we have incurred $267000 of restructuring costs related to retention bonuses and other costs associated with the upcoming Blue Earth closure, we estimate that the <unk> closure will result in restructuring cash charges of between $650000 700.

Speaker Change: Estimate the <unk> closure will result in restructuring cash charges of between $650000 $750000 in 2024.

Speaker Change: $50000 in 2024, we currently do not anticipate any significant noncash asset impairment charges related to this closure, we expect to pay substantially all of these restructuring costs in 2024.

Speaker Change: We currently do not anticipate any significant noncash asset impairment charges related to this closure, we expect to pay substantially all of these restructuring costs in 2024.

Yeah.

Speaker Change: Moving to the cash flow statement for the nine months ended September 32024, net cash used in operating activities totaled $3 million as.

Speaker Change: Moving to the cash flow statement for the nine months ended September 32024, net cash used in operating activities totaled $3 million.

As compared with cash provided of $2 2 million in the same period in 2003.

Speaker Change: Paired with cash provided of $2 2 million in the same period in 2003.

Speaker Change: While the timing.

Speaker Change: The timing.

Speaker Change: Customer and vendor payments impact operating cash flows for the period, we have purposely increased inventory levels in anticipation of the booth facility transitioning to the imaging.

Speaker Change: Customer and vendor payments impact operating cash flows for the period, we are purposely increased inventory levels in anticipation of the <unk> facility transitioning to the imaging.

Speaker Change: As noted in our press release distributed this morning, we use earnings before interest tax depreciation and amortization or EBITDA.

Speaker Change: As noted in our press release distributed this morning, and we use earnings before interest tax depreciation and amortization or EBITDA.

Speaker Change: As well as adjusted EBITDA, which does not reflect the restructuring charges, we incurred through the third quarter related to our blue.

Speaker Change: As well as adjusted EBITDA, which does not reflect the restructuring charges, we incurred through the third quarter related to our bluer.

Speaker Change: Plant closure as key performance indicators to manage our business.

Speaker Change: Closure as key performance indicators to manage our business.

Speaker Change: While EBITDA and adjusted EBITDA are non-GAAP measures. We believe these to provide meaningful information regarding our underlying core business financial performance in the press release, we have provided a reconciliation of our financial performance determined in accordance with U S. Generally accepted accounting principles.

Speaker Change: EBITDA and adjusted EBITDA are non-GAAP measures. We believe these provide meaningful information regarding our underlying core business financial performance in the press release, we have provided a reconciliation of our financial performance determined in accordance with U S. Generally accepted accounting principles and EBITDA as well.

Speaker Change: And EBITDA as well as adjusted EBITDA.

Speaker Change: As adjusted EBITDA.

Speaker Change: For the quarter ended September 32024, adjusted EBITDA was 143000 as compared with $1 6 million for the same period in 23 year to date, adjusted EBITDA was $2 7 million as compared with $4 $8 million in the.

Speaker Change: For the quarter ended September 32024, adjusted EBITDA was 143000 as compared with $1 6 million for the same period in 23 year to date, adjusted EBITDA was $2 $7 million as compared with $4 $8 million in the.

Speaker Change: First nine months of 2023, the decrease in adjusted EBITDA as a result of lower net sales and related gross profit.

Speaker Change: Turning to the balance sheet as of September 32020 for cats.

Speaker Change: Turning to the balance sheet as of September 32024, cash and equivalents totaled $1 $2 million down from $1 $7 million as of December 31, 2023.

Speaker Change: Equivalents totalled $1 $2 million down from $1 $7 million as of December 31, 2023.

Speaker Change: Fluctuation in cash balances reflects timing of cash receipts expenditures in line of credit borrowings. We ended the third quarter of 2024 was $5 $5 million of borrowing capacity under our line of credit.

Speaker Change: Accounts receivable as of September 32024 were $16 6 million down from $19 3 million as of December 31st 2023. This is in line with our strong fourth quarter sales in 2023, and the expected timing of customer payments inventories were $22 3 million.

Speaker Change: September 32024, as compared with $21 7 million as of December 31, 2023, the increase reflects the buildup of inventory balances in anticipation of completing the movement of blue Earth products into our <unk> facility.

Timber 30, 24, as compared with $21 7 million as of December 31, 2023. The increase reflects the buildup of inventory balances in anticipation of completing the movement of blueberry production into our <unk> facility.

Speaker Change: Our contract asset, which represents revenue earned but not yet <unk> customers increased to $15 $1 million.

Speaker Change: Timber 30, 24, as compared with $14 $5 million at the end of 'twenty. Three this increase reflects the timing of customer shipments.

Speaker Change: Timber 30, 24, as compared with $14 $5 million at the end of 'twenty three.

Speaker Change: This increase reflects the timing of customer shipments.

Speaker Change: Okay.

Speaker Change: In our press release issued earlier today, we have presented non-GAAP results, including trailing 12 month financial data and an EBITDA for the trailing 12 month period ended September 32024, net sales were $135 6 million as compared with a $138 9 million for the same 12.

Speaker Change: In our press release issued earlier today, we have presented non-GAAP results, including trailing 12 month financial data and an EBITDA for the trailing 12 months period ended September 32024, net sales were $135 6 million as compared with $138 9 million for the same 12 month period ended.

Speaker Change: Month's period ended September 32023.

Speaker Change: September 32023.

Speaker Change: In addition, adjusted EBITDA for the 12 months period ended September 32024 was $5 $9 million as compared with $6 million for the 12 month period ended September 32023.

In addition, adjusted EBITDA for the 12 months period ended September 32024 was $5 $9 million as compared with $6 million for the 12 month period ended September 32023.

Speaker Change: As we stated in August our top financial priority priority is it for 'twenty 'twenty four remain unchanged first we are extremely focused on continuing to strengthen our balance sheet next we will take further advantage of opportunities to align our operations and infrastructure as noted in Jay's comments today with market demand.

Speaker Change: There seem to deliver sustainable long term growth as well as driving improvements in free cash flow.

Couple of disciplined lean operations execution expense management, and R&D innovation, we believe nortek can deliver on our objectives.

Speaker Change: Will a disciplined lean operations execution expense management and R&D innovation, we believe nortek can deliver on our objectives.

Jay: With that I'll now turn the call back over to Jay for his closing comments Jay.

With that I'll now turn the call back over to Jay for his closing comments Jay.

Jay: Thank you Andy before we open the call to your questions I wanted to touch on three related areas that together serve our customers and help advance nor teck's corporate stewardship, our engineering expertise product innovation and sustainability plans.

Speaker Change: For engineering expertise, we have a dedicated engineering services team that is focused on enhancing manufacture ability and serviceability supply chain risk mitigation and cost efficiency for our customers.

Jay: Our engineering expertise, we have a dedicated engineering services team that is focused on enhancing manufacture ability and serviceability supply chain risk mitigation and cost efficiency for our customers.

Jay: Our three tiered cost structure across the U S, Mexico, and China allows us to quickly adopt our global engineering resources to fit our customers' changing needs.

Speaker Change: Our three tiered cost structure across the U S, Mexico, and China allows us to quickly adopt our global engineering resources to fit our customers' changing needs.

Jay: Our core goal of our long term strategic plan focuses on unique innovation.

Speaker Change: Our core goal of our long term strategic plan focuses on unique innovation.

Jay: This is somewhat unusual for most contract manufacturers, nor tax engineering capabilities and innovation skills further our research and development activities with enhancements like.

Speaker Change: This is somewhat unusual for most contract manufacturers.

Speaker Change: <unk> engineering capabilities and innovation skills further our research and development activities with enhancements like the expanded beam extreme fiber optic technology or <unk> that was announced in January.

Jay: The expanded beam extreme fiber optic technology or <unk> that was announced in January.

Jay: <unk> is designed for digital data transmission and offers improved speed reliability and security when compared to traditional copper.

Speaker Change: <unk> is designed for digital data transmission and offers improved speed reliability and security when compared to traditional copper.

Jay: We're also excited about our active optical extreme technology that works and sophisticated magnetic environment, a testament to our team's dedication to innovation hard work and excellence in the field of digital connectivity solutions.

Speaker Change: We're also excited about our active optical extreme technology that works and sophisticated magnetic environment, a testament to our team's dedication to innovation hard work and excellence in the field of digital connectivity solutions.

Jay: <unk> represents a significant advancement in our product offerings and underscores our commitment to provide state of the art solutions that meet the evolving needs of our clients to deliver products that offer a lighter weight lower cost and Ruggedized solutions sustainably.

Speaker Change: <unk> represents a significant advancement in our product offerings and underscores our commitment to provide state of the art solutions that meet the evolving needs of our clients to deliver products that offer a lighter weight lower cost and Ruggedized solutions sustainably.

Jay: At the simplest level the vast majority of <unk> products provide digital connectivity solutions that transmit data and power in various applications.

Speaker Change: At the simplest level the vast majority of <unk> products provide digital connectivity solutions that transmit data and power in various applications.

Speaker Change: As you May know the internet of things or Iot integrates a variety of electric components, such as Microcontrollers sensors actuators and connectivity modules.

Jay: As you May know the internet of things or Iot integrates a variety of electric components, such as Microcontrollers sensors actuators and connectivity modules.

Speaker Change: These components in turn enable Iot connected devices to collect parse transmit and receive data more and more today that data is being evaluated and analyze using human intelligence and combined artificial and human intelligence for improved performance and data management for our customers as well as for there.

Jay: These components in turn enable Iot connected devices to collect parse transmit and receive data.

Jay: More and more today that data is being evaluated and analyze using human intelligence and combined artificial and human intelligence for improved performance and data management for our customers as well as for their customers.

Speaker Change: Customers.

Speaker Change: <unk>, we see AI capabilities as a clear opportunity to streamline and improve our processes make our employees more productive and serve our customers better you'll hear more about our innovations in AI in future conference calls.

Speaker Change: Nor tech, we see AI capabilities as a clear opportunity to streamline and improve our processes make our employees more productive and serve our customers better.

Speaker Change: You'll hear more about our innovations in AI in future conference calls.

Speaker Change: More data needs better Dana pipelines, and that's where <unk> comes in technology like our <unk> smart cables helps collect and distribute this date a faster more cost effectively and more securely across these sophisticated networks, we see strong opportunities for growth here.

Speaker Change: More data needs better data pipelines, and that's where <unk> comes in technology like our <unk> smart cables helps collect and distribute this date a faster more cost effectively and more securely across these sophisticated networks, we see strong opportunities for growth here.

Speaker Change: Our pivot to more fiber optic technology improves product performance for our customers by offering unparalleled speed and reliability. It also aligns with sustainability goals that we shared with many of our customers.

Our pivot to more fiber optic technology improves product performance for our customers by offering unparalleled speed and reliability. It also aligns with sustainability goals that we shared with many of our customers.

When compared with traditional copper fiber optics offer significant environmental benefits during both production and operation, including improved energy efficiency and less material usage, while decreasing the carbon footprint of the complex cables we manufacturer.

Speaker Change: When compared with traditional copper fiber optics offer significant environmental benefits during both production and operation, including improved energy efficiency and less material usage, while decreasing the carbon footprint of the complex cables we manufacturer.

Speaker Change: For example, aerospace and defense customers are adopting fiber optic technology due to these key advantages reduced size weight and power requirements immediate to electromagnetic magnetic interference and greater recommendation in harsh environments.

Speaker Change: For example, aerospace and defense customers are adopting fiber optic technology due to these key advantages reduce size weight and power requirements immediate to electromagnetic magnetic interference and greater recommendation in harsh environments.

Speaker Change: Harsh environments of course are very common in aerospace and defense applications Nortek has a very proud history of serving these customers unique needs dating back roughly 30 years.

It's the smallest of our three core markets by net sales, but very important for our diversification and future growth.

Speaker Change: The smallest of our three core markets by net sales, but very important for our diversification and future growth are contributions to our national defense are also a source of great pride for North Tech employees.

Our contributions to our National Defense are also a source of great pride for North Tech employees.

Speaker Change: The majority of our aerospace and defense cables are still the traditional type common in legacy defense systems, such as shipboard missile launches for the Navy.

Speaker Change: We are looking to the future with Ruggedized fiber optics evolving along with our customers.

Speaker Change: Looking to the future with Ruggedized fiber optics evolving along with our customers.

Speaker Change: In closing we are excited about technological about and it's across all of our markets and expect them to support our continued sales momentum in 2024.

Speaker Change: In closing we are excited about technological about across all of our markets and expect them to support our continued sales momentum in 2024.

Speaker Change: Aided by stabilization of supply chain and customer orders.

Speaker Change: We will now open up the call for your questions Jenny Please open the lines.

Thank you very much at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on Youll find key patent now confirmation time will indicate that your line is open. The question. Keith You May Press Star two if you would like to remove your question from the key so any participants using speaker equipment it might be.

Speaker Change: Thank you very much at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on Youll find key Pat now confirmation time will indicate that your line is open. The question. Keith You May Press Star two if you would like to remove your question from the key so any participants using speaker equipment it might be necessary.

Speaker Change: Sorry to pick up your handset before pressing the keys. Please buy some other mostly poll for questions.

Speaker Change: Please pick up your handset before pressing the keys. Please buy some moment lusby poll for questions.

Speaker Change: Okay. Just a reminder, its star one on your phone keypad, if you would like to ask a question.

Speaker Change: I'm not seeing anyone jump into queue just yet.

Speaker Change: I have not seen anyone come in for questions right now gentlemen.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Yeah.

Speaker Change: I think we can probably I can probably hand, it back to Jay for the final closing comments.

Jay: Very good thank you Jenny and thanks to everyone for joining.

For joining us today, we look forward to talking with you in March when we report our fourth quarter 2024 results again, thank you very much and goodbye.

Jay: For joining us today look forward to talking with you in March when we report our fourth quarter 2024 results again, thank you very much and goodbye.

Speaker Change: Thank you very much. This does conclude today's conference you may now disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Thank you very much. This does conclude today's conference you may now disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Q3 2024 Nortech Systems Inc Earnings Call

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