Good afternoon, ladies and gentlemen, and welcome to the Nortex Systems Incorporated Third Quarter twenty twenty five 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 LaFrentz. Thank you, Paul. I would also 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 Nortech's third quarter twenty twenty five financial results before any 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 statements made during this call may be forward looking 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 on this call. These risks include those that are detailed in our most recent SEC filings, may be amended or supplemented. The statements made during this call call. are based upon information known by Nortech as of the date and time of this And we assume no obligation to update the information in today's call. You can find Nortech's complete safe harbor statements in our safe in our SEC filings. And now with that, I will turn it over to Jay for his opening comments. Jay?

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

I'm very proud of our team's execution and our positive third quarter results which reflect continued evidence of our restructuring efforts and cost discipline are paying off. During the quarter, we realized increase increased manufacturing efficiencies across customer programs transferred to new plants which are driving planned sustained performance improvement as we experience a continued positive mix shift from new product introduction to first builds of recurring production. While we have incremental work to do in this area, we have made significant progress over the past several quarters to realize the benefits of our streamlining and long term cost structuring initiatives. The entire Nortech leadership team is proud of the hard work and execution of our employees. We continue to closely monitor the on again, off again imposition of tariffs. We continue to see strong quoting activity as many of our customers are evaluating nearshore manufacturing strategies for both North America and China. We believe we are currently very well positioned in our North American footprint as our Monterey Maquiladora operations and Minnesota facilities work under the framework of the USMCA. While the tariffs with Mexico remain uncertain, it's important to note Nortec is not the importer of record into The United States for goods produced in Mexico as we operate under a Makilodora structure for our customers. This materially reduces our direct exposure to these tariffs. In situations where we incur tariffs on imported components, are working closely with our customers to pass these costs through. All in all, we are working hard and have all hands on deck to proactively monitor the shifting landscape. Trade policies, uncertainties in the current geopolitical environment. We have recently completed two regulatory milestones to further support our long term strategy. First, our Monterrey, Mexico facility has achieved a s 9,100 d certification.…

our

individual quarterly performance can be affected by outside factors. These might include timing fluctuations, including seasonal fluctuations, customer shipments, and supply chain issues, any of which could materially impact a particular quarter either positively or negatively. Consequently, we believe it's important to review our business on a twelve month basis rather focusing on quarterly performance. This approach will help to normalize these potential anomalies and offer a better gauge of our strategies long term success. So today, while I focus most of my comments on our third quarter results, I will spend some time reviewing trailing twelve months results for the business. Net sales for the 2025 totaled $3,500,000 This represents a 2.9% decrease from net sales of $31,400,000 in the 2024. Net sales in the 2025 were negatively impacted by a $1,400,000 decrease aerospace and defense net sales as a result of increased production in the last 2024 and the anticipation of moving aerospace and defense manufacturing from our Bulwark facility to our Bemidji facility and to a lesser extent, the continued delay of certain defense customer product approvals. As Jay noted, we made significant headway with the transfer of customer programs in the first nine months of twenty twenty five and this contributed to an 8.7% or $832,000 increase medical imaging net sales in the current quarter as compared with the same quarter in 2024. As Jay also noted, we have a strong customer backlog at the end of the third quarter. Which arrived at $77,300,000 This is consistent with our customer backlog at 06/30/2025. 2025 gross profit totaled $5,000,000 or point 5% of net sales compared with gross profit of $3,800,000 or 12.2% of net sales in the same prior year quarter. The increase in gross profit as a percentage of net sales in the current year…

customers.

When compared with traditional copper, fiber optics offer dramatic environmental benefits both during production and operations, including improved energy efficiency and less material usage. While significantly decreasing the carbon footprint of the complex cables we manufacture. Nortech's aerospace and defense customers are exploring fiber optic technology due to these key advantages. Reduced size, weight, and power requirements, immunity to electromagnetic magnetic interference, and greater ruggedization in harsh environments. Harsh environments, of course, are very common for aerospace and defense applications. Nortech has a proud history of serving these customers' unique needs dating back roughly thirty years. It's the smallest of our four core markets by net sales, but is our fastest growing segment, and it's very important for both diversification and future growth. Our contributions to our national defense are a source of great pride for the NORTEC team. Every year we make a point of recognizing Nortech's veterans, and all the veterans in our families and communities as we did this past Tuesday on Veterans Day. Most of the cables we produce today for aerospace and defense applications are traditional cable cables common in legacy defense systems such as shipboard missile launchers for the Navy. In conversations with our aerospace and defense customers, we see increasing interest in more modern warfare components such as ruggedized fiber optics, MT, 38 triple nine connectors, which would be applied in wearable technology and tethered drones among other uses. Nortech is well positioned to capitalize on this increase increasing interest with our advanced fiber optic capabilities. Our technologies align perfectly with the industry's move toward more efficient, and reliable fiber optic solutions to provide AMI immune high speed data transmission and power delivery in all in one cape hybrid cable. By integrating digital diagnostics with fiber optic cables, we are able to generate…

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 if you would like to remove your question from the queue. The star keys. One moment please while we poll for questions. Once again, that's 1 if there are any questions today. And there were no questions from the line. And I will now turn the call back to Jay Miller closing remarks.

Thank you, Paul, and thanks to everyone for joining us today. We look forward to talking to you in March when we report our fourth quarter twenty twenty five results. Again, thank you, and goodbye.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.