Nortech Systems(US:NSYS)2022-11-11 15:00Financial Data and Key Metrics Changes - In Q3 2022, revenue totaled $35.3 million, representing a 19.8% increase from $29.5 million in Q3 2021 and over 8% growth from the previous quarter [19] - Year-to-date revenue for the first nine months of 2022 reached $98.5 million, a nearly 21% increase from $81.7 million in the same period of 2021 [19] - Adjusted EBITDA in Q3 was $2.4 million compared to $735,000 in Q3 2021, with year-to-date adjusted EBITDA at $4.7 million versus $149,000 last year [23] Business Line Data and Key Metrics Changes - Medical market revenue increased by $3.5 million or 21% year-over-year [20] - Industrial market revenue rose by $1.5 million or 16% compared to the prior year [20] - Aerospace and Defense markets saw a 26% increase, totaling $3.9 million [20] Market Data and Key Metrics Changes - The backlog was up more than 30% from prior year levels to $103 million, although it saw a slight sequential decline from $106 million at the end of Q2 2022 [18] - The largest customer in the Medical segment reported quarterly revenue growth in the mid-single digits, indicating solid spending trends on healthcare equipment, particularly in Europe and Asia [11] Company Strategy and Development Direction - The company is focused on strategic planning that emphasizes stakeholder value, including employee care and supplier partnerships [29] - Ongoing supply chain optimization activities are aimed at improving customer on-time delivery and product quality [30] - The company aims to leverage its unique capabilities and strategic fulfillment solutions to differentiate itself in the marketplace [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about finishing strong in 2022 and carrying momentum into 2023, with a healthy backlog and improved supply chain conditions [15] - The company is actively monitoring macroeconomic conditions and is encouraged by reports of fewer supply chain disruptions from customers [18] Other Important Information - Operating cash flow for the year-to-date was a $1 million source of cash, compared to a cash use of $2.9 million last year [24] - The company anticipates receiving $5.2 million in employee retention credit (ERC) funds, which will be used to reduce line of credit balance [26] Q&A Session Summary Question: Continued sequential revenue and margin growth into Q4 - Management expects solid Q4 performance and momentum to carry into 2023, while carefully monitoring macroeconomic conditions [34] Question: Initiatives for shareholder value recognition - Management acknowledges the importance of communicating results and plans to increase press releases and analyst coverage to enhance visibility [36] Question: Labor situation and staffing levels - The company is reasonably well-staffed, with some overtime but not to the point of burnout, while parts availability remains the primary bottleneck [38][40]