Nortech Systems Reports Third Quarter Results
Operating Profits Improve
Nortech Systems Inc. (NASDAQ: NSYS) today reported net sales of $29.7 million for the third quarter ended September 30, compared
with net sales of $30.4 million for the third quarter of 2015. For the nine months ended September 30, Nortech’s net sales
increased 5 percent to $87.6 million.
Operating income for the third quarter was $190,000, compared with an operating loss of $66,000 for the third quarter of 2015.
For the nine-month period, Nortech reported operating income of $301,000, compared with an operating loss of $751,000 for the same
period in 2015.
Nortech Systems reported net income in the third quarter of $63,000, or $.02 per diluted common share, compared with a net loss
of $124,000, or $0.05 per diluted common share, for the same period last year. Third quarter results included an increase of
$456,000 to the bad debt reserve for a customer that filed for Chapter 11 bankruptcy protection. For the nine months ended
September 30, Nortech reported a net loss of $54,000, or $0.02 per diluted common share. This compares with a net loss of $695,000,
or $0.25 per diluted common share, for the same period in 2015.
“Our medical sales continued their strong momentum in the third quarter, up 9 percent sequentially and 27 percent year over year
with backlog growing 35 percent over the prior year,” said Rich Wasielewski, Nortech Systems’ president and CEO. “We’re
successfully leveraging our cross-selling opportunities and early engagement design engineering capabilities to gain traction in
the higher-growth medical market.”
Nortech’s other two core markets are still experiencing mixed results. Industrial sales decreased 25 percent in the quarter, due
primarily to transportation customers, while defense sales rose 6 percent. The overall corporate backlog increased 5 percent during
the quarter, providing some additional momentum for the remainder of the year.
“Our improved gross margin had a major impact on operating profits,” explained Wasielewski, noting that the company’s gross
margin improved 320 basis points to 12.7 percent of sales in the third quarter, as compared to the prior year’s third quarter. This
increase was aided by the mix of medical products, greater engineering service activity and selective pricing actions.
“These results show we’re making progress in Nortech’s transformation,” added Wasielewski. “Our strategic investments the past
two years have positioned us to better capitalize on growth opportunities. We’ve also improved our competitiveness by strengthening
our global footprint.”
The company is targeting the medical market with full-service solutions from product development, design transfer and production
manufacturing services, along with FDA expertise. For industrial and defense markets, Nortech is focused on improving asset
utilization and profitability while supporting early engagement including design for manufacturability and rapid prototyping.
Conference Call
Nortech Systems announces a conference call to be held at 10:00 a.m. (CDT) on Thursday, November 3, 2016, to discuss the company’s
third quarter results, which will be released after the market closes on November 2. Anyone interested in participating in the
conference can access the call by dialing 866-320-0174 from within the United States, or 785-424-1631 if calling internationally.
An audio webcast and replay of this conference call can be accessed at the investor relations portion of Nortech’s website at
www.nortechsys.com or at www.investorcalendar.com. A podcast (MP3 download) will also be available. The telephone replay will be
available through November 17, 2016, by dialing 877-481-4010 (from U.S.) or 919-882-2331 (International). To access the replay, the
conference ID 10126 is required.
About Nortech Systems Incorporated
Nortech Systems Incorporated (www.nortechsys.com), based in Maple Grove, Minn., is a full-service electronics manufacturing services (EMS)
provider of wire and cable assemblies, printed circuit board assemblies, and higher-level complete box build assemblies for a wide
range of industries. Markets served include industrial, medical and aerospace/defense. The company has operations in the U.S.,
Latin America and Asia. Nortech Systems Incorporated is traded on the NASDAQ Stock Market under the symbol NSYS.
Forward-Looking Statements
This press release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. While this release is based on management’s best judgment and current expectations, actual results
may differ and involve a number of risks and uncertainties. Important factors that could cause actual results to differ materially
from the forward-looking statements include, without limitation: volatility in market conditions which may affect market supply of
and demand for the company’s products; increased competition; changes in the reliability and efficiency of operating facilities or
those of third parties; risks related to availability of labor; commodity and energy cost instability; general economic, financial
and business conditions that could affect the company’s financial condition and results of operations; as well as risk factors
listed from time to time in the company’s filings with the SEC.
Condensed Statement of Operations
|
|
|
THREE MONTHS ENDED |
|
|
NINE MONTHS ENDED |
|
|
|
SEPTEMBER 30 |
|
|
SEPTEMBER 30 |
|
|
|
Unaudited |
|
|
Unaudited |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ |
29,718,414 |
|
|
$ |
30,409,064 |
|
|
$ |
87,613,591 |
|
|
$ |
83,750,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From Operations |
|
|
189,764 |
|
|
|
(65,646 |
) |
|
|
300,776 |
|
|
|
(750,607 |
) |
Interest Expense |
|
|
(139,458 |
) |
|
|
(133,960 |
) |
|
|
(410,727 |
) |
|
|
(341,148 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
|
|
50,306 |
|
|
|
(199,606 |
) |
|
|
(109,951 |
) |
|
|
(1,091,755 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Benefit |
|
|
(13,000 |
) |
|
|
(76,000 |
) |
|
|
(56,000 |
) |
|
|
(397,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
63,306 |
|
|
$ |
(123,606 |
) |
|
$ |
(53,951 |
) |
|
$ |
(694,755 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per Basic and Diluted Common Shares |
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
2,747,832 |
|
|
|
2,746,325 |
|
|
|
2,747,288 |
|
|
|
2,745,568 |
|
Diluted |
|
|
2,749,944 |
|
|
|
2,746,325 |
|
|
|
2,747,288 |
|
|
|
2,745,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Balance Sheets
|
|
|
SEPTEMBER 30
2016
|
|
|
DECEMBER 31
2015
|
|
|
|
(Unaudited) |
|
|
|
|
Accounts Receivable |
|
$ |
17,688,678
|
|
|
$ |
18,431,746
|
|
Inventories |
|
|
21,742,523 |
|
|
|
20,185,445 |
|
Other Current Assets |
|
|
1,699,705 |
|
|
|
1,755,548 |
|
Property and Other Long-term Assets |
|
|
16,079,531 |
|
|
|
16,192,348 |
|
Total Assets |
|
$ |
57,210,437
|
|
|
$ |
56,565,087
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable |
|
$ |
14,875,460
|
|
|
$ |
13,041,377
|
|
Other Current Liabilities |
|
|
5,822,314 |
|
|
|
6,630,333 |
|
|
|
|
|
|
|
|
|
|
Line of Credit – Long-term |
|
|
8,213,268 |
|
|
|
7,691,237 |
|
Long-term Debt and Other Long-term Liabilities |
|
|
6,100,883 |
|
|
|
6,930,284 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity |
|
|
22,198,512 |
|
|
|
22,271,856 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity |
|
$ |
57,210,437
|
|
|
$ |
56,565,087
|
|
|
|
|
|
|
|
|
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|
![](http://cts.businesswire.com/ct/CT?id=bwnews&sty=20161102006635r1&sid=mstr2&distro=nx&lang=en)
Nortech Systems Incorporated
Paula Graff, 952-345-2244
or
Brookside Communications Group
Warren Djerf, 952-920-3908
warren@brookcomm.net
View source version on businesswire.com: http://www.businesswire.com/news/home/20161102006635/en/