Nortech Systems Inc (NSYS) Reports Mixed Q3 2023 Results Amid Strong Backlog
Year-to-date revenue increased by 4.8% compared to the previous year.
Third quarter gross margin improved sequentially, despite a 5.4% decline in revenue.
Net income for the third quarter fell by 21.3% year-over-year.
EBITDA for the first nine months rose by 5.5% compared to the same period last year.
On November 8, 2023, Nortech Systems Inc (NASDAQ:NSYS), a prominent engineering and manufacturing solutions provider, disclosed its financial results for the third quarter ended September 30, 2023. The company reported a year-to-date revenue increase of nearly 5% from the prior year, reaching $103.3 million, despite a 5.4% decrease in third-quarter revenue to $33.4 million from the same quarter last year. The decline in quarterly revenue was attributed to order deferrals from two major customers managing their inventory levels.
Financial Performance Overview
Nortech Systems Inc (NASDAQ:NSYS) experienced a decrease in gross profit by 16.0% in the third quarter, totaling $5.3 million, while operating expenses saw a 4.3% decrease to $4.2 million. Net income for the quarter was down 21.3% to $1.2 million, and EBITDA dropped by 32.3% to $1.6 million. Despite these quarterly declines, the company's year-to-date performance remained positive with net income and EBITDA both increasing by 5.5% compared to the same period in the previous year.
Management Commentary
Our teams focused execution enabled us to increase third quarter gross margin sequentially and maintain EBITDA levels, said Jay D. Miller, President and CEO of Nortech Systems. We are encouraged by promising opportunities across our medical, industrial and defense markets.
Miller also noted the robust bookings and backlog levels, expressing optimism for the near-term resolution of the inventory management issues faced by customers. He highlighted the company's solid operations and diverse customer base as confidence factors in Nortech's long-term prospects.
Financial Statements Highlights
The income statement for the nine months ended September 30, 2023, showed a gross profit margin of 15.8%, slightly up from 15.6% in the prior year. Operating expenses increased by 6.2% due to investments in IT and HR systems and inflationary pressures. The balance sheet as of September 30, 2023, indicated a decrease in cash and restricted cash compared to December 31, 2022, while total assets decreased to $65.9 million from $69.5 million. The cash flow statement revealed a net cash provided by operating activities of $2.2 million for the nine months ended September 30, 2023.
Business Outlook and Developments
Looking forward, CEO Jay D. Miller conveyed a cautiously optimistic view for the remainder of the year and into 2024. He also mentioned the recent Class II Medical Device certification obtained by Nortech's facility in Suzhou, China, as a positive development for expanding medical sales opportunities in Asia.
Nortech Systems Inc (NASDAQ:NSYS) will hold a conference call and webcast to discuss the third quarter results, providing an opportunity for investors to gain further insights into the company's performance and outlook.
For detailed financial figures and management's perspective, investors are encouraged to review the full earnings release and participate in the upcoming conference call. As always, Nortech Systems Inc (NASDAQ:NSYS) remains committed to transparency and excellence in serving its stakeholders.
For more information on Nortech Systems Inc (NASDAQ:NSYS) and to access the full earnings report, please visit www.nortechsys.com.
Explore the complete 8-K earnings release (here) from Nortech Systems Inc for further details.
This article first appeared on GuruFocus.
