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Nortech Systems Reports 2019 Results

Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider of engineering and manufacturing solutions for complex electromechanical products serving the medical, industrial and aerospace and defense markets, reported net sales of $116.3 million for the year ended December 31, 2019, an increase of 3%, compared to $113.4 million for fiscal 2018.

Operating income for fiscal 2019 was $224,000, compared to $1.3 million for fiscal 2018. Net loss for fiscal 2019 was $1.2 million, or $0.45 per diluted common share. Fiscal 2018 had net income of $166,000, or $0.06 per diluted common share.

For the fourth quarter of 2019, net sales were $30.8 million, an increase of 7%, compared with $28.8 million for the prior-year period. The fourth quarter operating income was $805,000 compared to the prior-year period operating loss of $14,000. The fourth quarter net income of $271,000, or $0.10 per diluted common share, compares with a net loss of $197,000, or $0.07 per diluted common share, for the fourth quarter of 2018. December 31, 2019 backlog was $49.7 million vs. $45.0 million at December 31, 2018.

"We are pleased with our improvements in margin and operating income for the last half of the year. Revenue for 2019 met our expectations and backlog remains strong," said Jay D. Miller, president and CEO.

Nortech uses intelligence, innovation, speed and global expertise to provide manufacturing and engineering solutions in partnership with our medical, industrial and defense customers, enabling them to be leaders in digital connectivity and data management to achieve their business goals. Nortech strives to be a premier workplace that fosters valued relationships internally and in our communities.

Efforts to Address COVID-19

Nortech recognizes the seriousness of the current pandemic and is determined to play its role in addressing the outbreak and in minimizing the impact of the coronavirus disease (COVID-19). Nortech’s highest priority is the safety and well-being of its employees and other members in the Nortech community. In all of Nortech’s locations, teams have been working diligently to take precautions to ensure a clean and safe environment. Nortech is opting for virtual meetings, minimizing travel, and when possible, asking its team members to work remotely.

Nortech is also working closely with its suppliers and customers to ensure that it is taking every feasible step to minimize disruption and to continue to deliver the products our customers' need.

The COVID-19 situation is changing rapidly. Be assured Nortech will continue to monitor the most up to date information from regulatory authorities in the United States, China and Mexico, where its facilities are located. Nortech senior management is in constant contact and will adapt its response as information is available.

About Nortech Systems Incorporated Nortech Systems is a leading provider of design and manufacturing solutions for complex electromechanical systems, assemblies, and components. Nortech Systems primarily serves the medical, aerospace & defense, and industrial markets. Its design services span concept development to commercial design, and include software, electrical, mechanical, and biomedical engineering. Its manufacturing and supply chain capabilities are vertically integrated around wire/cable/interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has seven manufacturing locations and design centers across the U.S., Latin America, and Asia. Nortech Systems is traded on the NASDAQ Stock Market under the symbol NSYS. Nortech’s website is www.nortechsys.com.

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 Consolidated Statements of Operations

(in thousands, except for share data)

 
THREE MONTHS ENDEDTWELVE MONTHS ENDED
December 31, December 31,
UnauditedUnauditedUnauditedAudited

2019

2018

2019

2018

 
Net Sales

$

30,820

 

 

$

28,827

 

 

$

116,333

 

 

$

113,370

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

27,164

 

 

 

25,748

 

 

 

103,757

 

 

 

100,059

 

 

 

 

 

 

 

 

Gross Profit

 

3,656

 

 

 

3,079

 

 

 

12,576

 

 

 

13,311

 

 

11.9

%

 

 

10.7

%

 

 

10.8

%

 

 

11.7

%

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Selling Expenses

 

576

 

 

 

837

 

 

 

2,723

 

 

 

3,629

 

General and Administrative Expenses

 

2,275

 

 

 

2,256

 

 

 

9,629

 

 

 

8,433

 

Total Operating Expenses

 

2,851

 

 

 

3,093

 

 

 

12,352

 

 

 

12,062

 

 

 

 

 

 

 

 

Income (Loss) from Operations

 

805

 

 

 

(14

)

 

 

224

 

 

 

1,249

 

 

 

 

 

 

 

 

Interest Expense

 

(244

)

 

 

(206

)

 

 

(1,043

)

 

 

(757

)

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

561

 

 

 

(220

)

 

 

(819

)

 

 

492

 

 

 

 

 

 

 

 

Income Tax Expense (Benefit)

 

287

 

 

 

(23

)

 

 

409

 

 

 

326

 

 

 

 

 

 

 

 

Net Income (Loss)

$

274

 

 

$

(197

)

 

$

(1,228

)

 

$

166

 

 

 

 

 

 

 

 

Income (Loss) Per Common Share - Diluted

$

0.10

 

 

$

(0.07

)

 

$

(0.46

)

 

$

0.06

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding - Diluted

 

2,665,165

 

 

 

2,676,573

 

 

 

2,665,165

 

 

 

2,699,614

 

Condensed Consolidated Balance Sheets

(in thousands)

 

December 31,
2019

December 31,
2018

Unaudited

Audited

Cash

$

351

 

$

480

Restricted Cash

 

309

 

 

467

Accounts Receivable

 

18,558

 

 

20,093

Inventories

 

14,279

 

 

17,004

Contract Assets

 

7,659

 

 

6,431

Prepaid Expenses and Other Current Assets

 

2,128

 

 

1,381

Property and Other Long-term Assets

 

14,408

 

 

10,178

Goodwill and Other Long-term Assets, Net

 

3,718

 

 

3,926

Total Assets

$

61,410

 

$

59,960

 

 

 

Accounts Payable

$

14,014

 

$

18,142

Current Portion of Lease Obligation

 

1,415

 

 

337

Other Current Liabilities

 

6,803

 

 

6,413

Long Term Line of Credit

 

10,088

 

 

9,264

Long-term Debt and Other Long-term Liabilities

 

3,297

 

 

4,714

Long Term Operating Lease Obligation, Net

 

5,817

 

 

0

Shareholders’ Equity

 

19,976

 

 

21,090

Total Liabilities and Shareholders’ Equity

$

61,410

 

$

59,960

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200319005777/en/

Contacts

Connie Beck, VP & CFO
cbeck@nortechsys.com
952-345-2244