Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider of engineering and manufacturing solutions for complex electromechanical products, reported net sales of $27.3 million for the second quarter ended June 30, 2019, compared with $28.5 million for the second quarter of 2018.
Operating loss for the second quarter of 2019 was $1.2 million, which compares with an operating income of $0.7 million for the second quarter of 2018. Net loss for the second quarter of 2019 was $1.6 million, or $0.58 per diluted common share. This compares with a net income for second quarter of 2018 of $0.4 million, or $0.14 per diluted common share. June 30, 2019 backlog was $58.7 million vs. $40.1 million on June 30, 2018.
“While our second quarter revenue met our expectations, our margins were negatively impacted by a higher mix of customer shipments with low margins and operational inefficiencies incurred managing component shortages, ” said Jay D. Miller, president and CEO. “We are working closely with our customers and our supplier partners to mitigate lower margin shipments and the effects of component shortages. We expect to deliver on our backlog for the remainder of the year, which is the highest backlog we have had in recent history. Our operating expenses increased compared to prior year while we completed the implementation of our global ERP. Now that our new ERP is in place, we have begun to experience operational efficiencies that we believe will positively impact future periods. We will also no longer expect to invest in our ERP as the same level.”
The mission of Nortech Systems is to be the most trusted, innovative, and nimble design and manufacturing services and solutions provider, while taking great care of its employees, customers, and supplier partners.
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 ENDED | ||||||||
| June 30, 2019 | ||||||||
| Unaudited | Unaudited | |||||||
|
2019 |
2018 |
|||||||
| Net Sales |
$ |
27,292 |
|
$ |
28,538 |
|
||
| Cost of Goods Sold |
24,967 |
24,721 |
||||||
| Gross Profit |
2,325 |
3,817 |
||||||
|
8.5 |
% |
13.4 |
% | |||||
| Operating Expenses | ||||||||
| Selling Expenses |
797 |
1,037 |
||||||
| General and Administrative Expenses |
2,737 |
2,046 |
||||||
| Total Operating Expenses |
3,534 |
3,083 |
||||||
| (Loss) Income From Operations |
(1,209 |
) |
734 |
|||||
| Other Expense | ||||||||
| Interest Expense |
(279 |
) |
(209 |
) | ||||
| (Loss) Income Before Income Taxes |
(1,488 |
) |
525 |
|||||
| Income Tax Expense |
64 |
135 |
||||||
| Net (Loss) Income |
$ |
(1,552 |
) |
$ |
390 |
|
||
| (Loss) Income Per Common Share – Diluted |
$ |
(0.58 |
) |
$ |
0.14 |
|
||
| Weighted Average Number of Common Shares Outstanding – Diluted |
2,676,449 |
2,695,994 |
||||||
|
Condensed Consolidated Balance Sheets (in thousands) |
||||||
|
June 30, 2019 |
December 31, 2018 |
|||||
|
Unaudited |
Audited |
|||||
| Cash |
$ |
399 |
|
$ |
480 |
|
| Restricted Cash |
|
406 |
|
|
467 |
|
| Accounts Receivable |
|
20,691 |
|
|
20,093 |
|
| Inventories |
|
16,273 |
|
|
17,004 |
|
| Contract Assets |
|
7,228 |
|
|
6,431 |
|
| Prepaid Expenses and Other Current Assets |
|
1,776 |
|
|
1,381 |
|
| Property and Other Long-term Assets |
|
9,512 |
|
|
10,178 |
|
| Goodwill and Other Long-term Assets, Net |
|
9,044 |
|
|
3,926 |
|
| Total Assets |
$ |
65,329 |
|
$ |
59,960 |
|
|
|
|
|
||||
| Accounts Payable |
$ |
16,845 |
|
$ |
18,142 |
|
| Current Portion of Lease Obligation |
|
1,190 |
|
|
337 |
|
| Other Current Liabilities |
|
6,789 |
|
|
6,413 |
|
| Long Term Line of Credit |
|
12,297 |
|
|
9,264 |
|
| Long-term Debt and Other Long-term Liabilities |
|
4,295 |
|
|
4,714 |
|
| Long Term Operating Lease Obligation, Net |
|
4,666 |
|
|
0 |
|
| Shareholders’ Equity |
|
19,247 |
|
|
21,090 |
|
| Total Liabilities and Shareholders’ Equity |
$ |
65,329 |
|
$ |
59,960 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190814005724/en/
Connie Beck, VP & CFO
Nortech Systems Incorporated
(952) 345-2244
