Attached files

file filename
EX-99.2 - EX-99.2 - NORTECH SYSTEMS INCa18-18870_2ex99d2.htm
8-K - 8-K - NORTECH SYSTEMS INCa18-18870_28k.htm

Exhibit 99.1

 

 

 

Contact:

Connie Beck

 

 

Nortech Systems Incorporated

 

 

(952) 345-2244

 

 

or

 

 

Warren Djerf

 

 

Brookside Communications Group

 

 

952-920-3908 / warren@brookcomm.net

 

August 15, 2018

 

Nortech Systems Reports Second Quarter Results

Company Posts Sequential Gains in Revenue and Operating Profits

 

MINNEAPOLIS — Nortech Systems Incorporated (NASDAQ: NSYS) today reported net sales of $28.5 million for the second quarter ended June 30, 2018, which includes $1.6 million of revenue recognized under new FASB accounting guidelines adopted this fiscal year. On a pro forma basis to adjust for this change in accounting guidance, second quarter sales of $26.9 million increased 5 percent and $1.2 million sequentially from the first quarter of 2018 while net sales for the second quarter of 2017 were $30.1 million.

 

For the six months ended June 30, 2018, Nortech Systems’ reported net sales of $55.0 million, which includes $2.3 million of revenue recognized under the new FASB guidelines. For the first six months of 2017, net sales were $58.5 million.

 

For the second quarter of 2018, Nortech Systems reported operating income of $734,000, compared to an operating loss of $120,000 for the first quarter of 2018; operating income was $95,000 for the prior-year period. For the first six months of 2018, operating income of $615,000 compares with $215,000 for the same period last year.

 

For the second quarter of 2018, Nortech Systems reported net income of $390,000, or $0.14 per diluted common share, compared with a net loss of $16,000, or $0.01 per diluted common share, for the same period last year which included $175,000 of loss on extinguishment of debt. For the six months ended June 30, 2018, Nortech Systems reported essentially breakeven results. This compares with a net loss of $30,000, or $0.01 per diluted common share, for the first six months of 2017.

 

“We’re pleased with our sequential quarterly sales and profit improvements,” said Rich Wasielewski, Nortech Systems’ president and CEO. “After several quarters of working through customer inventory issues, it was good to see contributions across the board.” He noted that Nortech’s overall quarterly backlog increased nine percent, both sequentially and year over year,

 

1



 

with all three markets — medical, industrial and defense — providing momentum heading into the second half of the year.

 

Gross margin in the second quarter of 2018 was 13.4 percent, an improvement of 190 basis points sequentially and 220 basis points compared to the prior-year period. The strong gross margin performance resulted from a favorable product/service mix, cost reductions and process improvements.

 

“Our industry continues to face tariff concerns and electronic component shortages,” concluded Wasielewski, adding that these issues may become even more challenging in the second half of the year. Nortech estimates it was unable to ship $0.6 million in customer orders in the second quarter due to component shortages.

 

Conference Call

Nortech Systems announces a conference call to be held at 10:00 a.m. (CDT) on Thursday, August 16, 2018, to discuss the company’s second quarter results. Anyone interested in participating in the conference can access the call by dialing 877-407-0782 from within the United States, or 201-689-8567 if calling internationally. An audio webcast and replay of this conference call can be accessed at the investor relations portion of Nortech Systems’ website at www.nortechsys.com or at www.investorcalendar.com. The telephone replay will be available through August 30, 2018, by dialing 877-481-4010 (from U.S.) or 919-882-2331 (International). To access the replay, the conference ID 36917 is required.

 

About Nortech Systems Incorporated

 

Nortech Systems (www.nortechsys.com), based in Maple Grove, Minn., is a full-service electronics manufacturing services (EMS) provider of complex interconnect solutions, printed circuit board assemblies and diagnostic repair and integration services including higher-level assemblies and box builds for a wide range of industries. Markets served include industrial and commercial equipment, medical device, and aerospace & defense. Nortech has a range of specialized, high-tech facilities in the U.S., Latin America and Asia used for customized design, manufacture, testing and repair of its solutions. Nortech Systems 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.  Examples of forward-looking statements include, among others, statements we make regarding business development activities, backlog, financial results, and initiatives related to operational efficiencies, cash management, working capital utilization, inventory reduction and accounts payable reduction. 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; dependence on major customers, including a single customer that has represented a large percentage of our revenues in recent years; 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.

 

2



 

Condensed Consolidated Statements of Operations

(in thousands, except for share data)

 

 

 

As Reported

 

As Reported

 

Pro Forma as if the previous
accounting guidance was in
effect

 

 

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

 

THREE
MONTHS
ENDED

 

SIX
MONTHS
ENDED

 

 

 

JUNE 30,

 

JUNE 30,

 

JUNE 30,

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

 

 

2018

 

2017

 

2018

 

2017

 

2018

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

28,538

 

$

30,134

 

54,985

 

$

58,452

 

26,928

 

$

52,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

24,721

 

26,769

 

48,140

 

51,995

 

23,106

 

45,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

3,817

 

3,365

 

6,845

 

6,457

 

3,822

 

6,822

 

 

 

13.4

%

11.2

%

12.4

%

11.0

%

14.2

%

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling Expenses

 

1,037

 

1,327

 

2,075

 

2,532

 

1,037

 

2,075

 

General and Administrative Expenses

 

2,046

 

1,944

 

4,155

 

4,065

 

2,046

 

4,155

 

Gain on Sale of Property and Equipment

 

 

(1

)

 

(355

)

 

 

 

Total Operating Expenses

 

3,083

 

3,270

 

6,230

 

6,242

 

3,083

 

6,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income From Operations

 

734

 

95

 

615

 

215

 

739

 

592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on Extinguishment of Debt

 

 

(175

)

 

(175

)

 

 

Interest Expense

 

(209

)

(142

)

(382

)

(281

)

(209

)

(382

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

525

 

(222

)

233

 

(241

)

530

 

210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense (Benefit)

 

135

 

(206

)

235

 

(211

)

135

 

235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

390

 

$

(16

)

(2

)

$

(30

)

395

 

$

(25

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Per Common Share - Basic and Diluted

 

$

0.14

 

$

(0.01

)

(0.00

)

$

(0.01

)

0.15

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding - Basic and Diluted

 

2,695,994

 

2,747,831

 

2,708,234

 

2,747,831

 

2,695,994

 

2,708,234

 

 

3



 

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

JUNE 30, 2018

 

DECEMBER 31, 2017

 

 

 

Unaudited

 

Audited

 

Cash

 

$

437

 

$

473

 

Restricted Cash

 

234

 

306

 

Accounts Receivable

 

19,309

 

17,417

 

Inventories

 

13,969

 

18,527

 

Contract Assets

 

6,547

 

 

Prepaid Expenses and Other Current Assets

 

1,259

 

1,044

 

Property and Other Long-term Assets

 

10,138

 

10,204

 

Goodwill and Other Intangible Assets, Net

 

4,008

 

4,114

 

Total Assets

 

$

55,901

 

$

52,085

 

 

 

 

 

 

 

Accounts Payable

 

$

15,676

 

$

11,699

 

Other Current Liabilities

 

6,975

 

6,346

 

Long Term Line of Credit

 

7,142

 

8,503

 

Long-term Debt and Other Long-term Liabilities

 

5,099

 

5,712

 

Shareholders’ Equity

 

21,009

 

19,825

 

Total Liabilities and Shareholders’ Equity

 

$

55,901

 

$

52,085

 

 

4