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August 15, 2018 | Nortech SystemsEstimated reading time: 2 minutes
Nortech Systems Inc. has reported net sales of $28.5 million for the second quarter ended June 30, 2018. This 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% 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 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%, both sequentially and year over year, 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%, 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.
About Nortech Systems Incorporated
Nortech Systems, 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. For more information, click here.
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