Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider
of full-service electronics manufacturing services (EMS), reported
net sales of $112.3 million for the year ended December 31, 2017,
compared with $116.6 million for fiscal 2016.
The reported fiscal 2017 loss from operations was $1.3 million
and includes a year-end goodwill impairment charge of $0.9 million;
this compares with operating income of $0.6 million for fiscal
2016. The net loss for fiscal 2017 was $2.4 million, or $0.89 per
diluted common share, including $1.4 million of unfavorable impact
from tax reform and discrete tax-related adjustments. This compares
with net income of $44,000, or $0.02 per diluted common share, for
fiscal 2016.
For the fourth quarter of 2017, net sales were $25.6 million,
compared with $29.0 million for the prior-year period. The fourth
quarter operating loss of $1.8 million includes the $0.9 million
goodwill write-off; this compares with $0.3 million of operating
income for the fourth quarter of 2016. The fourth quarter net loss
of $2.5 million, or $0.90 per diluted common share, includes the
significant year-end, non-cash charges and compares with net income
of $0.1 million, or $0.04 per diluted common share, for the fourth
quarter of 2016.
“The revenue decline in the quarter was primarily due to our
larger medical customers adjusting orders to year-end demand and
market conditions,” said Rich Wasielewski, Nortech Systems’
president and CEO, adding that the four percent decrease in annual
revenue was mainly attributed to specific transportation and
medical device customers.
“Despite the negative year-end factors impacting our revenue and
income, we are encouraged by the increased sales for industrial and
defense customers in the fourth quarter, up 12 and 20 percent
respectively,” noted Wasielewski. He commented that both defense
and industrial markets also saw sizable year-over-year 90-day
backlog gains of greater than 35 percent, softening the impact of
the 42 percent medical backlog decline. The lower order position
should persist through the first half of 2018 as two large medical
customers work through on-hand inventory.
Given the positive momentum with industrial and defense
customers, along with cost structure changes made over the past six
months, the company expects to improve profitability and cash flow
in 2018.
“We’ll continue focusing on managing cash, working capital and
costs,” Wasielewski stated, citing a $2.1 million inventory
reduction and better alignment of accounts payable with customer
terms and conditions at year end. There was $0.2 million in
positive operating cash flow generated for the fourth quarter and
$0.8 million for the year.
The company’s recent investments in Asia and new Surface Mount
Technology capabilities are now accretive and ahead of their
expected ROI. Additional investments are planned for 2018 in the
areas of automation, targeted marketing, ERP software and facility
upgrades, including the recently announced expansion in Mexico that
will offer improved workflow, productivity and an enhanced customer
experience.
“The goal remains the same, to outperform the EMS industry with
profitable growth,” concluded Wasielewski. “Our global strategy is
successfully transforming Nortech from being a commodity-oriented
supplier to an early engagement valued partner.”
Conference CallNortech
Systems will hold a conference call at 10:00 a.m. (CT) on
Wednesday, March 28, 2018, to discuss the company’s fourth quarter
and fiscal year 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 April 11, 2018, by dialing
877-481-4010 (from U.S.) or 919-882-2331 (International). To access
the replay, the conference ID 26833 is required.
About Nortech Systems
IncorporatedNortech Systems Incorporated
(www.nortechsys.com), based in Maple Grove, Minn., is a
full-service EMS provider of wire and cable assemblies, printed
circuit board assemblies, and higher-level complete box build
assemblies for a wide range of industries. Markets served include
industrial equipment, aerospace/defense and medical. The company
has operations in the U.S., Latin America and Asia. Nortech Systems
Incorporated is traded on the NASDAQ Stock Market under the symbol
NSYS.
Forward-Looking
StatementsThis 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 Statements of
Operations
THREE MONTHS ENDED TWELVE
MONTHS ENDED DECEMBER 31 DECEMBER 31
Unaudited Unaudited Unaudited
Unaudited 2017 2016
2017 2016 Net Sales $ 25,572,618 $ 29,008,128
$ 112,334,749 $ 116,621,719 Income from Operations
(1,767,906 ) 328,287 (1,268,386 ) 629,063 Loss on Extinguishment of
Debt - - (174,834 ) - Interest Expense (174,860 ) (139,562 )
(627,555 ) (550,289 ) Income (Loss) Before Income Taxes
(1,942,766 ) 188,725 (2,070,775 ) 78,774 Income Tax Expense
(Benefit) 516,061 91,000 375,000 35,000
Net Income (Loss) $ (2,458,827 ) $ 97,725 $
(2,445,775 ) $ 43,774 Net Income (Loss) per Basic and
Diluted Common Shares $ (0.90 ) $ 0.04 $ (0.89 ) $ 0.02
Weighted Average Number of Common Shares Outstanding:
Basic 2,739,650 2,747,832 2,745,602 2,747,424
Diluted 2,739,650 2,749,889 2,745,602
2,749,545
Condensed Balance Sheets
DECEMBER 31 DECEMBER 31 2017
2016 Unaudited Audited Cash $ 472,886 $
268,204 Restricted Cash 305,683 - Accounts Receivable 17,417,481
17,320,784 Inventories 18,526,722 20,653,841 Other Current Assets
1,044,649 1,246,908 Property and Other Long-term Assets 10,203,979
10,881,560 Goodwill and Other Intangible Assets, Net 4,114,075
5,145,218 Total Assets $ 52,085,475 $ 55,516,515
Accounts Payable $ 11,699,220 $ 13,825,530 Other Current
Liabilities 6,345,746 6,480,109 Line of Credit – Long-term
8,502,853 7,315,262 Long-term Debt and Other Long-term Liabilities
5,712,123 5,580,826 Shareholders’ Equity 19,825,533 22,314,788
Total Liabilities and Shareholders’ Equity $ 52,085,475 $
55,516,515
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version on businesswire.com: https://www.businesswire.com/news/home/20180327006355/en/
Nortech Systems IncorporatedConnie Beck, VP & CFO,
952-345-2244orBrookside Communications GroupWarren Djerf,
952-920-3908warren@brookcomm.net
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