Nortech Systems Incorporated (Nasdaq: NSYS) (the "Company"), a
leading provider of engineering and manufacturing solutions for
complex electromedical and electromechanical products serving
medical, industrial and defense markets, reported 2021 fourth
quarter and full year results for the year ended December 31,
2021.
2021 Fourth Quarter and Full Year
Highlights
- Fourth quarter revenue up more than 40 percent from prior
year.
- Full year revenue of $115.2 million, up nearly 11% from
2020.
- Net income of $7.2 million, up from of a net loss of $1.5
million in the prior year.
- Year-end backlog of $95 million, up over 50 percent from
2020.
- Completed extension of the Bank of America $16 million credit
facility in December 2021.
Management Commentary “Our
entire Nortech team deserves enormous credit for their commitment
to delivering mission-critical solutions for our customers despite
ongoing Covid concerns and significant supply chain disruptions,”
said Jay D. Miller, Chief Executive Officer and President.
“In 2021 we made progress on several important fronts. We
strengthened our balance sheet, extended our Bank of America
agreement until 2026, restored revenue growth, and improved gross
margins. We tightened our focus on operational excellence and
innovation for our customers,” Miller added.
“Creating shareholder value remains a top priority; we believe
this is best accomplished by creating value for our diverse
customer base. In today’s problematic supply chain environment, our
current and new customers increasingly recognize and appreciate
Nortech as a key long-term partner offering complete fulfillment
solutions. We believe that creating efficiencies for our customers
and deepening these relationships will further improve Nortech’s
revenue, gross margin, and operating cash flow.”
In the fourth quarter of 2021, revenue totaled $33.5 million.
This represents a 40.3% increase from revenue of $23.8 million in
the fourth quarter of 2020. For the full year 2021, revenue totaled
$115.2 million. This represents a 10.6% increase from revenue of
$104.1 million in 2020.
In the fourth quarter of 2021, gross profit totaled $2.7
million, or 8.0%, compared to gross profit of $1.7 million, or
7.3%, in the prior-year quarter. For the full year 2021, gross
profit totaled $15.9 million, or 13.8%, compared to a gross profit
of $9.7 million, or 9.3%, in the prior year. Full year 2021 gross
profit included $4.7 million in CARES Act Employee Retention
Credits (ERC). Net of the ERC, full year 2021 gross profit would
have totaled $11.2 million or 9.7%.
Net income totaled $5.0 million, or $1.76 per diluted share, in
the fourth quarter of 2021, up from a net loss of $3.5 million, or
$1.33 per basic share, in the prior-year quarter. In the fourth
quarter of 2021 Nortech recognized a non-cash gain of $6.2 million
related to PPP loan forgiveness. For the full year 2021, net income
totaled $7.2 million, or $2.54 per diluted share, up from a net
loss of $1.5 million, or $0.58 per diluted share, in the prior
year.
Business Outlook “We believe
our results for 2021 provide a great springboard for 2022,”
continued Jay Miller. “For the remainder of this year, we will
continue to focus on managing supply-chain disruptions and related
cost challenges that our customers are experiencing.” Miller added
that rising material and labor costs continue to be the large
issues facing the Company. A January 2022 report by the global
trade organization IPC found that 90 percent of electronics
manufacturers report rising material costs and over 75 percent
report rising labor costs.
“In this current environment, our partnerships with customers
run much deeper than purchase orders,” concluded Miller. “In tandem
with our customers, we are leveraging our decades of technical
expertise to develop innovative proprietary technologies for
manufacturing methods and products.”
Conference Call The Company
will hold a live conference call and webcast at 4:00 p.m. central
time on Monday, March 21, 2022, to discuss the company's fourth
quarter financial results. The call will be hosted by Jay Miller,
Chief Executive Officer and Chris Jones, Chief Financial Officer.
To access the live audio conference call, U.S. participants may
call 888-506-0062 and international participants may call
973-528-0011. Participant Access Code: 551424. Participants may
also access the call via webcast at:
https://www.webcaster4.com/Webcast/Page/2814/44766.
About Nortech Systems
Incorporated Nortech Systems Incorporated is a leading
provider of design and manufacturing solutions for complex
electromedical devices, electromechanical systems, assemblies, and
components. Nortech Systems primarily serves the medical, defense,
and industrial markets. Its design services span concept
development to commercial design, and include medical device,
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 including without limitation
statements regarding future financial results, improving supply
chain management, the impact of new products and innovations on our
customers' and our results, monthly sales booking and backlog
trends, customer demand, the ability of our supply chain to supply
materials on a timely basis, our ability to hire and retain
sufficient direct labor to produce our products on a cost effective
basis, and our ability to develop innovative proprietary
technologies for manufacturing methods and products. While this
release is based on management's best judgment and current
expectations, actual results may differ materially from those
expressed or implied 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: (1) the impact of the COVID-19 pandemic on our
customers, employees, manufacturing facilities, suppliers, the
capital markets and our financial condition (2) supply chain
disruptions leading to parts shortages for critical components; (3)
volatility in market conditions which may affect market supply of
and demand for the company's products; (4) increased competition;
(5) changes in the reliability and efficiency of operating
facilities or those of third parties; (6) risks related to the
availability and cost of labor; (7) commodity cost increases
coupled with our inability to raise prices charged to our
customers; (8) the unanticipated loss of key members of senior
management and the transition of new members of our management
teams to their new roles; (9) general economic, financial and
business conditions that could affect the company's financial
condition and results of operations; (10) the Company's ability to
steadily improve manufacturing output throughout the remainder of
2022. Some of the above-mentioned factors are described in further
detail in the section entitled "Risk Factors" in our annual and
quarterly reports, as applicable. You should assume the information
appearing in this document is accurate only as of the date hereof,
or as otherwise specified, as our business, financial condition,
results of operations and prospects may have changed since such
date. Except as required by applicable law, including the
securities laws of the United States and the rules and regulations
of the United States Securities and Exchange Commission, we
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, to reflect actual results or changes in
factors or assumptions affecting such forward-looking
statements.
THREE MONTHS ENDED
TWELVE MONTHS ENDED
December 31,
December 31,
INCOME STATEMENT
Unaudited
Unaudited
Audited
Audited
2021
2020
2021
2020
Net Sales $
33,462
$
23,843
$
115,168
$
104,106
Cost of Goods Sold
30,785
22,105
99,304
94,441
Gross Profit
2,677
1,738
15,864
9,665
8.0
%
7.3
%
13.8
%
9.3
%
Operating Expenses Selling Expenses
620
529
2,361
2,474
General and Administrative Expenses
2,755
2,599
10,002
9,253
R&D Expenses
135
-
483
-
Restructuring Expenses
8
-
327
-
Loss on Abandonment of Intangible Asset
-
-
560
-
Impairment of Goodwill
-
-
-
2,375
Gain on Sale of Assets
35
2,375
(141
)
(3,821
)
Total Operating Expenses
3,553
5,503
13,592
10,281
Income (Loss) from Operations
(876
)
(3,765
)
2,272
(616
)
Other Income (Expense) PPP Loan Forgiveness Gain
6,171
-
6,171
-
Interest Expense
(116
)
(94
)
(430
)
(620
)
Income Before Income Taxes
5,178
(3,859
)
8,013
(1,236
)
Income Tax Expense
212
(328
)
859
310
Net Income $
4,966
$
(3,531
)
$
7,154
$
(1,546
)
Income Per Common Share - Basic $
1.86
$
(1.33
)
$
2.68
$
(0.58
)
Weighted Average Number of Common Shares Outstanding - Basic
2,664,586
2,658,358
2,664,586
2,657,738
Income Per Common Share - Diluted $
1.76
$
(1.33
)
$
2.54
$
(0.58
)
Weighted Average Number of Common Shares Outstanding - Diluted
2,821,523
2,658,358
2,821,523
2,657,738
December 31,
December 31,
BALANCE SHEET
2021
2020
Audited
Audited
Cash $
643
$
352
Restricted Cash
1,582
3,212
Accounts Receivable
14,548
15,625
Employee Retention Credit Receivable
5,209
-
Inventories
19,434
13,917
Contract Assets
8,698
5,899
Prepaid Expenses and Other Current Assets
1,660
2,032
Property and Equipment, Net
5,833
6,426
Operating Lease Assets
8,983
8,998
Other Intangible Assets, Net
501
1,173
Total Assets $
67,091
$
57,634
Accounts Payable $
12,710
$
11,239
Lease Obligations, Finance & Operating, Net
11,255
11,389
All Other Liabilities
8,055
5,891
Line of Credit
8,959
3,328
Long-term Debt, Net
0
7,069
Shareholders’ Equity
26,111
18,718
Total Liabilities and Shareholders’ Equity $
67,091
$
57,634
CASH FLOW STATEMENT
December 31,
December 31,
2021
2020
Cash Flows from Operating Activities
Audited
Audited
Net Income (Loss) $
7,154
$
(1,546
)
Depreciation and Amortization
1,950
2,193
Compensation on Stock-Based Awards
254
176
Change in Accounts Receivable Allowance
(15
)
8
Change in Inventory Reserves
(860
)
672
Loss on Abandonment of Intangible Asset
560
-
Loss on Goodwill Impairment
-
2,375
Gain on Disposal of Assets
(141
)
(3,821
)
PPP Loan Forgiveness Gain
(6,171
)
-
Employee Retention Credit Receivable
(5,209
)
-
Changes in Current Operating Items Accounts Receivable
1,134
3,019
Inventories
(4,613
)
(216
)
Contract Assets
(2,799
)
1,760
Prepaid Expenses and Other Assets
(171
)
651
Accounts Payable
1,471
(2,950
)
Accrued Payroll and Commissions
1,176
(623
)
All Other Operating Items
1,740
(335
)
Net Cash (Used In) Provided By Operating Activities $
(4,540
)
$
1,363
Cash Flows from Investing Activities Proceeds from
Sale of Property and Equipment
626
6,019
Purchase of Intangible Asset
(64
)
(34
)
Purchase of Property and Equipment
(1,292
)
(485
)
Net Cash (Used In) Provided By Investing Activities $
(730
)
$
5,500
Cash Flows from Financing Activities Net Change in
Line of Credit
5,688
(6,760
)
Proceeds from Long-Term Debt
-
6,077
Payments on Long-Term Debt
(1,128
)
(2,684
)
Payments on Capital Lease
(664
)
(592
)
Stock Option Exercises
35
-
Net Cash Provided by (Used in) Financing Activities $
3,931
$
(3,959
)
Net Change in Cash $
(1,339
)
$
2,904
Cash - Beginning of Period
3,564
660
Cash - Ending of Period $
2,225
$
3,564
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220321005851/en/
Chris Jones, CFO cjones@nortechsys.com 952-345-2244
Nortech Systems (NASDAQ:NSYS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Nortech Systems (NASDAQ:NSYS)
Historical Stock Chart
From Jul 2023 to Jul 2024