MINNEAPOLIS--(BUSINESS WIRE)--
Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider of full-service electronics manufacturing services (EMS), today reported net sales of $29.0 million for the fourth quarter ended December 31, 2016, compared with net sales of $31.4 million for the fourth quarter of 2015. Net sales for the 2016 fiscal year ended December 31 rose one percent, to $116.6 million, compared with $115.2 million reported for fiscal 2015.
For the fourth quarter of 2016, the majority of the revenue decline was from industrial customers in the transportation sector. Profitability was aided by a favorable medical product and service mix, which offset the volume impact. Operating income for the fourth quarter was $328,000, compared with $329,000 for the fourth quarter of 2015. Fourth quarter net income of $98,000, or $0.04 per diluted common share, compares with $123,000, or $0.04 per diluted common share, in the fourth quarter of 2015.
For fiscal 2016, operating income was $629,000, an improvement of $1.1 million from a fiscal 2015 loss. Net income was $44,000, or $0.02 per diluted common share, for fiscal 2016. This compares with a net loss of $571,000, or $0.21 per diluted common share, for fiscal 2015.
“We’re pleased with our progress transitioning into a more global value-added and medical-focused EMS company,” said Rich Wasielewski, Nortech Systems’ president and CEO. “Our strategy of early engagement, engineering expertise and solutions selling is also gaining traction with our industrial and defense customers.”
During 2016, Nortech’s medical sales increased 30 percent and defense sales rose 11 percent. Industrial sales declined 21 percent, impacted by the slow economic growth and softness in the transportation and oil and gas sectors. The company’s overall 90-day backlog was $20.5 million at the end of 2016 compared with $20.7 million at the end of 2015. The medical products and service mix, cost improvements and selective pricing actions all contributed to the 140-basis-point improvement in gross margin and improved profitability in fiscal 2016. Net cash provided by operating activities was $3.5 million in the year and debt was lowered by $1.4 million.
“Looking ahead, we’re expecting the first quarter to be soft,” explained Wasielewski, adding that the recent increased activity in new projects and bookings – the strongest levels since 2009 – gives the company optimism for profitable growth in 2017. Renewed U.S. economic confidence, buoyed by the potential of tax reform, reduced regulations and increased spending on infrastructure and defense, contributes to this outlook.
Conference Call
Nortech Systems
will hold a conference call at 10:00 a.m. (CST) on Thursday, March 9,
2017, to discuss the company’s fourth quarter and fiscal year results.
Anyone interested in participating in the conference can access the call
by dialing 866-682-6100 from within the United States, or 862-255-5401
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.
A podcast (MP3 download) will also be available. The telephone replay
will be available through March 23, 2017, by dialing 877-481-4010 (from
U.S.) or 919-882-2331 (International). To access the replay, the
conference ID 10237 is required.
About Nortech Systems Incorporated
Nortech
Systems Incorporated (www.nortechsys.com),
based in Maple Grove, Minn., is a full-service electronics manufacturing
services (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 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 Statement of Operations
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||
| DECEMBER 31 | DECEMBER 31 | ||||||||||||||||
| Audited | Audited | Audited | Audited | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Net Sales | $ | 29,008,128 | $ | 31,441,746 | $ | 116,621,719 | $ | 115,191,905 | |||||||||
| Income (Loss) From Operations | 328,287 | 328,559 | 629,063 | (422,048 | ) | ||||||||||||
| Interest Expense | (139,562 | ) | (124,226 | ) | (550,289 | ) | (465,374 | ) | |||||||||
| Income (Loss) Before Income Taxes | 188,725 | 204,333 | 78,774 | (887,422 | ) | ||||||||||||
| Income Tax Expense (Benefit) | 91,000 | 81,000 | 35,000 | (316,000 | ) | ||||||||||||
| Net Income (Loss) | $ | 97,725 | $ | 123,333 | $ | 43,774 | $ | (571,422 | ) | ||||||||
| Net Income (Loss) per Basic and Diluted Common Shares | $ | 0.04 | $ | 0.04 | $ | 0.02 | $ | (0.21 | ) | ||||||||
| Weighted Average Number of Common Shares Outstanding: | |||||||||||||||||
| Basic | 2,747,832 | 2,746,325 | 2,747,424 | 2,745,759 | |||||||||||||
| Diluted | 2,749,889 | 2,748,977 | 2,749,545 | 2,745,759 | |||||||||||||
Condensed Balance Sheets
| DECEMBER 31 2016 | DECEMBER 31 2015 | |||||
| Audited | Audited | |||||
| Cash | $ | 268,204 | $ | 887 | ||
| Accounts Receivable | 17,320,784 | 18,431,746 | ||||
| Inventories | 20,653,841 | 20,185,445 | ||||
| Other Current Assets | 1,246,908 | 1,754,661 | ||||
| Property and Other Long-term Assets | 16,026,778 | 16,192,348 | ||||
| Total Assets | $ | 55,516,515 | $ | 56,565,087 | ||
| Accounts Payable | $ | 13,825,530 | $ | 13,041,377 | ||
| Other Current Liabilities | 6,480,109 | 6,630,333 | ||||
| Line of Credit – Long-term | 7,315,262 | 7,691,237 | ||||
| Long-term Debt and Other Long-term Liabilities | 5,580,826 | 6,930,284 | ||||
| Shareholders’ Equity | 22,314,788 | 22,271,856 | ||||
| Total Liabilities and Shareholders’ Equity | $ | 55,516,515 | $ | 56,565,087 |
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