EX-99.1 2 ex99-1.htm EX-99.1

 

Exhibit 99.1

 

 

Nortech Systems Reports Fourth Quarter Results

 

MINNEAPOLIS – March 26, 2026 – Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial, and aerospace & defense markets, reported financial results for the fourth quarter ended December 31, 2025.

 

2025 Q4 Highlights:

 

  Net sales of $30.3 million in Q4 2025 vs. $28.6 million in Q4 2024
  Net income of $897 thousand, or $0.32 per basic share in Q4 2025 vs. $(1,478) thousand, or $(0.54) per basic share in Q4 2024
  Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of $1.2 million in Q4 2025 vs. ($585) thousand loss in Q4 2024
 

90-day backlog of $27.3 million as of December 31, 2025 vs. $26.5 million as of December 31, 2024

  Company closes on $17.2 million debt financing

 

Management Commentary

 

“Nortech delivered another quarter of meaningful operational and financial progress, marking our third consecutive period of positive operating and EBITDA results reflecting the positive execution of our strategic restructuring initiatives. The continued improvements we are seeing in gross margins, manufacturing efficiency, and world-class quality metrics reflect the disciplined execution of our long-term strategy and the dedication of our global team,” said President & CEO, Jay D. Miller.

 

“Our growing customer backlog, combined with the successful transfer of key programs to our optimized facilities, is strengthening the foundation for sustained performance improvement. We are especially proud of the AS9100:D certification achieved at our Monterrey facility - a significant milestone that further enhances our competitiveness in aerospace, and other high-reliability markets. With the closure of our new debt financing last week, and our strong North American and Asian footprint, we believe we are well-positioned to support customers pursuing nearshore manufacturing strategies. I am grateful for the hard work of our employees across the globe, and we remain optimistic about the opportunities ahead as we continue to execute our strategy into 2026,” Miller said.

 

Summary Financial Information

 

The following table provides summary financial information comparing the fourth quarter 2025 (“Q4 2025”) financial results to the same quarter in 2024 (“Q4 2024”) as well as the year ended December 31, 2025 (“2025”) with the year ended December 31, 2024 (“2024”).

 

($ in thousands)  Q4 2025   Q4 2024   %
Change
   2025   2024   %
Change
 
Net sales  $30,313   $28,620    5.9%  $118,365   $128,133    (7.6)%
Gross profit  $5,066   $2,822    79.5%  $18,006   $16,722    7.7%
Operating expenses  $4,165   $4,049    2.9%  $17,031   $16,917    0.7%
Net income (loss)  $897   $(1,478)   160.7%  $(252)  $(1,295)   (80.5)%
EBITDA  $1,203   $(889)   235.3%  $2,263   $1,543    46.7%
Adjusted EBITDA  $1,203   $(585)   305.6%  $2,529   $2,114    19.6%

 

 

 

 

Conference Call

 

The Company will hold a live conference call and webcast at 7:30 a.m. central time on Friday, March 27, to discuss the Company’s 2025 fourth quarter results. The call will be hosted by Jay D. Miller, Chief Executive Officer and President and Andrew D. C. LaFrence, Chief Financial Officer and Senior Vice President of Finance. To access the live audio conference call, US participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 726639. Participants may also access the call via webcast at: https://www.webcaster5.com/Webcast/Page/2814/53646.

 

###

 

About Nortech Systems Incorporated

 

Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech primarily serves the medical imaging, medical device, aerospace & 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, and interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has six 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 including increased gross margin, our ability to generate positive EBITDA, increased plant utilization and manufacturing efficiency, growth of our backlog, continuing improvement of quality metrics, success in moving production from on facility to another Company owned facility, nearshoring as a strategic advantage, successful execution of our long-term strategy, our enhanced competitiveness in aerospace, defense, and other high-reliability markets, effects of restructuring and consolidating manufacturing facilities, sustained long-term health and growth, and optimism about customer pipeline. 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) commodity cost increases coupled with challenges in raising prices and/or customer pressure to reduce prices; (2) supply chain disruptions leading to shortages of critical components; (3) volatility in market conditions which may affect demand for the Company’s products; (4) increased competition and/or reduced demand; (5) changes in the reliability and efficiency of operating facilities or those of third parties; (6) risks related to the availability of labor; (7) the unanticipated loss of any key member of senior management; (8) geopolitical, economic, financial and business conditions including changing tariff environment; (9) the Company’s ability to steadily improve manufacturing output and product quality; (10) the impact of global health epidemics on our customers, employees, manufacturing facilities, suppliers, the capital markets and our financial condition; (11) challenges with customers with respect to moving production from one facility to another Company-owned facility or (12) financing cost increases and continued availability. 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.

 

Reconciliation of Generally Accepted Accounting Principles (“GAAP”) Measures to Non-GAAP Financial Measure

 

EBITDA is a non-GAAP financial measure used by management that we believe provides useful information to investors because it reflects ongoing performance excluding certain non-recurring items during comparable periods and facilitates comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between different organizations as a result of differing capital structures and tax strategies. EBITDA is defined as net income (loss) plus interest expense, plus income tax expense plus depreciation expense and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Adjusted EBITDA reflects the impact of restructuring and non-recurring items. EBITDA and Adjusted EBITDA are not a measurement of our financial performance under GAAP and should not be considered an alternative to net sales or net income (loss), as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA and Adjusted EBITDA have limitations as an analytical metric, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP.

 

 

 

 

NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

   THREE MONTHS ENDED   YEARS ENDED 
   DECEMBER 31,   DECEMBER 31, 
   2025   2024   2025   2024 
                 
Net sales  $30,313   $28,620   $118,365   $128,133 
Cost of goods sold   25,247    25,798    100,359    111,411 
Gross profit   5,066    2,822    18,006    16,722 
Operating expenses                    
Selling   1,194    841    4,803    3,446 
General and administrative   2,693    2,606    10,790    11,709 
Research and development   278    298    1,172    1,191 
Restructuring charges   -    304    266    571 
Total operating expenses   4,165    4,049    17,031    16,917 
Income (loss) from operations   901    (1,227)   975    (195)
Other expense                    
Interest expense   (220)   (196)   (964)   (744)
Income (loss) before income taxes   681    (1,423)   11    (939)
Income tax (benefit) expense   (216)   55    263    356 
Net income (loss)  $897   $(1,478)  $(252)  $(1,295)
                     
Net income (loss) per common share:                    
Basic (in dollars per share)  $0.32   $(0.54)  $(0.09)  $(0.47)
Weighted average number of common shares outstanding - basic (in shares)   2,786,134    2,756,943    2,776,680    2,755,041 
Diluted (in dollars per share)  $0.31   $(0.54)  $(0.09)  $(0.47)
Weighted average number of common shares outstanding - diluted (in shares)   2,906,977    2,756,943    2,776,680    2,755,041 
                     
Other comprehensive income (loss)                    
Foreign currency translation   159    (310)   268    (445)
Comprehensive income (loss), net of tax  $1,056   $(1,788)  $16   $(1,740)

 

 

 

 

NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2025 AND DECEMBER 31, 2024

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE DATA)

 

   DECEMBER 31,
2025
   DECEMBER 31,
2024
 
ASSETS          
Current assets:          
Cash   $1,655   $916 
Accounts receivable, less allowances of $161 and $196, respectively   16,998    14,875 
Inventories, net   20,695    21,638 
Contract assets   15,184    13,792 
Prepaid assets and other assets   1,618    4,094 
Total current assets   56,150    55,315 
Property and equipment, net   5,203    6,232 
Operating lease assets   7,016    8,139 
Deferred tax assets   3,394    2,575 
Other intangible assets, net   156    174 
Total assets  $71,919   $72,435 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Line of credit  $7,000   $- 
Accounts payable   12,809    11,582 
Accrued payroll and commissions   1,822    1,841 
Customer deposits   5,386    5,140 
Current portion of operating leases   1,332    1,175 
Current portion of finance lease obligations   274    143 
Other accrued liabilities   1,221    1,547 
Total current liabilities   29,844    21,428 
Long-term liabilities:          
Long-term line of credit   -    8,634 
Long-term operating lease obligations, net of current portion   6,476    7,773 
Long-term finance lease obligations, net of current portion   626    311 
Other long-term liabilities   426    284 
Total long-term liabilities   7,528    17,002 
Total liabilities   37,372    38,430 
Shareholders’ equity:          
Preferred stock, $1 par value; 1,000,000 shares authorized; 250,000 shares issued and outstanding   250    250 
Common stock - $0.01 par value; 9,000,000 shares authorized; 2,786,134 and 2,760,793 shares issued and outstanding, respectively   28    28 
Additional paid-in capital   17,855    17,329 
Accumulated other comprehensive loss   (709)   (977)
Retained earnings   17,123    17,375 
Total shareholders’ equity   34,547    34,005 
Total liabilities and shareholders’ equity  $71,919   $72,435 

 

 

 

 

NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

 

   YEARS ENDED DECEMBER 31, 
   2025   2024 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(252)  $(1,295)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:          
Depreciation and amortization   1,288    1,738 
Compensation on stock-based awards   503    461 
Deferred taxes   (558)   (12)
Change in accounts receivable allowance   (35)   (162)
Change in inventory reserves   401    280 
Gain on disposal of property and equipment   -    (23)
Changes in current operating items          
Accounts receivable   (1,951)   4,405 
Inventories   485    (400)
Contract assets   (1,393)   689 
Prepaid expenses and other assets   2,482    (2,049)
Income taxes   (29)   (333)
Accounts payable   1,346    (3,956)
Accrued payroll and commissions   (30)   (2,289)
Customer deposits   244    1,071 
Other accrued liabilities   242    (375)
Net cash provided by (used in) operating activities   2,743    (2,250)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Proceeds from sale of property and equipment   504    7 
Purchases of property and equipment   (661)   (1,270)
Net cash used in investing activities   (157)   (1,263)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from line of credit   101,785    129,793 
Payments to line of credit   (103,480)   (126,944)
Proceeds from notes payable   -    345 
Principal payments on financing leases   (195)   (367)
Share repurchases   -    (100)
Stock award exercises   23    38 
Net cash (used in) provided by financing activities   (1,867)   2,765 
           
Effect of exchange rate changes on cash   20    (11)
           
Net change in cash   739    (759)
Cash - beginning of year   916    1,675 
Cash - end of year  $1,655   $916 

 

 

 

 

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

 

  

THREE MONTHS ENDED

DECEMBER 31,

  

YEARS ENDED

DECEMBER 31,

 
   2025   2024   2025   2024 
                 
($ in thousands)                    
Net income (loss)  $897   $(1,478)  $(252)  $(1,295)
Interest   220    196    964    744 
Taxes   (216)   55    263    356 
Depreciation   298    333    1,270    1,649 
Amortization   4    5    18    89 
EBITDA   1,203    (889)   2,263    1,543 
Restructuring charges   -    304    266    571 
ADJUSTED EBITDA  $1,203   $(585)  $2,529   $2,114 

 

There were no material adjustments to EBITDA in the quarter ended December 31, 2025. Adjustment to EBITDA for the year ended December 31, 2025 include ($ in thousands):

 

  During the first quarter of 2025, we incurred $235 of severance charges for a February 2025 reduction in force to align staffing to our forecasted net sales and $31 of expenses related to our closed Blue Earth facility, which expense amount is not included in Adjusted EBITDA.

 

Adjustment to EBITDA in 2024 include ($ in thousands):

 

  In connection with the Blue Earth facility closure, we incurred $304 and $571 of retention bonus and other expenses in the quarter and year ended December 31, 2024, respectively, which expense amount is not included in Adjusted EBITDA.

 

($ in millions)  Last Twelve Months (“LTM”) Ended in Quarter 
   Q4
2022
   Q1
2023
   Q2
2023
   Q3
2023
   Q4
2023
   Q1
2024
   Q2
2024
   Q3
2024
   Q4
2024
   Q1
2025
   Q2
2025
   Q3
2025
   Q4
2025
 
Net Sales  $134.1   $138.3   $140.8   $138.9   $139.3   $138.7   $137.5   $135.6   $128.1   $120.8   $117.6   $116.7   $118.4 
                                                                  
Gross Profit $ - Adjusted   20.5    21.9    22.4    21.4    23.1    23.1    22.2    20.7    16.7    14.4    14.6    15.8    18.0 
Gross Margin % - Adjusted   15.3%   15.8%   15.9%   15.4%   16.6%   16.6%   16.1%   15.3%   13.1%   11.9%   12.4%   13.5%   15.2%
                                                                  
EBITDA - Adjusted  $5.8   $6.7   $6.8   $6.0   $8.0   $8.1   $7.3   $5.9   $2.1   $(0.5)  $(0.4)  $0.7   $2.5 

 

Contact

 

Andrew D. C. LaFrence

Chief Financial Officer and Senior Vice President of Finance

alafrence@nortechsys.com

952-345-2243