Nortech Systems Reports First Quarter Results
MINNEAPOLIS, May 13, 2026 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2026.
2026 Q1 Highlights:
| ● | Net sales of $30.3 million in Q1 2026 vs. $26.9 million in Q1 2025 | |
| ● | Net loss of $(34) thousand, or $(0.01) per basic share in Q1 2026 vs. $(1,316) thousand, or $(0.48) per basic share in Q1 2025 | |
| ● | Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of $350 thousand in Q1 2026 vs. $(1.0) million loss in Q1 2025 | |
| ● | 90-day backlog of $31.5 million as of March 31, 2026 vs. $26.7 million as of March 31, 2025 | |
| ● | Total backlog of $90.8 million as of March 31, 2026 | |
| ● | Company closed on $17.2 million debt financing |
Management Commentary
“Nortech delivered another quarter of operational and financial progress, marking our fourth consecutive period of encouraging operating and EBITDA results reflecting the positive execution of our strategic restructuring initiatives. We are seeing continued improvements in gross margins, manufacturing efficiency, and world-class quality metrics reflect the disciplined execution of our long-term strategy. We are also excited to see our new Senior Vice President of Global Operations, Andrew Walko, stepping into his role to lead our global team and having an immediate and encouraging impact,” said President & CEO, Jay D. Miller.
“Our growing customer backlog, combined with the successful transfer of key programs to our optimized facilities, is strengthening the foundation for sustained performance improvement. Our Bemidji facility continues to make significant progress serving our customers in the Aerospace and Defense segment. Aerospace and Defense is historically our smallest customer segment, yet it continues to grow at a steady pace becoming an increasingly important part of our customer mix. The continued growth of the backlog will provide a tailwind for the Company into the second half of the year. With the closure of our new debt financing in March, and our strong North American and Asian footprint, we believe we are well-positioned to support customers pursuing nearshore manufacturing strategies. I am grateful for the hard work of our employees across the globe, and we remain optimistic about the opportunities ahead as we continue to execute our strategy in 2026 and beyond,” Miller said.
Summary Financial Information
The following table provides summary financial information comparing the first quarter 2026 (“Q1 2026”) financial results to the same quarter in 2025 (“Q1 2025”).
| ($ in thousands) | Q1 2026 | Q1 2025 | % Change | |||||||||
| Net sales | $ | 30,316 | $ | 26,895 | 12.7 | % | ||||||
| Gross profit | $ | 4,702 | $ | 3,078 | 52.8 | % | ||||||
| Operating expenses | $ | 4,655 | $ | 4,691 | (0.8 | )% | ||||||
| Net loss | $ | (34 | ) | $ | (1,316 | ) | (97.4 | )% | ||||
| EBITDA | $ | 350 | $ | (1,266 | ) | (127.6 | )% | |||||
| Adjusted EBITDA | $ | 350 | $ | (1,000 | ) | (135.0 | )% |
Conference Call
The Company will hold a live conference call and webcast at 3:30 p.m. central time on Thursday, May 14, to discuss the Company’s 2026 first 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: 361581. Participants may also access the call via webcast at: https://www.webcaster5.com/Webcast/Page/2814/53855.
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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 | ||||||||
| MARCH 31, | ||||||||
| 2026 | 2025 | |||||||
| Net sales | $ | 30,316 | $ | 26,895 | ||||
| Cost of goods sold | 25,614 | 23,817 | ||||||
| Gross profit | 4,702 | 3,078 | ||||||
| Operating expenses: | ||||||||
| Selling | 1,331 | 1,184 | ||||||
| General and administrative | 3,014 | 2,915 | ||||||
| Research and development | 310 | 326 | ||||||
| Restructuring charges | - | 266 | ||||||
| Total operating expenses | 4,655 | 4,691 | ||||||
| Income (loss) from operations | 47 | (1,613 | ) | |||||
| Other expense: | ||||||||
| Interest expense, net | (256 | ) | (214 | ) | ||||
| Loss before income taxes | (209 | ) | (1,827 | ) | ||||
| Income tax benefit | (175 | ) | (511 | ) | ||||
| Net loss | $ | (34 | ) | $ | (1,316 | ) | ||
| Net loss per common share: | ||||||||
| Basic (in dollars per share) | $ | (0.01 | ) | $ | (0.48 | ) | ||
| Weighted average number of common shares outstanding - basic (in shares) | 2,786,134 | 2,760,929 | ||||||
| Diluted (in dollars per share) | $ | (0.01 | ) | $ | (0.48 | ) | ||
| Weighted average number of common shares outstanding - diluted (in shares) | 2,786,134 | 2,760,929 | ||||||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translation | 69 | 6 | ||||||
| Comprehensive income (loss), net of tax | $ | 35 | $ | (1,310 | ) |
NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2026 AND DECEMBER 31, 2025
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
| MARCH 31, 2026 | DECEMBER 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,964 | $ | 1,655 | ||||
| Restricted cash | 244 | - | ||||||
| Accounts receivable, less allowance for credit losses of $205 and $161, respectively | 17,823 | 16,998 | ||||||
| Inventories, net | 23,561 | 20,695 | ||||||
| Contract assets | 16,010 | 15,184 | ||||||
| Prepaid assets and other assets | 1,071 | 1,618 | ||||||
| Total current assets | 60,673 | 56,150 | ||||||
| Property and equipment, net | 5,077 | 5,203 | ||||||
| Operating lease assets, net | 6,720 | 7,016 | ||||||
| Deferred tax assets | 3,753 | 3,394 | ||||||
| Other intangible assets, net | 151 | 156 | ||||||
| Deferred line of credit issuance costs | 266 | - | ||||||
| Total assets | $ | 76,640 | $ | 71,919 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Lines of credit | $ | 7,485 | $ | 7,000 | ||||
| Current portion of term loan | 433 | - | ||||||
| Accounts payable | 14,645 | 12,809 | ||||||
| Accrued payroll and commissions | 2,708 | 1,822 | ||||||
| Customer deposits | 4,672 | 5,386 | ||||||
| Current portion of operating leases | 1,309 | 1,332 | ||||||
| Current portion of finance lease obligations | 259 | 274 | ||||||
| Other accrued liabilities | 1,487 | 1,221 | ||||||
| Total current liabilities | 32,998 | 29,844 | ||||||
| Long-term liabilities: | ||||||||
| Term loan | 1,743 | - | ||||||
| Long-term operating lease obligations | 6,186 | 6,476 | ||||||
| Long-term finance lease obligations | 577 | 626 | ||||||
| Other long-term liabilities | 428 | 426 | ||||||
| Total long-term liabilities | 8,934 | 7,528 | ||||||
| Total liabilities | 41,932 | 37,372 | ||||||
| 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 2,786,134 shares issued and outstanding, respectively | 28 | 28 | ||||||
| Additional paid-in capital | 17,981 | 17,855 | ||||||
| Accumulated other comprehensive loss | (640 | ) | (709 | ) | ||||
| Retained earnings | 17,089 | 17,123 | ||||||
| Total shareholders’ equity | 34,708 | 34,547 | ||||||
| Total liabilities and shareholders’ equity | $ | 76,640 | $ | 71,919 |
NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
| THREE MONTHS ENDED MARCH 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (34 | ) | $ | (1,316 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 303 | 347 | ||||||
| Compensation on stock-based awards | 126 | 118 | ||||||
| Change in allowance for credit losses | 44 | 35 | ||||||
| Change in inventory reserves | (257 | ) | 231 | |||||
| Deferred taxes | (359 | ) | - | |||||
| Changes in current operating items: | ||||||||
| Accounts receivable | (822 | ) | (814 | ) | ||||
| Inventories | (2,610 | ) | 487 | |||||
| Contract assets | (826 | ) | 388 | |||||
| Prepaid expenses and other assets | 460 | (1,588 | ) | |||||
| Accounts payable | 1,917 | (1,441 | ) | |||||
| Accrued payroll and commissions | 883 | 674 | ||||||
| Customer deposits | (713 | ) | (112 | ) | ||||
| Other accrued liabilities | 327 | 61 | ||||||
| Net cash used in operating activities | (1,561 | ) | (2,930 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | (228 | ) | (268 | ) | ||||
| Net cash used in investing activities | (228 | ) | (268 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from lines of credit | 9,960 | 25,970 | ||||||
| Payments to line of credit | (9,472 | ) | (22,710 | ) | ||||
| Proceeds from term loan | 2,200 | - | ||||||
| Payments of debt issuance costs | (290 | ) | - | |||||
| Proceeds from notes payable | - | 219 | ||||||
| Principal payments on financing leases | (62 | ) | (52 | ) | ||||
| Stock award exercises | - | 19 | ||||||
| Net cash provided by financing activities | 2,336 | 3,446 | ||||||
| Effect of exchange rate changes on cash and restricted cash | 6 | (2 | ) | |||||
| Net change in cash and restricted cash | 553 | 246 | ||||||
| Cash and restricted cash - beginning of period | 1,655 | 916 | ||||||
| Cash and restricted cash - end of period | $ | 2,208 | $ | 1,162 |
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA
| THREE MONTHS ENDED MARCH 31, | ||||||||
| 2026 | 2025 | |||||||
| ($ in thousands) | ||||||||
| Net loss | $ | (34 | ) | $ | (1,316 | ) | ||
| Interest | 256 | 214 | ||||||
| Taxes | (175 | ) | (511 | ) | ||||
| Depreciation | 298 | 342 | ||||||
| Amortization | 5 | 5 | ||||||
| EBITDA | 350 | (1,266 | ) | |||||
| Restructuring charges | - | 266 | ||||||
| ADJUSTED EBITDA | $ | 350 | $ | (1,000 | ) |
There were no material adjustments to EBITDA in the quarter ended March 31, 2026. Adjustment to EBITDA for the quarter ended March 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 $31 of expenses related to our closed Blue Earth facility, which expense amount is not included in Adjusted EBITDA. |
| ($ in millions) | Last Twelve Months (“LTM”) Ended in Quarter | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||||||||||||
| Net Sales | $ | 138.3 | $ | 140.8 | $ | 138.9 | $ | 139.3 | $ | 138.7 | $ | 137.5 | $ | 135.6 | $ | 128.1 | $ | 120.8 | $ | 117.6 | $ | 116.7 | $ | 118.4 | $ | 121.8 | ||||||||||||||||||||||||||
| Gross Profit $ - Adjusted | 21.9 | 22.4 | 21.4 | 23.1 | 23.1 | 22.2 | 20.7 | 16.7 | 14.4 | 14.6 | 15.8 | 18.0 | 19.6 | |||||||||||||||||||||||||||||||||||||||
| Gross Margin % - Adjusted | 15.8 | % | 15.9 | % | 15.4 | % | 16.6 | % | 16.6 | % | 16.1 | % | 15.3 | % | 13.1 | % | 11.9 | % | 12.4 | % | 13.5 | % | 15.2 | % | 16.1 | % | ||||||||||||||||||||||||||
| EBITDA - Adjusted | $ | 6.7 | $ | 6.8 | $ | 6.0 | $ | 8.0 | $ | 8.1 | $ | 7.3 | $ | 5.9 | $ | 2.1 | $ | (0.5 | ) | $ | (0.4 | ) | $ | 0.7 | $ | 2.5 | $ | 3.9 |
Contact
Andrew D. C. LaFrence
Chief Financial Officer and Senior Vice President of Finance
alafrence@nortechsys.com
952-345-2243
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