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Nortech Systems Inc. has reported net sales of $28.3 million for the first quarter ended March 31, 2017, compared with net sales of $29 million for the first quarter of 2016.
For the first quarter of 2017, operating income was $120,000, compared with $221,000 for the first quarter of 2016. For the first quarter of 2017, the company reported a net loss of $15,000, or $0.01 per diluted common share, compared with net income of $63,000, or $0.02 per diluted common share, in the prior-year period.
"Our first quarter revenue came in as expected due to lower backlog levels to start the quarter," said Rich Wasielewski, Nortech Systems' president and CEO. "Our overall 90-day backlog began the first quarter down sequentially as our customers adjusted orders to their current demand. By the end of the first quarter, backlog had rebounded nicely across our three core markets, rising 15% overall."
During the first quarter of 2017, gross margin and profits were impacted by expenses related to the Wisconsin facility closure and startup costs associated with the large number of product transfers, as well as delays with several new medical product launches planned for first quarter production. Nortech sold the Wisconsin facility at the end of the quarter and reported a gain of $354,000, helping offset the majority of the additional expenses incurred during the first quarter of 2017.
"We're optimistic in the outlook for the remainder of 2017 with these expenses and delays behind us and our backlog increasing," Wasielewski stated. "Our medical market continues to show the strongest growth potential and the positive momentum being generated from our industrial customers adds to our confidence." The new China operation received production validations in April from a major medical customer and the plan is to be accretive starting in the second quarter.
Wasielewski concluded, "Nortech's strategy to expand our global footprint is improving our competitiveness with multinational customers looking for partners to provide in-region manufacturing support and a global supply chain." He expects the company's facilities in China and Mexico to post significant revenue growth in 2017. Across all markets, Nortech continues to advance its successful approach offering customers earlier engagement, enhanced engineering resources and value-added services.
About Nortech Systems Incorporated
Nortech Systems Incorporated, 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.