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Nortech Systems Incorporated, a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical, defense and industrial markets, reported results for the first quarter ended March 31, 2022.
2022 First Quarter Highlights
- Revenue up 39%, or $8.6 million, compared to the first quarter of 2021.
- Trailing twelve-month revenue as of March 31, 2022 of $124 million, up more than 25% from trailing twelve-month revenue as of March 31, 2021.
- Gross margin of 13.2%, up 6.1 percentage points compared to the first quarter of 2021.
- Total backlog of $97.6 million, up over 55% compared to backlog as of March 31, 2021.
“We were pleased to begin 2022 with continuing positive momentum from last year and we are optimistic about the remainder of this year,” said Jay D. Miller, Chief Executive Officer and President. “In partnership with our customers and suppliers, everyone at Nortech worked diligently to help mitigate ongoing supply chain challenges, inflationary pressures, and lingering pandemic impacts.
“Our team made significant progress in several key performance areas during the quarter, including revenue growth, pricing adjustments, operating cash flow, and new product development,” noted Mr. Miller. Launched last month, Nortech’s Active Optical Xtreme (AOX) cable technologies target challenging data-dependent applications – including factory automation, machine vision and robotics – and complement the Company’s Intercon 1 product line. Mr. Miller added, “Developing select proprietary technologies complements our global manufacturing operations and engineering services.”
In the first quarter of 2022, revenue totaled $30.7 million. This represents a 39.1% increase from revenue of $22.1 million in the first quarter of 2021. Net income totaled $138,000, or $0.05 per basic and diluted share, in the first quarter of 2022, up from a net loss of ($1.6) million, or ($0.58) per basic and diluted share, in the first quarter of 2021.
In the first quarter of 2022, gross profit was $4.0 million, or 13.2%, compared to gross profit of $1.6 million, or 7.1%, in the first quarter of 2021. Gross profit improvement was primarily due to a combination of higher plant volume and improved operating efficiencies coupled with pricing increases implemented to overcome inflationary cost pressures.
First quarter 2022 operating expenses totaled $3.9 million, a 3.7% increase from first quarter 2021 operating expenses of $3.7 million. The increase in operating expenses was primarily driven by $0.3 million in R&D costs in first quarter of 2022 compared to no R&D expense in the first quarter of 2021. First quarter 2022 R&D expense reflects continued investment in new technologies, such as the recently announced AOX cable platform.
First quarter 2022 EBITDA, or earnings before interest, taxes, depreciation and amortization, totaled $0.6 million, compared to an EBITDA loss of ($1.5) million in the first quarter of 2021.
Mr. Miller stated that “Nortech’s results in the first quarter of 2022 are a result of great teamwork with our customers, suppliers and the Nortech team working very closely together to meet our combined goals. In 2022, Nortech will continue this successful collaboration as part of our unique fulfillment solution strategy to overcome component shortages, increase plant throughput, and deliver high quality, mission-critical parts as quickly as possible.”
Mr. Miller concluded that “We are also focused on generating growth from our newly announced AOX technology. Innovation is a key component of our growth strategy and we are confident that new product technologies will help lay the groundwork for future revenue opportunities that complement our core business.”