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NSYS...At a quick glance, looks like a loss after the PPP loan forgiveness gain...Nortech Systems Announces 2021 Fourth Quarter and Full Year Results

MINNEAPOLIS--(BUSINESS WIRE)-- Nortech Systems Incorporated (Nasdaq: NSYS) (the "Company"), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving medical, industrial and defense markets, reported 2021 fourth quarter and full year results for the year ended December 31, 2021.

2021 Fourth Quarter and Full Year Highlights

Fourth quarter revenue up more than 40 percent from prior year.
Full year revenue of $115.2 million, up nearly 11% from 2020.
Net income of $7.2 million, up from of a net loss of $1.5 million in the prior year.
Year-end backlog of $95 million, up over 50 percent from 2020.
Completed extension of the Bank of America $16 million credit facility in December 2021.
Management Commentary
“Our entire Nortech team deserves enormous credit for their commitment to delivering mission-critical solutions for our customers despite ongoing Covid concerns and significant supply chain disruptions,” said Jay D. Miller, Chief Executive Officer and President.

“In 2021 we made progress on several important fronts. We strengthened our balance sheet, extended our Bank of America agreement until 2026, restored revenue growth, and improved gross margins. We tightened our focus on operational excellence and innovation for our customers,” Miller added.

“Creating shareholder value remains a top priority; we believe this is best accomplished by creating value for our diverse customer base. In today’s problematic supply chain environment, our current and new customers increasingly recognize and appreciate Nortech as a key long-term partner offering complete fulfillment solutions. We believe that creating efficiencies for our customers and deepening these relationships will further improve Nortech’s revenue, gross margin, and operating cash flow.”

In the fourth quarter of 2021, revenue totaled $33.5 million. This represents a 40.3% increase from revenue of $23.8 million in the fourth quarter of 2020. For the full year 2021, revenue totaled $115.2 million. This represents a 10.6% increase from revenue of $104.1 million in 2020.

In the fourth quarter of 2021, gross profit totaled $2.7 million, or 8.0%, compared to gross profit of $1.7 million, or 7.3%, in the prior-year quarter. For the full year 2021, gross profit totaled $15.9 million, or 13.8%, compared to a gross profit of $9.7 million, or 9.3%, in the prior year. Full year 2021 gross profit included $4.7 million in CARES Act Employee Retention Credits (ERC). Net of the ERC, full year 2021 gross profit would have totaled $11.2 million or 9.7%.

Net income totaled $5.0 million, or $1.76 per diluted share, in the fourth quarter of 2021, up from a net loss of $3.5 million, or $1.33 per basic share, in the prior-year quarter. In the fourth quarter of 2021 Nortech recognized a non-cash gain of $6.2 million related to PPP loan forgiveness. For the full year 2021, net income totaled $7.2 million, or $2.54 per diluted share, up from a net loss of $1.5 million, or $0.58 per diluted share, in the prior year.

Business Outlook
“We believe our results for 2021 provide a great springboard for 2022,” continued Jay Miller. “For the remainder of this year, we will continue to focus on managing supply-chain disruptions and related cost challenges that our customers are experiencing.” Miller added that rising material and labor costs continue to be the large issues facing the Company. A January 2022 report by the global trade organization IPC found that 90 percent of electronics manufacturers report rising material costs and over 75 percent report rising labor costs.

“In this current environment, our partnerships with customers run much deeper than purchase orders,” concluded Miller. “In tandem with our customers, we are leveraging our decades of technical expertise to develop innovative proprietary technologies for manufacturing methods and products.”

Conference Call
The Company will hold a live conference call and webcast at 4:00 p.m. central time on Monday, March 21, 2022, to discuss the company's fourth quarter financial results. The call will be hosted by Jay Miller, Chief Executive Officer and Chris Jones, Chief Financial Officer. To access the live audio conference call, U.S. participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 551424. Participants may also access the call via webcast at: https://www.webcaster4.com/Webcast/Page/2814/44766.

About Nortech Systems Incorporated
Nortech Systems Incorporated is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech Systems primarily serves the medical, 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/interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has seven 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.