Nortech Systems Reports Third Quarter Results; Net Income Rises 10 Percent for Quarter, 30 Percent for Nine Months.MINNEAPOLIS -- Nortech Systems Incorporated (Nasdaq:NSYS) today reported record net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $20.9 million for the third quarter ended Sept. 30, 2005, up nine percent over net sales of $19.2 million for the comparable period in 2004. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. totaled $590,613, up nine percent from $541,576 reported for the third quarter of 2004. Net income totaled $260,357, or $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share, up 10 percent versus $236,439, or $0.09 per diluted common share, for the third quarter of 2004. For the nine months ended Sept. 30, 2005, the company reported net sales of $60.5 million, compared with $52.3 million for the same period in 2004, an increase of 16 percent. Operating income for the period was $1.3 million, a 37 percent increase over operating income of $935,494 for the same period in 2004. Net income for the nine-month period was $498,210, or $0.19 per diluted common share, up 30 percent versus $384,472, or $0.15 per diluted common share, for the same period last year. "We're pleased with these results," says Mike Degen, Nortech's president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "In three of the past four quarters - including this third quarter - Nortech has reported record sales levels in excess of $20 million. Net income was up 87 percent over the previous quarter, on the same level of revenue, reflecting the operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. we're building into the business." The company's 90-day order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. increased to $22.5 million, up 28 percent during the quarter. Nortech's Aerospace Systems and commercial electronic assembly divisions again posted strong quarterly results in both sales and earnings. However, the company's commercial wire and cable division continued to struggle at the gross margin line due to underutilized plant capacity and the impact of higher energy costs on manufacturing expenses and commodities such as copper wire and petroleum-based materials. During the third quarter, Nortech Systems announced an expansion of its relationship with General Electric, which includes both transportation and health care markets. Nortech received an order from GE Rail to supply components for the LocoCAM(TM) video camera system. This work is performed at several Nortech locations, headed by the electronic assembly division in Merrifield Mer·ri·field , R(obert) Bruce Born 1921. American biochemist. He won a 1984 Nobel Prize for developing a method of synthesizing peptides and proteins from amino acids. , Minn. Outlook The company now anticipates fiscal 2005 revenue to increase by approximately 13 to 16 percent over 2004, in the range of $82 million to $84 million. Earnings per diluted common share for fiscal 2005 are expected to be on the high end of the previously announced range, in the area of 33 to 35 cents. This is approximately 50 percent higher than the 23 cents per diluted common share reported for the 2004 fiscal year. Earnings per diluted common share for the fourth quarter are anticipated to be between 14 to 16 cents, up 75 to 100 percent over the 8 cents reported for last year's fourth quarter. Earnings in the fourth quarter of 2005 will continue to be impacted favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. by record sales levels, helping to offset increased energy and commodity costs and under utilized plant capacity cited earlier. Conference Call Webcast Nortech Systems will hold a webcast at 9:00 a.m. (CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ) on Thurs. Nov. 3, 2005, to allow securities analysts, shareholders and other interested parties to hear management discuss the company's third quarter results. This audio webcast can be accessed - live or replay - at the investor relations Investor relations The process by which the corporation communicates with its investors. portion of Nortech Systems' website at www.nortechsys.com or at www.vcall.com. Nortech executives participating in the webcast will be Mike Degen, president and CEO, and Rich Wasielewski, vice president and chief financial officer. The toll-free number for audio replay is 1-877-660-6853. To access the toll-free replay, the account code of 286 and conference ID of 175918 are both required. About Nortech Systems, Inc. Nortech Systems Incorporated (www.nortechsys.com), based in Wayzata, Minn., is a full-service electronics manufacturing services Electronic manufacturing services (EMS) is term used for companies that design, test, manufacture, distribute and provide return/repair services for electronic component and assemblies for original equipment manufacturers (OEMs). (EMS) provider of wire and cable assemblies, printed circuit board assemblies, higher-level assemblies and box builds for a wide range of industries. Markets served include medical, automotive, defense, computer, commercial, recreational, government and consumer. The company has manufacturing facilities in Baxter, Bemidji, Fairmont and Merrifield, Minnesota; Augusta, Wisconsin Augusta is a city in Eau Claire County, Wisconsin, United States. The population was 1,460 at the 2000 census. The city is located entirely within the Town of Bridge Creek. Geography Augusta is located at (44.679656, -91. ; and Monterrey, Mexico. Nortech Systems is traded on the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the symbol NSYS. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provision of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. While this release is based on management's best judgment and current expectations, actual results may differ 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: volatility in market conditions which may affect market supply of and demand for the company's products; increased competition; changes in the reliability and efficiency of operating facilities or those of third parties; risks related to availability of labor; commodity and energy cost instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability ; general economic, financial and business conditions that could affect the company's financial condition and results of operations; as well as risk factors listed from time to time in the company's filings with the SEC. The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by the company. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements. All forward-looking statements included in this press release are expressly qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by the forgoing for·go also fore·go tr.v. for·went , for·gone , for·go·ing, for·goes To abstain from; relinquish: unwilling to forgo dessert. cautionary statements. The company undertakes no obligations to update publicly any forward-looking statement (or its associated cautionary language) whether as a result of new information or future events.
Condensed Statements of Operations - Unaudited
Three months ended Nine months ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
Net Sales $20,919,151 $19,189,852 $60,549,569 $52,264,134
Income from
Operations 590,613 541,576 1,281,741 935,494
Income before
Income Taxes 413,357 375,439 788,210 614,472
Tax Provision 153,000 139,000 290,000 230,000
Net Income 260,357 236,439 498,210 384,472
Net Income Per
Basic Share 0.10 0.09 0.19 0.15
Weighted Average
Number of Shares -
Basic 2,582,292 2,573,135 2,582,221 2,554,466
Net Income Per
Diluted Share 0.10 0.09 0.19 0.15
Weighted Average
Number of Shares -
Diluted 2,622,108 2,608,294 2,613,956 2,602,688
Condensed Balance Sheets
Sept. 30, 2005 Dec. 31, 2004
(unaudited)
Current Assets $30,343,491 $29,715,808
Property and Other Assets 6,792,109 7,165,800
---------------- ----------------
Total Assets $37,135,600 $36,881,608
Current Liabilities $18,146,670 $17,965,817
Long-Term Debt 2,964,120 3,399,210
Shareholders' Equity 16,024,810 15,516,581
---------------- ----------------
Total Liabilities and Shareholders'
Equity $37,135,600 $36,881,608
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