Nortech Systems Announces 2022 First Quarter Results
Nortech Systems Incorporated (Nasdaq: NSYS) reported a remarkable 39% increase in revenue for Q1 2022, reaching $30.7 million compared to $22.1 million in Q1 2021. Gross profit soared by 159% to $4.0 million, with a gross margin of 13.2%. The company achieved positive net income of $138,000, recovering from a $1.6 million loss in the prior year. Nortech's total backlog increased to $97.6 million, up over 55% year-over-year. The launch of the new AOX cable technology aims to meet growing demands in automation and robotics.
- Revenue increased 39% year-over-year to $30.7 million.
- Gross profit rose to $4.0 million, a 159% increase.
- Gross margin improved to 13.2%, up 6.1 percentage points.
- Positive net income of $138,000, reversing a prior loss of $1.6 million.
- Total backlog reached $97.6 million, up over 55% year-over-year.
- Operating expenses increased by 3.7% to $3.9 million, driven by new R&D costs.
2022 First Quarter Highlights
-
Revenue up
39% , or$8.6 million -
Trailing twelve-month revenue as of
March 31, 2022 of$124 million 25% from trailing twelve-month revenue as ofMarch 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 55% compared to backlog as ofMarch 31, 2021 .
Management Commentary
“We were pleased to begin 2022 with continuing positive momentum from last year and we are optimistic about the remainder of this year,” said
“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
2022 First Quarter Results (in thousands)
|
Q1 2022 |
Q1 2021 |
YoY change |
Revenue |
|
|
+ |
Gross Profit $ |
|
|
+ |
Gross Margin % |
|
|
+6.1 percentage points |
Adjusted EBITDA |
|
( |
|
In the first quarter of 2022, revenue totaled
In the first quarter of 2022, gross profit was
First quarter 2022 operating expenses totaled
First quarter 2022 EBITDA, or earnings before interest, taxes, depreciation and amortization, totaled
Business Outlook
Conference Call
About
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 or trends in financial results, our ability to adjust pricing to combat inflation, our ability to work with customers and suppliers to overcome supply chain challenges, improving supply chain management, growth due to of new products, technologies and innovations, backlog trends, customer demand, the ability of our supply chain to supply materials on a timely basis, and steady improvement in production output. 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) engineering challenges with new products, technologies and innovations; (2) our ability to secure intellectual property rights with respect to new products, technologies, and innovations; (3) the impact of the COVID-19 pandemic on our customers, employees, manufacturing facilities, suppliers, the capital markets, and our financial condition; (4) supply chain disruptions leading to parts shortages for critical components; (5) volatility in market conditions which may affect market supply of and demand for the company's products; (6) increased competition; (7) changes in the reliability and efficiency of operating facilities or those of third parties; (8) risks related to the availability of labor; (9) commodity cost increases coupled with our inability to raise prices charged to our customers; (10) general economic, financial, and business conditions that could affect the company's financial condition and results of operations; (11) the Company's ability to steadily improve manufacturing output throughout the remainder of 2022. 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
Reconciliation of Non-GAAP Financial Measure
EBITDA is a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense, net, 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. It is not a measurement of our financial performance under GAAP and should not be considered as alternatives to revenue or net income, 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 has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.
THREE MONTHS ENDED |
||||||||
|
||||||||
| INCOME STATEMENT | Unaudited |
|
|
Unaudited |
||||
2022 |
|
|
2021 |
|||||
| $ | 30,711 |
|
$ | 22,072 |
|
|||
| Cost of Goods Sold | 26,667 |
|
20,511 |
|
||||
| Gross Profit | 4,044 |
|
1,561 |
|
||||
13.2 |
% |
7.1 |
% |
|||||
| Operating Expenses | ||||||||
| Selling Expenses | 833 |
|
721 |
|
||||
| General and Administrative Expenses | 2,729 |
|
2,796 |
|
||||
| Research and Development Expenses | 328 |
|
- |
|
||||
| Restructuring Expenses | - |
|
219 |
|
||||
| Gain on Sale of Assets | (15 |
) |
- |
|
||||
| Total Operating Expenses | 3,875 |
|
3,736 |
|
||||
| Income (Loss) from Operations | 169 |
|
(2,175 |
) |
||||
| Other Expense | ||||||||
| Interest Expense | (98 |
) |
(86 |
) |
||||
| Income (Loss) Before Income Taxes | 71 |
|
(2,261 |
) |
||||
| Income Tax Benefit | (67 |
) |
(707 |
) |
||||
| Net Income (Loss) | $ | 138 |
|
$ | (1,554 |
) |
||
| Net Income (Loss) Per Common Share - Basic | $ | 0.05 |
|
$ | (0.58 |
) |
||
| Weighted Average Number of Common Shares Outstanding - Basic | 2,680,731 |
|
2,659,132 |
|
||||
| Net Income (Loss) Per Common Share - Diluted | $ | 0.05 |
|
$ | (0.58 |
) |
||
| Weighted Average Number of Common Shares Outstanding - Diluted | 2,871,901 |
|
2,659,132 |
|
||||
| BALANCE SHEET |
|
|
|
|
||||
Unaudited |
|
|
Audited |
|||||
| Cash | $ | 841 |
|
$ | 643 |
|
||
| Restricted Cash | 776 |
|
1,582 |
|
||||
| Accounts Receivable | 14,695 |
|
14,548 |
|
||||
| Employee Retention Credit Receivable | 5,209 |
|
5,209 |
|
||||
| Inventories, Net | 21,187 |
|
19,434 |
|
||||
| Contract Assets | 8,114 |
|
8,698 |
|
||||
| Prepaid Expenses and Other Current Assets | 1,996 |
|
1,660 |
|
||||
| Property and Equipment, Net | 5,922 |
|
5,833 |
|
||||
| Operating Lease Assets | 8,706 |
|
8,983 |
|
||||
| Other Intangible Assets, Net | 465 |
|
501 |
|
||||
| Total Assets | $ | 67,911 |
|
$ | 67,091 |
|
||
| Accounts Payable | $ | 14,012 |
|
$ | 12,710 |
|
||
| Lease Obligations, Finance & Operating, Net | 10,823 |
|
11,255 |
|
||||
| Accrued Payroll and Commissions | 4,890 |
|
4,045 |
|
||||
| All Other Liabilities | 4,325 |
|
4,009 |
|
||||
| Line of Credit | 7,526 |
|
8,959 |
|
||||
| Shareholders’ Equity | 26,335 |
|
26,111 |
|
||||
| Total Liabilities and Shareholders’ Equity | $ | 67,911 |
|
$ | 67,091 |
|
||
| CASH FLOW STATEMENT |
|
|
|
|
||||
| Cash Flows from Operating Activities | Unaudited |
|
|
Unaudited |
||||
| Net Income (Loss) | $ | 138 |
|
$ | (1,554 |
) |
||
| Depreciation and Amortization | 486 |
|
477 |
|
||||
| Compensation on Stock-Based Awards | 48 |
|
34 |
|
||||
| Change in Accounts Receivable Allowance | 38 |
|
379 |
|
||||
| Change in Inventory Reserves | 97 |
|
(394 |
) |
||||
| (Gain) Loss on Disposal of Assets | (15 |
) |
59 |
|
||||
| Changes in Current Operating Items | ||||||||
| Accounts Receivable | (188 |
) |
2,732 |
|
||||
| Inventories | (1,852 |
) |
(2,777 |
) |
||||
| Contract Assets | 585 |
|
(778 |
) |
||||
| Prepaid Expenses and Other Assets | (263 |
) |
(299 |
) |
||||
| Accounts Payable | 1,302 |
|
1,553 |
|
||||
| Accrued Payroll and Commissions | 845 |
|
721 |
|
||||
| All Other Operating Items | 269 |
|
(1,050 |
) |
||||
| Net Cash Provided By (Used In) Operating Activities | $ | 1,491 |
|
$ | (897 |
) |
||
| Cash Flows from Investing Activities | ||||||||
| Proceeds from Sale of Property and Equipment | 15 |
|
- |
|
||||
| Purchase of Intangible Asset | - |
|
(64 |
) |
||||
| Purchase of Property and Equipment | (529 |
) |
(208 |
) |
||||
| $ | (514 |
) |
$ | (272 |
) |
|||
| Cash Flows from Financing Activities | ||||||||
| Net Change in Line of Credit | (1,434 |
) |
(1,128 |
) |
||||
| Principal Payments on Long-Term Debt | - |
|
(124 |
) |
||||
| Principal Payments on Financing Leases | (184 |
) |
(162 |
) |
||||
| Stock Option Exercises | 33 |
|
- |
|
||||
| $ | (1,585 |
) |
$ | (1,415 |
) |
|||
| Net Change in Cash | $ | (608 |
) |
$ | (2,583 |
) |
||
| Cash - Beginning of Period | 2,225 |
|
3,565 |
|
||||
| Cash - Ending of Period | $ | 1,617 |
|
$ | 982 |
|
||
THREE MONTHS ENDED |
||||||||
|
||||||||
| RECONCILIATION TO ADJUSTED EBITDA | Unaudited |
|
|
Unaudited |
||||
2022 |
|
|
2021 |
|||||
| Net Income (Loss) | $ | 138 |
|
$ | (1,554 |
) |
||
| Interest expense | 98 |
|
86 |
|
||||
| Tax benefit | (67 |
) |
(707 |
) |
||||
| Depreciation & amortization expense | 486 |
|
477 |
|
||||
| Restructuring | - |
|
219 |
|
||||
| Gain on asset sale | (15 |
) |
- |
|
||||
| Adjusted EBITDA | $ | 640 |
|
$ | (1,479 |
) |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20220510006355/en/
cjones@nortechsys.com
952-345-2244
Source:
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