NSYS

Image source: The Motley Fool. Wednesday, Aug. 12, 2026, at 9 a.m. ET President and Chief Executive Officer-Jay Miller Chief Financial Officer and Senior Vice President of Finance-Andrew LaFrence Operator: Good afternoon, ladies and gentlemen, and welcome to the Nortech Systems Incorporated Second Quarter 2026 Earnings Conference Call. With me on the line today are Jay Miller, President and Chief Executive Officer; and Andrew LaFrence, Chief Financial Officer and Senior Vice President of Finance. [Operator Instructions] At this time, it is my pleasure to turn the call over to Andy LaFrence. Andrew LaFrence: Thank you, Jenny, and welcome, everyone. Jay will begin today's call with a review of our operations, recent developments and business outlook. I will then review Nortech's second quarter financial results before turning the call back to Jay for closing comments. After that, we will open up the line for questions. Before we continue, please note statements made during this call may be forward-looking statements regarding expected net sales, operating results, future plans, opportunities and other company expectations. These estimates, plans and other forward-looking statements involve unknown and known risks and uncertainties that may cause actual results to differ materially from those expressed or implied in this call. These risks, including those detailed in our most recent SEC filings, may be amended or supplemented. The statements made during this conference call are based upon information known by Nortech as of the date and time of this call, and we assume no obligation to update the information in today's call. You can find Nortech's complete safe harbor statements in our SEC filings. And with that, I will turn it over to Jay for his opening comments. Jay? Jay Miller: Thank you, Andy, and good afternoon, everyone. We appreciate you joining us. The second quarter reflected continued execution across the business with net sales increasing 9.3% year-over-year to $33.5 million, gross margin improving to 17% and operating income of $623,000. Our results benefited from higher revenue levels, improved manufacturing cost absorption from increased production activity and continued progress following the restructuring initiatives in late 2024 and early 2025. These improvements were partially offset by higher incentive compensation expense in 2026. Backlog remains one of the clearest and best forward-looking indicators that our strategy is gaining traction. As of June 30, 2026, our 90-day shipment backlog was $33.4 million, up 6.3% from the beginning of the quarter and up 25.8% from June 30, 2025. Our total order backlog as of June 30, 2026, was $93.8 million, up 3.4% from the beginning of the quarter and up 19.8% compared with the same period last year. Year-over-year growth in total backlog was primarily driven by an increase in aerospace and defense and medical imaging orders. This progress reflects stronger customer engagement, successful program transfers and the value of our manufacturing footprint across the U.S., Mexico and China. We continue to see strong quoting activity as customers evaluate nearshore manufacturing strategies for North America and Asia. We believe our North American footprint positions us well with our Monterrey, Mexico, Maquiladora operations and Minnesota facilities operating within the framework of the U.S., Mexico, Canada agreement. While the tariff environment remains somewhat uncertain, we are actively monitoring developments and the picture is getting clearer. We are pursuing reimbursement and recovery of previously paid IEPA-related tariffs. And while we are confident we are making important progress, the timing and amount of any recoveries remain uncertain and no amounts have been recognized as of June 30, 2026. We remain proactive in monitoring trade policy, geopolitical uncertainty and supply chain risk. In June 2026, we've strengthened our supply chain leadership with the addition of a new Vice President of Supply Chain. This leadership addition comes at an important time as selected component constraints, longer lead times, allocation pressures and price volatility continue to affect many OEMs and EMS providers. We are working closely with customers and suppliers to plan ahead, secure critical materials and protect production continuity. Next, I'll turn it over to Andy for a more in-depth look at our financial results. Andy? Andrew LaFrence: Thank you, Jay. I will provide a brief overview of Nortech's financial performance for the second quarter ended June 30, 2026. Additional details are available in our Form 8-K earnings release and Form 10-Q filed with the Securities and Exchange Commission this afternoon. As we have discussed previously, quarterly results can be influenced by the timing of customer shipments, production schedules and working capital movements. While those factors persist, our execution and longer-term strategies are gaining traction as we move through 2026, consistent with Jay's comments earlier in the call. Net sales for the second quarter of 2026 were $33.5 million, an increase of $2.9 million or 9.3% compared with $30.7 million in the second quarter of 2025. Growth was led by the medical device market, where sales increased 36% year-over-year, primarily due to higher customer demand from existing customers and continued ramp-up of new programs. Medical imaging sales increased 12.2%, driven by higher customer demand supported in part by increased revenues from a stocking program with a key customer that provides product availability to enable shorter lead times. Industrial sales decreased 4.7%, reflecting customer inventory adjustments and temporary production disruptions associated with the transfer of manufacturing activities to Monterrey, Mexico, partially offset by growth in China. Aerospace and Defense sales decreased 12.8% in the quarter, primarily due to reduced demand from one customer who is reducing post-COVID inventory levels. However, year-to-date aerospace and defense sales increased 8.7% compared with the prior year period, benefiting from higher production volumes associated with completed transfers to our Bemidji location. Gross profit totaled $5.7 million compared with $4.8 million in the prior year period and gross margin improved to 17% up 120 basis points compared with 15.8% last year. The improvement was primarily attributable to higher revenue levels and improved manufacturing cost absorption resulting from increased production activity, partially offset by unfavorable sales mix. Total operating expenses were $5.1 million in the second quarter of 2026 compared with $4.1 million in the prior year period. The increase in operating expenses was primarily attributable to higher incentive compensation accruals in 2026. For the 3 and 6 months ended June 30, 2026, incentive compensation expenses were $402,000 and $647,000, respectively, compared with a reversal of expense of $131,000 during the second quarter of 2025 resulting in no management incentive compensation recorded in the first half of 2025. In summary, incentive compensation expense in the second quarter and year-to-date periods in 2026 were $533,000 and $647,000 higher than in the respective 2025 periods. As a result, we reported second quarter operating income of $623,000 compared with operating income of $742,000 in the prior year period. For the 6 months -- for the first 6 months of 2026, operating income was $670,000 compared with an operating loss of $871,000 in the same prior year period, reflecting higher gross profit associated with increased revenue and improved operating leverage, offset by higher management incentive compensation, together with the absence of a $266,000 restructuring charge recorded in the first quarter of 2025. Net interest expense was $197,000 compared with $257,000 last year during the quarter, driven by lower average borrowings and reduced interest costs following the transition to our new financing arrangements. We reported second quarter net income of $316,000 or $0.11 per diluted share compared with net income of $313,000 or $0.12 per diluted share in the second quarter of 2025. For the first 6 months of 2026, net income was $282,000 or $0.09 per share compared with a net loss of $1 million or $0.36 per share in the same prior period. Cash used in operating activities was $2.4 million in the first 6 months of 2026 compared with $2.8 million in the prior year period. Cash used by accounts receivable and contract assets was $4.5 million, largely due to the timing of customer shipments and related cash collections and an increase in our contract assets to support future customer shipments. Cash used by inventory was $3.5 million, reflecting purchases of materials needed to support the growing backlog. These uses of cash were partially offset by $2.1 million of cash provided by changes in accounts payable, primarily related to the timing of cash payments. At quarter end, cash and restricted cash totaled $1.7 million. Under our Associated Bank facility, the revolving credit facility balance was $7.6 million, and we had $3.6 million of unused availability as of June 30, 2026. For the remainder of the year, with the support of our recently hired Vice President of Supply Chain, we are very focused on reducing investments in inventory and generating cash from reductions in working capital, while year-over-year revenue growth, improved gross margins, positive year-to-date operating income and a more flexible capital structure, we believe that Nortech is well positioned to continue building momentum throughout the year. With that, I will turn it back to Jay for his closing remarks. Jay? Jay Miller: Thanks, Andy. Before we open the call to your questions, I want to highlight once again 3 related areas that together serve our customers and help advance Nortech's corporate stewardship, Nortech's engineering expertise, product innovation focus and sustainability plans. As for engineering expertise, we have a dedicated engineering services team focused on optimizing manufacturability, serviceability, supply chain risk mitigation and cost efficiency for our customers. Our 3-tier cost structure across the U.S., Mexico and China allows us to quickly adapt our global engineering resources to fit our customers' changing needs. A core element of our long-term strategy is innovation. Nortech's engineering capabilities and research and development activities are focused on helping customers solve complex connectivity challenges with technologies that are ruggedized, lighter, faster, more sustainable and more affordable. We see important customer priorities shaping demand. First, these customers need ruggedized solutions that perform reliably in harsh environments, particularly in aerospace and defense applications. Nortech's fiber optic technologies have been tested to withstand twisting, bending and torquing while maintaining data integrity and high-speed data transfer. While we continue to support legacy defense programs, we are also seeing growing interest in next-generation applications that utilize ruggedized fiber optics, MT38999 connectors and wearable technology. Second, customers need better ways to capture, transmit and use system performance data. Nortech's Digital Diagnostics Xtreme and SkyIoT technology platforms integrate digital diagnostics with fiber optic cables to generate real-time cable and system performance data, helping customers improve visibility and transition from preventative to predictive maintenance strategies. Third, customers are seeking lighter, more sustainable technologies that reduce complexity while improving system performance. This is where we see significant opportunity for Nortech's Power Over Fiber technology. By transmitting both power and data through fiber -- through optical fiber, Power Over Fiber can reduce overall cable weight, eliminate the need for certain local power sources and provide immunity to electromagnetic interference in demanding applications. These advantages are particularly valuable in medical devices, imaging systems, aerospace, defense and satellite applications where reliability, weight reduction and EMI immunity are critical. As copper costs continue to rise and system architectures become more demanding, we believe Power Over Fiber is well positioned to support the next generation of connected technologies. More and more often today, that data is being evaluated and analyzed using human intelligence as well as combined artificial and human intelligence for improved performance and data management for our customers and for their customers. For Nortech, we see AI capabilities as a clear opportunity to streamline and improve our processes, make our employees more productive and serve our customers better. To put a finer point on it, we are allocating resources and dedicating time to continue to build the AI skills of our employees in all functions to make better products, of course, but also to make us all more productive. With our intellectual property on fiber optic and digital technologies, Nortech is well positioned for projected future demand for fiber products. When compared with traditional copper, fiber optics offer dramatic environmental benefits during both production and operations, including improved energy efficiency and less material usage while significantly decreasing the carbon footprint of the complex cables we manufacture. We're also taking a forward-looking stance on materials, shifting focus from copper to fiber optics to mitigate cost pressures and align with our long-term strategy to produce ruggedized, lighter, faster, more sustainable and more affordable technology. In closing, we are excited about technological developments across all of our markets and expect them to support our continued sales momentum in 2026 and beyond, aided by stabilization in the supply chain and customer orders. As we wrap up our prepared remarks, let me summarize the key takeaways from today's call. First, we are realizing operational and financial benefits from the restructuring activities completed in 2024 and early 2025. Second, we remain optimistic about our positioning in near-shoring landscape and continue to see strong customer interest in our North American and Asian manufacturing footprint. Third, Nortech's backlog remains strong with both 90-day shipment backlog and total order backlog up significantly year-over-year. Finally, we continue to invest in people, technology, innovation, supply chain capabilities and regulatory expertise to better serve our customers and position Nortech for future growth. We believe the direction of the business is positive and has never been better. Our backlog is stronger, commercial activity remains healthy, operating execution is improving, and our team is focused on converting these opportunities into sustainable growth and long-term value for our customers, employees and shareholders. Now we'll open the call for your questions. Jenny, please open the lines. Operator: [Operator Instructions] Our first question is coming from [ Sergi Mascaro from Even Discovery BFT. ] Unknown Analyst: So I think I've heard that most of the OpEx growth was one-off during the quarter. Is that correct? Jay Miller: I'm sorry. We didn't quite hear that. It's -- so most of the OpEx growth for the quarter, it was really revolving around incentive compensation. So there was 2 pieces there related to -- we had incentive compensation, and then we also had increased stock-based compensation. So the combination of those 2 really drove the majority of the increase in terms of operating expenses during the quarter year-over-year. Unknown Analyst: All right. And then I'm wondering if you are seeing any opportunity related to the data center build-outs. It sounds like your products should be very useful within the data center. Is that correct? Jay Miller: We're pursuing a number of opportunities. I wouldn't say we've closed a lot of business there, but we're pursuing a number of opportunities in that space, where they are looking for custom complex cable capabilities, especially fiber optics in pretty demanding environments. It fits us extremely well. And we feel like we're quite well positioned there. So we're looking at a number of things. I wouldn't say we've gained a lot of traction there yet, but we're certainly taking a hard look, and we've had a number of conversations. Unknown Analyst: All right. That's helpful. Next question is if you can provide some color on the level of capacity utilization at the company? Andrew LaFrence: Yes. We generally certainly do not provide forward-looking or current capacity. What we have said in the past is that we do have the ability with our footprint to significantly expand without any additional CapEx -- significant CapEx or facilities at this point in time. So if you look at our facilities, we've got 4 in Minnesota, 1 in Monterrey and in Suzhou, China. All those have the ability to continue to grow for several years without needing additional space. And we can also continue to focus on adding shifts to many of those facilities to increase our capacity. So right now, we have plenty of capacity. I would say we have plenty of capacity to continue to grow. Unknown Analyst: All right. That's also very helpful. And last question is if you believe that the gross margin has levers for expansion as the company grows? Andrew LaFrence: Yes. If you look at the gross margin, if you look at the gross margin for the first 6 months of the year, that's actually a record for the company. And we do believe -- I mean, one of the comments we made not only in our comments, but in the 10-Q was that there was some unfavorable mix. And so if you look at some of our mix attributes out there. We think there are opportunities to continue to expand. And we do think that there's a lot of leverage at the plants. So we continue to look for opportunities with our current clientele and new clients that are coming in to expand that margin profile through more leverage of our current fixed cost structure. So yes, we do believe that we have the ability to continue to expand margin. Unknown Analyst: All right. And maybe one more related to data center because I'm wondering if your go-to-market strategy, if you are looking for any partners or you're going alone? Can you maybe explain a bit more about that? Jay Miller: Yes. Our business development, I will say this, our business development team, which is very, very good and getting better and better every day and doing a great job in the market of winning more and more business. Right now, they're doing an amazing job. And look, in this space, they're looking for a number of different angles to try to get into that space, whether it's directly with the people building the data centers or whether it's partnering. But that's as much detail as we can go into at this point. And thank you for the questions. Operator: [Operator Instructions] We appear to have no further questions in the queue. So I will now hand the call back over to Jay Miller for any closing comments. Jay Miller: Thank you again, Jenny, and thanks to everyone for joining us today. We're encouraged by the progress we are making and confident in the opportunities ahead. We look forward to speaking with you when we report our third quarter 2026 results. Again, thank you, and goodbye. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation. Before you buy stock in Nortech Systems, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nortech Systems wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $419,408!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,348,694!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 19, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Nortech Systems (NSYS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Release Date: August 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Nortech Systems Inc (NASDAQ:NSYS) reported a 9.3% year-over-year increase in net sales, reaching $33.5 million in Q2 2026. Gross margin improved to 17%, up 120 basis points from the prior year, driven by higher revenue and improved manufacturing cost absorption. Total order backlog grew 19.8% year-over-year to $93.8 million, with 90-day shipment backlog up 25.8%, indicating strong future demand. The company is well-positioned in the nearshoring landscape with its North American footprint, including operations in Mexico under the USMCA framework. Nortech Systems Inc (NASDAQ:NSYS) is investing in innovative technologies like Power over Fiber and ruggedized fiber optics, which are gaining traction in aerospace, defense, and medical markets. Year-to-date operating income turned positive at $670,000, compared to an operating loss of $871,000 in the same period last year. Aerospace and defense sales decreased 12.8% in the quarter due to one customer reducing post-COVID inventory levels. Industrial sales declined 4.7%, impacted by customer inventory adjustments and temporary production disruptions from the transfer of manufacturing to Monterey, Mexico. Operating expenses increased to $5.1 million from $4.1 million, primarily due to higher incentive compensation accruals in 2026. Cash used in operating activities was $2.4 million in the first half of 2026, with significant cash tied up in accounts receivable and inventory to support growing backlog. The tariff environment remains uncertain, and while the company is pursuing reimbursement for previously paid IEPA-related tariffs, no amounts have been recognized as of June 30, 2026. The company faces ongoing supply chain challenges, including component constraints, longer lead times, and price volatility, which could impact production continuity. Warning! GuruFocus has detected 4 Warning Signs with NSYS. Is NSYS fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide some color on the level of capacity utilization at the company?A: Andy Laference, CFO and Senior Vice President of Finance, stated that while the company does not provide specific capacity utilization figures, Nortech has the ability to significantly expand production without incurring significant capital expenditures or needing additional facilities. With six plants across Minnesota, Monterey, Mexico, and Suzhou, China, the company has ample capacity to support growth for several years by adding shifts and utilizing existing space. Q: Do you believe that the gross margin has level for expansion as the company grows?A: Andy Laference, CFO, confirmed that the gross margin for the first six months of 2026 was a record for the company. He noted that despite some unfavorable sales mix in the quarter, there are significant opportunities to expand margins further through increased leverage of the fixed cost structure as production volumes grow, both with existing and new customers. Q: Are you seeing any opportunity related to the data center buildouts?A: Jay Miller, President and CEO, stated that Nortech is actively pursuing a number of opportunities in the data center space, particularly for custom complex cable capabilities and fiber optics in demanding environments. While the company has not yet closed a significant amount of business in this area, it is well-positioned and engaged in numerous conversations to gain traction. Q: Can you explain the go-to-market strategy for data centers, whether you are looking for partners or going alone?A: Jay Miller, CEO, explained that the business development team is exploring multiple angles to enter the data center market, including direct engagement with data center builders and potential partnerships. He declined to provide further specifics but emphasized the team's effectiveness in winning new business. Q: Was most of the OpEx growth during the quarter due to one-off items?A: Andy Laference, CFO, clarified that the majority of the operating expense increase was driven by higher incentive compensation accruals and increased stock-based compensation. These two factors combined accounted for the bulk of the year-over-year increase in operating expenses during the second quarter. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Net sales growth of 9.3% was primarily driven by a 36% surge in medical device demand and a 12.2% increase in medical imaging, supported by a new stocking program. Gross margin expansion to 17% resulted from improved manufacturing cost absorption and higher production activity following restructuring initiatives in late 2024 and early 2025. Total order backlog reached $93.8 million, a 19.8% year-over-year increase, signaling strong customer engagement in aerospace, defense, and medical imaging sectors. The company is strategically pivoting from copper to fiber optics to mitigate rising material costs and meet demand for lighter, more sustainable, and EMI-immune technologies. Industrial sales faced a 4.7% decline due to customer inventory adjustments and temporary disruptions from transferring manufacturing activities to Monterrey, Mexico. Management attributes the year-over-year operating income decline to higher incentive and stock-based compensation accruals compared to the prior year period. The North American manufacturing footprint in Mexico and Minnesota is being positioned as a key competitive advantage for customers seeking nearshore strategies under USMCA. Management is focused on reducing inventory investments and generating cash through working capital improvements for the remainder of 2026. The company is actively pursuing the recovery of previously paid IEPA-related tariffs, though the timing and final amount of these recoveries remain uncertain. Growth strategy centers on 'Power Over Fiber' technology, which targets next-generation medical and aerospace applications by combining power and data transmission. Nortech is investing in AI skill development across all functions to improve internal productivity and enhance product performance for customers. The company maintains significant latent capacity across its global footprint, allowing for multi-year growth and additional shifts without requiring major capital expenditures. Supply chain risks persist, with management citing selected component constraints, allocation pressures, and price volatility as ongoing challenges for OEMs. A new Vice President of Supply Chain was appointed in June 2026 to lead efforts in material security and production continuity. Aerospace and defense sales saw a quarterly dip of 12.8% due to a specific customer reducing post-COVID inventory levels, despite an 8.7% increase year-to-date. The transition to a new financing arrangement has successfully reduced interest costs and provided a more flexible capital structure. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the majority of OpEx growth was tied to increased incentive compensation and stock-based compensation accruals. This contrasts with the prior year period, which saw a reversal of incentive expenses. The company is pursuing opportunities for custom complex fiber optic cables in demanding data center environments. While management has not yet gained significant traction or closed major business in this space, they are actively engaging in partnership and direct-entry conversations. Management believes further expansion is possible by leveraging the current fixed cost structure as revenue grows. Current margins were achieved despite 'unfavorable mix' attributes, suggesting upside potential if product mix shifts toward higher-margin offerings.

MINNEAPOLIS, Aug. 12, 2026 (GLOBE NEWSWIRE) -- Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial, and aerospace & defense markets, reported financial results for the second quarter ended June 30, 2026. 2026 Q2 Highlights: Management Commentary “Nortech delivered a solid second quarter, with year-over-year revenue growth, improved gross margins, and continued positive operating income reflecting the benefits of our restructuring actions and disciplined execution,” said President & CEO, Jay D. Miller. “We are encouraged by the continued strength of our bookings and our backlog, which we view as an important leading indicator of future business prospects, including opportunities in attractive markets such as Aerospace and Defense as well as Medical. We are also seeing continued customer interest in nearshoring and regional manufacturing strategies, where our North American footprint, combined with our China operations, positions Nortech well to support customers’ evolving supply chain needs. As we move through the second half of 2026, we remain focused on converting strong customer engagement into sustainable growth and long-term value.” Summary Financial Information The following table provides summary financial information comparing the second quarter 2026 (“Q2 2026”) financial results to the same quarter in 2025 (“Q2 2025”) as well as the six-month period ended June 30, 2026 (“YTD 2026”) with the same period in 2025 (“YTD 2025”). Conference Call The Company will hold a live conference call and webcast at 3:30 p.m. central time on Wednesday, August 12, to discuss the Company’s 2026 second quarter results. The call will be hosted by Jay D. Miller, Chief Executive Officer and President and Andrew D. C. LaFrence, Chief Financial Officer and Senior Vice President of Finance. To access the live audio conference call, US participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 979013. Participants may also access the call via webcast at: https://www.webcaster5.com/Webcast/Page/2814/54239. ### About Nortech Systems Incorporated Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech primarily serves the medical imaging, medical device, aerospace & 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, and interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has six 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. 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 strength and growth of bookings and backlog, future business prospects, opportunities in aerospace and defense and medical markets, converting strong customer engagement into sustainable growth and long-term value, future financial results including increased gross margin, our ability to generate positive EBITDA, nearshoring as a strategic advantage, successful execution of our long-term strategy, our enhanced competitiveness in aerospace, defense, and other high-reliability markets, and effects of restructuring and consolidating manufacturing facilities. 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) commodity cost increases coupled with challenges in raising prices and/or customer pressure to reduce prices; (2) supply chain disruptions leading to shortages of critical components; (3) volatility in market conditions which may affect demand for the Company's products; (4) increased competition and/or reduced demand; (5) changes in the reliability and efficiency of operating facilities or those of third parties; (6) risks related to the availability of labor; (7) the unanticipated loss of any key member of senior management; (8) geopolitical, economic, financial and business conditions including changing tariff environment; (9) the Company's ability to steadily improve manufacturing output and product quality; (10) the impact of global health epidemics on our customers, employees, manufacturing facilities, suppliers, the capital markets and our financial condition; (11) challenges with customers with respect to moving production from one facility to another Company owned facility or (12) financing cost increases and continued availability. 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 the United States and the rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. Reconciliation of Generally Accepted Accounting Principles (“GAAP”) Measures to Non-GAAP Financial Measure EBITDA is a non-GAAP financial measure used by management that we believe provides useful information to investors because it reflects ongoing performance excluding certain non-recurring items during comparable periods and facilitates comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between different organizations as a result of differing capital structures and tax strategies. EBITDA is defined as net income (loss) plus interest expense, 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. Adjusted EBITDA reflects the impact of restructuring and non-recurring items. EBITDA and Adjusted EBITDA are not a measurement of our financial performance under GAAP and should not be considered an alternative to net sales or net income (loss), 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 and Adjusted EBITDA have limitations as an analytical metric, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS)(UNAUDITED)(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSAS OF JUNE 30, 2026 AND DECEMBER 31, 2025(UNAUDITED)(IN THOUSANDS, EXCEPT SHARE DATA) NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(IN THOUSANDS) RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA There were no material adjustments to EBITDA in the three or six months ended June 30, 2026 and the three months ended June 30, 2025. Adjustment to EBITDA for the six months ended June 30, 2025 include ($ in thousands): Contact Andrew D. C. LaFrenceChief Financial Officer and Senior Vice President of [email protected]

This article first appeared on GuruFocus. Release Date: May 14, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Nortech Systems Inc (NASDAQ:NSYS) reported its fourth consecutive quarter of positive operating and EBITDA results, indicating successful execution of strategic restructuring initiatives. Gross margins increased by 410 basis points in Q1 2026 compared to Q1 2025, reflecting improved manufacturing efficiencies and cost management. The company experienced a significant increase in customer backlog, reaching $90.8 million as of May 31, 2026, a 37.9% increase from the end of 2025. Nortech Systems Inc (NASDAQ:NSYS) secured new agreements with Associated Bank for a $2.2 million term note and a $15 million asset-backed line of credit, providing more flexible financial arrangements. Sales in the aerospace and defense sector grew by 41.2% year-over-year, driven by customer approvals and production transfers, showcasing strong sector performance. Despite improvements, Nortech Systems Inc (NASDAQ:NSYS) reported a net loss of $34,000 or a penny per share for Q1 2026. Net interest expense increased to $256,000 from $214,000 in the previous year, partly due to the write-off of unamortized debt issuance costs. Industrial sales remained relatively flat year-over-year, indicating challenges in this sector. The company is exposed to uncertainties in the tariff environment, although it operates under a maquiladora structure to mitigate direct exposure. Cash used in operating activities was $1.6 million, although this was an improvement from the prior-year period. Warning! GuruFocus has detected 1 Warning Sign with NSYS. Is NSYS fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide an overview of Nortech's financial performance for the first quarter of 2026? A: Andrew LaFrence, CFO, reported that net sales for Q1 2026 were $30.3 million, a 12.7% increase from $26.9 million in Q1 2025. Growth was driven by a 41.2% increase in aerospace and defense sales. Gross profit rose to $4.7 million, with a gross margin improvement to 15.5%. Operating income was $47,000, a $1.7 million improvement from the previous year. The net loss was $34,000, significantly better than the $1.3 million loss in Q1 2025. Q: What strategic initiatives have contributed to Nortech's recent performance improvements? A: Jay Miller, CEO, highlighted the positive impact of strategic restructuring initiatives from late 2024 and early 2025. These initiatives have led to improved operating and EBITDA results for four consecutive quarters, with a $1.7 million improvement in income from operations in Q1 2026 compared to Q1 2025. Q: How has Nortech's customer backlog changed, and what factors are influencing this trend? A: Jay Miller noted that the customer backlog increased to $90.8 million as of May 31, 2026, a 17.4% increase from year-end 2025 and a 37.9% increase from the end of 2025. This growth is driven by confirmed purchase orders and shorter lead times requested by customers, facilitated by just-in-time delivery strategies. Q: What are the key areas of focus for Nortech's engineering and innovation efforts? A: Jay Miller emphasized Nortech's focus on engineering expertise, product innovation, and sustainability. The company is advancing its research and development to address customer needs for ruggedized, lighter, faster, and more sustainable technologies, particularly in fiber optics for aerospace and defense applications. Q: How is Nortech positioned in terms of nearshoring and geopolitical factors? A: Jay Miller stated that Nortech is well-positioned with its North American footprint and maquiladora operations under the US-Mexico-Canada Agreement. The company is monitoring trade policies and geopolitical uncertainties, with strategies in place to mitigate tariff impacts and capitalize on nearshoring opportunities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

MINNEAPOLIS, May 13, 2026 (GLOBE NEWSWIRE) -- Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial, and aerospace & defense markets, reported financial results for the first quarter ended March 31, 2026. 2026 Q1 Highlights: Management Commentary “Nortech delivered another quarter of operational and financial progress, marking our fourth consecutive period of encouraging operating and EBITDA results reflecting the positive execution of our strategic restructuring initiatives. We are seeing continued improvements in gross margins, manufacturing efficiency, and world-class quality metrics reflect the disciplined execution of our long-term strategy. We are also excited to see our new Senior Vice President of Global Operations, Andrew Walko, stepping into his role to lead our global team and having an immediate and encouraging impact,” said President & CEO, Jay D. Miller. “Our growing customer backlog, combined with the successful transfer of key programs to our optimized facilities, is strengthening the foundation for sustained performance improvement. Our Bemidji facility continues to make significant progress serving our customers in the Aerospace and Defense segment. Aerospace and Defense is historically our smallest customer segment, yet it continues to grow at a steady pace becoming an increasingly important part of our customer mix. The continued growth of the backlog will provide a tailwind for the Company into the second half of the year. With the closure of our new debt financing in March, and our strong North American and Asian footprint, we believe we are well-positioned to support customers pursuing nearshore manufacturing strategies. I am grateful for the hard work of our employees across the globe, and we remain optimistic about the opportunities ahead as we continue to execute our strategy in 2026 and beyond,” Miller said. Summary Financial Information The following table provides summary financial information comparing the first quarter 2026 (“Q1 2026”) financial results to the same quarter in 2025 (“Q1 2025”). Conference Call The Company will hold a live conference call and webcast at 3:30 p.m. central time on Thursday, May 14, to discuss the Company’s 2026 first quarter results. The call will be hosted by Jay D. Miller, Chief Executive Officer and President and Andrew D. C. LaFrence, Chief Financial Officer and Senior Vice President of Finance. To access the live audio conference call, US participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 361581. Participants may also access the call via webcast at: https://www.webcaster5.com/Webcast/Page/2814/53855. ### About Nortech Systems Incorporated Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech primarily serves the medical imaging, medical device, aerospace & 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, and interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has six 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. 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 including increased gross margin, our ability to generate positive EBITDA, increased plant utilization and manufacturing efficiency, growth of our backlog, continuing improvement of quality metrics, success in moving production from on facility to another Company owned facility, nearshoring as a strategic advantage, successful execution of our long-term strategy, our enhanced competitiveness in aerospace, defense, and other high-reliability markets, effects of restructuring and consolidating manufacturing facilities, sustained long-term health and growth, and optimism about customer pipeline. 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) commodity cost increases coupled with challenges in raising prices and/or customer pressure to reduce prices; (2) supply chain disruptions leading to shortages of critical components; (3) volatility in market conditions which may affect demand for the Company’s products; (4) increased competition and/or reduced demand; (5) changes in the reliability and efficiency of operating facilities or those of third parties; (6) risks related to the availability of labor; (7) the unanticipated loss of any key member of senior management; (8) geopolitical, economic, financial and business conditions including changing tariff environment; (9) the Company’s ability to steadily improve manufacturing output and product quality; (10) the impact of global health epidemics on our customers, employees, manufacturing facilities, suppliers, the capital markets and our financial condition; (11) challenges with customers with respect to moving production from one facility to another Company-owned facility or (12) financing cost increases and continued availability. 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 the United States and the rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. Reconciliation of Generally Accepted Accounting Principles (“GAAP”) Measures to Non-GAAP Financial Measure EBITDA is a non-GAAP financial measure used by management that we believe provides useful information to investors because it reflects ongoing performance excluding certain non-recurring items during comparable periods and facilitates comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between different organizations as a result of differing capital structures and tax strategies. EBITDA is defined as net income (loss) plus interest expense, 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. Adjusted EBITDA reflects the impact of restructuring and non-recurring items. EBITDA and Adjusted EBITDA are not a measurement of our financial performance under GAAP and should not be considered an alternative to net sales or net income (loss), 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 and Adjusted EBITDA have limitations as an analytical metric, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2026 AND DECEMBER 31, 2025 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA There were no material adjustments to EBITDA in the quarter ended March 31, 2026. Adjustment to EBITDA for the quarter ended March 31, 2025 include ($ in thousands): Contact Andrew D. C. LaFrence Chief Financial Officer and Senior Vice President of Finance [email protected] 952-345-2243

MINNEAPOLIS, March 26, 2026 (GLOBE NEWSWIRE) -- Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial, and aerospace & defense markets, reported financial results for the fourth quarter ended December 31, 2025. 2025 Q4 Highlights: Management Commentary “Nortech delivered another quarter of meaningful operational and financial progress, marking our third consecutive period of positive operating and EBITDA results reflecting the positive execution of our strategic restructuring initiatives. The continued improvements we are seeing in gross margins, manufacturing efficiency, and world-class quality metrics reflect the disciplined execution of our long-term strategy and the dedication of our global team,” said President & CEO, Jay D. Miller. “Our growing customer backlog, combined with the successful transfer of key programs to our optimized facilities, is strengthening the foundation for sustained performance improvement. We are especially proud of the AS9100:D certification achieved at our Monterrey facility - a significant milestone that further enhances our competitiveness in aerospace, and other high-reliability markets. With the closure of our new debt financing last week, and our strong North American and Asian footprint, we believe we are well-positioned to support customers pursuing nearshore manufacturing strategies. I am grateful for the hard work of our employees across the globe, and we remain optimistic about the opportunities ahead as we continue to execute our strategy into 2026,” Miller said. Summary Financial Information The following table provides summary financial information comparing the fourth quarter 2025 (“Q4 2025”) financial results to the same quarter in 2024 (“Q4 2024”) as well as the year ended December 31, 2025 (“2025”) with the year ended December 31, 2024 (“2024”). Conference Call The Company will hold a live conference call and webcast at 7:30 a.m. central time on Friday, March 27, to discuss the Company’s 2025 fourth quarter results. The call will be hosted by Jay D. Miller, Chief Executive Officer and President and Andrew D. C. LaFrence, Chief Financial Officer and Senior Vice President of Finance. To access the live audio conference call, US participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 726639. Participants may also access the call via webcast at: https://www.webcaster5.com/Webcast/Page/2814/53646. ### About Nortech Systems Incorporated Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech primarily serves the medical imaging, medical device, aerospace & 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, and interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has six 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. 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 including increased gross margin, our ability to generate positive EBITDA, increased plant utilization and manufacturing efficiency, growth of our backlog, continuing improvement of quality metrics, success in moving production from on facility to another Company owned facility, nearshoring as a strategic advantage, successful execution of our long-term strategy, our enhanced competitiveness in aerospace, defense, and other high-reliability markets, effects of restructuring and consolidating manufacturing facilities, sustained long-term health and growth, and optimism about customer pipeline. 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) commodity cost increases coupled with challenges in raising prices and/or customer pressure to reduce prices; (2) supply chain disruptions leading to shortages of critical components; (3) volatility in market conditions which may affect demand for the Company’s products; (4) increased competition and/or reduced demand; (5) changes in the reliability and efficiency of operating facilities or those of third parties; (6) risks related to the availability of labor; (7) the unanticipated loss of any key member of senior management; (8) geopolitical, economic, financial and business conditions including changing tariff environment; (9) the Company’s ability to steadily improve manufacturing output and product quality; (10) the impact of global health epidemics on our customers, employees, manufacturing facilities, suppliers, the capital markets and our financial condition; (11) challenges with customers with respect to moving production from one facility to another Company-owned facility or (12) financing cost increases and continued availability. 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 the United States and the rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. Reconciliation of Generally Accepted Accounting Principles (“GAAP”) Measures to Non-GAAP Financial Measure EBITDA is a non-GAAP financial measure used by management that we believe provides useful information to investors because it reflects ongoing performance excluding certain non-recurring items during comparable periods and facilitates comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between different organizations as a result of differing capital structures and tax strategies. EBITDA is defined as net income (loss) plus interest expense, 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. Adjusted EBITDA reflects the impact of restructuring and non-recurring items. EBITDA and Adjusted EBITDA are not a measurement of our financial performance under GAAP and should not be considered an alternative to net sales or net income (loss), 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 and Adjusted EBITDA have limitations as an analytical metric, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2025 AND DECEMBER 31, 2024 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) NORTECH SYSTEMS INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA There were no material adjustments to EBITDA in the quarter ended December 31, 2025. Adjustment to EBITDA for the year ended December 31, 2025 include ($ in thousands): Adjustment to EBITDA in 2024 include ($ in thousands): Contact Andrew D. C. LaFrence Chief Financial Officer and Senior Vice President of Finance [email protected] 952-345-2243