MINNEAPOLIS -- Nortech Systems today reported net sales of $29.6 million for the third quarter ended Sept. 30, up from $28.3 million in 2017.

The figure includes $1.9 million of revenue recognized under new FASB accounting guidelines adopted this fiscal year.

On a pro forma basis to adjust for this accounting change, sales were $27.7 million in 2018.

Operating income for the quarter was $649,000, compared with $284,000 in 2017. Net income was $364,000, up from $43,000 last year. At quarter's end, backlogs were $27.7 million, up double digits both sequentially and year-over-year.

“We’re encouraged by our quarterly performance and continued profit improvement,” said Rich Wasielewski, Nortech Systems’ president and CEO. “Our customers remain optimistic and confident, influenced by a strong economy, an increase in defense spending and higher medtech investing.”

For the nine months ended Sept. 30, Nortech’s net sales were $84.5 million, which includes $4.2 million of revenue recognized under the new FASB guidelines. For the comparable period in 2017, net sales were $86.8 million. Operating income of $1.3 million, up from $500,000. Net income jumped to $362,000, from $13,000 a year ago.

 In a press release, the EMS company said it continues to face challenges related to electronic component shortages, which are expected to continue into next year. The company estimates these shortages had a impact of approximately -5% in the third quarter, with profitability also affected by related inefficiencies in production and increased inventory levels. Nortech is working with its customers and supply chain partners to reduce the impact.

Two facility-related developments expected to provide long-term benefits are scheduled to conclude by year-end: the move of Nortech’s Monterrey, Mexico, operations into a larger, more efficient facility and the relocation of the Devicix by Nortech medical device product development group to an expanded corporate headquarters building in Maple Grove, MN.

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