MINNEAPOLIS – Nortech Systems reported fourth quarter revenue of $23.8 million, down 22.7% year-over-year.

Net loss for the quarter ended Dec. 31 was $3.5 million, compared with net income of $300,000 in the fourth quarter of 2019.

Operating loss was $3.8 million, which includes a $2.4 million non-cash charge due to the impairment of goodwill remaining from the acquisition of the Devicix business in 2015. During the fourth quarter, all aspects of Devicix engineering services were fully integrated into Nortech Systems. Excluding this one-time charge, adjusted operating loss for the fourth quarter was $1.4 million, compared with operating income of $800,000 in the fourth quarter of 2019.

Adjusted EBITDA was a loss of $900,000, compared to EBITDA of $1.4 million in 2019. The EBITDA decline was primarily due to reduced revenue related Covid-19.

Nortech’s backlog at the end of the fourth quarter was $48.7 million and is rebounding in the first quarter of 2021.

In the fourth quarter, Nortech’s Merrifield production facility consolidation was completed. The company shifted nearly all of its PCB manufacturing to its Mankato, Minnesota, production facility, and much of its complex wire and cable assembly production to its Bemidji, Minnesota, production facility that recently achieved AS9100D certification.

“This consolidation reflects Nortech’s strategy of focusing our investments on talent, equipment, and infrastructure in fewer core center of excellence locations to improve foundational capabilities that matter most to our customers: high quality, reliable on-time delivery, innovative solutions, and exceptional value,” said CEO and president Jay D. Miller. “I am also excited about recent additions to our leadership team, as we welcome Lianne King as our VP of human resources, Christine LaPoint as our senior director of quality and regulatory, and John Koski as the plant manager at our medical device center of excellence in Milaca, Minnesota. Lianne, Christine, and John all bring a wealth of experience to our leadership team. I’m thrilled to have them on board, and I am energized about the operational improvements they will implement in 2021 in conjunction with our entire global team."

2020 net sales were $104.1 million, a decline of 10.5% year-over-year. The decline was primarily due to reduced demand from medical and industrial customers impacted by Covid-19.

Net loss for the year ended Dec. 31 was $1.5 million, compared to a net loss of $1.2 million in 2019. Adjusted EBITDA was $100,000 million, compared to $2.4 million in the prior year.

"The fourth quarter of 2020 was a significant challenge for Nortech due to the effects of Covid-19, related supply-chain challenges, and slower customer order volume. Our team battled through adversity, preserved our workforce with the help of a PPP loan, and continued supplying mission-critical parts to our medical, industrial, and defense customers. Our monthly bookings trend improved late in the fourth quarter of 2020, and we are seeing those positive trends continue into the first quarter of 2021. The team has done a great job positioning the company to return to profitable growth in 2021.”

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