MINNEAPOLIS – Nortech Systems reported second quarter net sales of $30.2 million, up 14% year-over-year and 36.7% sequentially. The revenue improvement was primarily due to higher production volume resulting from actions to scale the direct labor workforce and strengthen the supply chain for parts.

Net income was $179,000, compared to net loss of $123,000 million in the same quarter of 2020. Adjusted EBITDA was $973,000 million, up 58.7% year-over-year.

Adjusted EBITDA excludes one-time restructuring expenses related to relocating manufacturing operations from Merrifield, MN, to Mankato, MN. The company incurred $77,000 in restructuring expenses in the second quarter and $296,000 year-to-date.

“Nortech rebounded significantly in the second quarter of 2021,” said Jay D. Miller, CEO and president. “We have been taking aggressive action to overcome Covid-related obstacles. We’re continuing to address supply chain bottlenecks to find creative ways to build and ship mission-critical parts to our medical, military, and industrial customers. We have a large $72 million customer backlog, and we’re 100% focused on operations execution to increase production output throughout the remainder of 2021 and into 2022.”

In May, Nortech announced it planned to apply for the Employee Retention Credit to support ongoing investment in Nortech’s frontline workforce to drive increased manufacturing output. If this action is successful, the company estimates the ERC will total approximately $5 million in fiscal 2021. As of July, the company has filed for half of the ERC and expects to file for the second half in the third quarter.

"The PPP and ERC programs were key factors in helping us retain our workforce during the Covid-19 downturn. As demand recovered in early 2021, we were better prepared to return the company to profitability in the second quarter 2021.”

For the first six months of 2021, net sales were $52.3 million, down 3% year-over-year. Net loss was $1.4 million, compared to net income of $14,000 in the same period last year.

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