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• Net Sales: $31.4 million for Q3 2024, a 5.9% decrease from $33.4 million in Q3 2023.

• Year-to-Date Net Sales: $99.5 million for the first nine months of 2024, down 3.6% from $103.3 million in the same period of 2023.

• Gross Profit: $3.8 million for Q3 2024, representing 12.2% of net sales, compared to $5.3 million or 15.9% in Q3 2023.

• Year-to-Date Gross Profit: $13.9 million or 14% of net sales for the first nine months of 2024, compared to $16.3 million or 15.8% in the same period of 2023.

• Adjusted EBITDA: $143,000 for Q3 2024, down from $1.6 million in Q3 2023.

• Year-to-Date Adjusted EBITDA: $2.7 million for the first nine months of 2024, compared to $4.8 million in the same period of 2023.

• Cash and Equivalents: $1.2 million as of September 30, 2024, down from $1.7 million as of December 31, 2023.

• Accounts Receivable: $16.6 million as of September 30, 2024, down from $19.3 million as of December 31, 2023.

• Inventories: $22.3 million as of September 30, 2024, up from $21.7 million as of December 31, 2023.

• Restructuring Costs: $267,000 incurred year-to-date 2024 related to the Blue Earth facility closure.

• Expected Annual Savings: At least $1.6 million from facility optimization activities starting in 2025.

• Warning! GuruFocus has detected 3 Warning Signs with NSYS.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Nortech Systems Inc (NASDAQ:NSYS) is making strategic investments in facility consolidations and business development to improve long-term growth and profitability.

• The company is on track to complete the closure of its Blue Earth, Minnesota facility, which is expected to result in at least $1.6 million in annual savings starting in 2025.

• Nortech Systems Inc (NASDAQ:NSYS) has a strong focus on innovation, with advancements like the Expanded Beam Xtreme fiber optic technology and Active Optical Xtreme technology.

• The company has a dedicated engineering services team that enhances manufacturability, serviceability, and cost efficiency for customers.

• Nortech Systems Inc (NASDAQ:NSYS) is seeing strong revenue growth in its aerospace and defense category, which is important for diversification and future growth.

Negative Points

• Nortech Systems Inc (NASDAQ:NSYS) experienced a 5.9% decrease in net sales for the third quarter of 2024 compared to the same period in 2023.

• The company faced headwinds with industrial and medical customers, leading to delayed product launches and reduced inventory investments.

• Gross profit and gross margin percentages decreased due to lower net sales and reduced facility utilization.

• Operating expenses for the third quarter and first nine months of 2024 were lower, but this was offset by increased payroll-related costs.

• Adjusted EBITDA for the quarter ended September 30, 2024, was significantly lower than the same period in 2023, reflecting lower net sales and related gross profit.