Nortech Systems Reports Decline in Q2 2025 Financial Performance

Nortech Systems Incorporated reported a decline in financial performance for the second quarter of 2025, with net sales of $30.7 million, down 9.5% from $33.9 million in the same period last year. For the first half of 2025, the company recorded net sales of $57.6 million, a decrease of 15.5% compared to $68.1 million in the first half of 2024. The decline in revenue was attributed to delays in customer approvals in the Aerospace and Defense sector and inefficiencies related to the consolidation of production facilities. Despite the drop in sales, the company achieved a gross profit of $4.8 million for the quarter, resulting in a gross margin of 15.8%, an increase from 13.6% in the prior year.

Operating expenses for the second quarter were $4.1 million, slightly lower than the $4.3 million reported in the same quarter of 2024. The company reported an operating income of $742,000 for the quarter, a significant improvement from an operating loss of $871,000 in the first half of 2025. However, the company experienced a net loss of $1 million for the six months ended June 30, 2025, compared to a net income of $922,000 in the same period last year. The net income for the second quarter was $313,000, up from $157,000 in the prior year.

Nortech's operational developments included the completion of the sale of its Blue Earth facility for $500,000 in July 2025, which was classified as held for sale in the financial statements. The company has also been focusing on restructuring efforts, incurring $266,000 in restructuring charges during the first half of 2025, primarily related to staff reductions and the closure of the Blue Earth facility. The company’s total order backlog as of June 30, 2025, was $78.4 million, reflecting a 14.7% increase from the previous quarter, driven by large medical device orders.

In terms of geographic performance, Nortech's sales in the United States decreased to $18 million from $22.5 million year-over-year, while sales in Mexico and China showed slight increases. The company reported a total employee headcount of 485 as of June 30, 2025, reflecting ongoing adjustments to align staffing with operational needs. Looking ahead, Nortech anticipates resolving current operational inefficiencies and improving manufacturing efficiencies, which are expected to positively impact financial performance in the latter half of 2025. The company believes it has sufficient liquidity to meet its operational needs for the next twelve months, supported by its existing financing arrangements.