Nortech Systems Reports 12.7% Sales Increase and Improved Profitability in Q1 2026

Nortech Systems Incorporated reported a net sales increase of 12.7% for the first quarter of 2026, reaching $30.3 million compared to $26.9 million in the same period of 2025. The company achieved a gross profit of $4.7 million, a significant rise from $3.1 million year-over-year, resulting in a gross margin percentage of 15.5%, up from 11.4%. Operating income improved to $47, contrasting with an operating loss of $1.6 million in the prior year. The net loss for the quarter was $34, a notable reduction from a loss of $1.3 million in the previous year, leading to a basic net loss per share of $0.01.

The increase in revenue was driven by strong performance in the Aerospace and Defense sector, which saw a 41.2% increase in sales, attributed to customer approvals for products transferred from the now-closed Blue Earth facility to the Bemidji facility. Medical Imaging also contributed significantly, with a 15% increase in sales. In contrast, sales in the Industrial sector remained relatively flat, while Medical Device sales increased by 10.4%. The company’s total order backlog as of March 31, 2026, was $90.8 million, reflecting a 32.9% increase from the previous year, driven primarily by Aerospace and Defense orders.

Operationally, Nortech Systems reported a slight increase in total current assets to $60.7 million, up from $56.2 million at the end of 2025. Cash and restricted cash rose to $2.2 million, compared to $1.7 million at the end of the previous year. The company’s employee headcount remained stable, with no significant changes reported. The company also noted a decrease in restructuring charges, which were $0 in the first quarter of 2026, down from $266, indicating a stabilization in operational costs following previous restructuring efforts.

In terms of strategic developments, Nortech entered into a new Credit and Security Agreement with Associated Bank, providing a revolving credit facility of up to $15 million and a $2.2 million term loan. This facility is expected to support the company’s working capital needs and operational expenditures. The company is also evaluating the potential impact of recent tariff legislation on its material costs and sourcing decisions, following a temporary 10% global tariff imposed on most imported products.

Looking ahead, Nortech Systems anticipates continued growth in its key markets, particularly in Aerospace and Defense and Medical Imaging, as it focuses on expanding its customer base and enhancing operational efficiencies. The company remains committed to its strategic investments aimed at capitalizing on growth opportunities in the medical markets while improving profitability across its industrial and defense sectors.