Financial Data and Key Metrics Changes - Net sales for Q2 2025 totaled $30.7 million, representing a 9.5% decrease from $33.9 million in Q2 2024, impacted by delays in aerospace and defense customer approvals and manufacturing inefficiencies [12][17] - Gross profit for Q2 2025 was $4.8 million, or 15.8% of net sales, compared to $4.6 million, or 13.6% of net sales in the same prior year quarter, due to increased facility utilization and manufacturing productivity [12][13] - Adjusted EBITDA for Q2 2025 was $1.1 million, up from $900,000 in Q2 2024, indicating improved operational performance despite lower sales [14][17] Business Line Data and Key Metrics Changes - The aerospace and defense segment faced challenges due to the closure of the Blue Earth facility and the transfer of programs to Bemidji, but significant progress has been made in customer approvals [5][12] - Customer backlog increased by approximately $10 million from March 31, 2025, to $78.4 million by the end of Q2 2025, indicating potential future revenue growth [12][17] Market Data and Key Metrics Changes - The company is well-positioned in North America and China, with operations under the USMCA framework and a near-shoring approach to reduce shipping costs and time [7][8] - The company is monitoring tariff impacts closely, particularly regarding piece parts imported from China, and is adjusting pricing and sourcing strategies accordingly [8][9] Company Strategy and Development Direction - The company is focused on strengthening its balance sheet and reducing inventory investments while driving efficiencies in manufacturing processes [18] - There is a strong emphasis on engineering expertise, product innovation, and sustainability, with advancements in fiber optic technology being a key area of growth [19][20][24] - The shift from copper to fiber optics aligns with industry trends towards more efficient and reliable solutions, particularly in aerospace and defense markets [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future revenues, citing improved customer backlog and stabilization of supply chains [17][26] - The company is adapting to changing customer needs and geopolitical uncertainties, focusing on building deeper partnerships and tailored delivery strategies [8][9][27] Other Important Information - The company completed the sale of the Blue Earth facility in July 2025, which is expected to further reduce ongoing operating expenses [13] - Cash totaled $652,000 as of June 30, 2025, down from $916,000 at the end of 2024, reflecting timing of cash receipts and expenditures [15][16] Q&A Session Summary Question: Are there any questions from the audience? - No questions were received during the Q&A session, and the call was concluded with a note of thanks for participation [29][31]

Exhibit 99.1 Nortech Systems Reports Second Quarter Results MINNEAPOLIS – August 7, 2025 – Nortech Systems Incorporated (Nasdaq: NSYS) ("Nortech" or the "Company"), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial and aerospace & defense markets, reported financial results for the second quarter ended June 30, 2025. 2025 Q2 Highlights: Summary Financial Information The following tab ...

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) This section provides the basic identification details for the quarterly report, including the registrant's name, filing period, stock symbol, and filer status [General Information](index=1&type=section&id=General%20Information) This section details the registrant's identification, filing type, period, stock information, and filer status for the quarterly report - Registrant: **NORTECH SYSTEMS INCORPORATED**[1](index=1&type=chunk) - Filing Type: **Quarterly Report on Form 10-Q**[1](index=1&type=chunk) - Period Ended: **June 30, 2025**[1](index=1&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :----------------------------------------| | Common Stock, par value $.01 per share | NSYS | NASDAQ Capital Market | - Filer Status: **Non-accelerated Filer and Smaller Reporting Company**[3](index=3&type=chunk) - Common Stock Outstanding as of July 31, 2025: **2,786,134 shares**[3](index=3&type=chunk) [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) This section outlines the organizational structure of the Form 10-Q, detailing the main parts and items, along with their corresponding page numbers, to facilitate navigation through the financial and other information [Report Structure](index=3&type=section&id=Report%20Structure) This section details the Form 10-Q's two main parts, financial and other information, and their respective items for navigation - The report is divided into two main parts: **PART I – FINANCIAL INFORMATION** and **PART II – OTHER INFORMATION**[4](index=4&type=chunk) - PART I includes Financial Statements, Management's Discussion and Analysis, Quantitative and Qualitative Disclosures About Market Risk, and Controls and Procedures[4](index=4&type=chunk) - PART II covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, Defaults on Senior Securities, Mine Safety Disclosures, Other Information, and Exhibits[4](index=4&type=chunk) [PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and controls and procedures [Item 1 - Financial Statements](index=4&type=section&id=Item%201%20-%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including the statements of operations, balance sheets, cash flows, and shareholders' equity, along with comprehensive notes providing detailed explanations and disclosures [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) show a significant increase in net income for the three months ended June 30, 2025, compared to the prior year, while the six-month period reflects a net loss, primarily due to decreased net sales and higher operating expenses Net Sales and Profitability (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $30,675 | $33,891 | $57,570 | $68,106 | | Gross profit | $4,837 | $4,617 | $7,915 | $10,065 | | Income (loss) from operations | $742 | $344 | $(871) | $1,499 | | Net income (loss) | $313 | $157 | $(1,003) | $922 | | Basic EPS | $0.12 | $0.06 | $(0.36) | $0.34 | | Diluted EPS | $0.12 | $0.05 | $(0.36) | $0.32 | | Comprehensive income (loss), net of tax | $437 | $(18) | $(873) | $564 | - Net sales decreased by **9.5%** for the three months and **15.5%** for the six months ended June 30, 2025, compared to the prior year[6](index=6&type=chunk) - Net income for the three months ended June 30, 2025, more than doubled to **$313 thousand** from **$157 thousand** in the prior year, while the six-month period shifted from a net income of **$922 thousand** to a net loss of **$(1,003) thousand**[6](index=6&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets show an increase in total assets and total liabilities as of June 30, 2025, compared to December 31, 2024, while total shareholders' equity experienced a slight decrease Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total assets | $74,825 | $72,435 | | Total liabilities | $41,437 | $38,430 | | Total shareholders' equity | $33,388 | $34,005 | | Cash | $652 | $916 | | Accounts receivable, net | $17,810 | $14,875 | | Inventories, net | $18,628 | $21,638 | | Long-term line of credit | $11,615 | $8,634 | - Total assets increased by **$2,390 thousand**, driven by higher accounts receivable and contract assets, partially offset by a decrease in inventories[9](index=9&type=chunk) - Total liabilities increased by **$3,007 thousand**, primarily due to an increase in the long-term line of credit[9](index=9&type=chunk) - Total shareholders' equity decreased by **$617 thousand**, mainly due to the net loss for the six months ended June 30, 2025[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows indicate increased cash usage in operating activities and decreased cash usage in investing activities for the six months ended June 30, 2025, compared to the prior year, with financing activities providing more cash Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,773) | $(1,458) | | Net cash used in investing activities | $(358) | $(1,011) | | Net cash provided by financing activities | $2,858 | $2,343 | | Net change in cash | $(264) | $(133) | - Cash used in operating activities increased by **$1,315 thousand**, primarily due to changes in accounts receivable and contract assets, partially offset by cash provided by inventory[11](index=11&type=chunk) - Cash used in investing activities decreased by **$653 thousand**, mainly due to lower purchases of property and equipment[11](index=11&type=chunk) - Cash provided by financing activities increased by **$515 thousand**, driven by higher net proceeds from the line of credit[11](index=11&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) The Condensed Consolidated Statements of Shareholders' Equity show a decrease in total shareholders' equity for the six months ended June 30, 2025, primarily due to a net loss, partially offset by foreign currency translation adjustments and stock-based compensation Shareholders' Equity Changes (in thousands) | Metric | Balance as of Dec 31, 2024 | Net Loss (6M 2025) | Foreign Currency Translation (6M 2025) | Stock Option Exercises (6M 2025) | Stock-Based Awards (6M 2025) | Balance as of June 30, 2025 | | :-------------------------------- | :------------------------- | :------------------- | :------------------------------------- | :------------------------------- | :----------------------------- | :-------------------------- | | Preferred Stock | $250 | - | - | - | - | $250 | | Common Stock | $28 | - | - | - | - | $28 | | Additional Paid-In Capital | $17,329 | - | - | $21 | $235 | $17,585 | | Accumulated Other Comprehensive Loss | $(977) | - | $130 | - | - | $(847) | | Retained Earnings | $17,375 | $(1,003) | - | - | - | $16,372 | | Total Shareholders' Equity | $34,005 | $(1,003) | $130 | $21 | $235 | $33,388 | - Total shareholders' equity decreased from **$34,005 thousand** at December 31, 2024, to **$33,388 thousand** at June 30, 2025[15](index=15&type=chunk) - The net loss of **$(1,003) thousand** for the six months ended June 30, 2025, was the primary driver of the decrease in retained earnings[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The Notes to Condensed Consolidated Financial Statements provide essential context and detailed breakdowns for the financial figures, covering accounting policies, credit risk, sales, financing, leases, stock awards, income taxes, segment information, restructuring, related party transactions, and subsequent events [NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%201.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation, principles of consolidation, use of estimates, and recently issued accounting standards, emphasizing compliance with U.S. GAAP and the evaluation of new ASUs and tax legislation - Financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and **SEC rules**[17](index=17&type=chunk) - The Company adopted **ASU 2023-07 (Segment Reporting)** in Q4 2024 and is evaluating **ASU 2023-09 (Income Taxes)** and **ASU 2024-03 (Expense Disaggregation Disclosures)** for future impact[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted in July 2025, makes permanent key elements of the Tax Cuts and Jobs Act of 2017, and the Company is evaluating its potential effects[23](index=23&type=chunk) Inventories, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $18,570 | $21,122 | | Work in process | $802 | $892 | | Finished goods | $1,053 | $1,070 | | Reserves | $(1,797) | $(1,446) | | **Inventories, net** | **$18,628** | **$21,638** | - The Blue Earth manufacturing facility and related land were classified as **held for sale** as of June 30, 2025, and the sale was completed in July 2025 for **$500 thousand**[28](index=28&type=chunk) [NOTE 2. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS](index=10&type=section&id=NOTE%202.%20CONCENTRATION%20OF%20CREDIT%20RISK%20AND%20MAJOR%20CUSTOMERS) This note highlights the company's exposure to credit risk, particularly concerning cash balances held in foreign banks and significant customer concentrations in net sales, accounts receivable, and contract assets - As of June 30, 2025, **$573 thousand** of the **$652 thousand** cash balance was held at banks in China and **$5 thousand** in Mexico[30](index=30&type=chunk) Major Customers' Contribution to Net Sales | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Customer A | 31% | 26% | 31% | 25% | | Customer B | 10% | -% | 10% | -% | | **Total** | **41%** | **26%** | **41%** | **25%** | Major Customers' Contribution to Accounts Receivable and Contract Assets | Category | Customer | June 30, 2025 | December 31, 2024 | | :--------------- | :--------- | :-------------- | :---------------- | | Accounts Receivable | Customer A | 22% | 23% | | | Customer C | 10% | 13% | | | **Total** | **32%** | **36%** | | Contract Assets | Customer A | 30% | 33% | | | Customer D | 16% | 12% | | | **Total** | **46%** | **45%** | [NOTE 3. NET SALES](index=12&type=section&id=NOTE%203.%20NET%20SALES) This note details the company's revenue recognition, with contract manufacturing agreements recognized over time accounting for a significant portion of net sales, and provides a breakdown of net sales by market segment - Revenue recognized over time from contract manufacturing agreements accounted for **75%** of net sales for both the three and six months ended June 30, 2025[34](index=34&type=chunk) Net Sales by Market (in thousands) | Market | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Medical Device | $7,550 | $9,689 | $15,620 | $19,893 | | Medical Imaging | $9,664 | $8,182 | $18,252 | $17,083 | | Industrial | $8,516 | $9,385 | $15,461 | $18,977 | | Aerospace and Defense | $4,945 | $6,635 | $8,237 | $12,153 | | **Total net sales** | **$30,675** | **$33,891** | **$57,570** | **$68,106** | - Contract assets, representing unbilled amounts for revenue recognized over time, increased from **$13,792 thousand** at December 31, 2024, to **$14,984 thousand** at June 30, 2025[39](index=39&type=chunk) [NOTE 4. FINANCING ARRANGEMENTS](index=14&type=section&id=NOTE%204.%20FINANCING%20ARRANGEMENTS) This note details the company's $15,000 thousand Senior Secured Revolving Line of Credit, including multiple amendments made in 2025 to waive covenant non-compliance, adjust compliance thresholds, modify EBITDA requirements, and extend the expiration date - The Company has a **$15,000 thousand Senior Secured Revolving Line of Credit** with Bank of America, expiring on **August 31, 2026**, following the Third Amendment[40](index=40&type=chunk)[43](index=43&type=chunk) - The Revolver requires maintaining a leverage ratio of no more than **2.5 times** and a minimum fixed charges coverage ratio of at least **1.25 times**, with compliance deferred until Q4 2025[41](index=41&type=chunk)[42](index=42&type=chunk) - Minimum adjusted EBITDA requirements are set at **$1,000 thousand** for Q2 2025, **$1,300 thousand** for Q3 2025, and **$1,600 thousand** for Q4 2025 and thereafter[42](index=42&type=chunk) - The borrowing rate increased by **100 basis points** with the First Amendment and an additional **25 basis points** with the Second Amendment[41](index=41&type=chunk)[42](index=42&type=chunk) Revolver Borrowings and Availability (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Outstanding borrowings | $11,615 | $8,695 | | Weighted-average interest rate | 7.8% | 7.7% | | Unused availability | $3,385 | N/A | [NOTE 5. LEASES](index=16&type=section&id=NOTE%205.%20LEASES) This note provides a breakdown of lease expenses, assets, and liabilities for both operating and finance leases, along with future payment obligations and weighted-average lease terms and discount rates Total Lease Cost (in thousands) | Lease Cost Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $564 | $581 | $1,129 | $1,177 | | Finance lease interest cost | $9 | $6 | $15 | $12 | | Finance lease amortization expense | $33 | $129 | $85 | $129 | | **Total lease cost** | **$606** | **$716** | **$1,229** | **$1,318** | Leased Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Finance lease assets | $878 | $411 | | Operating lease assets | $7,563 | $8,139 | | **Total leased assets** | **$8,441** | **$8,550** | | Current operating lease liabilities | $1,237 | $1,175 | | Current finance lease liabilities | $229 | $143 | | Long-term operating lease obligations | $7,145 | $7,773 | | Long-term finance lease obligations | $781 | $311 | | **Total lease liabilities** | **$9,392** | **$9,402** | Future Annual Lease Payments (in thousands) | Year | Operating Leases | Finance Leases | Total | | :---------------- | :--------------- | :------------- | :------ | | Remainder of 2025 | $925 | $144 | $1,069 | | 2026 | $1,864 | $320 | $2,184 | | 2027 | $1,571 | $212 | $1,783 | | 2028 | $1,569 | $212 | $1,781 | | 2029 | $986 | $197 | $1,183 | | Thereafter | $4,669 | $67 | $4,736 | | **Total lease payments** | **$11,584** | **$1,152** | **$12,736** | | Less: imputed interest | $(3,202) | $(142) | $(3,344) | | **Present value of lease liabilities** | **$8,382** | **$1,010** | **$9,392** | [NOTE 6. STOCK BASED AWARDS](index=18&type=section&id=NOTE%206.%20STOCK%20BASED%20AWARDS) This note details the stock-based compensation expense, stock option activity, and restricted stock unit (RSU) activity, including grants, exercises, forfeitures, and unrecognized compensation Stock-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Three months ended June 30 | $117 | $126 | | Six months ended June 30 | $235 | $206 | - **43,382 service-based stock options** were granted during the six months ended June 30, 2025, with a weighted average grant date fair value of **$5.21**[51](index=51&type=chunk) - As of June 30, 2025, there was **$764 thousand** of unrecognized compensation related to stock options, to be recognized over **2.66 years**[51](index=51&type=chunk) - **43,664 RSUs** were granted during the six months ended June 30, 2025, at an average grant price of **$8.73**[53](index=53&type=chunk) - As of June 30, 2025, total unrecognized compensation expense related to RSUs was **$356 thousand**, vesting over **1.8 years**[53](index=53&type=chunk) [NOTE 7. NET INCOME (LOSS) PER SHARE DATA](index=20&type=section&id=NOTE%207.%20NET%20INCOME%20(LOSS)%20PER%20SHARE%20DATA) This note details the calculation of basic and diluted net income (loss) per common share, including the weighted-average number of shares outstanding and the impact of potential common stock equivalents Weighted Average Shares Outstanding | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average shares outstanding | 2,773,598 | 2,760,052 | 2,767,263 | 2,751,330 | | Diluted weighted average shares outstanding | 2,954,765 | 2,935,671 | 2,767,263 | 2,922,113 | - For the six months ended June 30, 2025, **504,194 restricted stock units and stock options** were excluded from diluted EPS computation as their inclusion would be anti-dilutive due to the net loss[56](index=56&type=chunk) [NOTE 8. INCOME TAXES](index=20&type=section&id=NOTE%208.%20INCOME%20TAXES) This note discusses the company's effective tax rates for the three and six months ended June 30, 2025 and 2024, highlighting changes in pretax income (loss) and foreign entity taxes as primary drivers Effective Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Three months ended | 35% | 12% | | Six months ended | 25% | 21% | - The primary drivers of the increase in effective tax rate were changes in pretax (loss) income and taxes on foreign entities[59](index=59&type=chunk) [NOTE 9. SEGMENT INFORMATION](index=21&type=section&id=NOTE%209.%20SEGMENT%20INFORMATION) This note clarifies that the company operates as a single operating and reporting segment, Contract Manufacturing, within the EMS industry, and provides a geographical breakdown of net sales and long-lived tangible assets - The Company operates as a **single operating and reporting segment: Contract Manufacturing** within the EMS industry[60](index=60&type=chunk) - Over **50% of net sales** come from medical-related markets (Medical Device and Medical Imaging)[60](index=60&type=chunk) Net Sales by Geography (in thousands) | Location | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $18,005 | $22,480 | $34,315 | $46,009 | | Mexico | $7,895 | $7,571 | $14,475 | $14,357 | | China | $4,775 | $3,840 | $8,780 | $7,740 | | **Total net sales** | **$30,675** | **$33,891** | **$57,570** | **$68,106** | Long-Lived Tangible Assets by Geography (in thousands) | Location | June 30, 2025 | December 31, 2024 | | :------------- | :-------------- | :---------------- | | United States | $9,326 | $10,429 | | Mexico | $2,195 | $2,445 | | China | $1,485 | $1,497 | | **Total** | **$13,006** | **$14,371** | [NOTE 10. RESTRUCTURING CHARGES](index=21&type=section&id=NOTE%2010.%20RESTRUCTURING%20CHARGES) This note details the restructuring charges incurred during the six months ended June 30, 2025, related to the closure and consolidation of the Blue Earth, Minnesota facility and additional staff reductions - The Company incurred **$266 thousand** in restructuring charges during the six months ended June 30, 2025, related to the Blue Earth facility and staff reductions[62](index=62&type=chunk) - No restructuring charges were recorded in the three months ended June 30, 2025[62](index=62&type=chunk) Restructuring Activity (Six Months Ended June 30, 2025, in thousands) | Category | Facility Consolidation | Workforce Reductions | Total | | :-------------------- | :--------------------- | :------------------- | :------ | | December 31, 2024 | $154 | - | $154 | | Charges | $31 | $235 | $266 | | Cash payments | $(185) | $(235) | $(420) | | **June 30, 2025** | **-** | **-** | **-** | [NOTE 11. RELATED PARTY TRANSACTIONS](index=22&type=section&id=NOTE%2011.%20RELATED%20PARTY%20TRANSACTIONS) This note describes transactions with related parties, including the write-off of receivables from Abilitech Medical and a grant collaboration with Marpe Technologies, where the Company will receive exclusive manufacturing rights - Accounts receivable related to Abilitech Medical, Inc (minority-owned by the Chairman) were written off in **2024** as Abilitech ceased operations[65](index=65&type=chunk) - The Company collaborated with Marpe Technologies (minority-owned by the Chairman) to secure a **$1,000 thousand BIRD Foundation grant**, with each party receiving **$500 thousand** and contributing a matching **$500 thousand**[66](index=66&type=chunk) - The Company's contribution to Marpe Technologies was through services at cost or no cost, in exchange for a **10-year exclusive right** to manufacture Marpe's products[66](index=66&type=chunk) [NOTE 12. SUBSEQUENT EVENTS](index=22&type=section&id=NOTE%2012.%20SUBSEQUENT%20EVENTS) This note reports two significant events that occurred after the reporting period: the sale of the Blue Earth facility and the Third Amendment to the Revolver line of credit agreement - On **July 24, 2025**, the Blue Earth facility was sold for **$500 thousand**[67](index=67&type=chunk) - On **July 29, 2025**, the Revolver line of credit agreement was amended (Third Amendment) to extend its expiration to **August 31, 2026**[67](index=67&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, including detailed analysis of sales, expenses, cash flows, and liquidity, along with forward-looking statements and associated risks [Overview](index=23&type=section&id=Overview) The company operates as a full-service global EMS contract manufacturer in Medical Device, Medical Imaging, Aerospace and Defense, and Industrial markets, focusing on complex electromedical and electromechanical products, with strategic investments aimed at growth and efficiency - Nortech Systems is a **Minnesota-based global EMS contract manufacturer** specializing in complex electromedical and electromechanical products[68](index=68&type=chunk) - Key markets include **Medical Device, Medical Imaging, Aerospace and Defense, and Industrial**[68](index=68&type=chunk) - Strategic focus areas include expanding and diversifying the customer base, lean manufacturing, quality improvements, and capitalizing on growth opportunities in medical markets[69](index=69&type=chunk)[70](index=70&type=chunk) [Restructuring Activities](index=23&type=section&id=Restructuring%20Activities) The company initiated a restructuring plan in fiscal year 2024, involving the closure of its Blue Earth, MN facility and staff reductions, incurring total charges of $837 thousand, with $266 thousand recorded in the first six months of 2025 - Restructuring plan initiated in **fiscal year 2024** related to the closure of the Blue Earth, MN facility[72](index=72&type=chunk) - Total restructuring charges amounted to **$837 thousand**, with **$266 thousand** incurred in the six months ended June 30, 2025[72](index=72&type=chunk) - No restructuring charges were recorded in the three months ended June 30, 2025[72](index=72&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) The company experienced a decline in net sales for both the three and six-month periods ended June 30, 2025, primarily due to customer approval delays, manufacturing inefficiencies, and inventory re-balancing, impacting overall profitability despite some gross margin improvements [Net Sales](index=23&type=section&id=Net%20Sales) Net sales decreased by 9.5% for the three months and 15.5% for the six months ended June 30, 2025, primarily due to delays in Aerospace and Defense customer approvals, manufacturing inefficiencies from plant consolidation, and inventory re-balancing in Medical Device Net Sales by Market (in thousands) | Market | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Medical Device | $7,550 | $9,689 | $(2,139) | (22.1)% | | Medical Imaging | $9,664 | $8,182 | $1,482 | 18.1% | | Industrial | $8,516 | $9,385 | $(869) | (9.3)% | | Aerospace and Defense | $4,945 | $6,635 | $(1,690) | (25.5)% | | **Total net sales** | **$30,675** | **$33,891** | **$(3,216) | (9.5)%** | Net Sales by Market (Six Months Ended June 30, in thousands) | Market | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Medical Device | $15,620 | $19,893 | $(4,273) | (21.5)% | | Medical Imaging | $18,252 | $17,083 | $1,169 | 6.8% | | Industrial | $15,461 | $18,977 | $(3,516) | (18.5)% | | Aerospace and Defense | $8,237 | $12,153 | $(3,916) | (32.2)% | | **Total net sales** | **$57,570** | **$68,106** | **$(10,536) | (15.5)%** | - Medical Device sales decreased due to **inventory re-balancing** and lower productivity from facility consolidation[78](index=78&type=chunk) - Medical Imaging sales increased due to **higher sales to existing customers**[78](index=78&type=chunk) - Aerospace and Defense sales decreased significantly due to **delays in customer approvals** following business consolidation into the Bemidji facility[78](index=78&type=chunk) [Backlog](index=24&type=section&id=Backlog) The 90-day shipment backlog slightly decreased, while the total order backlog increased by 14.7% from the beginning of the quarter and 6.9% year-over-year, primarily driven by large medical device orders - 90-day shipment backlog as of June 30, 2025, was **$26,592 thousand**, a **0.6% decrease** from the beginning of the quarter and an **11.6% decrease** from June 30, 2024[75](index=75&type=chunk) - Total order backlog as of June 30, 2025, was **$78,351 thousand**, a **14.7% increase** from the beginning of the quarter and a **6.9% increase** year-over-year, driven by large medical device orders[76](index=76&type=chunk) Backlog by Market (in thousands) | Market | 90 Day Backlog (June 30, 2025) | Total Backlog (June 30, 2025) | 90 Day Backlog (June 30, 2024) | Total Backlog (June 30, 2024) | | :-------------------- | :----------------------------- | :---------------------------- | :----------------------------- | :---------------------------- | | Medical Device | $7,897 | $32,222 | $8,130 | $23,497 | | Medical Imaging | $5,101 | $7,584 | $7,776 | $10,953 | | Industrial | $6,010 | $9,349 | $6,398 | $11,423 | | Aerospace and Defense | $7,584 | $29,196 | $7,791 | $27,423 | | **Total backlog** | **$26,592** | **$78,351** | **$30,095** | **$73,296** | [Operating Costs and Expenses](index=25&type=section&id=Operating%20Costs%20and%20Expenses) Operating costs and expenses showed mixed trends, with gross margin improving quarterly but declining year-to-date, selling expenses increasing due to realignment, and general and administrative expenses decreasing due to lower incentive compensation [Gross profit and gross margins](index=25&type=section&id=Gross%20profit%20and%20gross%20margins) Gross profit as a percentage of net sales increased for the three months ended June 30, 2025, due to improved plant utilization and favorable sales mix, but decreased for the six-month period due to lower net sales and reduced manufacturing efficiencies Gross Profit and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $4,837 | $4,617 | $7,915 | $10,065 | | Gross margin percentage | 15.8% | 13.6% | 13.7% | 14.8% | - Quarterly gross margin increased by **220 basis points**, while year-to-date gross margin decreased by **110 basis points**[80](index=80&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) [Selling expenses](index=26&type=section&id=Selling%20expenses) Selling expenses, as a percentage of net sales, increased for both the three and six-month periods ended June 30, 2025, primarily due to the realignment of customer-facing managers from operations to business development and the impact of fixed costs on a lower revenue base Selling Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling expenses | $1,204 | $909 | $2,388 | $1,714 | | % of Net sales | 3.9% | 2.7% | 4.1% | 2.5% | - Selling expenses increased by **$295 thousand (32.5%)** quarterly and **$674 thousand (39.3%)** year-to-date[80](index=80&type=chunk)[82](index=82&type=chunk) [General and administrative expenses](index=26&type=section&id=General%20and%20administrative%20expenses) General and administrative expenses decreased for both the three and six-month periods ended June 30, 2025, primarily due to lower incentive compensation accruals General and Administrative Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $2,589 | $2,982 | $5,504 | $6,152 | | % of Net sales | 8.4% | 8.8% | 9.6% | 9.0% | - General and administrative expenses decreased by **$393 thousand (13.2%)** quarterly and **$648 thousand (10.5%)** year-to-date[80](index=80&type=chunk)[82](index=82&type=chunk) [Research and development](index=25&type=section&id=Research%20and%20development) Research and development expenses remained relatively stable for both the three and six-month periods ended June 30, 2025 Research and Development Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $302 | $291 | $628 | $609 | | % of Net sales | 1.0% | 0.9% | 1.1% | 0.9% | [Restructuring charges](index=26&type=section&id=Restructuring%20charges) Restructuring charges were $0 for the three months ended June 30, 2025, but $266 thousand for the six-month period, primarily due to severance charges for staff reductions and expenses related to the closed Blue Earth facility Restructuring Charges (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restructuring charges | $0 | $91 | $266 | $91 | | % of Net sales | 0.0% | 0.2% | 0.5% | 0.2% | - The six-month charges included **$235 thousand** for severance and **$31 thousand** for Blue Earth facility expenses[87](index=87&type=chunk) [Operating (loss) income](index=26&type=section&id=Operating%20(loss)%20income) Operating income increased for the three months ended June 30, 2025, driven by improved gross margin and lower incentive compensation, but the six-month period resulted in an operating loss due to decreased net sales and gross margin Operating (Loss) Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating (loss) income | $742 | $344 | $(871) | $1,499 | | % of Net sales | 2.4% | 1.0% | (1.5)% | 2.3% | - Quarterly operating income increased by **$398 thousand (115.7%)**, while year-to-date operating income shifted to a loss of **$(871) thousand** from a **$1,499 thousand** income[80](index=80&type=chunk)[82](index=82&type=chunk)[88](index=88&type=chunk) [Interest expense](index=26&type=section&id=Interest%20expense) Interest expense increased for both the three and six-month periods ended June 30, 2025, primarily due to higher borrowings under the line of credit arrangement Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense | $257 | $165 | $471 | $332 | - Interest expense increased by **$92 thousand** quarterly and **$139 thousand** year-to-date[89](index=89&type=chunk) [Income taxes](index=26&type=section&id=Income%20taxes) The effective tax rate for the three and six months ended June 30, 2025, increased compared to the prior year, primarily driven by changes in pretax (loss) income and taxes on foreign entities Effective Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :--------------- | :-------------- | :-------------- | | Three months ended | 35% | 12% | | Six months ended | 25% | 21% | - The **One Big Beautiful Bill Act (OBBBA)**, enacted in July 2025, makes permanent key elements of the Tax Cuts and Jobs Act of 2017, and the Company is evaluating its potential effects[91](index=91&type=chunk) [Cash Flow Operating Results](index=26&type=section&id=Cash%20Flow%20Operating%20Results) Cash used in operating activities increased significantly for the six months ended June 30, 2025, primarily due to changes in accounts receivable and contract assets, while investing activities used less cash and financing activities provided more cash from the line of credit Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(2,773) | $(1,458) | | Investing activities | $(358) | $(1,011) | | Financing activities | $2,858 | $2,343 | | Effect of exchange rates on changes in cash and cash equivalents | $9 | $(7) | | **Net change in cash and cash equivalents** | **$(264)** | **$(133)** | - Cash used in operating activities increased by **$1,315 thousand**, mainly due to **$4,034 thousand** cash used by accounts receivable and contract assets[92](index=92&type=chunk) - Cash provided by inventory was **$2,714 thousand** in 2025, compared to cash used of **$1,288 thousand** in 2024, reflecting inventory reduction efforts[92](index=92&type=chunk) - Cash used in investing activities decreased by **$653 thousand**, primarily due to lower capital expenditures[93](index=93&type=chunk) - Cash provided by financing activities increased by **$515 thousand**, driven by line of credit advances for working capital[93](index=93&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company believes its existing financing arrangements and anticipated cash flows will be sufficient for the next twelve months, despite past non-compliance with credit covenants that required multiple amendments to its revolving line of credit - Management believes existing financing, anticipated cash flows, and cash on hand will be sufficient for working capital, capital expenditures, and debt repayments for the next twelve months[94](index=94&type=chunk) - The **$15,000 thousand Senior Secured Revolving Line of Credit (Revolver)** was amended three times in 2025 to waive past covenant non-compliance, defer future compliance, adjust EBITDA requirements, and extend the expiration to **August 31, 2026**[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - As of June 30, 2025, outstanding borrowings on the Revolver were **$11,615 thousand** with **$3,385 thousand** unused availability, subject to a minimum liquidity requirement of **$2,500 thousand**[99](index=99&type=chunk)[97](index=97&type=chunk) - The company has implemented plant optimization activities and cost-cutting initiatives to address losses and reduce borrowings in the remainder of 2025[101](index=101&type=chunk) [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has not engaged in any off-balance sheet arrangements as defined by SEC regulations - The Company has not engaged in any off-balance sheet activities[102](index=102&type=chunk) [Forward-Looking Statements](index=28&type=section&id=Forward-Looking%20Statements) This section provides a cautionary statement regarding forward-looking statements, highlighting various unpredictable factors that could cause actual results to differ materially from expectations, and disclaims any obligation to update such statements - Statements in the report that are not historical facts are forward-looking statements made pursuant to the safe-harbor provisions of the **Private Securities Litigation Reform Act of 1995**[103](index=103&type=chunk) - Factors that could cause actual results to differ include market volatility, sufficiency of financing, supply chain disruptions, human resource availability, increased competition, facility reliability, raw material costs, regulatory compliance, and general economic conditions[103](index=103&type=chunk) - The Company undertakes no obligation to update publicly any forward-looking statement[104](index=104&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reporting period - This item is not applicable[106](index=106&type=chunk) [Item 4 - Controls and Procedures](index=29&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and confirms no material changes in internal control over financial reporting during the most recently completed fiscal quarter [Evaluation of Disclosure Controls and Procedures](index=29&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - Disclosure controls and procedures were evaluated by management, with **CEO and CFO participation**[107](index=107&type=chunk) - Conclusion: **Disclosure controls and procedures were effective**[107](index=107&type=chunk) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[108](index=108&type=chunk) [PART II – OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, defaults on senior securities, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings and claims that arise in the ordinary course of its business operations - The Company is subject to various legal proceedings and claims in the ordinary course of business[110](index=110&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, specifically highlighting the risks associated with non-compliance with credit agreement covenants, which required multiple amendments and waivers, and the potential for future impairment charges on long-lived assets - The Company was not in compliance with financial covenants related to Mexican operating expense contributions in **Q1 and Q2 2024**, and received a waiver[112](index=112&type=chunk) - Multiple amendments (First, Second, Third) to the Revolver were signed in **2025** to waive non-compliance with leverage and fixed charge ratios, modify EBITDA levels, and extend the Revolver's duration[113](index=113&type=chunk) - Failure to comply with future covenants could lead to inability to secure additional financing or acceleration of debt repayment[114](index=114&type=chunk) - As of June 30, 2025, no long-lived asset impairment was required, but future declines in fair value could lead to impairment losses[116](index=116&type=chunk) [Item 2 - Unregistered Sales of Equity Securities, Use of Proceeds](index=30&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - None[117](index=117&type=chunk) [Item 3 - Defaults on Senior Securities](index=30&type=section&id=Item%203%20-%20Defaults%20on%20Senior%20Securities) This section indicates that there were no defaults on senior securities to report for the period - None[118](index=118&type=chunk) [Item 4 - Mine Safety Disclosures](index=30&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Not applicable[120](index=120&type=chunk) [Item 5 - Other Information](index=31&type=section&id=Item%205%20-%20Other%20Information) This section indicates that there is no other information to report for the period - None[121](index=121&type=chunk) [Item 6 - Exhibits](index=31&type=section&id=Item%206%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and XBRL formatted financial statements - Exhibits include certifications of the **CEO and CFO (31.1, 31.2, 32)**[123](index=123&type=chunk) - Financial statements from the quarterly report are provided in **XBRL format (101, 104)**[123](index=123&type=chunk) [SIGNATURES](index=32&type=section&id=SIGNATURES) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the submission of the quarterly report on behalf of Nortech Systems Incorporated [Report Signatures](index=32&type=section&id=Report%20Signatures) This section presents the official signatures of the CEO and CFO, certifying the quarterly report submission for Nortech Systems Incorporated - The report is signed by **Jay D. Miller, Chief Executive Officer and President**, and **Andrew D. C. LaFrence, Chief Financial Officer and Senior Vice President of Finance**[125](index=125&type=chunk) - Signatures are dated **August 7, 2025**[125](index=125&type=chunk)

Core Viewpoint - Nortech Systems Incorporated is preparing to discuss its second quarter 2025 financial results in a live conference call scheduled for August 7, 2025, at 7:30 a.m. Central Time [1] Company Overview - Nortech Systems Incorporated is a leading provider of design and manufacturing solutions for complex electromedical devices and electromechanical systems, primarily serving the medical device, medical imaging, aerospace & defense, and industrial markets [2] - The company's design services encompass concept development to commercial design, including medical device, software, electrical, mechanical, and biomedical engineering [2] - Nortech's manufacturing and supply chain capabilities are vertically integrated, focusing on wire/cable/interconnect assemblies, printed circuit board assemblies, and system-level assembly, integration, and final testing [2] - The company is headquartered in Maple Grove, Minnesota, and operates six manufacturing locations and design centers across the U.S., Latin America, and Asia [2] - Nortech Systems is publicly traded on the NASDAQ Stock Market under the symbol NSYS [2]

Nortech Systems (NSYS) Q1 2025 Earnings Call May 14, 2025 04:30 PM ET Company Participants Andrew LaFrence - CFO & SVP of FinanceJay Miller - President & CEO Operator Good afternoon, ladies and gentlemen, and welcome to the Nortech Systems Incorporated First Quarter twenty twenty five Earnings Conference Call. With me on the line today are Jay Miller, President and Chief Executive Officer and Andrew LaFrenz, Chief Financial Officer and Senior Vice President of Finance. All lines have been placed on a listen ...

Financial Data and Key Metrics Changes - Net sales for Q1 2025 totaled $26.9 million, a decrease of 21.4% from $34.2 million in Q1 2024, impacted by delays in customer approvals and manufacturing efficiencies [15][16] - Gross profit for Q1 2025 was $3.1 million, or 11.1% of net sales, compared to $5.4 million, or 15.9% in the same quarter last year, due to lower sales and reduced facility utilization [16] - Adjusted EBITDA for Q1 2025 was negative $1 million, down from $1.6 million in Q1 2024, reflecting ongoing operational challenges [18] Business Line Data and Key Metrics Changes - The aerospace and defense segment faced revenue impacts due to the closure of the Blue Earth facility and delays in customer approvals for the transfer of programs to the Bemidji facility [4][5] - Customer backlog has stabilized as of March 31, 2025, consistent with the year-end 2024 backlog, with expectations for improved order volume as approvals are completed [16] Market Data and Key Metrics Changes - The company is closely monitoring supply chain strategies as customers evaluate their operations in light of tariff uncertainties, particularly regarding facilities in China and Mexico [6][7] - Opportunities are emerging in China as companies seek to consolidate manufacturing within the region, aligning with the company's nearshoring strategy [7] Company Strategy and Development Direction - The company is focused on reducing operating costs and aligning operations with market demand to drive sustainable long-term EBITDA growth [21] - A three-tier global manufacturing strategy across the US, Mexico, and China is in place to enhance competitiveness and operational flexibility [10][11] - The company is investing in engineering expertise and product innovation, particularly in fiber optic technologies, to meet evolving customer needs [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stabilization of customer backlogs and the potential for revenue recovery in the second half of 2025 [5][9] - The company is committed to monitoring geopolitical uncertainties and adjusting strategies to mitigate risks associated with tariffs and supply chain disruptions [6][7] Other Important Information - The company plans to further reduce inventory investments throughout 2025, aiming to improve cash flow and operational efficiency [19][21] - The focus on sustainability and innovation in fiber optics is expected to align with industry trends and customer demands for environmentally friendly solutions [26][27] Q&A Session Summary Question: What are the expectations for future revenue recovery? - Management expects revenue recovery in the second half of 2025 as customer approvals are completed and operational efficiencies improve [5][9] Question: How is the company addressing tariff impacts? - The company is closely monitoring tariff implications and adjusting pricing and sourcing strategies to mitigate adverse effects [7] Question: What innovations are being pursued in product development? - The company is advancing fiber optic technologies, including EBX and AOX, to enhance product performance and meet customer needs [24][26]

Exhibit 99.1 Nortech Systems Reports First Quarter Results MINNEAPOLIS – May 14, 2025 – Nortech Systems Incorporated (Nasdaq: NSYS) ("Nortech" or the "Company"), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial and aerospace & defense markets, reported financial results for the first quarter ended March 31, 2025. 2025 Q1 Highlights: Management Commentary "Over the past few quarters, ...

MINNEAPOLIS, May 14, 2025 (GLOBE NEWSWIRE) -- Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical imaging, medical device, industrial and aerospace & defense markets, reported financial results for the first quarter ended March 31, 2025. 2025 Q1 Highlights: ●Net sales of $26.9 million ●Net loss of ($1.3) million, or ($0.48) per diluted share ●Adju ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from to NORTECH SYSTEMS INCORPORATED Commission file number 0-13257 Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 State of Incorporation: Minnesota IRS Employer Identification No. 41-1681094 Executive Offices ...

Core Insights - Nortech Systems Incorporated will hold a live conference call and webcast on May 14, 2025, at 3:30 p.m. Central Time to discuss its first quarter 2025 financial results [1] - The call will be hosted by the CEO Jay D. Miller and CFO Andrew D. C. LaFrence [1] Company Overview - Nortech Systems is a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products [2] - The company serves various markets including medical imaging, medical devices, aerospace & defense, and industrial sectors [2] - Nortech's design services cover the entire process from concept development to commercial design, including various engineering disciplines [2] - The company has vertically integrated manufacturing and supply chain capabilities, focusing on wire/cable/interconnect assemblies and printed circuit board assemblies [2] - Nortech is headquartered in Maple Grove, Minnesota, and operates six manufacturing locations and design centers across the U.S., Latin America, and Asia [2] - The company is publicly traded on the NASDAQ under the symbol NSYS [2]