Financial Performance - Net sales for the three months ended September 30, 2024, were $31,407 thousand, a decrease of 5.9% compared to $33,369 thousand for the same period in 2023[4]. - Gross profit for the nine months ended September 30, 2024, was $13,900 thousand, down 14.5% from $16,277 thousand in the prior year[4]. - The company reported a net loss of $739 thousand for the three months ended September 30, 2024, compared to a net income of $1,207 thousand for the same period in 2023[4]. - The net income for the three months ended September 30, 2024, was $183, compared to a net income of $1,207 for the previous quarter, indicating a decline of about 85%[9]. - The company reported a net loss of $739 for the nine months ended September 30, 2024, compared to a net income of $2,522 for the same period in the previous year[9]. - Medical segment net sales for the nine months ended September 30, 2024 were $53,991 million, compared to $59,814 million for the same period in 2023, a decline of approximately 10%[25]. - Industrial segment net sales decreased by $2,001 or 19.2% in Q3 2024 compared to Q3 2023, and by $1,323 or 4.6% for the nine months ended September 30, 2024[63]. - Aerospace and defense segment net sales decreased by $173 or 3.4% in Q3 2024 compared to Q3 2023, but increased by $3,381 or 23.3% for the nine months ended September 30, 2024[62]. Operating Expenses - Operating expenses totaled $4,302 thousand for the three months ended September 30, 2024, compared to $4,195 thousand for the same period in 2023, reflecting an increase of 2.6%[4]. - Stock-based compensation expense for the three months ended September 30, 2024 was $127 million, compared to $80 million for the same period in 2023[41]. - Total compensation expense related to stock options was $61 and $184 for the three and nine months ended September 30, 2024, respectively, compared to $42 and $184 for the same periods in 2023[45]. - Restructuring charges of $267 were accrued during the first nine months of 2024 related to the closure of the Blue Earth production facility[54]. - Restructuring charges were $176 million and $267 million for the three and nine months ended September 30, 2024, respectively[73]. Cash Flow and Liquidity - Cash flows from operating activities showed a net cash used of $3,043 thousand for the three months ended September 30, 2024, compared to a net cash provided of $2,181 thousand in the same period of 2023[6]. - As of September 30, 2024, cash balance was $1,239, with approximately $1,035 held in banks located in China[18]. - Cash used in operating activities was $3,043 million in the first nine months of 2024, compared to cash provided of $2,181 million in the same prior-year period[77]. - Cash provided by financing activities was $3,561 million in the first nine months of 2024, compared to cash used of $2,388 million in the same prior-year period[79]. - The company has $5,450 thousand of unused availability on the line of credit as of September 30, 2024[83]. Assets and Liabilities - The company had cash and cash equivalents of $1,239 thousand at the end of the period, compared to $1,121 thousand at the end of the same period in 2023[6]. - The company had contract assets of $15,058 million as of September 30, 2024, an increase from $14,481 million at the beginning of the year[27]. - Total lease liabilities as of September 30, 2024 were $9,378 million, an increase from $8,361 million as of December 31, 2023[37]. - The company’s total intangible assets as of September 30, 2024, were valued at $179, down from $263 as of December 31, 2023, indicating a decrease of approximately 32%[16]. - Amortization expense for finite life intangible assets for the nine months ended September 30, 2024, was $84, compared to $120 for the same period in 2023, reflecting a decrease of 30%[17]. Shareholder Equity - As of September 30, 2024, total shareholders' equity was $35,690, an increase from $30,708 as of June 30, 2023, reflecting a growth of approximately 16%[9]. Risk Factors - The company faces risks including supply chain disruptions, increased competition, and potential FDA noncompliance[87]. - There have been no material changes in risk factors from those disclosed in the Annual Report for the fiscal year ended December 31, 2023[93]. Accounting and Compliance - The company is currently evaluating the impact of new accounting standards issued by the FASB on its consolidated financial statements and related disclosures[13]. - The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the reporting period[91]. - There was no change in internal control over financial reporting that materially affected the company during the most recently completed fiscal quarter[92]. Customer Concentration and Sales - One customer accounted for 28% of net sales for the three months ended September 30, 2024, highlighting a significant concentration of revenue[19]. - Revenue from contract manufacturing agreements recognized over time accounted for approximately 72% of net sales for the three months ended September 30, 2024[22]. - Export sales from the U.S. represented approximately 2% of net sales for both the three and nine months ended September 30, 2024, consistent with the previous year's performance[21].
Nortech Systems(NSYS) - 2024 Q3 - Quarterly Report