MINNEAPOLIS -- Nortech Systems today reported net sales of $28.3 million for the quarter ended Sept. 30, down 4.7% from a year ago.
Net income fell 32% to $43,000, and operating income was $284,000, up from $190,000 in 2016.
Year to date, Nortech’s net sales are down 1% to $86.8 million, while net income has swing to a profit of $13,000 versus a loss of $54,000. Operating income is up 66% to $500,000,.
“While our defense and industrial customers are beginning to show positive traction, our third quarter results were impacted by a seven percent decline in medical sales,” said Rich Wasielewski, Nortech Systems’ president and CEO. After a long run of medical growth for Nortech, the recent trends in the medical market, along with program delays, have resulted in less engineering project work and product revenue.
Industry factors negatively impacting U.S. medical technology companies include uncertainty about the future of the federal medical device tax, increased FDA regulations and lower venture capital funding.
Wasielewski expects the medical sector will continue to present challenges through the remainder of 2017 and the first half of next year as several of Nortech’s larger OEM medical customers work down inventory levels.
“Our diverse customer base across three core markets and our globalization strategy remain key strengths,” Wasielewski concluded. “We’re also supporting infrastructure, operations and business development activities to target profitable growth.” Enhancing Nortech’s technical resources, information systems and “One Nortech” cooperation across facilities is aimed at providing better customer service and an improved return to shareholders.
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