MINNEAPOLIS – Nortech Systems reported net sales of $26.5 million for the second quarter, down 2.9% year-over-year.

Net loss was $123,000, compared to a net loss for the second quarter of 2019 of $1.6 million. Operating income for the second quarter was $49,000, compared to an operating loss of $1.2 million for the same period last year.

Nortech’s backlog at the end of the second quarter was $46.6 million.

The company has entered into sale and leaseback agreements with Essjay Investment Co. relating to manufacturing facilities in Bemidji and Mankato, MN. Nortech and Essjay are expected to close the agreements during the firm’s fiscal third quarter, subject to final documentation and other customary conditions.

Nortech expects net proceeds from the sale, excluding expenses and expected taxes, of approximately $5 million. Nortech intends to use the funds to pay down debt, provide additional liquidity for initiatives, capital investments and working capital, and strengthen the company’s financial position. At closing, Nortech will enter into a lease agreement for the Bemidji and Mankato, MN, facilities for an initial 15-year term, with multiple renewal options.

Nortech will close its Merrifield, MN, production facility on or before Dec. 31, shifting wire and cable assembly, system-level assembly and PCB manufacturing to other Minnesota locations. Approximately 60 employees will be offered positions at other Nortech facilities in the state.

Additionally, by the end of 2020, the company will shift its PCB manufacturing from its Monterrey, Mexico, location to its Mankato, MN, production facility.

"Given the challenging economic environment, we are pleased with the significant improvement in operating profitability for the second quarter, our sale and leaseback agreements with Essjay and the company’s plans to drive PCB manufacturing productivity. Our balance sheet continues to strengthen, and the sale leaseback and plant consolidation will provide significant liquidity to make further investments in the business. Our goal through these essential moves is to enhance Nortech’s ability to operate through the current Covid-19 pandemic and succeed long term," said CEO and president Jay D. Miller.

Register now for PCB West Virtual 2020, the leading conference and exhibition for the printed circuit board industry, coming this September. pcbwest.com  

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