Nortech Systems reports Q1

Solid gains in revenue, operating income and net income

Nortech Systems Incorporated (Nasdaq:NSYS) reported net sales of $19.1 million for the first quarter ended March 31, 2005, an increase of 27 percent over net sales of $15.0 million for the same period in 2004. Operating income for the first quarter of 2005 was $315,333, up 64 percent from $192,532 reported for the first quarter of 2004. Net income for the first quarter of 2005 was $98,892, or $0.04 per diluted share, compared with $43,049, or $0.02 per diluted share, for the first quarter of 2004. 
 
"This year has started very well, with positive momentum continuing from the second half of 2004," says Mike Degen, President and CEO of Nortech Systems. "Our diverse customer base remains a core strength."

First-quarter sales growth was led by the Aerospace Systems division in Fairmont, Minn., which supplies the defense industry, followed by the electronic assembly division in Merrifield, Minn., which makes printed circuit board assemblies and higher-level builds for industrial customers.

"Our commercial wire and cable business remains under margin pressure due to the strong competitive environment, increased copper prices and higher energy costs," notes Degen, who adds that corporate strategic initiatives in sales and marketing, along with infrastructure enhancements, are beginning to positively impact some business sectors.

The quarterly improvement in corporate operating profits was attributed to a favorable product mix, increased productivity and cost leveraging from the increased volume in the quarter compared to the first quarter of 2004.

Outlook
As previously announced, the company expects revenues in fiscal 2005 to increase by approximately 8 to 10 percent over fiscal 2004, in the range of $78.0 million to $80.0 million. Earnings per diluted share for 2005 are expected to be in the range of 30 to 35 cents.