Nortech Systems Incorporated

Second-quarter 2026 net sales were $33.5 million, up $2.9 million or 9.3% from $30.7 million in Q2 2025. Gross profit was $5.7 million versus $4.8 million a year ago, and gross margin improved to 17% from 15.8%, up 120 basis points. Operating income was $623,000 versus $742,000 last year, and diluted EPS was $0.11 versus $0.12. For the first six months, net income was $282,000, or $0.09 per share, versus a net loss of $1 million, or $0.36 per share, in the prior-year period. Management did not provide formal next-quarter or full-year revenue/EPS guidance, but said it expects continued momentum in 2026, aided by supply-chain stabilization and customer orders.

Jay Miller framed the quarter as evidence that Nortech’s restructuring and operating execution are starting to show through in the numbers. He highlighted stronger backlog, healthy quoting activity, and customer interest in nearshoring across North America and Asia, while also noting ongoing monitoring of tariffs and supply-chain risk. His tone was upbeat and strategic, with emphasis on fiber optics, digital diagnostics, power-over-fiber, AI, and data-center opportunities as longer-term growth themes.

Andrew LaFrence walked through the quarter’s financials, citing $33.5 million of sales, $5.7 million of gross profit, 17% gross margin, and $623,000 of operating income. He said higher operating expenses were mainly due to incentive compensation, including $402,000 in Q2 and $647,000 year to date, plus increased stock-based compensation. He also pointed to cash used in operations of $2.4 million in the first half, cash and restricted cash of $1.7 million at quarter end, and $7.6 million drawn on the revolving credit facility with $3.6 million of unused availability. Looking ahead, he said the company is focused on reducing inventory and converting working capital into cash.

Analysts asked whether the OpEx increase was mostly one-time, and management said the main drivers were incentive compensation and increased stock-based compensation. They also asked about data-center exposure; Jay Miller said Nortech is pursuing opportunities and feels well positioned, but has not yet closed much business there. On capacity utilization, Andrew LaFrence said the company has plenty of capacity across its footprint and can grow for several years without major CapEx. Asked about gross margin expansion, he said the first-half gross margin was a record and that plant leverage and mix improvement should provide room to expand margins further.