Nortech Systems Incorporated (NASDAQ:NSYS), a provider of electronic components, has announced the extension of its facility lease in Milaca, Minnesota, until June 30, 2030. This extension, finalized on November 22, 2024, includes an additional 5-year renewal option.
The company, headquartered in Maple Grove, Minnesota, operates under the industrial classification of Electronic Components, NEC (3679), and has a fiscal year ending on December 31. Nortech Systems has been assigned an IRS Employer Identification No. of 41-1681094 and is incorporated in the state of Minnesota.
The information regarding the lease extension is based on a press release statement filed with the Securities and Exchange Commission. The filing also included an exhibit detailing the amendment to the lease agreement for the Milaca facility between Nortech Systems and Pakonen-Kolb, LLC.
In other recent news, Nortech Systems Incorporated reported a decrease in net sales and gross profit for Q3 2024 during its earnings conference call. The company's net sales for the quarter were $31.4 million, a 5.9% drop from Q3 2023, with year-to-date sales also down by 3.6%. Despite the decline, attributed to delayed purchases and inventory reductions, Nortech is strategically investing in new technologies to foster long-term growth.
The company's gross profit for Q3 2024 was $3.8 million, a decrease from the previous year. Adjusted EBITDA for the same period was $143,000, a significant decline from $1.6 million in Q3 2023. Nortech is also consolidating operations, closing its Blue Earth facility and moving production to Bemidji, a move expected to save at least $1.6 million annually from 2025.
InvestingPro Insights
Nortech Systems' recent lease extension in Milaca, Minnesota, aligns with its strategy to maintain operational stability. According to InvestingPro data, the company has a market capitalization of $28.64 million and a P/E ratio of 6.3, suggesting it may be undervalued relative to its earnings. This valuation could be attractive to investors looking for potentially underpriced stocks in the electronic components sector.
InvestingPro Tips highlight that Nortech Systems is profitable over the last twelve months and has liquid assets exceeding short-term obligations. These factors support the company's decision to commit to a long-term lease, as it indicates financial stability to meet ongoing operational costs.
However, investors should note that the company is quickly burning through cash, which could be a concern in the context of a long-term lease commitment. This information, along with 7 additional tips, is available on InvestingPro, offering a more comprehensive analysis for potential investors.
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