Q1 2020 Eltek Ltd Earnings Call

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Ladies and gentlemen, thank you for standing by welcome to the Eltek Ltd first quarter 2020 of financial results Conference call all participants.

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Management's formal presentation instructions will be given for the question answer session property assistance. During the conference. Please press Star Zero as a reminder, this conference is being recorded before I turn the call over to Mr. <unk>, Chief Executive Officer and alone what I'm Chief Financial Officer, I would like to remind you that opex earnings release today and this.

Call, including forward looking statements within the private.

Meaning that the private Securities Litigation Reform Act that might be 95, and the Securities and Exchange Act of 1934.

Well as certain non-GAAP financial measures before making any investment decision. We strongly encourage you to meet their full disclosure is a forward looking statements and use of non-GAAP financial measures set forth at the end of earnings release.

Well as are the already this filings with the FCC for airport material assumptions expectations and risk factors that could cause actual results to differ materially from build anticipated, which got in such forward looking statements.

These forward looking statements our projections and reflects the current beliefs and expectations of the company actual events or results could differ materially.

Undertakes no obligation to publicly released provisions that such forward looking statements reflect events or circumstances occurring subsequent to the state I would now like turn look over to Mr. Elie asking if they offy. Please go ahead.

[noise]. Good morning, everyone. Thank you for joining us and welcome to what extent Twentytwenty first quarter earnings.

With me is alone want him, our chief financial Officer.

We will begin by providing you with an overview our business in summary of the principal factors that affected our results into first quarter Twentytwenty.

By the details of our financial results.

After our prepared remarks, we will be happy to answer any off your question.

No every one.

She did access to our first quarter earnings press release, which was released earlier today. The release will be also available on our website at Www Dot Mr. Celtic Dutch cool.

[laughter] quarter in a row.

Achieved both operationally metro [laughter], our revenue in the fourth quarter of Twentytwenty rose to $9.2 million.

<unk> point 7 million door or in the first quarter 2019.

The dollar revenue reflects you over real goals in the defense and aerospace segment.

I'm also pleased with the continuous improvement in production efficiency that these evidencing our improved gross margin.

Don't break off the corner you were filed its way to new operational and business challenges, which require a week adjustment to enable us to maintain our production will be should be whiting, maintaining the safety all fall workforce, we see both risk and new book Ulysses existing business.

This environment and are making the necessary deductions to meet customer demand and our revenue and profit margin goals.

[noise] as we said in the past.

We also see an approach you only due to lower business in the U.S due to the wall seeing the relationship between the us in China.

The impact of any trade war between the U.S. in China will also impact these early market.

Yes, we see the you, especially on the Israeli government would use that use when China trade activity.

At the same time, we also are facing slowdown from some of our customers in India and not expected to be close.

It will be close through the end of June twentytwenty due to the core we maintain volumes.

So far Weve finance, our growth strategy by our own internal resources during Twentytwenty in 2021, we plan to increase our investment in you ask me brand and expansion will follow facility and infrastructure to support our long term sales girls as previously previously announced.

We find the central into installation statement during the third quarter 2019.

The company with the ability to raise additional funds to support our plan to rule and expand our business, we expect that any proceeds from.

We'll be used in about four additional investment.

And to accelerate our long term gross.

The increase in our topline in Q1 Twentytwenty reflects the continued market recognition will follow quality and reliability products, mainly in the flex PCB cyclical.

Our defense revenue growth from 4.1 million dollar doing you won 2019 to 4.6 million dollar in Q1 Twentytwenty.

Well percent globally over real our customers continues to see the value proposition of our products and ever greatly strategy in our company and its capabilities. We continue to pursue new pursue new business opportunities and increased customer of theirs and design engagements DVT that.

We leveraged advanced technology capabilities.

We remain.

On operational excellence and financial discipline, as well as ours potentially gross add goes.

We are focused on addressing the challenges that their widespread as crises said on us and we are working diligently on expanding our business, while maintaining the trends.

Improved operational efficiency.

I will now down the core over to a lot more limb our CFO to discuss our financings.

Thank you Ashley.

I would like to draw your attention to the financials of the first quarter of Twentytwenty.

During this call I will also be discussing certain non-GAAP financial measures.

At the accuses EBITDA as a non-GAAP financial performance measurement, please see our earnings release.

For its definition and the reason for would choose.

Now I will go over the highlights of the first quarter of Twentytwenty compared to the first quarter of 2019.

Revenues for the first quarter of Twentytwenty were $9.2 million up from revenues of 8.7 million in the first quarter of 2019.

Gross profit was $1.8 million into first quarter of Twentytwenty compared to 1.5 million in the first quarter last year.

Net profit was 541000 or 12 cents per share into first quarter of this year compared to a net profit of 242000 or 12 cents per share in the first quarter of 29.

EBITDA was approximately $1 million in the first quarter of Twentytwenty compared to EBITDA of 811000 in the first quarter of 2019.

Cash flow provided by operating activities was 1.5 million compared to 1.6 million into first quarter of 2019.

As Alan mentioned before we remain focused on operational excellence and financial discipline as well as our long term strategic growth scores.

We're now ready to take your question.

Thank you ladies and gentlemen at this time will begin the question answer session. If you have a question. Please press star one.

Yes to answer your question. Please press Star, Tim If you think speaker equipments, Canada.

Pressing the numbers your question we pulled in the order. They are received please standby they pull for your questions.

The first question is from Mark Stocker. Please go ahead.

Yes, good afternoon, Eli Mark soccer private investor.

I see your profit has gone from eight cents a share to 12 cents a share quarter over quarter.

My question is really what what are you planning to use SFC for what initiatives.

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As we mentioned last three or the proceeds from the subs such transaction may be used to general corporate purposes, which we had may include working capital expenditure repayment of debt.

Additional investments the amount of any offering will be limited based on the results of the six to one sale default public float.

So.

We are going to use it in order to accelerate our gross because right now we goal based on our internal resources and if we'll get the funds that we try to raise will accelerate our goals. That's the main purpose of that raising the farms.

Thank you.

The next question from Roni Lipschitz of Tech time. Please go ahead.

Hello. This is already some technical congratulations.

Wow.

Page from all been calling a box your expectation.

Programs.

Yes.

Wondering again expansion.

Yes, you view in Europe.

Yeah.

Glenn to increase your index something.

Thanks and expansion.

Can you give us a low background about those.

Yes, so we speak mainly Obama investment in equipment in older and power equipment to double the capacity for example, we would like to double the capacity, we have to double that amount of machines as we have installed.

Very simply its capital investment that we are going to put in ROE in powder to existing equipment and by doing it will increase our capacity.

Sorry, so low.

You are planning to W. Boston.

Oh, yes. Some examples this is just an example.

The next question from all concerned Us PBS Holdings. Please go ahead.

Okay. Congratulations on a good results I'm looking at the the gross margin increase between 19 and 20 and this happened despite the potential inventory in operating disruptions in the quarter.

So how can we expect to think about margins going forward.

In general.

We and our gross margin as improved during 2019 and even in the first quarter Fair Twentytwenty.

We we are making an effort to increase our.

Operational efficiency.

But we cannot provide any other looking forward statements. So.

At this point.

We cannot give any forecast.

Alright twentytwenty.

[noise] SM any additional questions. Please press star one if you like to answer your question. Please press Star Tim Please stand by Lilly Pulitzer more questions.

The next question from Dean Chen. Please go ahead.

Hi, great quarter, congratulations on a growing the company and surviving cover 19.

Recently in the Israeli pressing the Hebrew press.

Siemens was mentioned partnering with Ms Tech.

In terms of AI board processing testing.

His eltek participating in this program since I will take is a part of in the stock.

Oh I missed a chain.

No we are not the most Palo alto.

Mystic is a major all stakeholder in stockholder in Eltek.

But we don't participate in their program and about a high we have our own a program that we developing oldest with some alignment between the layers, but this is technological issues that we developed internally in order to improve our production, but it's not related to list.

Okay and my second question is in terms of your shifts as you mentioned the 6K are you still running on three shifts.

Yes, we are going mainly to enough shifts right now.

Okay. All right. Thank you so much. Thank you. Thank you.

There are no further questions at this time before I ask Mr. Zhao. Please go ahead with his closing statement I would like to make the participants are currently planned this call will be available tomorrow, and they'll pick something www dot net that eltek dotcom missing assay, which I can make her concluding statement.

Before we conclude our course I would like to tanks, although employees for all their efforts during these difficult period than their contribution in renewing our position is a leading high end PCB manufacturer, making deltic profitable again.

I would like to thanks, once again to all our customers partners investors and the Eltek team folder I continued support I wish everyone. Good as thank you all for joining us on todays call have a good day.

This concludes the Eltek Ltd first quarter 2020 financial results Conference call. Thank you for your participation you May go ahead and disconnect.

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