Q2 2020 Eltek Ltd Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the Eltek Ltd second quarter 2020 financial results Conference call. All participants are present in listen only mode. Following managements formal presentation instructions will be given for the question answer session for API.
Right or assistance during the conference. Please press Star Zero as a reminder, this conference is being recorded.
Before I turn the call over to Mr. Elie Office, Chief Executive Officer, and alone Wallis Chief Financial Officer, I'd like to remind you that Elteks earnings release today. This call include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures before making any investment decisions. We strongly encourage you to read our full disclosures on forward looking statements and use of non-GAAP financial measure set forth at the end of our earnings release as well as review our latest filings.
With the FCC for important material assumptions expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward looking statements. These forward looking statements our projections and reflect the current beliefs and expectations of the company actual.
Ben or results may differ materially Eltek undertakes no obligation to publicly release revisions to such forward looking statements.
Sure reflect events or circumstances occurring subsequent to the state I will now turn the call over to Mr. Elie Yasser.
Mr Ya Li.
Please go ahead.
Thank you.
Good morning, everyone. Thank you for joining us and welcome to Elteks Twentytwenty second quarter around in corn.
With me the Lumwana him, our Chief Financial Officer.
We will begin by providing you always an overview of our business a summary of the principal fructose.
The fixed are resolved in the second quarter of Twentytwenty and an update how.
Well Weve 19 as in impact our business followed by the details of our financial results. After our prepared remarks, we'd be happy to answer any of your questions.
By now everyone should have access to our second quarter earnings press release, which was released earlier today.
Lease will be also available on our website at www Dot Mr. Celtic dotcom.
This is the six quarter in ROE that we achieved both operating and net profit.
Our revenue in the second quarter of Twentytwenty rose to $8.8 million from $8.2 million in second quarter of 2019.
Revenues for the six months or Twentytwenty were $17.9 million compared to $16.9 million in the first six months of 2019.
This growth.
These results of 11% girls in sales to customers in Israel and reflects year over year grossing sales to defense segment and the contract electronics manufacturers.
I'm also pleased with the continued improvement in production efficiency that these evidenced in our improved gross margins and operating profits.
Oh, well diversified end markets allowed us to grow revenue year over year, despite the weakness in Indian markets.
In addition, strong operational execution overcome production of C inefficiency and exit costs due to the Colby 19.
Accordingly team pandemic has created operational the fees and the FICO difficulties Mccormick uncertainty and employees consume I'm extremely proud.
Deltics employees, if a walk you believe me are excellent performance.
Despite challenging environments.
We have three employees with tested positive for coupled with 19 be seal without their returning to walk after being cleared followed through existing canteen Brooke Burke of course, we continue to use context racing and currently in individuals who are close flowing close contact with.
Infected team members. In addition to the deep cleaning of fixed and walk you area. We also continue Aldo I don't measures such as extensive internal communication masking temperatures chicks and broker will be something you know facility.
Because of the preventive measures in place and our culture will still experiencing the communication.
These events as minimal impact on our manufacturing operation that was to date.
The outbreak of the corner for your worse, it's great news operational and business challenges, which required weak adjustment to enable us to maintain our production of PCB, while maintaining the safety will fall of our workforce.
We see both risk and new opportunities in the existing business environment and are making the necessary reductions to meet customers' demand in our revenue and profit margin goals.
As we say during the past, we also see an opportunity to glow business in the U.S. market due to the waltzing relationship between the us in China.
The impact of any trade war between the U.S. in China. We will also include easily market seems we see you espresso and these are really going into a view these willie Chiang chain Chinese trade activities.
At the same time.
We are also facing a slowdown from some of our customers in India to the continued negative impact of call, we'd 19 investor or three.
So far we have finance our growth strategy by our positive operating cash flow and our own internal resources viewing Twentytwenty and Twentytwenty. One we plan to increase our investment in new equipment and expansion of our facility.
And in infrastructure to support our long term sales gross.
The increase in our topline twentytwenty reflected the continued market recognition or follow a high quality and reliable products, mainly in the flex PCB six stores, our revenue from the defense six tool and Cotwo contract electronic manufacturers glue grow from $13.8 million during the first.
Couple of 2000 $19 million to $15.3 million into first half of Twentytwenty.
11% growth you over real.
I think I think those contribute 9.7% will follow revenue during the first outflow twentytwenty, representing 4% gross you over real.
Our customers continue to see the value proposition of our products.
And as a great deal when traffic in our company an hour and its capabilities.
Well continue to pursue new business opportunities in increased customer design engagement activities that we leverage our advance advancing technology capability, we remain focused on operational excellence and financial discipline as well as ours potentially gross goals.
We are or focus in addressing the challenging debt how widespread as crises is on us and our walking the likely to expanding our business, while maintaining the trend of improved woes and operation results.
I will now turn the call over to along while in our CFO to discuss our financial.
Thank you Ashley.
I would like to draw your attention to the financials of the second quarter of Twentytwenty.
During this call I will also be discussing certain non-GAAP financial measures.
Excuse is EBITDA as a non-GAAP financial performance measurement.
Please see our earnings release voice definition and the reason for refuse.
Now I will go over the highlights of the second quarter of Twentytwenty compared to the second quarter of 2019.
As Kelly mentioned revenues for the second quarter of Twentytwenty were 8.8 million up from a revenues of 8.2 million in the second quarter of 2019.
Gross profit increased from 1.3 million or 15.3% of revenues in the second quarter 2019 to 1.9 million or 21.6% in the second quarter of Twentytwenty.
During the second quarter of Twentytwenty, we had an operating profit of 809000 as compared to an operating profit of 7000 in the second quarter of 2019.
Net profit was 704000 or 16 cents per share in the second quarter of Twentytwenty compared to a net profit of 790000 or 19 cents per share in the second quarter 2019.
The results of the second quarter 2018 were positively affected by nonrecurring other income of 871000 as a result of every seat.
Of insurance payment associated with damaging could do want to follow manufacturing machine.
EBITDA was approximately 1.2 million into second quarter of Twentytwenty as compared to EBITDA of 1.25 million in the second quarter of 2019.
During the second quarter of 2020, we had positive operating cash flow of 1.4 million compared to net cash used in operating activities of 300, and the 1000 in the second quarter of 29 team.
During the first half of Twentytwenty. The company achieved positive operating cash flow of $2.9 million as compared to positive operating cash flow of $1.3 million in the first half of 2019.
As Sallie mentioned before we remain focused on operational excellence and financial discipline as well as our long term strategic growth goal.
As previously announced we filed a shelf registration statement during the third quarter 2019 to provide the company with the ability to raise additional funds.
The company is also considering different options to fund.
Moving to support our plan to grow and expand our business.
We're now ready to take your questions.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star too. If you are using speaker equipment kindly lift the handset before pressing the numbers.
Questions will be pulled in the order they rcs. Please standby, while we pull for your question.
The first question is from Michael.
Please go ahead.
Oh, hi, Thanks for taking my question.
So.
First.
Question on power.
Correct.
I can have the last year.
And we are finding so you said I'm hearing.
Okay and in an 18 you have to.
Correct.
So you received a crane per one equipment. So my question is that came over I mean.
Set out you'll see our waiting for a nickel.
Our claim.
Hi, yes.
We indeed received.
Payments from insurance for one and manufacturing machine, we still have at pending.
Claim with our insurance company, but we cannot.
Predict or no I'll, just say claim will end up.
So so far that no provision in our financial.
Okay.
Congrats on the deep.
Then I mean that's.
What's that once that happens.
Your margins on our affecting your I mean, how is that that act you could then.
Your operation though.
These machines, where.
Hi, good bye.
Our water damage as including our plant.
We overcome this.
Damage.
Typically five in there.
Third quarter of 2018 and there.
Long time ago, we are all very.
Okay. Okay, great. Thank you Mike second questions about.
You're correct.
Because customers.
Based on the last quarter.
Last year Nike's number.
Perhaps like 30%.
Two.
But I take your family and you said there too.
Customer.
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I'm not quite sure what is that group is that one customer to people.
So what's your relationship with them.
Indeed, we have.
Group of major customers.
Related companies that are all in one group and presented during one a.
As one group paying already 20 here.
So that they are.
On the order access through one technology like I mean.
The act like if any are the.
And.
Maybe one or are they made.
Different orders from different time from different combined.
And this is.
One group of companies.
Our.
Combined of few companies the any.
How's that.
I mean, maybe I'm asking too much Tonight.
They're ordering like one batch or something like one.
With that person or something.
No each and all the company that as a few division and.
Directly.
One company, but we got.
The PEO slum different divisions, so we combine it because in the end of the taste one company.
Okay, Great Cape Cod.
Fair enough.
From a U.S. Israel or.
Yes.
This quarter is based in Israel, but we got the although a majority of fees from Israel and some will feed from other parts in the world, including Brazil, United States.
And Israel.
Okay.
No.
How about another question about your Oh.
Six meeting right.
No not like 800 to 900000.
I know there's dose.
Yes, I indicated.
Annual report says.
You have us spend 1.7 meeting.
Men.
So basically your cash.
Capex or.
Then there's kind of a little bit different until.
And I'm like what is that 1.7 meeting.
Okay.
Spending.
You were caught in the middle of say your question can you repeat please.
All right.
So in year 2019, so your Capex cash Capex is around 800 900000.
But desktop.
As you spend was 7 million man for new equipment. So.
And maybe not the subscription numbers I think the 1.7 that you referred to it is a in the last three years altogether.
I'm not sure, but today, we will need to look into it.
We're on 800 900.
Sounds good or last year, yes, correct.
Yes.
And then same number.
And then it's not like that right. So this year, what's your I mean, what's your current like how much you're going to spend.
New equipment.
We do not provide looking forward statements. So we cannot provide the numbers for the second off but as you can see in our cash flow.
For the first six months we.
Approximately 450000 a in a.
Cash investment in that fixed assets.
Yeah, I mean, I remember last quarter.
Okay data that you want to you know increased spending.
So you have you plan to I mean by you.
Are you to basically maintaining current capacity, yes, yes, as I mentioned in my discussion I'll leave we have.
The goal and we have the means then we clearly look on the increasing our capacity.
Based on our internal sources equally raise money will accelerate these were not money, we'll do it seem that organic growth, we sell to own resources.
Okay.
Okay.
I ask it back.
You are running more like I mean, you full capacity are you can actually like 10% more revenue.
New machines.
Yeah.
We'd like right now.
Walk in some of our Wow departments to shift some of our department three shifts.
Right.
Sorry again during your last question.
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You are.
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It's close to full capacity or five days a week. So we still have opportunity to grow over the weekend.
So Mike that's all my question. Thank you concur and it makes sense. Thank you. Thank you Michael.
If there any additional questions. Please press star one if you wish to cancel your request please press star too.
Standby, while we pull for more question.
Okay.
Yeah No further questions at this time before I ask Mr. yet to go ahead with his closing statement I would like to remind participants that a replay of this call will be available tomorrow on Elteks website Www dot.
Deck Eltek dotcom, Mr. Yaphet would you like to me concluding statement.
Before we conclude our coal I would like to thanks, all of our employees of older efforts during the difficult period than their contribution in renewing our position as a leading high end PCB manufacturers and making Celtic book to Bill again, I would like to thanks, once again to our customers partners investors.
And the Elteks team to do your continued support I wish everyone. Good Dennis Thank you for join US on today's call every good day.
This concludes the Eltek Ltd second quarter 2020 financial results Conference call. Thank you for your participation you May go ahead and disconnect.
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