Q3 2021 Eltek Ltd Earnings Call

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<unk>.

Ladies and gentlemen, thank you for standing by welcome to the Alphatec L. P. D third quarter 2021 financial results conference call. All participants are present in a listen only mode. Following management's formal presentation instructions will be given for the question and answer session for operator assistance during the conference.

Please press Star Zero as a reminder, this conference is being recorded before I turn the call over to Mr. Li Our Chief Executive Officer, and a little more I'm Chief Financial Officer, I'd like to remind you that Opex earnings release today and this call include forward looking statements within the meaning of the private securities.

And Reform Act of 1995, and Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures.

We're making any investment decisions, we strongly encourage you to read our full disclosure on forward looking statements and use of non-GAAP financial measures set.

Fourth at the end of our earnings release as well as review our latest filings with SEC 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.

Statements are projections and reflect the current poorly.

Beliefs and expectations of the company actual events or results may differ materially all tech undertakes no obligation to publicly release revisions to the such forward looking statements to reflect events or circumstances.

Occurring subsequent to this date.

I will now turn the call over to Mr. Al We offer mystery Opex. Please go ahead.

Thank you.

Good morning, everyone. Thank you all for joining us and welcome to <unk> 2021 third quarter earnings call.

With me is a little more on them a little.

Thanks, a lot for sale, we will begin by providing you with an overview of our business and summary of the principal factors that affect affected our results in the third quarter of 2021, followed by the details of our financial results.

After our prepared remarks, we will be happy to answer.

If any of your questions.

Now everyone should have access to our third quarter earnings press release, which was released earlier today.

At least it was also available on our website.

New Ww adult it'll take them to explore.

This quarter was very challenging both operation.

And Lee and business Wise in addition to the COVID-19 pandemic.

It was affecting us our results were affected by the reduced number of working days during the quarter compared to the number of working days in their sales quarter of 2020. In addition, our results were impacted by the strength of the new Israeli shekel.

Compared to the U S dollar during the third quarter.

Nevertheless, we were able to maintain operation operating profitability also power revenue declined from $9 3 million in the third quarter of 2022 8 million and all are in the third quarter of 2021.

The spread of COVID-19 was still affecting some of our customers being India why during quarter, three 2021, whereas partial recovery of the prior outlooks at a day supply compared to the Salford shortage that we face.

In Q1, 2021.

This show.

They created operational and business challenges.

During the nine months ended September 32001, which required quick adjustment to enable us to maintain production and deliveries of PCB to our customers.

Due to the raw material worldwide shortage, we built this deal in Q.

Q3, 2021, a sufficient amount of inventory ahead of time and also alternative raw materials that were pre approved two weeks ago as a backup plan for our production of Pcbs in Q4 of 2021 and the beginning of 2022.

During the third quarter, we were able to obtain.

<unk> for the majority of our customers to use the alternative raw materials.

Once the currency raw materials is fully approved by all of our customers will accept the reduction of the cost of production, which will give us the flexibility to offer our customers more options for production as well as better.

<unk> occurring and most secure sources of raw materials.

During the third quarter and to date, we faced significant price increase of some of our materials on top of the extra logistics costs for material freight.

In addition, some will follow operation expenses are dominated in new Israeli.

Shakers and were negatively affected by the devaluation of the U S dollar against the Israeli new shape. It. Nevertheless, we were able to maintain our gross margin at 22% in the nine months.

The period of 2021 compared to 23% in the nine months period.

<unk> of 2020, but keeping our operational costs under tight control.

As we stated in the past, we see an opportunity to wall business in the U S. Due to the shift back to the production in the Western World by Defense Aerospace space and communication PCB sectors.

For example, the decider of threats and by China, and the liquid production capacity in United States Europe and Nissan.

Yes.

To date, we have financed our growth strategy from our own internal resource and so right offering to our shareholders.

Shareholders during the first nine.

And the first nine months of 2021, we invested $1 $4 million in Utica, We plan and our plan to continue investing in sales activity that will enable us to grow revenue with.

The focus on the U S market.

We continue to invest in a new advanced manufacturing equipment.

This will strengthen frankly strengthen our manufacturing capability and increase our competitiveness by implementing improved production processes and adoption of the industry for zero technologies.

We believe that this recent investment and planned future investment will strengthen our manufacturing capability and increased our.

Our competitiveness by implementing improved production processes.

As previously reported we.

We apply to the Israeli lends authority for relocation of land in the North of Israel, where we intend to build the second production facility. This is a major part of our long term strategic roadmap to facilitate and accelerate the expansion of our business.

Mandate.

We intend to continue our long term machinery investment program into 2022, and 2023 with the purchase of a new and modern machinery and are focused on an investment that will increase our total in and increase our production capacity.

As we have previously reported.

We are conducting a civil R&D programs in order to maintain our position as an innovative industry due to our 2021 R&D program.

Designed to enable <unk> to achieve a significantly faster production rate and would be scrapped if successful this island people that will enhance.

Our ability to offer IRA libraries, the print printed circuit boards.

Short term production time and reduce costs.

I'm glad to report the design of the program is progressing as planned and approximately 60% of the program has been completed and the demo machine is already in testing mode.

But his team more milestone to pass in order to declare on for success.

We will continue to pursue new business opportunity.

Opportunities and increase customer design engagement.

Activities that we literally job or advanced.

Ladies and technology capabilities, we remain focused.

On operational excellence are using advanced technology, and financial discipline and in making the necessary adjustments to address the challenges we face from the widespread as crisis, the global supply chain crisis.

We continue.

Continuing to work the likely all of them.

In our business, while maintaining operational efficiency and continued to trend in the improved operational results.

We are focused on business goals and now we have a consistent positive cash flow and strong working capital, we expect to future to further increase.

Spend due to investment program as long as we get a clear and positive return on investments.

I will now turn the call over to <unk>, our CFO, who will discuss our financials.

Thank you Eddie.

I would like to draw your attention to the financials of the third quarter of 2000.

If you won.

During this call I will be discussing certain non-GAAP financial measures I will take you. The EBITDA is a non-GAAP financial performance measurement. Please see our earnings release for its definition and the reason for it to you.

Now I will go over the highlights of the.

<unk> quarter of 2021 compared to the third quarter of 2020.

As Andy mentioned revenue for the third quarter of 2021 were $8 million compared to revenues of $9 3 million in the third quarter of 2020.

Gross profit.

Third quarter, $1 4 million or 17, 5% of revenues in the third quarter of 2021 compared to $1 8 million or 19, 7% of revenues in the third quarter of 2020.

During the third quarter of 2021, and we had an operating profit.

$65000 as compared to an operating profit of 638000 in the third quarter of 2020.

Net loss was 26000 or zero cents per share.

In the third quarter of 2021 compared to.

With a profit of 598000 or 14th thing.

The share in the third quarter of 2021.

EBITDA was 553000 in the third quarter of 2021 as compared to EBITDA of $1 million in the third quarter.

Net of 2020.

During the third quarter of 2021, we had positive operating cash flow of 598000.

<unk> to net cash provided by operating activities of 873000 in the third quarter of 2020.

During the nine months of 2021, our operating cash flow was $3 4 million.

Baird to operating cash flow of $3 7 million in the first nine months of 2020.

During the second quarter of 2021, we obtained alone.

10 million new Israeli.

Israeli shekels or approximately $3 1 million.

From Bank Leumi.

They build us to support our growth plan.

The long has a term of 10 years with favorable terms.

Including our repayment schedule that starts after twice.

Month, Grace period, and interest, which is waived for the first year of the loan.

As previously announced.

We filed the shelf registration statement during the third quarter of 2019 to provide us with the ability to raise additional funds to support our.

Our plan to grow and expand our business.

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

We are now ready to take your questions.

Thank.

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 two if you are using speaker equipment kindly with the handset before pressing the numbers.

<unk> will be pulled in the order they are received.

Please standby, while we poll for your questions.

The first question is from Michael Blum. Please go ahead.

Oh hi.

I just have a question about them.

Thank you.

He has done.

Let's see from Covid.

Just giving you more detail about what he's done.

Okay can you. Please repeat the question a reduction and what.

Marketing days reduction I was walking through some of what he thought I can't do that.

During September they'll do a Jewish holidays that are unfortunately happens and you only the walking very similar although the weekend in D. C is a rare situation and we face significant amount of work in the days that we were not able to work.

Because of.

Okay Jewish holidays.

So I mean, you have gone.

Kind of a reflection of all of them.

Revenue from not like I mean.

One two or three leading Madison Avenue, not quantify that on something.

I mean by that.

Okay.

The number of working days that we lose viewing to be Stein was approximately 10% of the of the VIX.

Oh, that's kind of a quiet kind of benign.

Okay.

So you don't you don't want any customer contracts or something since no no. It gets nets.

Right now there are two effects first of all LTE could been work during these days and also our Israeli customers. It means we're doing these things.

Okay. Okay, that's great.

So I think that's fine.

S J D.

Nine months compared to last.

It's like 100, Okay. So basically you think in that sense because of the currency fluctuation.

In general and.

During the first quarter, we had a negative impact on the profitability.

Yeah.

The salary and the building Ge's energy costs are dominated in your Israeli shekel.

It was reevaluated in Q3 as compared to the U S dollar.

And the financial expenses will present, you in Q3, a luxury related.

So the effect of the devaluation of the U S dollar and euro against the new Israeli shekel.

Okay. Okay. That's great. So I'm pumped in Marquis soon it's Tom I think the thing it's not because they're losing.

We're talking about are now.

It doesn't mean portfolio.

And because we try to pass.

Some of these devaluation cost on our customers seem slow mode.

Yeah. So yeah. My question is does it need to.

No I mean, it's just kind of around 75.

James and 19 119 million $19, 7% downtime.

Okay.

The main reason is that the we have some fixed costs are included in our cost of revenues and whenever it.

<unk>.

<unk> down.

Yeah.

This is a become a larger part.

<unk> expenses as a percentage.

Okay great.

So how about this quarter and so forth.

Fourth quarter or so.

You're working days.

It could be the same.

Last month and you are right.

Do you have working full time, so it should be I mean, it would be marketing your revenues because of that right.

Quarter on quarter fall, though there's no lost and they deal is because of the Jewish holidays.

To the full quarter.

Uh huh.

The phone call them right.

Quarter four was full quarter.

Okay. Okay. That's great that's great. Okay. Thank you. Thank you very much thank you Michael.

Yeah.

The next question is from <unk> Chen of argue group International Please go.

Okay.

Hi, I wanted to thank you for your service I noticed that your past 6K that are resigning from the position of CFO. So I want to thank you for your service.

Or we're working very very long term for.

Go ahead.

But my question is are there is no reason for your reservations in the six.

As Greg and I will just commentary.

On why you chose to resign.

And the last three years is it a big part of specialty care management.

The company.

<unk> implemented significant they are not they're not playing raised funds and improve the finance financial position.

I'm very proud of our achievements and I'm I'm sure that the company would go ahead with a long term growth and Hello, I personally decided to pursue other lines itself.

Okay.

Opportunities.

But again I I will photo L Pic and look forward to its success.

[noise] mean.

Dean is there any other question.

[noise].

Is there any additional questions. Please press star one if you wish to cancel your request. Please press star two please standby, while we poll for more questions.

There are no further questions at this time.

Time before I ask Mr. Yang to go ahead with his closing statement I would like to remind participants that a replay of this call will be available tomorrow on the Opex website Www Dot NASDAQ L pack dotcom, Mr. Your Opex would you like to make your concluding statement.

Before we.

We include all of the call I would like to thanks, all of our employees for their full so it makes it a little closer to <unk> again, and even in these challenging times I would like to thanks, once again to our customers both nursing vegetables.

<unk> are still doing their own continuum.

I also personally would.

Likes to thinks alone.

Marley mellow CFO for three years of service and which implementing together with.

The management team to fill in on plan and improve the company's financial position.

Thank you all for joining us on today's call is a good day.

This.

The Altair L. P D third quarter and full year 2021 financial results Conference call. Thank you for your participation you May go ahead and disconnect.

Okay.

Okay.

Okay.