Q4 2022 Eltek Ltd Earnings Call

We will be the EBITDA.

The visibility.

[music].

Ladies and gentlemen, thank you for standing by.

Welcome to the Alphatec limited 2022 full year and fourth quarter financial results Conference call. All participants are at 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 ring.

Minder This conference is being recorded.

Before I turn the call over to Mr. Elie outfit, Chief Executive Officer, and Ron <unk>, Chief Financial Officer, I would like to remind you that they will be referring to forward looking information in today's presentation and in the Q&A by its nature. This information contains forecasts assumptions and expectations about future outcomes, which are subject to the risk.

And uncertainties online outlined here and discussed more fully in our public disclosure filings. These forward looking statements are projections and reflect the current beliefs and expectations of the company.

Actual events or results may differ materially we will also be referring to non-GAAP measures.

<unk> undertakes no obligation to publicly release revisions to such forward looking statements to reflect events or circumstances occurring subsequent to the states I will now turn the call over to Mr. <unk>. Mr. <unk>. Please go ahead.

Good morning, everyone. Thank you for joining us and welcome to <unk> 2022, full year and fourth quarter rounding Cogs.

With me is <unk>, our Chief Financial Officer.

We will begin by four <unk>.

Writing you with an overview of our business and summary of the principal factors that affected our results. During 2022, followed by the details of our financial results.

After our prepared remarks, we will be happy to answer any of your questions questions.

By now everyone should have access to our press release, which was released earlier today. There are at least will be also available on our website at www dot mystic ill take those questions.

When did wanted to was a year of great growth in the company activities.

This year, thanks to the growing demand for our products and the execution of our dedicated team of employees, we were able to achieve sales of almost $40 million.

In the last two quarters of 2022, we achieved sales of over $10 million per quarter.

These results are the result of our successful plan to keep pace with increased demand for our products.

We ended 2022 with a backlog of 70% <unk> in the backlog of the beginning of the year.

The increase in demand for the company products is mainly due to two trends that have prevailed over the past few years and which we anticipate will continue in 2020 through 2023.

The first one is the shift.

Two manufacturing complex PCB manufacturing plants in western countries from the east due to the IP and security considerations.

We are mainly active in the military aerospace Aerospace aviation defense market, which both are in Bolton on these topics and therefore, we have benefited.

<unk> continued to benefit from these trends.

Second trend.

The secured during the last year is the political situation in Eastern New York, which led many governments to increase the defense budget and issue older or defense products, we estimate it's about 60% of our revenues.

Our pcbs for the defense industry.

We continue to notice I demand.

On the Indian market for other liability flex PCB.

We are constantly working on expanding our range of products, while adopting the latest production technologies, using new raw materials and adapting our range of products do.

Due to the changing needs in the market.

Viewing 2022, we continue to invest in our new machines and equipment as well as the optimization of our manufacturing processes in the first quarter of 2022.

Decided to accelerate our investments land and enter a phase one of the plan, where we will invest approximately 8 million.

With the aim to enable us to increase sales.

These phase, including exploration of new production lines and machines and will allow for increased output increased efficiency and manufacturers of products with Io technology technological level.

We accept we expect that anticipates increased efficiency and increasing sales will support our long term goals, our long soil Atlanta for a gross margin target of 24%.

In June and July 2022, we successfully dealt with the fire that broke out one of our production rooms.

Today, we have not finished the negotiation with the insurance company to receive a full compensation for the damages we stopped those.

We hope to conclude these negotiations soon.

During.

Q4 <unk>.

Received final approval from the Israeli innovation authority.

I will.

So a 40% royalty bearing participation in approximately $800000 one yield development program, which started in January 2023.

Program is volatile following investment in research and development.

Activity to bring a new <unk> quality products, the market and drives drives future growth.

We ended 2022 with a net profit of three point.

2 million EBITDA was $4 5 million cash balance of approximately seven 4 million and net cash provided operating activity of $3 $8 million.

Our strong balance sheets and consistent profitability are an excellent starting point for 2023, and which we plan to continue the growth in the company revenue and profitability.

Thank you Ali.

I would like to draw your attention to the financial statements for the year ended December 31st 2022 and for the fourth quarter of 2022.

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

<unk> uses EBITDA as a non-GAAP financial performance measurement.

See our earnings release towards the definition and the reasons for its use.

First I will go over the highlights of 2022.

All numbers mentioned are in U S dollar.

Revenues for the full year of 2022 totaled $39 6 million compared to $33 8 million.

2021.

An increase of 17%.

The increase in revenues is mainly due to the effects of the COVID-19 crisis on our customers demand for products during 2021.

A shortage in raw materials in Q1, 2021, and the increased demand for our products in 2022 as Eddie mentioned before.

Gross profit increased by 20%, reaching $8 $3 million compared to a gross profit of $6 $9 million in 2021.

The increase is mainly due to the increase in revenues.

Operating profit amounted 3 million daus in 2022 compared to one $9 million in 2021.

In 2022, we have recorded financial income in the amount of zero point $9 million compared to financial expense of <unk> five.

$5 million in 2021.

The increase steel companies due to the devaluation of the niche against the us dollar.

Profit before income tax amounted $3 $9 million in 2022 compared to one $5 million in 2021.

Tax expenses amounted to <unk> $7 million compared to tax income.

$3 $5 million in 2021.

In coming 2021 is due to recording a deferred tax assets.

Got to the Companys tax loss carryforwards net.

Net profit was $3 $2 million of 55 cents per share in 2022 compared to a net profit of $5 million or <unk> 86 cents per share in 2021.

EBITDA was $4 $5 million in 2022 compared to $3 8 million.

In 2021.

During <unk> 2002, we enjoyed positive cash flow from operating activities of $3 8 million compared to $3 9 million in 2021.

As of December 31st 2022, we had cash and cash equivalents of $7 4 million compared to $9 $3 million at the end of 2021.

This decrease is due to dividend distribution of $1 million the devaluation of the needs against the U S dollar and the investment in your machines for which we still do not receive compensation from our insurance company.

I will now go over the highlights of the fourth quarter of 2022 compared to the first quarter of 2021.

Revenues for the fourth quarter of 2021 were $10 $5 million compared to $9 $5 million in the fourth quarter of 2021.

Gross profit amounted to $2 $2 million in the fourth quarter of 2022.

Compared to $2 million in the first quarter of 2021.

Net profit in the fourth quarter of 2022 was zero point $8 million or 40, 14 cents per fully diluted share.

Compared to net profit of $3 million or 65 cents per fully diluted share in the fourth quarter of 2021.

In the fourth quarter of 2021 and we have recorded a tax benefit in the amount of $3 6 million Donuts.

EBITDA was $1 $2 million in the fourth quarter of 2022 compared to EBITDA of $1.1 million in the fourth quarter of 2021.

Cash flow from Berthing activities was $1 3 million as compared to zero point $4 million provided by operating activities in the fourth quarter of 2021.

We are now ready to take your questions.

Thank you.

Ladies and gentlemen at this time, we will begin the question and answer session. You have a question. Please press star one.

Wish to cancel your request please press star two.

You are using speaker equipment currently lift the handset before pressing the numbers questions will be answered in the order. They are received please standby.

The first question is from sugar.

On capital market. Please go ahead.

Hi, Hello.

I would like to ask please about the tenant feel that 0.6 million donuts.

And if the expenses.

The penalty equal.

In.

Fourth quarter, Oh, Lyrica and denied the expenses in the first quarter was 23.

Okay.

In January 23, we received a notification from the Ministry.

Sort of a mental protection about its intention to impose a penalty of approximately zero point $6 million.

For an alleged breach of the cleaner lower during the years two.

2019 and 2020.

We invest mainly sauces in compliance with environmental laws and constantly improves what is required in order to prevent future evaluations.

Today, we believe that we comply with the laws, we intend to seek a reduction in the amount of the penalty in accordance with provisions of the cleaner low.

We have recorded in our annual financial statement and in Netherlands in regard to dependency based on management estimation and its legal advisor opinion.

Okay and a question about the business based on your data.

Mr Sims backlog.

Can you say that double digit grow in 2020 threes.

You can say something that you can predict.

Yeah.

Actually as you know we don't.

Forecast, one always story, we never focusing to that.

As I mentioned in my call.

We saw positive about the business, but I don't I cannot give any expectation or.

Uh huh.

And about the growth rate typically would it be.

Okay and is there anything about the dividend policy for the next year.

We don't have any dividend policy.

And so basically currently we do not anticipate any future dividend unless it will be decided either otherwise by our board of directors.

Okay. Thank you good luck.

Sure.

The next question is from Tom <unk> of Zacks. Please go ahead.

Hello.

Quick questions can you comment on the backlog.

Like what products comprised a large growth in backlog or is it spread across all product lines.

Yeah. Thank you. It's a good question are spread all over the product line.

For close to about 60% on flex reagent type PCB.

Okay, 60%, 60% of it is flex agents, yes.

Okay.

And I think I heard you say gross margin goal is 24%.

Yes, and I know you don't give projections, but is that a near term or long term goal or can you give us any.

Guidance when that could happen.

We are underway to be they all wanted to invest once the investment that we announced about $8 million investment will be accused and finished we will be there.

But on the way, we will be on the way to 24.

Yes.

We anticipate that within two to three years will be though.

Okay, that's fair enough.

Okay.

Other questions have been answered. Thank you. Thank you.

If there are any additional questions. Please press star one if you wish to cancel your request. Please press the star to please stand by while we poll for more questions.

Yes.

There are no further questions at this time before I ask Mr. You're all set to go ahead with his closing statement I would like to remind the participants that a replay of this call will be available tomorrow on <unk> website, www dot <unk> dot com.

Before we conclude our call I would like to thank all our employees for their continued efforts to meet our strategy of increased sales and profitability I would like also to tanks, all our customers partners investors and to the LTE team for their continued support. Thank you all for joining us on today's call is a good day.

This concludes the <unk> limited 2022 full year and fourth quarter financial results Conference call. Thank you for your participation you May go ahead and disconnect.

[music].

Okay.

[music].