Eltek Ltd. Q1 2023 Earnings Call
Speaker 1: Is he?
Speaker 2: Ladies and gentlemen, thank you for standing by. Welcome to the LTCH Limited 2023 first 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.
Speaker 2: for operating assistance during the conference, please press star zero.
Speaker 2: As a reminder, this conference is being recorded.
Speaker 2: Before I turn the call over to Mr. Eliyase, Chief Executive Officer and Rome Freund, Chief Financial Officer, I'd 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.
Speaker 2: which are subject to the risks and uncertainties outlined here and discussed more fully in LTX public disclosure filings. These four looking statements are projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. We'll also be referring to non-GAAP measures.
Speaker 2: LTECH undertakes no obligation to publicly release revisions to such four looking statements to reflect events or circumstances occurring subsequent to this date. I will now turn the call over to Mr. Eliyasa. Mr. Yasa, please go ahead.
Speaker 2: release revisions to such four-looking statements to reflect events or circumstances occurring subsequent to this date. I will now turn the call over to Mr. Eliyasa. Mr. Yasa, please go ahead. Thank you.
Speaker 3: Good morning everyone. Thank you for joining us and welcome to Elpec 2023 first quarter round in call.
Speaker 3: With me is Ron Freund, our Chief Financial Officer. We will begin by providing you with an overview of our business and summary of our principal factors that affected our results during the first quarter, followed by the details of our financial results.
Speaker 3: After our prepared remarks, we will be happy to answer any of your questions.
Speaker 3: We will be at it to answer any of your questions. Bye now.
Speaker 3: Everyone should have access to our press release, which was released earlier today.
Speaker 3: The release will also be available on our website at www.nisterkeltek.com
Speaker 3: The trend of IDMAN for our company products that we witness is
Speaker 3: in 2022 continue into the first quarter of 2023. I'm pleased to report that the efforts of our dedicated employees and the strong demand have resolved record sales of $11.5 million during this quarter.
Speaker 3: Our backlog today is 10% higher than it's in the beginning of the year.
Speaker 3: We are currently experiencing a significant trend we identified recent years and we have prepared to.
Speaker 3: the shift back of PCBs manufactured to Western countries.
Speaker 3: In the segments in which we prepared mainly the military defense, aerospace and medical market, this policy of shifting manufacturing back to the Western countries began in recent years, due mainly to the security consideration.
Speaker 3: This trend supported our forecast of sustained eye demand and is the reason for our significant efforts to enhance our operation and efficiencies as well as for our ongoing accelerate investment plan.
Speaker 3: During the first quarter of 2023, we finished issuing orders for all the machines and production lines planned to be purchased as part of the first phase of our accelerated investment plan.
Speaker 3: Some of these machines are all of the operational and are contribute to our production capacity while the rest of the machines is scheduled to arrive by the end of 2025. It is important to note that the installation of these machines will take place gradually through this period, resulting in a gradual contribution to our cells and both of these cells.
Speaker 3: in the same ratio as sales. As a result, the higher our sales, the greater our company gross profitability.
Speaker 3: We ended the first quarter of 2023 with a record pre-tax income of $1.9 million and a net income of $1.6 million.
Speaker 3: This result and the high profitability during the last quarter of 2022 resulted in high cash flow from operating activity. In light of this, we decided to repay $1.6 million of long-term loans in order to reduce our financial expenses.
Speaker 3: given the high prevailing interest rates. I will now turn the call over to one point our CFO to discuss our financial results.
Speaker 4: I would like to draw your attention to the financial statements for the first quarter of 2023.
Speaker 4: During this call, I will also discuss certain un- GAAP financial measures.
Speaker 4: This is EBITDA, a Synan GAAP financial Performance Measurement.
Speaker 4: Please see our running release for with the finition and the reasons for its use.
Speaker 4: I will now go over the highlights of 2023 first quarter. All numbers mentioned are in US dollars.
Speaker 4: Reving us for the first quarter of 2023, where 11.5 million dollars.
Speaker 4: compared to $9.8 million in the first quarter of 2022.
Speaker 4: Gross profit increased by 54% reaching $3 million compared to a gross profit of $2 million in the first quarter of 2022.
Speaker 4: The increase is mainly due to the increase in revenue in the fixed component of part of the expenses included in cost of revenues.
Speaker 4: Operating profit amounted $1.6 million in Q1 2023, compared to $0.7 million in Q1 2022. We recorded financial income of $0.3 million during Q1.
Speaker 4: and 0.1 million dollars in Q1 2022 due to the variation of the mix against the Lewis weeks not tactics any more.
Speaker 4: Profit the 4-inch uptax amounted $1.9 million in Q1 2023 compared to $0.8 million in Q1 2022.
Speaker 4: Net profit was $1.6 million or $27 cents per share in Q1 2020-3 compared to net profit of $0.6 million or $11 cents per share in Q1 2022.
Speaker 4: EBITDA was $1.9 million compared to $1.1 million in Q1 2022.
Speaker 4: During the first quarter of 2023, we enjoyed positive cash flow for operating activities of $2.8 million compared to $0.3 million in Q1 2022.
Speaker 4: As of March 31, 2023, we have cash-in-cash equivalence of $8 million compared to $7.4 million at the end of 2022.
Speaker 4: of March 31, 2023 we had cash-in-cash equivalent of $8 million compared to $7.4 million at the end of 2022. We are now ready to take your questions.
Speaker 2: Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers.
Speaker 2: Your questions will be pulled in the order they are received. Please stand by.
Speaker 2: The first question is from Tom Kerr of Zacks Investment Research. Please go ahead. With ease, please view the code.
Speaker 5: Good morning everybody.
Speaker 5: Good morning everybody.
Speaker 6: The first question is on gross margins that 26% seems to almost exceed one of your long-term goals or near-term goals.
Speaker 6: Do you feel that's sustainable in coming quarters or coming years? And can it improve from there?
Speaker 4: Yes, we think that we achieved this goal and we are targeting this gross profit margin. We hope that we can improve our efficiency and even reach higher.
Speaker 4: Although currently we are satisfied with this percentage.
Speaker 6: Okay, thank you. On the capital of the accelerated investment plan, where are we in terms of spending?
Speaker 6: And then related to that, what does that show up on the financial statements? Because capital expenditures were $305,000.
Speaker 6: wary on sort of the timeline of the Accelerated Investment Plan and where does that spending show up?
Speaker 3: Thank you, Tom. Good morning. As I mentioned before,
Speaker 3: We commit ourselves to most of the investment and it's in a form of PO. So nothing is still yet on our books. But the planning is done. Most of the critical machines all over the defined and PO.
Speaker 3: already issued we start to get some of the machine earlier and that results some of our cells increase during Q1 and we can assume that linearly or in a
Speaker 3: It will be ended by the end of 2025. This is the plan.
Speaker 7: Okay.
And one more question, the any thoughts on pain, the remaining debt balances since the cash balances have become so high?
I didn't understand your question fully.
Oh, plans to repay the remaining amount of long-term debt. Yeah, so as you saw, we have a 6 million checkers balance of long-term debt. We have a plan for financing the accelerated investment plan....
Okay, thank you. I'll get back in the little queue.
Okay, thank you Tom.
The next question is from Michael Wu. Please go ahead.
Hello, hi. Congrats for a great quarter. So my first question is, give us some color-only product revenue mix.
What is the percentage of the revenues from the defense sector?
um
I didn't analyze it, but I can estimate it. Approximately 60% is aerospace and defense.
Oh okay great so any updates going forward on the sector like in Coloradans?
So we didn't get your last sentence? Oh yeah, just like what's the trend? Do you see any trends on the defense sector?
We believe the defense sector will only grow and will not decline in the coming years. Okay, great. Thank you very much. So, follow-up question from the capital expenditure. So, you said it will be fully invested until like 2025, right? Yes.
Okay, so it's sort of like a minor investment or for all those accelerated investment plan, right?
Yes, as I said, we commit ourselves and issued PO for the balance of the equipment.
that is going to arrive step by step between now and the year 2025. Some of the equipment already arrived in Q1 2023, and it's partially reflected in our results.
Okay great. Any update on the labor side? Do you have, you know, like you'll be able to enough to acquire enough?
And workers for you guys.
Yes, we decided that in the next month we will decide if we will continue to grow the growth only in the facility that we have here or we'll go to the other facility. Most of it seems to me and I cannot commit it to right now that we'll give up the recording.
but in the next weeks we will decide about it.
Okay, so it's clear, do you have numbers on how many employees you have right now? Like where's last year, you know, like how many added?
We added approximately 50 employees during 2022 and we maintained the same amount of employees as we were in the end of 2022.
Okay, great. Thank you very much. Thank you, Michael.
If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we pull for more questions. The next question is a follow-up from Tom Kerr of Zacks Investment Research. Please go ahead. If you wish to cancel your request, please press star 1. Please go ahead.
Just a quick follow up on the components of backlog.
Is it still the majority of flexed rigid or did those components make up change?
Yes, it's the same mix.
Okay, that's all I have for today. Thank you. Have a good one.
There are no further questions at this time. Before I ask Mr. Yasai 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 LTEX website, www.nistekeltec.com.
Before we conclude our call, I wish to thank our employees for the continued to contribute to LTCH and our critical mission of inspiring innovation for our customers. I would also like to thank all our customers, partners, investors and LTCH team for their continued support. Thank you all for joining us on today's call. Have a good day.
I wish to thank our employees for their continued to contribute to Eltec and our critical mission of inspiring innovation for our customers. I would also like to thank all our customers, partners, investors and the Eltec team for their continued support. Thank you all for joining us on today's call. Have a good day.