Q3 2023 Eltek Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by welcome to the Alphatec L. T. D 2023 third quarter financial results Conference call. All participants are present in listen only mode. Following management's formal presentation instructions will be given for the question and answer session for operator assistance during the conference.
Press Star Zero as a reminder, this conference is being recorded before I turn the call over to Mr. <unk>, Li Our Chief Executive Officer, and Ron <unk>, 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.
Its nature. This information contains forecasts assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in <unk> 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 I'll take undertakes no obligation to publicly release revisions to such forward looking statements to reflect events or circumstances occurring subsequent to this date I will now turn the call over to Mr. <unk>.
Mr. Yap It would you like to begin.
Good morning, Thank you for joining us for the third quarter of fiscal year, 2000, and 2023, earning calls.
With me is Ron <unk>, our Chief Financial Officer, we.
We will begin by providing you with an overview of our business and a summary of the principal factors that affected our results during the third quarter, followed by the details of our financial results.
After our prepared remarks, we will be happy to answer any of your questions.
By now everyone should have access to our press release, which was released earlier today.
The release will also available on our website.
And the oldest I would like to express our controller says condolences on behalf of the company management and its employees to the families of the.
Skilled in the murderous terrorist attacks that have fueled on total seven 2023.
Our house go out to the Griffing families and we hope for a speedy recovery of the injured and safely down or taking it up soon.
We also showed the grief of the families of the idea of soldiers who were killed in the bedroom.
Taking place recent weeks and wants to wish you wanted.
Full recovery.
Grateful the piece.
The soldier, while still fighting doing these days.
The company is.
Currently operating smoothly and maintain stunt those activity levels.
Most of our employees are constantly are reporting to work and the impact of the war on the attendance has been very minimal to no effects.
As of our supply chain, we have implemented several measures, including bolstering our stork office session of raw material. So queuing advance advanced deliveries and engaging in active communication with our primary suppliers to ensure continuous flow of resources.
The ongoing conflict in Israel underscore the critical significance of domestic PCB industry.
Such an industry not only offer advanced technology cost solution, but also produce intrigued.
It's tailored to specific defense week violence, employing staples, Dell technologies, and ensuring the highest quality standards.
<unk>.
And they blue Swift delivery to meet the immediate demands with the fixed two defense sector.
I think also startled sofa sectional enterprise as designated by the Israeli government granting us permission to operate around the clock 365 days is needed.
We see that these really defense sector companies.
Beginning to place orders, including Boastful Pcbs really.
We remain committed to our pricing strategy and.
And the selection of the orders to be received with the goal of optimizing our production capability, while ensuring strong profitability.
Consequently, we give boy always eat why profitability income purchase orders, including those from all the signals and manage our oldest backlog accordingly.
Oldest received directly from government entities with the combined weight requirements for immediate delivery takes precedence to promote.
<unk> production.
Looking good.
We believe that the long term increase demand trend in defense next door worldwide will continue we're involving several long term customer projects.
The oldest of all these projects are perceived suite.
The life of the project. Therefore, we expect a stream of income from these projects throughout the coming years.
We are also experiencing experiencing the continuing to gleason and demand from customers in the European countries due to decreased demand for defense products.
At this time because demand for PCB products in Western Com countries, mainly in Europe increase in such a way that the lead time for production will more than double which caused price to become a secondary flexible.
This fall, we will accelerate investment plan. The current situations in these late may lead to a limited delaying base of the employing new machines.
Today, we don't see any delays.
In addition to the investments in the production equipment.
I'll also walking to obsolete our engineering software to allow us to fully respond to the needs of our customers.
During the recent months.
We felt that the trend of workplace market.
It's changed and there is a greater number of individuals applying for employment interviews, we hope that this trend will strengthen our will and will allow us to fill open positions more easily and equally solid production capacity accordingly.
And now our Q3 results.
We ended the third quarter of 2023 with revenue of $11 9 million to allow it to net profit of 2.1 million Boe.
For the first nine months of 2023.
We had revenue of $34 4 million and $5 million net profits the IEP.
The ability to use the results of our pricing and purchase all the acceptance policy.
Due to the high level of demand and the limitation of production capacity, we made sure to choose the oldest I imagine of profitability and try to maximize maximize the consideration of the profitability with operational efficiency consideration.
I'm glad that this policy has proven itself during the last quarters.
We had gross profit of $3 7 million in Q3, and a gross margin of 71%.
<unk> gross margin is due to an excellent mix of products. We sold during this quarter, we are keeping our medium term target of 27% for smoking.
During the third quarter, the dollar rate against it and I guess continue to rise as a result in the third quarter. We recorded exchange rate income of amount of point to medium.
As of September 32012, 23, our cash balances amounted to $11 3 million.
We have invested most of the balance in interest bearing deposits.
We also decided to hold a substantial part of this balance in a and I guess to edge risk range format sharp drop in the dollar exchange rate.
I will now turn the call over to Juan <unk>, our CFO to discuss our financial results.
Thank you I really I would like to draw your attention to the financial statements for the third quarter of 2023.
During this call I will also discuss certain non-GAAP financial measures.
<unk> uses EBITDA as a non-GAAP financial performance measurement. Please see our earnings release for the definition and the reason for its use.
I will now go over the highlights of the 2023 third quarter all numbers mentioned other news daughters.
Revenue for the third quarter of 2023 were $11 $9 million compared to $10 $3 million in the third quarter of 2022.
Gross profit increased by 51%, reaching $3 $7 million compared to a gross profit of $2 $4 million in the third quarter of 2022.
The increase is mainly due to the increase in revenue and the increase in gross margin as Eddie mentioned before.
Operating profit amounted to $2 $3 million in Q3, 2023 compared to $1 $1 million in Q3 2022.
We recorded financial income of zero point $3 million during Q3, and zero point $1 million in Q3, 2022, mainly due to devaluation of the niche against the U S dollar.
Profit before income tax amounted to $2 $6 million in Q3, 2023 compared to $1 $2 million in Q3 2022.
Net profit was $2 $1 million or 36 cents per share in Q3 2023.
Compared to a net profit of $1.17 per share in Q3 2022.
EBITDA was $2 $6 million compared to $1.4 million in Q3 'twenty to 'twenty two.
During the third quarter of 2023, we enjoyed positive cash flow for a variety of activities of $3 $6 million compared to $1 $7 million in Q3 2022.
The increase is mainly due to the increase in net income.
As of September 32023, we had cash and cash equivalents of $11 $3 million compared to $7 $4 million at the end of 2022.
We are now ready to answer your questions.
Yeah.
Thank you Lee.
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 kind of lift the handset before pressing the numbers.
<unk> will be pulled in the order they are received.
The first question is from Michelle. Please go ahead.
Michel do you have a question.
Oh, it's a me yes.
Yes.
Oh, Okay sorry.
Could you just disclose what is the person age outs in military.
Revenue.
But this quarter.
We believe that it's around 60% of all of our sales.
I should probably the same right yeah.
Yeah.
Okay going forward what is.
Capacity I can't give you any update about its capacity cans of capacity.
Your demand or any labor related issues.
Issues.
As we mentioned before we go slowly capacity based on the presentation that we made in a quarter ago.
And we will gradually by the end of 2025, beginning of 2026, we would like to be in the range of $55 million.
Okay.
So you are just like us.
I mean, your current capacity is enough or not.
Meteoric demand.
Okay.
The capacity the installed capacity that we have right now is more than what we sell we have the ability to win more than we grow gradually based on the backlog.
Oh purchase order that we get limited by the capacity that we live when we land.
Dutch the capacity limits right now, we don't touch the capacity limit yet.
Oh, Okay, great. That's great. One just last question what is the outlook for the military segment for the next year.
Any outlet.
We don't disclose it.
Okay. Okay. Thank you very much. Thank you appreciate it thank you Michelle.
The next question is from Tom Kerr of Zacks investment. Please go ahead.
Good morning, several questions on the gross margins that were very strong at 31%.
Your outlook is still for 27% was it just an unusual quarter.
Or is that 31% not sustainable.
Trying to get more.
Color on that.
It was a very item it was a very unique quarter, we enjoyed a favorable mix of sales reaching crude it says with relatively low material copper then and now.
Technological added value. So we don't think that will keep the same gross.
Gross margin for the next quarter, and we didn't change our estimate or forecast for the 27% gross margin.
Okay.
And on the business mix.
Any information on the flex rigid versus Richard is it still the vast majority is flex rigid.
Now it is the same the same the same ratios were in the last several quarters that will remain.
Also for this quarter and for the next ones.
And that was about two thirds or 60% Flex Richard correct, Yeah, correct, yes.
Okay.
Any other information on entering the U S market and you're still looking for capacity there.
Yes, we're still looking for M&A deals, but there is no nothing to report as of now.
And.
You've got the defense.
Uh huh.
And do you guys have a share buyback authorization with all your strong free cash flow I was just curious no. We don't have any such policy and the assets now.
Now, we do not intend to make such a plan.
Yeah.
Okay I think that's all I have thank you. Thank you Tom.
If there are 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.
Yes.
This concludes the question. The next question is from Sugary Hassan Hassan capital markets. Please go ahead.
Hi, Hello, guys very good quarter.
I wanted to ask about the needs of the idea.
Thanks.
Obviously because of the OS as urgent needs.
So compliments and.
And I want to know about the pricing goes the urgent need send a do you think.
Yeah.
The gross margin.
These needs.
The higher than normal and eh.
Okay.
If we are talking about the situation in insurance. So you are at the moment.
It's fair to sell to local.
The security companies into foreign companies.
I shouldn't clearly speaking.
Regarding our policy for speeding process is the same policy, we didn't change the policy for speeding process, we have some.
Charles and we keep the same policy even in these days so if the customer's idea if and they ask for speedy process.
They paid a premium if it's another customer the speedy process they pay for the premium as well we don't differentiate between the two now regarding regarding.
Guarding preference of ideas versus other customers no we don't depreciate.
We continue to work because because we would like to keep our customers happy.
And the metal effect in order to reduce feels of our customers, we are making deliveries to our customers.
Outside Israel, even faster and at a time.
To be sure that there would be satisfied right now the government and the government are when they gave us the sectional enterprise statues.
They can force us to ever.
President's or things that we have to do on top of everything and I a priority, but it is limited.
Up to 2% to 3% of our capacity so it's not it's not affecting our business.
Okay and did you feel the change in the business since the seventh of October.
The answer is yes.
Yeah. Okay. Thank you very much. Thank you good luck. Thank you.
There are no further questions at this time before I ask Mr. Yap at to go ahead with his closing statement I would like to remind participants that a replay of this call will be available tomorrow on our website.
<unk> would you like to make a closing statement.
In closing I would like to thanks, the company employees and the management team or a folder outwork during this time and things our customers and our investors for their continued support.
This concludes the al Tac L. T D 2023 third quarter financial results Conference call. Thank you for your participation you May go ahead and disconnect.
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