Q4 2024 Eltek Ltd Earnings Call
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The 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. All tech undertakes no obligation to publicly release revisions to such forward looking statements to reflect events or circumstances occurring subsequent to this date.
Speaker Change: I will now turn the call over to Mr. Elie Office Mr. Yao. Please go ahead.
Thank you good morning.
Speaker Change: Thank you for joining us for our 2020 full and you are you earning call.
Worn Froind: With me he's worn Froind, Oh, Chief Financial Officer.
Worn Froind: We will begin by providing you with an overview of our business and summary of the principal factors that affected our results during 2024.
Worn Froind: After all the prepared remarks, we will be happy to answer any of your questions.
Worn Froind: By now everyone should have access to our press release, which was released earlier today. The release will be also available on our website.
Worn Froind: In 2020 full we generated revenue of $46 5 million Boe at all.
Worn Froind: With our 2023 levels, but below low expectations.
Worn Froind: While demand for our products remains strong revenue growth was constrained.
Worn Froind: Baidu.
Worn Froind: The operational challenges associated with the construction and installation of the new appointment.
Worn Froind: As well as the ongoing regional conflict, which led to a sedation or delays in visits from throw interconnect technically expense.
Worn Froind: Spike these challenges we closed the eel with a net profit of $4 $2 million and maintain a solid cash position of approximately $17 million, even after capital expenditure of approximately $10 million.
Worn Froind: In today's call I will first focus on revenue and gross before addressing operational aspects.
Worn Froind: We continue to operate in a strong market environment with sustained demand in recent months, we have received a request to participate in local in both local and international bids for.
Worn Froind: Well, that's a lot of scale defense 10 deals including opportunities behind domestic needs.
Worn Froind: Recently in the industrial sectors, we have observed a slight uptick.
Worn Froind: Activities over the past two months.
Worn Froind: I'll start.
Worn Froind: Focus to remain on maintaining a well balanced portfolio of course all of these three core market segments defense medical.
Worn Froind: And I and industrial.
Worn Froind: Great distinction between the U S and Europe, if promote civil European nations to accelerate increasing defense budgets.
Worn Froind: These trends present additional growth opportunities in the defense sector will reinforce our position in this expanding market.
Worn Froind: Despite the strong market and ongoing tender activity, we have yet to see significant degrees.
Worn Froind: Backlog in the pricing and competition remains.
Worn Froind: October both on local and European companies.
Worn Froind: We view competition from European films is relatively limited, but I believe they are driven by efforts to penetrate these oily markets. These companies.
Worn Froind: Initial pricing benchmark that we believe are unsustainable beyond the market entry phase as corn pricing does not yet reflect the anticipate driving demand of course is oil in Europe.
Worn Froind: While we continue to receive short term all this discussion around long term agreements of gaining momentum.
Worn Froind: Fueling such agreement with enhanced operational efficiency and provide greater production stability.
Worn Froind: Additionally, we are actively working to obtain large scale production of holders, which would further support sustained and efficient manufacturing.
Worn Froind: It's both of our growth strategy and our commitment to enhancing the customer.
Worn Froind: Over the past six months we have.
Worn Froind: Place a significant emphasis on expanding our commercial activities.
Worn Froind: The successful implementation of these launches you will allow us to increase sales volume, while leveraging our manufacturing capability for complex production stages.
Worn Froind: Those that must remain local due to the security can see durations.
Worn Froind: On the voice of our phones.
Worn Froind: We are making steady progress in executing our accelerating investment plan is reflected in our fiscal <unk> capital expenditure and machinery and equipment totaled approximately $10 million viewing 2024, and we anticipate a similar level of investment in 2025.
Worn Froind: In 2024 hour.
I am reinvestment will directed toward the new solar marketing application development.
Worn Froind: Pension of the cooling and infrastructure will falls facility and the relocation and reconstruction of the office space to facilitate the planned expansion to our production capacity, including the installation of 68 meters plating lines one of the core component so far accelerated investment plan.
Worn Froind: The large scale acquisition of a new machinery, along with the need to reallocate we installed existing equipment. According the <unk>.
Worn Froind: New production sales.
Worn Froind: Presented significant operational challenges.
Worn Froind: Maintaining normal production levels, while responding to the increased demand while simultaneously reallocating, we've been integrating new machinery and carrying out construction work is required precise timing and I level or fixed.
Worn Froind: Additional complexity.
Worn Froind: Unfortunately, we faced difficulties and delays in some of our task, particularly towards the end of the yield when we launched the solder mask application Department.
Worn Froind: One of the main challenges stems from the inability of overseas technician to travel.
Worn Froind: For the installation of the equipment due to the ongoing conflict in the region.
Worn Froind: <unk> we've been deliberately.
Worn Froind: Since of the installations that condition.
Worn Froind: Direction of our ongoing manufacturing operational lead to production stoppage and increase in the fixed rates and set of vehicles and execution of investment plan. According to the schedule.
Worn Froind: On the most critical component will fall investment plan is the installation of the new plating line.
Worn Froind: Which.
Worn Froind: Which form from the cole our production process and have significant impact on our quality and our products.
Worn Froind: The first new plating line smaller scale one.
Worn Froind: Was delivered by this.
Worn Froind: Buyouts supply out at the beginning of 2024 and he now has been fully operational the primary learning is currently being assembled at the supplier facility in York and expecting to be shipped to us during the second quarter of 2025.
Worn Froind: Their line is scheduled to deliver at the end of 2025 or early 2026.
Worn Froind: The installation.
Worn Froind: And the stabilization process.
Worn Froind: The lines is expected to take several months.
Worn Froind: To ensure continuous production we are installing the new lines alongside the existing ones aligns us to maintain uninterrupted operation to meet the customers' demands.
Worn Froind: Extensive work load faced by all of our dedicated workforce both in the ongoing production and integration and installation of the new machinery.
Worn Froind: Also a labor shortage and production capacity constraints.
Worn Froind: We are actively working the we call the additional employees.
Worn Froind: Engineers to support the expansion efforts.
Speaker Change: I'll now turn the call over to one point, our CFO to discuss our financial results.
Speaker Change: Thank you Ali I would like to draw your attention to the financial statements for the year ended December 31st 2024 and for the fourth quarter of 2024.
Speaker Change: During this call I will also discuss certain non-GAAP financial measures.
Speaker Change: <unk> uses EBITDA as a non-GAAP financial performance measurement.
Speaker Change: Please see our earnings release and its definition and the reason for its use.
Speaker Change: I'll now go over the highlights of credit spread before all numbers mentioned are in Arizona.
Speaker Change: Revenues for the year ended December 31, 2020, full totaled $46 5 million compared to $46 7 million in 2023.
Speaker Change: Gross profit reached $10 $3 million compared to a gross profit of hurting point $1 million in 2023.
Speaker Change: Gross margin reflected dropped 22% down from 38 in 2023.
Speaker Change: The decrease in gross profit and gross margin was primarily driven by a higher amount of factoring in political mutation costs.
Speaker Change: Before I sort of shifting our product mix.
Speaker Change: Operating profit amounted to $4 $4 million in 'twenty, 'twenty, four compared to $7 $3 million in 2023.
Speaker Change: In 2024, we recorded financial income of zero point $7 million compared to zero point $4 million in 2023.
Speaker Change: The increase is the result of increased interest income on our bank deposits.
Speaker Change: Net profit was $4 $2 million or 63 cents per share in 2024.
Speaker Change: The net profit of $6 4 million a 1.7 dollars.
Speaker Change: Loss per share in 2023.
Speaker Change: EBITA was one was $5 $9 million in 2024 compared to $8 6 million daus in 'twenty two 'twenty three.
Speaker Change: During two antitrust before we enjoyed positive cash from operating activities of $4 $5 million compared to eight 5 million daus in 2023.
Speaker Change: As of December 31 directly to a default, we had cash and cash equivalents and short term bank deposits and the total amount of $17 2 million.
Speaker Change: I would now rolls are the highlights.
Speaker Change: The fourth quarter of 2024 compared to the fourth quarter of 2023.
Speaker Change: Revenues for the fourth quarter of 2024 wells.
Speaker Change: $10.8 million compared to $12 3 million in the fourth quarter of 2023.
Gross profit amounted to $1 $9 million in the fourth quarter of 2024 compared to $3 5 million in the fourth quarter of 2023.
Speaker Change: Net profit for the fourth quarter of 2012 before was zero compared to a net profit of $1 $3 million or 22 cents per share in the fourth quarter of <unk>.
Speaker Change: EBITA was EUR $4 million in the fourth quarter of 30, 34 compared to EBITDA of $2 $4 million in the fourth quarter was <unk> 23.
Speaker Change: We are now ready to take your questions.
Speaker Change: Thank you ladies and gentlemen at this time, we will begin the question and answer session. 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 youre questions will be pulled in the order. They are received please standby.
Speaker Change: While we poll for your questions.
Speaker Change: I repeat if you have a question please press star one.
Speaker Change: Yeah.
Speaker Change: There are no questions at this time before I ask Mr. Yafei 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.
Speaker Change: <unk>. Please go ahead.
Speaker Change: In closing I would like to extend my sincere gratitude to our investors for their continued trust and support.
Speaker Change: Confidence in our vision and the strategy drives us to boost food even in the face of challenges I would like to thanks, and dedicate all of our dedicated employees, whose hard work and commitment even.
Speaker Change: Even instrumental in litigation the complex spirit, they are reliance's index expertise.
Speaker Change: Foundation of our success.
Speaker Change: As we move forward, we remain focused on executing our strategy linking our market position and delivering long term value. Thank you for joining us today is Mr. Yap that there is a question would you like to take a question yes.
Speaker Change: Okay.
Speaker Change: The next one moment.
Speaker Change: Yes.
Yao Lipschitz: The question is from our Yao Lipschitz. Please go ahead.
Yao Lipschitz: Yes, Hello, good afternoon, and good morning.
Yao Lipschitz: My question relates to competitive pressures that you mentioned very briefly.
Yao Lipschitz: You explained quite clearly the operational challenges related to the new equipment and to the difficulties.
Yao Lipschitz: Certain suppliers to travel to Israel during.
Yao Lipschitz: The war period.
Yao Lipschitz: My first question is related to these travel difficulties are they behind.
Yao Lipschitz: Behind you do you will get all the technical.
Yao Lipschitz: Technical.
Yao Lipschitz: <unk> do you expect it from these suppliers at this time and are these new installations are proceeding as expected.
Speaker Change: The second question is related to these competitive pressures I was not.
Speaker Change: Clear if you face competition in the Israeli market or in the European market and who are these new competitors you mentioned that.
Speaker Change: But you don't believe they're lower prices can be sustained long term.
Speaker Change: But more clarity would be welcome about that thank you.
Speaker Change: Thank you all for your questions.
Speaker Change: Question number one regarding the technical support most of their.
Speaker Change: Travel restrictions for you all do is really there is not exist anymore most of the technicians already.
Speaker Change: Coming there is out there right now two machines that we didn't get.
Speaker Change: Online simple we didn't get to.
Speaker Change: Support directly, but we get online support and our engineers are.
Speaker Change: Succeed to solve the problem.
Speaker Change: With remote support.
Speaker Change: So to summarize the issue I think that the.
Speaker Change: Most of the problem is behind us on the call and equipment that we have there is still a window to come.
Speaker Change: In time, we'll see if we live programs.
Speaker Change: Yeah.
Speaker Change: Travelling to Israel or not in the future regarding the competition in New York.
Speaker Change: Competition as I mentioned is the competition in Israel.
Speaker Change: With European companies that will not in Israel before.
Speaker Change: They come in with very aggressive pricing.
Speaker Change: Not in limited.
Speaker Change: But in very limited capacity.
Speaker Change: But this happened this is even before the attention that started between the United States and Europe did double the budget of.
Speaker Change: And defense in Europe, So we believe that they will land.
Speaker Change: You turn and we will go back to Europe with high prices and they will leave the Israeli market that's our estimate.
Speaker Change: Yes.
Speaker Change: My follow up would you summarized that your challenges are operational rather than demand.
Speaker Change: The words do you believe that Collyn.
Speaker Change: Currently and for the next year or two you're challenges auto in your internal operational.
Speaker Change: The installation of new machinery.
Speaker Change: New employers training et cetera, or are the difficulties externally in terms of demand.
Speaker Change: And the revenues.
Speaker Change: Central operational issues.
Speaker Change: No not demand demand is operational now.
Speaker Change: Alright, you also mentioned in the past the new facility in the North of Israel and gradually I believe is there any.
Speaker Change: Given this demand that we expect to remain or increase.
Speaker Change: Do you envisage any further capacity expansion beyond protecting book.
Tony: Hi, This is Tony.
Speaker Change: We are not progressing.
Tony: Yeah.
Tony: Our plan to open a new facility. They know US. However, we are starting to think about in your investment plan, which will come after we learned.
Tony: And toward the accelerated one.
Tony: That's what we said we think that it will take us towards the end of 2025 at the beginning of 2026 months to finish the current investment and only then we really see it making another plan.
Tony: Yeah, that's clear and unemployment side do you have.
Speaker Change: How do you proceed with hiring.
Speaker Change: No the additional or replacement employers.
Speaker Change: You mentioned in the past you've had some problems also related to the to the order of course that's understood.
Speaker Change: But those are related to the new capacity and to the increased cost with salaries. Because you mentioned in the past that you had to raise salaries because of competitive pressures on the employment market when the labor market. So.
Speaker Change: Could you comment on that.
Speaker Change: Yes, so the recruiting employees is a continuous effort, which will be with us along 2025.
Speaker Change: We think that they're raising salaries that we made during the second quarter of 2024 was good it allow us to keep employees <unk>.
Speaker Change: However, the labor market and he's already is very tough.
Speaker Change: And it requires a lot of efforts to recruit engineers and also in our federal employee we are succeeding.
Speaker Change: But it goes not quickly.
Speaker Change: And as I said it is a it is a continuous effort along the year.
Speaker Change: Yeah.
Speaker Change: Thank you for all the qualifications have a good day.
Speaker Change: The next question is from Dan South Korea. Please go ahead.
Speaker Change: Hello. Thank you for taking my question, so I have and I have one on the gross margin the latest scrubbed the lace less quotas and on the earnings calls.
Speaker Change: You came in guided in around 27% on the gross margin in this quarter you only came at 18. So should we see this set rents continue to 'twenty to 'twenty five.
Speaker Change: We believe that the.
Speaker Change: Dan, which mean that the next two to three years it will be around the 26 to 29. Some are there we had some difficulties as Andy explained before on the operation side. We had also an unfavorable mix of February.
Speaker Change: Flex really just orders with a big volume.
Speaker Change: And relatively low.
Speaker Change: The average price due to its a level of sophistication.
Speaker Change: We are targeting to meet the this for this.
Speaker Change: Guideline and to reach the 26% to 39% gross margin.
Speaker Change: Can you talk about the timeline again, you said two or three years or two or three quarters quarters, two to three years to meet them.
Speaker Change: Okay, and then what about 2025 live some are some guidance to give them about it no I cannot give.
Speaker Change: Okay. Thank you very much thank you.
Speaker Change: There are no further questions at this time. This concludes the Alphatec L. T. D 2024 financial results Conference call. Thank you for your participation you May go ahead and disconnect. Thank you.
Speaker Change: Okay.