Eltek Ltd. Reports 2024 First Quarter Financial Results

Rhea-AI Summary

Eltek (NASDAQ: ELTK), a global leader in advanced PCB solutions, reported its Q1 2024 financial results. Revenues rose by 3% to $11.8 million compared to Q1 2023. Operating profit increased by 8% to $1.7 million, and net income grew by 11% to $1.7 million, translating to $0.27 per fully diluted share. Net cash from operating activities was $1.3 million. Highlights include a $1.6 million repeat order from a defense client and plans to expand the workforce by 15% to meet rising demand. The company also aims to acquire a PCB manufacturer in the U.S. and expand its Israeli operations. However, Eltek faces challenges with construction delays and integrating new production lines, though progress remains steady.

Positive

• Revenues up 3% to $11.8 million.
• Operating profit increased by 8% to $1.7 million.
• Net income grew by 11% to $1.7 million or $0.27 per fully diluted share.
• Gross profit margin improved to 28%.
• EBITDA rose to $2.1 million, representing 18% of revenues.
• Net cash from operating activities was $1.3 million.
• Secured a $1.6 million repeat order from a defense client.
• No outstanding debt; cash and short-term deposits at $19.9 million.

Negative

• Construction delays affecting new production lines.
• Manpower constraints limiting production capacity.
• Slight delay in investment program for new equipment.

Insights

Financial Analyst

Eltek Ltd.'s Q1 2024 financial performance shows a moderate growth trajectory with a 3% increase in revenues compared to the same quarter last year, accompanied by a 8% rise in operating profit. These figures suggest an ongoing, albeit slow, improvement in financial health. The company's net income of $1.7 million or $0.27 per share reflects an 11% increase, highlighting a positive trend in profitability.

The gross profit margin stands at 28%, which is a slight improvement from 26% in Q1 2023. This suggests that the company's efforts to enhance efficiency and quality are bearing fruit. Moreover, the company’s cash position remains strong at $19.9 million with no outstanding debt, indicating robust liquidity and a solid foundation for future investments.

However, the growth rate in revenues is relatively slow, which could be a concern for investors seeking higher returns. The announcement of securing a significant repeat order worth $1.6 million from a defense client is promising, particularly given the expected sustained demand in the defense sector. But, the company's production constraints due to manpower limitations may hinder its ability to capitalize on such opportunities fully.

Looking forward, Eltek's plans for workforce expansion and the integration of new production lines suggest a strategic move to overcome current limitations and support growth. Yet, the potential delays in these investments could pose short-term challenges. Overall, the company's financial health is stable, but growth potential may be tempered by operational constraints and the pace of infrastructure developments.

Market Research Analyst

Eltek Ltd.'s performance in the first quarter of 2024 showcases a solid, if unremarkable, business trajectory. The company's focus on the defense sector, as evidenced by the substantial repeat order, is noteworthy given the sector's resilience and high demand, particularly in the current geopolitical climate. This focus aligns with broader industry trends where defense spending remains robust, potentially providing Eltek with a stable and lucrative revenue stream.

However, the company's production constraints are a critical factor to consider. The need to increase the workforce by 15% initially and another 10% subsequently indicates a potential bottleneck that could limit the company's ability to scale up in response to rising demand. This scenario underscores the importance of operational efficiency and capacity planning in the manufacturing sector.

Eltek's strategy to seek acquisitions in the American market indicates a strategic expansion plan aimed at enhancing its market presence in North America. Such a move could potentially provide the company with access to new customers and markets, fostering growth. However, the success of this strategy will heavily depend on the identification and integration of suitable acquisition targets, which can be complex and time-consuming.

In summary, while Eltek's financial results reflect stability and cautious optimism, the company's growth prospects will be closely tied to its ability to manage operational constraints and successfully execute its expansion plans.

PETACH TIKVA, Israel, May 21, 2024 /PRNewswire/ -- Eltek Ltd. (NASDAQ: ELTK), a global manufacturer and supplier of technologically advanced solutions in the field of printed circuit boards (PCBs), today announced its financial results for the quarter ended March 31, 2024.

First Quarter 2024 Highlights

• Revenues were $11.8 million, up 3% over Q1 2023
• Operating profit was $1.7 million, up 8% over Q1 2023
• Net income was $1.7 million or $0.27 per fully diluted share, up 11% over Q1 2023
• Net cash provided by operating activities amounted to $1.3 million.

"We have ended another successful quarter with net income of $1.74 million, compared to $1.56 million in the first quarter of 2023, an increase of 11%. Revenues reached $11.8 million, marking a 3% rise compared to the same period last year. These results are the outcome of our continuous investment in increasing efficiency and quality. We have seen a consistent uptrend in both product orders and requests for quotations during the quarter. Recently, we secured a repeat order worth $1.6 million from a defense client for PCB supply, with $1 million due by the end of 2024 and the remainder by the end of 2025. We anticipate sustained high demand in the defense sector, for the next 2-3 years. Our current principal production constraint lies in manpower and not in machine capacity. To manage this increased demand for our products, we're actively seeking to boost our workforce by 15% in the short term and an additional 10% thereafter," said Eli Yaffe, CEO of Eltek.

"Looking ahead to 2024 and 2025, we anticipate significant challenges as we undertake extensive construction work and integrate additional new production lines and machines. Our focus is on ensuring the smooth installation of new equipment while sustaining full production capacity on our existing lines. Despite a slight delay of several months in our investment program, our progress remains steady, with the successful installation of the first of three ordered coating lines during the quarter," continued Mr. Yaffe.

"We continue to seek a suitable PCB manufacturing company to acquire in the American market to enhance our presence in North America. Concurrently, we are exploring additional options for expanding production at our plant in Israel to support our growth strategy," concluded Mr. Yaffe.

First Quarter 2024 GAAP Financial Results

• Revenues for the first quarter of 2024 were $11.8 million, compared to $11.5 million in the first quarter of 2023;
• Gross profit for the first quarter of 2024 was $3.3 million (28% of revenues) compared to $3.0 (26% of revenues) in the first quarter of 2023;
• Operating profit for the first quarter of 2024 was $1.7 million compared to operating profit of $1.6 million in the first quarter of 2023;
• Net income for the first quarter of 2024 was $1.7 million or $0.27 per fully diluted share compared to net income of $1.6 million or $0.27 per fully diluted share in the first quarter of 2023;
• Cash and short-term bank deposits amounted to $19.9 million as of March 31, 2024, with no outstanding debt.

First Quarter 2024 Non-GAAP Financial Results

EBITDA for the first quarter of 2024 was $2.1 million (18% of revenues) compared to EBITDA of $1.9 million (17% of revenues) in the first quarter of 2023;

Conference Call

Today, Tuesday, May 21, 2024, at 8:30am Eastern Time (15:30pm Israel Time, 5:30am Pacific Time), Eltek will conduct a conference call to discuss the results. The call will feature remarks by Eli Yaffe, Chief Executive Officer and Ron Freund, Chief Financial Officer.

To participate, please call the following teleconference numbers. Please allow for additional time to connect prior to the call:
United States:        1-866-860-9642
Israel:                       03-918-0691
International:        +972-3-918-0691

To Access a Replay of the Call

A replay of the call will be available for 30 days on the Investor Info section on Eltek's corporate website at http://www.nisteceltek.com approximately 24 hours after the conference call is completed.

About Eltek

Eltek – "Innovation Across the Board", is a global manufacturer and supplier of technologically advanced solutions in the field of printed circuit boards (PCBs), and is an Israeli leading company in this industry. PCBs are the core circuitry of most electronic devices. Eltek specializes in the manufacture and supply of complex and high quality PCBs, HDI, multilayered and flex-rigid boards for the high-end market. Eltek is ITAR compliant and has AS-9100 and NADCAP Electronics certifications. Its customers include leading companies in the defense, aerospace and medical industries in Israel, the United States, Europe and Asia.

Eltek was founded in 1970. The Company's headquarters, R&D, production and marketing center are located in Israel. Eltek also operates through its subsidiary in North America and by agents and distributors in Europe, India, South Africa and South America.

For more information, visit Eltek's web site at www.nisteceltek.com 

Forward Looking Statement

Some of the statements included in this press release may be forward-looking statements that involve a number of risks and uncertainties including, but not limited to expected results in future quarters, the impact of the Coronavirus on the economy and our operations, risks in product and technology development and rapid technological change, product demand, the impact of competitive products and pricing, market acceptance, the sales cycle, changing economic conditions and other risk factors detailed in the Company's Annual Report on Form 20-F and other filings with the United States Securities and Exchange Commission. Any forward-looking statements set forth in this press release speak only as of the date of this press release. The information found on our website is not incorporated by reference into this press release and is included for reference purposes only.

About our Non-GAAP Financial Information

The Company reports financial results in accordance with U.S. GAAP and herein provides some non-GAAP measures, including EBITDA. These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP measures are intended to supplement the Company's presentation of its financial results that are prepared in accordance with GAAP. The Company uses the non-GAAP measures presented to evaluate and manage the Company's operations internally. The Company is also providing this information to assist investors in performing additional financial analysis. Reconciliation between the Company's results on a GAAP and non-GAAP basis is provided in a table below.

Investor Contact
Ron Freund
Chief Financial Officer
Investor-Contact@nisteceltek.com
+972-3-939-5023

 

     

Eltek Ltd.
Consolidated Statements of Income
U.S. dollars in thousands (except per share data)
		Three months ended
		March  31,
		2024		2023
Revenues		11,783		11,470
Costs of revenues		(8,531)		(8,455)
Gross profit		3,252		3,015
Research and development, expenses, net		(15)		(9)
Selling, general and administrative expenses		(1,516)		(1,417)
Operating income		1,721		1,589
Financial income, net		350		287
Income before income taxes		2,071		1,876
Income tax expenses		332		314
Net Income		1,739		1,562
Earnings per share:
Basic net income per ordinary share		0.27		0.27
Diluted net income per ordinary share		0.27		0.27
Weighted average number of ordinary shares used to compute
basic net income per ordinary share (in thousands)		6,376		5,850
Weighted average number of ordinary shares used to compute
diluted net income per ordinary share (in thousands)		6,491		5,852
Eltek Ltd.
Consolidated Balance Sheets
U.S. dollars in thousands
		March  31,		December  31,
		2024		2023
Assets
Current assets:
Cash and cash equivalents		10,610		9,278
Short-term bank deposits		9,264		2,862
Receivables:   Trade, net of provision for doubtful accounts		9,977		10,898
Other		471		689
Inventories		6,420		6,135
Prepaid expenses		372		245
Total current assets		37,114		30,107
Long term assets:
Severance pay fund		56		57
Deferred tax assets and long term tax receivables, net		889		1,098
Operating lease right of use assets		6,280		6,555
Total long term assets		7,225		7,710
Fixed assets, less accumulated depreciation		10,996		9,354
Total Assets		55,335		47,171
Liabilities and Shareholder's equity
Current liabilities:
Accounts payable: Trade		5,343		7,503
Other		5,389		5,689
Short-term operating lease liabilities		778		789
Total current liabilities		11,510		13,981
Long-term liabilities:
Employee severance benefits		457		447
Long-term operating lease liabilities		5,606		5,871
Total long-term liabilities		6,063		6,318
Shareholders' equity:
Ordinary shares, NIS 3.0 par value authorized 10,000,000 shares, issued and outstanding 6,704,830 at March 31, 2024 and  6,020,693 at December 31, 2023 Additional paid-in capital		6,003		5,443
		32,584		23,587
Cumulative foreign currency translation adjustments		245		783
Capital reserve		2,032		1,900
Accumulated deficit		(3,102)		(4,841)
Total shareholders' equity		37,762		26,872
Total liabilities and shareholders' equity		55,335		47,171
Eltek Ltd.
Unaudited Non-GAAP EBITDA Reconciliations
U.S. dollars in thousands
		Three months ended
		March  31,
		2024		2023
GAAP net Income		1,739		1,562
Add back items:
Financial income, net		(350)		(287)
Income tax expenses		332		314
Depreciation and amortization		365		329
Non-GAAP EBITDA		2,086		1,918
Eltek Ltd.
Consolidated Statements of  Cash Flows
U.S. dollars in thousands
		Three months ended
		March  31,
		2024		2023
Cash flows from operating activities:
Net Income		1,739		1,562
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization		365		329
Stock-based compensation		132		72
Decrease in deferred tax assets and long term tax receivable		322		306
		819		707
Decrease (increase) in operating lease right-of-use assets		1		(33)
Decrease (increase) in trade receivables		736		112
Decrease (increase) in other receivables and prepaid expenses		75		(525)
Decrease (increase) in inventories		(396)		(313)
Increase (decrease) in trade payables		(1,491)		412
Increase (decrease) in other liabilities and accrued expenses		(201)		847
Increase (decrease)  in employee severance benefits, net		18		5
		(1,258)		505
Net cash provided by operating activities		1,300		2,774
Cash flows from investing activities:
Purchase of fixed assets		(2,731)		(305)
Investment in short-term bank deposits, net		(6,490)		-
Net cash used in investing activities		(9,221)		(305)
Cash flows from financing activities:
Exercise of options		246		-
Repayment of long-term loans from bank		-		(1,580)
Issuance of shares, net		9,180		-
Net cash provided by (used in) financing activities		9,426		(1,580)
Effect of translation adjustments		(173)		(196)
Net increase (decrease) in cash and cash equivalents		1,332		693
Cash and cash equivalents at the beginning of the period		9,278		7,366
Cash and cash equivalents at the end of the period		10,610		8,059

 

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SOURCE Eltek Ltd.

FAQ

What were Eltek's Q1 2024 revenues?

Eltek reported Q1 2024 revenues of $11.8 million, a 3% increase from Q1 2023.

How much did Eltek's net income grow in the first quarter of 2024?

Eltek's net income grew by 11% to $1.7 million in Q1 2024.

What is Eltek's operating profit for Q1 2024?

Eltek's operating profit for Q1 2024 was $1.7 million, an 8% increase from Q1 2023.

What was Eltek's EPS for Q1 2024?

Eltek's EPS for Q1 2024 was $0.27 per fully diluted share.

How much cash did Eltek generate from operating activities in Q1 2024?

Eltek generated $1.3 million from operating activities in Q1 2024.

What is the status of Eltek's new production lines?

Eltek is facing construction delays but has made steady progress, with the first of three coating lines installed during Q1 2024.

What recent order did Eltek secure?

Eltek secured a $1.6 million repeat order from a defense client, with $1 million due by the end of 2024.

What are Eltek's plans for workforce expansion?

Eltek plans to boost its workforce by 15% in the short term and an additional 10% thereafter.