Eltek Reports 2021 First Quarter Financial Results

Rhea-AI Summary

Eltek Ltd. (NASDAQ: ELTK) reported Q1 2021 financial results, revealing revenues of $7.2 million, down from $9.2 million in Q1 2020. Gross profit decreased to $1.1 million (15.9% of revenues) from $1.8 million (19.7%). Operating profit fell to $136,000 compared to $612,000 last year, while net profit was $223,000 ($0.04 per share), down from $541,000 ($0.12). EBITDA also declined to $577,000 (8.0% of revenues). Positive cash flow was noted with $2.5 million from operations. Looking ahead, Eltek aims to recover lost sales and enhance operational efficiency amid raw material shortages.

Positive

• Cash and cash equivalents increased to $6.4 million from $4.7 million (Q4 2020).
• Net cash provided by operating activities rose to $2.5 million, improving from $1.5 million in Q1 2020.
• Plans to strengthen sales activities and invest in new equipment for growth.

Negative

• Revenues decreased by 22% compared to Q1 2020.
• Gross profit margin fell to 15.9% from 19.7% year-over-year.
• Operating profit down to $136,000, a significant decline from $612,000.
• Net profit decreased from $541,000 to $223,000.

PETACH-TIKVA, Israel, May 20, 2021 /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, 2021.

"Despite the global challenges we encountered related to both the Covid-19 pandemic and the shortage of key raw materials, we were able to respond quickly, maintain operational efficiency and remain profitable in the first quarter," said Eli Yaffe, Chief Executive Officer of Eltek. "We expect that revenues will rebound during the rest of the year and lost sales will be recovered upon the expected availability of key raw material (Pyralux AP) which was in short supply and with the authorization of the use of alternative raw materials by our customers," added Mr. Yaffe. "The approval process with our customers for the use of the alternative raw materials is proceeding as planned and, is reducing our production costs. In addition, we are exploring ways to strengthen our position in the multi-billion dollar PCB market in North America, and can serve as a rapid growth engine for Eltek," further explained Mr. Yaffe.

"We are operating in a challenging business environment and making the necessary adjustments to increase revenues, expand our operating efficiencies, improve customer satisfaction and maintain sustained profitability. We plan to strengthen our sales activities and continue our investments in new equipment to expand our manufacturing facilities and infrastructure during the remainder of the year as part of our strategic growth plan. Our board of directors approved our obtaining a loan of NIS 10 million (approximately $3.1 million) from Bank Leumi B.M. The loan has a term of ten years, with favorable terms, including a repayment schedule that starts after a 12 month grace period and carried interest of Prime + 1.50%, which is waived for the first year of the loan," concluded Mr. Yaffe.

Highlights of the First Quarter of 2021 compared to the First Quarter of 2020

• Revenues were $7.2 million in the first quarter of 2021 compared to revenues of $9.2 million in the first quarter of 2020;
• Gross profit was $1.1 million (15.9% of revenues) in the first quarter of 2021 compared to $1.8 (19.7% of revenues) in the first quarter of 2020;
• Operating profit was $136,000 in the first quarter of 2021 compared to operating profit of $612,000 in the first quarter of 2020;
• Net profit was $223,000 or $0.04 per fully diluted share for the first quarter of 2021 compared to net profit of $541,000 or $0.12 per fully diluted share in the first quarter of 2020;
• EBITDA was a $577,000 (8.0% of revenues) in the first quarter of 2021 compared to EBITDA of $1.0 million (11.0% of revenues) in the first quarter of 2020;
• Net cash provided by operating activities amounted to $2.5 million in the first quarter of 2021 compared to net cash provided by operating activities of $1.5 million in the first quarter of 2020; and
• Cash and cash equivalents as of March 31, 2021 were $6.4 million compared to $4.7 million as of December 31, 2020.

Conference Call

Today, Thursday, May 20, 2021, at 8:30am Eastern Time, Eltek will conduct a conference call to discuss the results. The call will feature remarks by Eli Yaffe, Chief Executive Officer and Alon Mualem, Chief Financial Officer.

To participate, please call the following teleconference numbers. Please allow for additional time to connect prior to the call:

United States:                     1-888-723-3164
Israel:                                   03-918-0691
International:                      +972-3-918-0691

                                  at:

                  8:30am Eastern Time
                   5:30am Pacific Time
                 15:30pm Israel Time

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 is a global manufacturer and supplier of technologically advanced solutions in the field of printed circuit boards (PCBs) and is the leading Israeli company in this industry. PCBs are the core circuitry of most electronic devices for which 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 subsidiaries in North America and by agents and distributors in Europe, India and South America.

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

Use of 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.

Forward Looking Statement

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to statements regarding expected results in future quarters, the impact of COVID-19 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, shortage of raw materials, 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.

Investor Contact

Alon Mualem
Chief Financial Officer
alonm@nisteceltek.com
+972-3-939-5023

                                                            (Tables follow)

 

Eltek Ltd.
Consolidated Statements of Operations
(In thousands US$, except per share data)
		Three months ended
		March  31,
		2021	2020
Revenues		7,205	9,157
Costs of revenues		(6,061)	(7,354)
Gross profit		1,144	1,803
Selling, general and administrative expenses		(1,008)	(1,189)
R&D expenses, net		-	(2)
Operating profit		136	612
Financial expenses, net		104	(55)
Other income, net		(2)	(1)
Profit before income tax		238	556
Tax expenses		(15)	(15)
Net Profit		223	541
Earnings per share
Basic and diluted net profit per ordinary share		0.04	0.12
Weighted average number of ordinary shares used to compute
basic net profit per ordinary share (in thousands)		5,840	4,380
Weighted average number of ordinary shares used to compute
diluted net profit per ordinary share (in thousands)		5,866	4,382

 

 

Eltek Ltd.
Consolidated Balance Sheets
(In thousands US$)
		March  31,	December  31,
		2021	2020
Assets
Current assets
Cash and cash equivalents		6,406	4,735
Receivables:   Trade, net of provision for doubtful accounts		5,770	9,062
Other		938	700
Inventories		4,065	3,704
Prepaid expenses		552	619
Total current assets		17,731	18,820
Long term assets
Restricted deposits		60	62
Severance pay fund		62	64
Operating lease right of use assets		8,694	8,948
Total long term assets		8,816	9,074
Fixed assets, less accumulated depreciation		7,029	7,263
Total Assets		33,576	35,157
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current maturities of long-term debts		364	676
Accounts payable: Trade		4,289	4,452
Other		3,378	3,831
Short-term operating lease liabilities		713	742
Total current liabilities		8,744	9,701
Long-term liabilities
Long term debt, excluding current maturities		1,387	1,495
Employee severance benefits		320	338
Deferred tax liabilities		88	84
Long-term operating lease liabilities		8,049	8,272
Total long-term liabilities		9,844	10,189
Equity
Ordinary shares, NIS 3.0 par value authorized 10,000,000 shares, issued and outstanding 5,840,357		5,296	5,296
Additional paid-in capital		22,846	22,846
Cumulative foreign currency translation adjustments		2,638	3,153
Capital reserve		1,097	1,084
Accumulated deficit		(16,889)	(17,112)
Shareholders' equity		14,988	15,267
Total liabilities and shareholders' equity		33,576	35,157

 

 

Eltek Ltd.
Unaudited Non-GAAP EBITDA Reconciliations
(In thousands US$)
Non-GAAP EBITDA Reconciliations		Three months ended
		March  31,
		2021	2020
		Unaudited
GAAP net Income (loss)		223	541
Add back items:
Financial expenses, net		(104)	55
Income tax expense		15	15
Depreciation and amortization		443	395
Non-GAAP EBITDA		577	1,006

 

 

Eltek Ltd.
Consolidated Statement of  Cash flow
(In thousands US$)
		Three months ended
		March  31,
		2021	2020
Cash flows from operating activities:
Net Income		223	541
Adjustments to reconcile net profit to net
cash flows provided by operating activities:
Depreciation and amortization		443	395
Stock-based compensation		13	26
Revaluation of long term loans		-	10
Increase in deferred tax liabilities		8	5
		464	436
Decrease (increase) in operating lease right-of-use assets		4	(5)
Decrease (increase) in trade receivables		3,028	(132)
Decrease (increase) in other receivables and prepaid expenses		(220)	139
Decrease (increase) in inventories		(502)	221
Decrease in trade payables		(200)	(257)
Increase (decrease) in other liabilities and accrued expenses		(323)	520
Increase (decrease)  in employee severance benefits, net		(6)	16
		1,781	502
Net cash provided by operating activities		2,468	1,479
Cash flows from investing activities:
Purchase of fixed assets		(208)	(204)
Net cash used in investing activities		(208)	(204)
Cash flows from financing activities:
Short- term bank credit, net		(377)	(438)
Repayment of long-term loans from bank		(38)	(73)
Repayment of credit from fixed asset payables		(11)	(151)
Net cash used in financing activities		(426)	(662)
Effect of translation adjustments		(163)	(27)
Net increase (decrease) in cash and cash equivalents		1,671	586
Cash and cash equivalents at beginning of the period		4,735	1,628
Cash and cash equivalents at period end		6,406	2,214

 

 

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SOURCE Eltek Ltd.

FAQ

What were Eltek's Q1 2021 revenues?

Eltek reported revenues of $7.2 million for Q1 2021.

How much did Eltek's net profit decrease in Q1 2021?

Net profit decreased to $223,000 in Q1 2021 from $541,000 in Q1 2020.

What is Eltek's plan for future growth?

Eltek plans to recover lost sales, enhance operational efficiency, and invest in new equipment.

How did Eltek's gross profit change in Q1 2021?

Gross profit fell to $1.1 million in Q1 2021 from $1.8 million in Q1 2020.

What cash position did Eltek report for Q1 2021?

Eltek reported cash and cash equivalents of $6.4 million as of March 31, 2021.