Eltek Reports Full Year and Fourth Quarter 2020 Financial Results

Rhea-AI Summary

Eltek Ltd. (NASDAQ: ELTK) reported robust financial results for the full year and fourth quarter of 2020. Revenues rose by 5.5% year-over-year to $36.7 million, while net profit surged 44.4% to $2.6 million or $0.58 per share. Fourth-quarter revenues increased by 10.5% to $9.5 million, with net profit more than doubling to $766,000. The company improved its operating efficiency and managed cash effectively despite the challenges posed by the COVID-19 pandemic. Cash and cash equivalents saw a significant rise from $1.6 million in 2019 to $4.7 million in 2020.

Positive

• Revenues increased 5.5% YoY to $36.7 million for 2020.
• Net profit grew 44.4% YoY to $2.6 million and $0.58 per share.
• Fourth quarter revenue rose 10.5% YoY to $9.5 million.
• Operating profit increased 156.7% YoY to $973,000 in Q4 2020.
• Cash and cash equivalents improved from $1.6 million to $4.7 million YoY.

Negative

• Supply chain challenges due to raw material shortages.
• A new expense reduction plan was initiated to lower the breakeven point.

PETACH-TIKVA, Israel, March 25, 2021 /PRNewswire/ -- Eltek Ltd. (NASDAQ: ELTK), a global manufacturer and supplier of technologically advanced solutions in the field of printed circuit boards, announced today its financial results for the full year and fourth quarter ended December 31, 2020.

Mr. Eli Yaffe, Chief Executive Officer, commented: "We are pleased with the growth in our revenues and profitability in the fourth quarter and the significant change in our full year results. The improved results reflect the growth in our revenues and the continued improved operating efficiencies."

Eltek has managed successfully through the COVID pandemic in 2020 because of the following actions:

• Eltek's balance market sectors strategy enabled Eltek to mitigate the downturn in the commercial aerospace market through its involvement in the defense market and the medical devices market.
• Eltek managed carefully its cash during the pandemic period by obtaining a reduced rate long term loan guaranteed by the government and by raising $5.7 million in a rights offering.
• Eltek increased investments during 2020 capitalizing on the reduced prices of capital equipment due to Covid.

In addition, we were able to emphasis the following:

• Eltek used its strong cash flow during 2020 in order to pay back part of its short-term loans. As a result, the ratio of Equity/Total Balance sheet increased to 43.4% at the end of 2020 compared to 27.5% at the end of 2019.
• Eltek accelerated its R&D plans and was awarded a grant from the Israel Investment Authority and approval for participation in a special R&D program funded by the Israel Innovation Authority.

"The outbreak and spread of the Coronavirus has created new operational and business challenges, including a shortage of certain raw material that we are dealing with. The Covid pandemic forced Eltek to start a new expense reduction plan at the end of 2020 that will reduce further the breakeven point of the company." concluded Mr. Yaffe.

Highlights of the Full Year of 2020 compared to the Full Year of 2019

• Revenues for the full year of 2020 amounted to $36.7 million compared to revenues of $34.8 million in 2019, an increase of 5.5% YoY.
• Gross profit increased by 28.3% to $7.7 million (21.0% of revenues) in 2020 from gross profit of $6.0 million (17.3% of revenues) in 2019.
• Operating profit was $3.0 million in 2020 compared to an operating profit of $1.4 million in 2019, an increase of 114.3% YoY.
• Net profit was $2.6 million, or $0.58 per fully diluted share in 2020, compared to a net profit of $1.8 million, or $0.48 per fully diluted share in 2019. Net profit increased 44.4% YoY.
• EBITDA was $4.6 million in 2020 compared to EBITDA of $3.8 million in 2019, an increase of 21.1% YoY.
• Net cash provided by operating activities amounted to $3.3 million in 2020 compared to $2.6 million in 2019.
• Cash and cash equivalents as of December 31, 2020 were $4.7 million compared to $1.6 million as of December 31, 2019.

Highlights of the Fourth Quarter of 2020 compared to the Fourth Quarter of 2019

• Revenues for the fourth quarter of 2020 were $9.5 million compared to revenues of $8.6 million in the fourth quarter of 2019, an increase of 10.5% YoY.
• Gross profit increased by 46.7% from gross profit of $1.5 million (17.0% of revenues) in the fourth quarter of 2019 to $2.2 million (23.2% of revenues) in the fourth quarter of 2020.
• Operating profit was $973,000 in the fourth quarter of 2020 compared to an operating profit of $379,000 in the fourth quarter of 2019, an increase of 156.7% YoY.
• Net profit was $766,000 or $0.16 per fully diluted share in the fourth quarter of 2020 compared to a net profit of $370,000 or $0.08 per fully diluted share in the fourth quarter of 2019. Fourth quarter net profit increased 107.0% YoY.
• EBITDA was $1.4 million in the fourth quarter of 2020 compared to EBITDA of $817,000 in the fourth quarter of 2019, an increase of 71.4% YoY.
• Short term credit and loans were down from 24.5% of the total balance sheet at the end of 2019 to 1.9% at the end of 2020.

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.

Conference Call

Eltek will conduct a conference call to discuss the results today, Thursday, March 25, 2021, at 8:30 a.m. Eastern Time. 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:                     1-888-668-9141
Israel:                                   03-9180691
International:                      +972-3-9180691

                  At:

                  8:30 a.m. Eastern Time
                  5:30 a.m. Pacific Time
                 14:30 p.m. Israel Time

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

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 the Israeli leader 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.

Investor Contact:

Alon Mualem
Chief Financial Officer
alonm@nisteceltek.com
+972-3-9395023

 

Eltek Ltd.
Consolidated Statements of Operations
(In thousands US$, except per share data)
		Three months ended			Twelve months ended
		December  31,			December  31,
		2020	2019		2020		2019
Revenues		9,501	8,582		36,707		34,794
Costs of revenues		(7,290)	(7,124)		(28,969)		(28,787)
Gross profit		2,211	1,458		7,738		6,007
Selling, general and administrative expenses		(1,236)	(1,063)		(4,704)		(4,604)
R&D expenses, net		(2)	(16)		(2)		(16)
Operating profit		973	379		3,032		1,387
Financial expenses, net		(179)	(32)		(337)		(440)
Other income, net		(6)	48		(16)		923
Profit before income tax		788	395		2,679		1,870
Tax expenses		(22)	(25)		(71)		(77)
Net Profit		766	370		2,608		1,793
Earnings per share
Basic and diluted net profit per ordinary share		0.16	0.08		0.58		0.48
Weighted average number of ordinary shares used to compute
basic net profit per ordinary share (in thousands)		4,841	4,380		4,495		3,734
Weighted average number of ordinary shares used to compute
diluted net profit per ordinary share (in thousands)		4,852	4,380		4,501		3,734

 

 

Eltek Ltd.
Consolidated Balance Sheets
(In thousands US$)
		December  31,	December 31,
		2020	2019
Assets
Current assets
Cash and cash equivalents		4,735	1,628
Receivables:   Trade, net of provision for doubtful accounts		9,062	7,480
Other		700	145
Inventories		3,704	3,735
Prepaid expenses		619	530
Total current assets		18,820	13,518
Long term assets
Restricted deposits		62	-
Severance pay fund		64	60
Operating lease right of use assets		8,948	2,490
Total long term assets		9,074	2,550
Fixed assets, less accumulated depreciation		7,263	6,761
Total Assets		35,157	22,829
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current maturities of long-term debts		676	2,120
Short-term credit from related party		-	3,472
Accounts payable: Trade		4,452	4,673
Other		3,831	3,118
Short-term operating lease liabilities		742	1,383
Total current liabilities		9,701	14,766
Long-term liabilities
Long term debt, excluding current maturities		1,495	387
Employee severance benefits		338	268
Deferred tax liabilities		84	45
Long-term operating lease liabilities		8,272	1,094
Total long-term liabilities		10,189	1,794
Equity
Ordinary shares, NIS 3.0  par value authorized 10,000,000 shares, issued and outstanding 5,840,357 and 4,380,268 at December 31, 2020 and December 31, 2019, respectively		5,296	3,964
Additional paid-in capital		22,846	18,583
Cumulative foreign currency translation adjustments		3,153	2,479
Capital reserve		1,084	963
Accumulated deficit		(17,112)	(19,720)
Shareholders' equity		15,267	6,269
Total liabilities and shareholders' equity		35,157	22,829

 

 

Eltek Ltd.
Unaudited Non-GAAP EBITDA Reconciliations
(In thousands US$)
Non-GAAP EBITDA Reconciliations		Three months ended			Twelve months ended
		December  31,			December  31,
		2020	2019		2020		2019
		Unaudited			Unaudited
GAAP net Income (loss)		766	370		2,608		1,793
Add back items:
Financial expenses, net		179	32		337		440
Income tax expense		21	25		71		77
Depreciation and amortization		414	390		1,590		1,508
Non-GAAP EBITDA		1,380	817		4,606		3,818

 

 

Eltek Ltd.
Consolidated Statement of  Cash flow
(In thousands US$)
		Three months ended			Twelve months ended
		December  31,			December  31,
		2020	2019		2020		2019
Cash flows from operating activities:
Net Income		766	370		2,608		1,793
Adjustments to reconcile net profit to net
cash flows provided by operating activities:
Depreciation and amortization		415	390		1,592		1,508
Capital (gain) loss on disposal of fixed assets, net		14	-		(2)		-
Stock-based compensation		30	53		121		141
Transaction with controlling shareholder		-	(22)		-		22
Revaluation of long term loans		-	(2)		2		(38)
Increase in deferred tax liabilities		15	45		33		45
		474	464		1,746		1,678
Decrease (increase) in operating lease right-of-use assets		79	8		74		(3)
Increase in trade receivables		(2,054)	(565)		(956)		(1,277)
Decrease (increase) in other receivables and prepaid expenses		334	(58)		(556)		598
Decrease in inventories		93	77		290		175
Increase (decrease)  in trade payables		(476)	15		(449)		107
Increase (decrease) in other liabilities and accrued expenses		267	(473)		448		(529)
Increase in employees severance benefits, net		20	21		47		36
		(1,737)	(975)		(1,102)		(893)
Net cash provided by (used in) operating activities		(497)	(141)		3,252		2,578
Cash flows from investing activities:
Purchase of fixed assets		(279)	(263)		(1,082)		(806)
Restricted deposits		-	-		(58)		-
Net cash used in investing activities		(279)	(263)		(1,140)		(806)
Cash flows from financing activities:
Short- term bank credit, net		328	135		(1,600)		(4,181)
Proceeds from short- term shareholder loan		-	2		-		561
Repayment of short- term shareholder loan		(3,090)	-		(3,661)		-
Issuance of ordinary shares in rights offering, net		5,594	-		5,594		3,298
Repayment of long-term loans from bank		(38)	(216)		(183)		(891)
Proceeds from long-term loans		-	-		1,141		558
Repayment of credit from fixed asset payables		(86)	(188)		(477)		(477)
Net cash provided by (used in) financing activities		2,708	(267)		814		(1,132)
Effect of translation adjustments		152	11		181		(4)
Net increase (decrease) in cash and cash equivalents		2,084	(660)		3,107		636
Cash and cash equivalents at beginning of the period		2,651	2,288		1,628		992
Cash and cash equivalents at period end		4,735	1,628		4,735		1,628

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SOURCE Eltek Ltd.

FAQ

What were Eltek's revenue figures for 2020?

Eltek reported revenues of $36.7 million for the full year 2020, a 5.5% increase from $34.8 million in 2019.

How much did Eltek's net profit increase in 2020?

Eltek's net profit increased by 44.4% in 2020, totaling $2.6 million.

What was Eltek's operating profit for Q4 2020?

Eltek reported an operating profit of $973,000 for the fourth quarter of 2020.

What challenges did Eltek face during the COVID-19 pandemic?

Eltek faced supply chain challenges, including raw material shortages, during the pandemic.

How has Eltek managed its cash flow during 2020?

Eltek increased its cash flow, resulting in cash and cash equivalents rising from $1.6 million at the end of 2019 to $4.7 million at the end of 2020.