Eltek Reports 2017 Third Quarter Financial Results
PETACH-TIKVA, Israel, Nov 27, 2017 /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 quarter ended September 30, 2016.
Mr. Yitzhak Nissan, Chairman of the Board and Chief Executive Officer, commented: "The third quarter was very challenging for our company due to several significant equipment failures, which impacted our ability to supply our customers' orders and affected our on-time delivery performance. In addition, the unsatisfactory operating results resulted into a $1.3 million impact on our operating cash flows. As a result, in November 2017, the Company obtained an additional NIS 3.0 million ($850,000) line of credit that was guaranteed by Nistec, Eltek's controlling shareholder.
We have recently made several changes in our manufacturing operations to address the difficulties encountered in the third quarter and the vast majority of the delayed orders were successfully supplied during October 2017. Based on these changes, we are better organized to supply higher sales in the fourth quarter, compared to the third quarter. Furthermore, the backlog of orders as of September 30, 2017 was higher than that at September 30, 2016.
In addition to the changes made to the manufacturing operations, we were able to reduce our operating costs compared to the third quarter of 2016.
During the third quarter, the Company received a $1.3 million order from one of our existing customers in the United States. Additionally, it should be noted that the governmental project, which we announced in July 2017, is progressing as scheduled.
Cash and cash equivalents as of September 30, 2017 were $1.0 million compared to $842,000 as of September 30, 2016. Taking into account the Company's current cash position, management believes that the Company needs to generate quarterly revenues of at least $8.8 million in order to continue operations without external financing. Management believes that the revenue goals for the fourth quarter will be achieved.
The results to the third quarter and the first nine months of 2017 do not include the operations of Kubatronik Leiterplatten GmbH, which were included in Eltek's results for the comparable periods in 2016. Therefore, we have provided selected financial information on a proforma basis, excluding Kubatronik's results for 2016," Mr. Nissan concluded.
Highlights of the Third Quarter of 2017
-- Revenues for the third quarter of 2017 were $7.7 million, compared to
$9.3 million in the third quarter of 2016 ($8.4 million excluding
Kubatronik).
-- Gross loss was $32,000 (0.4% of revenues), compared to a gross profit of
$880,000 (9.5% of revenues) in the third quarter of 2016 ($871,000 or
10.3% of revenues excluding Kubatronik). Excluding a $348,000 one-time
amortization of a software system, gross profit for the third quarter
was $316.000. The decrease in gross profit and gross profit margins
reflects the decreased sales, while a significant portion of our cost of
sales remained constant, along with the adverse effects of the
amortization expense and the 6.3% decrease in the US Dollar exchange
rate.
-- Operating loss was $1.2 million, compared to an operating loss of
$338,000 in the third quarter of 2016 ($193,000 excluding Kubatronik).
-- Net loss was $1.2 million or $0.12 per fully diluted share ($0.59 per
new share post a 5:1 reverse stock split effected on November 22, 2017
("Post Split Share"), compared to a net loss of $446,000 or $0.04 per
fully diluted share ($0.22 per Post Split Share) in the third quarter of
2016 ($317,000 or $0.03 per fully diluted share excluding Kubatronik
($0.16 per Post Split Share);
-- EBITDA was a negative amount of $422,000 compared to a positive amount
of $164,000 in the third quarter of 2016 ($239,000 excluding
Kubatronik).
-- Net cash used in operating activities was $1.3 million, compared to net
cash provided by operating activities of $643,000 in the third quarter
of 2016 ($705,000 excluding Kubatronik)
-- Cash and cash equivalents as of September 30, 2017 were $1.0 million,
compared to $842,000 as of September 30, 2016.
Highlights for the first nine months of 2017
-- Revenues for the first nine months of 2017 were $23.7 million, compared
to $29 million in the first nine months of 2016 ($25.9 million excluding
Kubatronik).
-- Gross profit was $587,000 (2.5% of revenues), compared to a gross profit
of $3.3 million (11.3% of revenues) in the first nine months of 2016 ($3
million or 2.5% of revenues excluding Kubatronik).
-- Operating loss was $2.9 million, compared to an operating loss of
$387,000 in the first nine months of 2016 ($162,000 excluding
Kubatronik).
-- Net loss was $3.1 million or $0.31 per fully diluted share ($1.53 per
Post Split Share), compared to a net loss of $617,000, or $0.06 per
fully diluted share ($0.30 per Post Split Share) in the first nine
months of 2016 ($399,000 or $0.04 per fully diluted share excluding
Kubatronik ($0.20 per Post Split Share).
-- EBITDA was a negative amount of $1.2 million, compared to a positive
amount of $1.1 million in the first nine months of 2016 ($1.1 million
excluding Kubatronik).
-- Net cash used in operating activities amounted to $2.6 million, compared
to net cash provided by operating activities of $1.5 million in the
first nine months of 2016 ($1.5 million excluding Kubatronik).
Conference Call
Today, Monday, November 27, 2016 at 9:30 a.m. Eastern Time, Eltek will conduct a conference call to discuss the results. The call will feature remarks by Mr. Yitzhak Nissan, Chairman of the Board of Directors and Chief Executive Officer, Mr. Roberto Tulman, Deputy CEO and Chief Technology Officer, and Mr. Amnon Shemer, Chief Financial Officer.
To participate, please call the following teleconference numbers. Please allow for additional time to connect prior to the call:
United States: +1-888-668-9141
Israel: 03-9180610
International: +972-3-9180610
At:
9:30 a.m. Eastern Time
6:30 a.m. Pacific Time
16:30 p.m. Israel Time
A replay of the call will be available through the Investor Info section on Eltek's corporate website at www.nisteceltek.com approximately 24 hours after the conference call is completed and will be archived for 30 days.
Eltek Ltd.
Consolidated Statements of Operations
(In thousands US$, except per share data)
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues 7,703 9,252 23,662 28,956
Costs of revenues (7,734) (8,372) (23,075) (25,677)
------ ------ ------- -------
Gross profit (32) 880 587 3,279
Selling, general and
administrative expenses (1,166) (1,185) (3,399) (3,569)
R&D expenses, net (3) (34) (38) (97)
Operating profit (loss) (1,201) (338) (2,850) (387)
Financial expenses, net (3) (114) (220) (212)
--- ---- ---- ----
Profit (loss) before other
income, net (1,204) (452) (3,071) (599)
Other income, net 0 0 16 0
--- --- --- ---
Profit (loss) before income
tax expenses (1,204) (452) (3,055) (598)
Tax expenses (2) (29) (52) (77)
--- --- --- ---
Net Profit (loss) (1,206) (481) (3,107) (675)
====== ==== ====== ====
Net loss attributable to
non controlling interest 0 (34) 0 (58)
--- --- --- ---
Net Profit (loss)
attributable to Eltek Ltd. (1,206) (446) (3,107) (617)
====== ==== ====== ====
Earnings per share
Basic and diluted net gain
(loss) per ordinary share (0.12) (0.04) (0.31) (0.06)
===== ===== ===== =====
Weighted average number of
ordinary shares
used to compute basic and
diluted net gain (loss)
per
ordinary share (in
thousands) 10,143 10,143 10,143 10,143
====== ====== ====== ======
Number of shares post the
reverse split (in
thousands) 2,029 2,029 2,029 2,029
===== ===== ===== =====
Basic and diluted net gain
(loss) per post-reverse-
split share (0.59) (0.22) (1.53) (0.30)
===== ===== ===== =====
Eltek Ltd.
Consolidated Balance Sheets
(In thousands US$)
September 30, September 30,
-------------- --------------
2017 2016
---- ----
Assets
Current assets
Cash and cash equivalents 1,003 842
Receivables: Trade, net of
provision for doubtful accounts 5,871 6,786
Other 956 272
Inventories 4,342 4,834
Prepaid expenses 348 321
--- ---
Total current assets 12,520 13,055
------ ------
Deferred taxes 0 1,082
--- -----
Assets held for employees'
severance benefits 54 51
--- ---
Fixed assets, less accumulated
depreciation 8,624 9,611
----- -----
Intangible asset 0 330
--- ---
Total assets 21,198 24,129
====== ======
Liabilities and Shareholder's
equity
Current liabilities
Short-term credit and current
maturities of long-term debts 6,659 1,244
Accounts payable: Trade 5,065 5,910
Other 3,852 4,511
----- -----
Total current liabilities 15,576 11,665
------ ------
Long-term liabilities
Long term debt, excluding current
maturities 1,402 2,205
Employee severance benefits 159 299
--- ---
Total long-term liabilities 1,561 2,504
----- -----
Equity
Ordinary shares, NIS 0.6 par
value authorized 50,000,000
shares, issued and outstanding
10,142,762 1,985 1,985
Additional paid-in capital 17,270 17,270
Cumulative foreign currency
translation adjustments 2,348 2,287
Capital reserve 695 695
Accumulated deficit (18,237) (12,125)
Shareholders' equity 4,061 10,112
Non controlling interest 0 (152)
--- ----
Total equity 4,061 9,960
----- -----
Total liabilities and
shareholders' equity 21,198 24,129
====== ======
Eltek Ltd.
Unaudited Non-GAAP EBITDA Reconciliations
(In thousands US$)
Non-GAAP EBITDA Reconciliations Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
GAAP net Income (loss) (1,206) (446) (3,107) (617)
Add back items:
---------------
Financial expenses (income), net 3 114 220 211
Income tax expense 2 29 52 77
Depreciation and amortization 780 467 1,619 1,413
--- --- ----- -----
Adjusted EBITDA (422) 164 (1,215) 1,084
Eltek Ltd.
Consolidated Statement of Cash flow
(In thousands US$, except per share data)
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from operating
activities:
Net Income (loss) (1,206) (481) (3,107) (675)
-
Adjustments to reconcile
net loss to net -
cash flows provided by
operating activities: -
Depreciation and
amortization 432 467 1,284 1,413
Capital lose on disposal of
fixed assets, net - (13) -
Amortization of Intangible
asset 348 348
Revaluation of long term
loans 2 - (0) 1
Decrease (increase) in
Deferred Tax - 8 5 22
782 475 1,624 1,436
--- --- ----- -----
Decrease (increase) in
trade receivables 168 928 377 1,502
Decrease (increase) in
other receivables and
prepaid expenses (738) (132) (802) (114)
Decrease (increase) in
inventories (76) (108) (70) (214)
Increase (decrease) in
trade payables (99) 171 (305) (183)
Increase (decrease) in
other liabilities and
accrued expenses (118) (206) (294) (255)
Increase (decrease) in
employee severance
benefits, net 3 (5) 2 (2)
(859) 649 (1,092) 734
---- --- ------ ---
Net cash provided by (used
in) operating activities (1,283) 643 (2,575) 1,495
------ --- ------ -----
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from investing
activities:
Owners investment
Purchase of fixed assets (71) (231) (232) (561)
Purchase of Intangible
asset (22) - (43)
Net cash used in investing
activities (71) (253) (232) (604)
--- ---- ---- ----
Cash flows from financing
activities:
Increase (decrease) in
short- term credit 2,109 (158) 1,948 (67)
Increase (decrease) in
short- term shareholder
loan - - 1,430 -
Repayment of long-term
loans from bank (230) (176) (636) (506)
Proceeds from long-term
loans (36) - 167 -
Repayment of credit from
fixed asset payables (8) (158) (173) (552)
Net cash provided by (used
in) financing activities 1,836 (491) 2,736 (1,125)
----- ---- ----- ------
Effect of translation
adjustments (271) 50 (160) 38
Net increase (decrease) in
cash and cash equivalents 211 (52) (230) (196)
--- --- ---- ----
Cash and cash equivalents
at beginning of the period 792 894 1,234 1,038
--- --- ----- -----
- -
Cash and cash equivalents
at period end 1,003 842 1,003 842
===== === ===== ===
Eltek ltd.
Proforma (Non-GAAP) Statements of Operations
(In thousands US$, except per share data)
Excluding Kubatronik's operation in 2016
Solo Solo
Three months ended Nine months ended
------------------ -----------------
Sep 30, Sep 30,
------- -------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Revenues 7,703 8,444 23,662 25,814
Costs of revenues (7,734) (7,573) (23,075) (22,779)
------ ------ ------- -------
Gross profit (32) 871 587 3,035
Research and development
income, net (3) (34) (38) (97)
Selling, general and
administrative expenses (1,166) (1,030) (3,399) (3,100)
Operating profit (loss) (1,201) (193) (2,850) (162)
Financial expenses, net (3) (95) (221) (160)
--- --- ---- ----
Profit (loss) before other
income, net (1,204) (289) (3,071) (323)
Other income, net 0 0 16 0
--- --- --- ---
Profit (loss) before income
tax expenses (1,204) (289) (3,055) (323)
Income tax (expenses), net (1) (29) (51) (77)
--- --- --- ---
Net Profit (loss) (1,205) (317) (3,106) (399)
====== ==== ====== ====
Diluted net loss per ordinary
share (0.12) (0.03) (0.31) (0.04)
===== ===== ===== =====
Weighted average number of
ordinary shares
used to compute diluted net
loss per
ordinary share (in thousands) 10,143 10,143 10,143 10,143
====== ====== ====== ======
Number of shares post the
reverse split (in thousands) 2,029 2,029 2,029 2,029
===== ===== ===== =====
Basic and diluted net gain
(loss) per post-reverse-
split share (0.59) (0.16) (1.53) (0.20)
===== ===== ===== =====
Eltek ltd.
Proforma (Non-GAAP) Balance Sheets
(In thousands US$)
Excluding Kubatronik's operation in 2016
Sep 30,
-------
2017 2016
---- ----
Unaudited
---------
Assets
Current assets
Cash and cash
equivalents 1,003 924
Receivables: Trade,
net of provision for
doubtful accounts 5,871 6,512
Other 956 1,319
Inventories 4,342 4,477
Prepaid expenses 348 346
--- ---
Total current assets 12,520 13,578
------ ------
Deferred taxes 0 1,082
--- -----
Assets held for
employees' severance
benefits 54 51
--- ---
Fixed assets, less
accumulated
depreciation 8,624 9,014
----- -----
Investment 0 (571)
--- ----
Intangible asset 0 330
--- ---
Total assets 21,198 23,484
====== ======
Liabilities and
Shareholder's equity
Current liabilities
Short-term credit
and current
maturities of long-
term debts 6,659 1,244
Accounts payable:
Trade 5,065 5,498
Other 3,852 4,321
----- -----
Total current
liabilities 15,576 11,063
------ ------
Long-term liabilities
Long term debt,
excluding current
maturities 1,402 2,055
Employee severance
benefits 159 255
--- ---
Total long-term
liabilities 1,561 2,310
----- -----
Equity
Ordinary shares, NIS
0.6 par value
authorized
50,000,000 shares,
issued and
outstanding
6,610,107 as of
December 31, 2011. 1,985 1,985
Additional paid-in
capital 17,270 17,270
Cumulative foreign
currency translation
adjustments 2,348 2,286
Capital reserve 695 695
Accumulated deficit (18,237) (12,125)
Shareholders' equity 4,061 10,111
Non controlling
interest 0 0
--- ---
Total equity 4,061 10,111
----- ------
Total liabilities and
shareholders' equity 21,198 23,484
====== ======
Eltek Ltd.
Proforma Unaudited Non-GAAP EBITDA Reconciliations
(In thousands US$)
Excluding Kubatronik's operation in 2016
Non-GAAP EBITDA Reconciliations Three months ended six months ended
------------------ ----------------
Sep 30, Sep 30, Sep 30, Sep 30,
-------- -------- -------- --------
2017 2016 2017 2016
---- ---- ---- ----
GAAP net Income (loss) (1,205) (317) (3,106) (399)
Add back items:
---------------
Financial expenses (income), net 3 95 221 160
Income tax expense 1 29 51 77
Depreciation and amortization 780 432 1,619 1,271
--- --- ----- -----
Adjusted EBITDA (421) 239 (1,215) 1,109
==== === ====== =====
Eltek Ltd.
Proforma (Non-GAAP) Consolidated Statement of Cash flow
(In thousands US$, except per share data)
Excluding Kubatronik's operation in 2016
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from operating
activities:
Net Income (loss) (1,206) (446) (3,107) (617)
Adjustments to reconcile
net loss to net
cash flows provided by
operating activities:
Depreciation and
amortization 432 431 1,284 1,301
Capital lose on disposal
of fixed assets, net - (13) -
Amortization of
Intangible asset 348 348
Revaluation of long term
loans 2 8 (0) 22
Decrease (increase) in
Deferred Tax - - 5 1
Equity loss (gain) - 124 - 209
782 563 1,624 1,533
--- --- ----- -----
Decrease (increase) in
trade receivables 168 753 377 1,415
Decrease (increase) in
other receivables and
prepaid expenses (738) (115) (802) (104)
Decrease (increase) in
inventories (76) (51) (70) (205)
Increase (decrease) in
trade payables (99) 182 (305) (266)
Increase (decrease) in
other liabilities and
accrued expenses (118) (183) (294) (265)
Increase (decrease) in
employee severance
benefits, net 3 3 2 7
(859) 589 (1,092) 581
---- --- ------ ---
Net cash provided by
(used in) operating
activities (1,283) 705 (2,575) 1,497
------ --- ------ -----
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
Cash flows from investing
activities:
Owners investment
Purchase of fixed assets (71) (229) (232) (565)
Purchase of Intangible
asset - - - -
Purchase of Intangible
asset - (22) - (43)
Net cash used in
investing activities (71) (251) (232) (607)
--- ---- ---- ----
Cash flows from financing
activities:
Increase (decrease) in
short- term credit 2,109 (158) 1,948 (67)
Increase (decrease) in
short- term shareholder
loan - - 1,430
Repayment of long-term
loans from bank (230) (176) (636) (506)
Proceeds from long-term
loans (36) - 167 -
Repayment of credit from
fixed asset payables (8) (118) (173) (442)
Net cash provided by
(used in) financing
activities 1,836 (452) 2,736 (1,016)
----- ---- ----- ------
Effect of translation
adjustments (271) 31 (160) 52
Net increase (decrease)
in cash and cash
equivalents 211 33 (230) (74)
Cash and cash equivalents
at beginning of the
period 792 891 1,234 998
Cash and cash equivalents
at period end 1,003 923 1,003 923
----- --- ----- ---
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 has ITAR, AS-9100 and NADCAP Electronics permits and its customers include top of the line 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 in Europe 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.
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 Statements:
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, risks in product and technology development and rapid technological change, product demand, the impact of competitive products and pricing, market acceptance, the sales cycle and changing economic conditions.. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in our Annual Report on Form 20-F and subsequent reports and filings made from time to time with the Securities and Exchange Commission.
Investor Contact:
Amnon Shemer
Chief Financial Officer
amnons@nisteceltek.com
+972-3-9395023
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SOURCE Eltek Ltd.
