Eltek Reports 2018 Second Quarter Financial Results

PETAH-TIKVA, Israel, Sept. 27, 2018 /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 June 30, 2018.

Mr. Yitzhak Nissan, Chairman of the Board commented: "Revenues in Q2 2018 were $8.7 million, up 16% from Q2 2017, and we incurred a net loss of $843,000, 22% less than in Q2 2017. We recently appointed Mr. Eli Yaffe, who has a proven track record as a CEO in the defense and aerospace industries, as chief executive officer in order to create and implement a turnaround plan that will focus on further improving operating results and cash flow. Mr. Yaffe is establishing a new leadership team and has appointed a VP sales and marketing, an operations manager and an IT and procurement manager."

Mr. Eli Yaffe, Chief Executive Officer, commented: "I am pleased to join Eltek as its CEO. In accepting this position, I am aware of the challenges that face the company and am determined and committed to returning the Company back to profitability and to renew the industry's recognition of Eltek as a leading high-end PCB manufacturer."

Highlights of the Second Quarter of 2018

    --  Revenues for the second quarter of 2018 were $8.7 million compared to
        $7.5 million in the second quarter of 2017;
    --  Gross profit was $578,000 (6.7% of revenues) compared to gross profit of
        $134,000 (1.8% of revenues) in the second quarter of 2017;
    --  Operating loss was $721,000 compared to an operating loss of $1 million
        in the second quarter of 2017;
    --  Net loss was $843,000 or ($0.42) per fully diluted share compared to a
        net loss of $1.1 million or ($0.54) per fully diluted share in the
        second quarter of 2017;
    --  EBITDA was a negative $296,000 (3.4% of revenues) compared to a negative
        EBITDA of $583,000 (7.8% of revenues) in the second quarter of 2017;
    --  Net cash used in operating activities amounted to $571,000 compared to
        net cash used in operating activities of $517,000 in the second quarter
        of 2017. The change is mainly attributable to the operating results in
        this quarter, and changes in asset and liability accounts.
    --  Cash and cash equivalents as of June 30, 2018 were $991,000 compared to
        $792,000 as of June 30, 2017.

Highlights for the First Six Months of 2018

    --  Revenues for the first six months of 2018 were $17.6 million compared to
        $16 million in the first six months of 2017;
    --  Gross profit was $1 million (5.8% of revenues) compared to gross profit
        of $619,000 (3.9% of revenues) in the first six months of 2017;
    --  Operating loss was $1.3 million compared to an operating loss of $1.6
        million in the first six months of 2017;
    --  Net loss was $1.5 million, or ($0.75) per fully diluted share compared
        to a net loss of $1.9 million, or ($0.94) per fully diluted share in the
        first six months of 2017;
    --  EBITDA was a negative $481,000 (2.7% of revenues) compared to a negative
        EBITDA of $794,000 (5% of revenues) in the first six months of 2017;
    --  Net cash used in operating activities amounted to $1.4 million compared
        to net cash used in operating activities of $1.3 million in the first
        six months of 2017.

Financial Status

As of June 30, 2018, the Company was not in compliance with its financial covenants with its banks and does not expect to be in compliance at December 31, 2018. The Company has initiated discussions with its banks to obtain waivers for such non-compliance. As a result, long term bank loans amounting to $417,000 were reclassified from long term to short term.

In April 2018, Nistec provided a letter of commitment to the Company to provide additional financing in the amount of up to $2.5 million, valid for one year, of which $2.2 million have been utilized. It should be noted that the Company is making efforts to improve operations and its cash position (including applicable waivers), although there is no certainty that the Company will be able to attain these.

Conference Call

Today, Thursday, September 27, 2018, at 9:00 a.m. Eastern Time, Eltek will conduct a conference call to discuss the results. The call will feature remarks by Yitzhak Nissan, Chairman of the Board of Directors, Eli Yaffe, Chief Executive Officer and 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- 9180609
International: +972-3-9180609

At:
9:00 a.m. Eastern Time
6:00 a.m. Pacific Time
16:00 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.

(Tables follow)

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 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 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, 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.


                                                          
          
              Eltek Ltd.


                                               
            
         Consolidated Statements of Operations


                                             
            
         (In thousands US$, except per share data)




                                             Three months
                                                 ended                                             Six months ended



                                               June  30,                                               June  30,



                                                     2018                2017                                             2018        2017





                 Revenues                           8,667               7,492                                           17,610      15,960


                 Costs of revenues                (8,089)            (7,358)                                        (16,588)   (15,341)





                 Gross profit                         578                 134                                            1,022         619




      Selling, general and
       administrative expenses                    (1,299)            (1,138)                                         (2,367)    (2,233)





     R&D expenses, net                                 0                (15)                                             (1)       (34)




                 Operating profit (loss)            (721)            (1,019)                                         (1,347)    (1,649)




      Financial expenses, net                       (105)               (41)                                           (132)      (218)





                 Profit (loss) before other
                  income, net                       (826)            (1,060)                                         (1,479)    (1,867)





     Other income, net                                 0                   0                                                0          15





                 Profit (loss) before income
                  tax expenses                      (826)            (1,060)                                         (1,479)    (1,852)





     Tax expenses                                   (17)               (26)                                            (34)       (50)





                 Net Profit (loss)                  (843)            (1,087)                                         (1,513)    (1,902)





                 Earnings per share


      Basic and diluted net gain
       (loss) per ordinary share                   (0.42)             (0.54)                                          (0.75)     (0.94)





      Weighted average number of
       ordinary shares


      used to compute basic and
       diluted net gain (loss)
       per


      ordinary share (in
       thousands)                                   2,029               2,029                                            2,029       2,029


                                                               
         
             Eltek Ltd.


                                                           
         
         Consolidated Balance Sheets


                                                             
         
           (In thousands US$)




                                                                         June  30,                 June  30,



                                                                              2018                       2017




              
                Assets




                            Current assets


               Cash and cash equivalents                                       991                        792


               Receivables:   Trade, net of
                provision for doubtful accounts                              8,024                      6,097


                                      Other                                    668                        171



              Inventories                                                   4,555                      4,305



              Prepaid expenses                                                212                        394





                            Total current assets                            14,450                     11,759





                            Deferred taxes                                       0                          0





                            Assets held for employees'
                             severance benefits                                 54                         55





                            Fixed assets, less accumulated
                             depreciation                                    7,468                      8,966





                            Intangible asset                                     0                        355





                            Total assets                                    21,972                     21,135









                            Liabilities and Shareholder's
                             equity




                            Current liabilities


               Short-term credit and current
                maturities of long-term debts                                9,876                      4,570



              Accounts payable: Trade                                       5,956                      5,382


                                              Other                          3,864                      4,008





                            Total current liabilities                       19,696                     13,960





                            Long-term liabilities


               Long term debt, excluding current
                maturities                                                     222                      1,692


               Employee severance benefits                                     245                        157





                            Total long-term liabilities                        467                      1,849






              
                Equity


               Ordinary shares, NIS 0.6  par
                value authorized 50,000,000                                  1,985                      1,985
    shares, issued and outstanding
     10,142,762


               Additional paid-in capital                                   17,270                     17,270


               Cumulative foreign currency
                translation adjustments                                      2,278                      2,408



              Capital reserve                                                 695                        695



              Accumulated deficit                                        (20,419)                  (17,032)


                            Shareholders' equity                             1,809                      5,326



                            Total liabilities and
                             shareholders' equity                           21,972                     21,135


                                                               
            
                Eltek Ltd.


                                                     
         
              Unaudited Non-GAAP EBITDA Reconciliations


                                                           
            
                (In thousands US$)




                     Non-GAAP EBITDA Reconciliations   Three months
                                                           ended                                                Six months ended



                                                         June  30,                                                  June  30,



                                                               2018                   2017                                            2018       2017







                     GAAP net Income (loss)                   (843)               (1,087)                                        (1,513)   (1,902)


                                    Add back items:

    ---



        Financial expenses (income), net                        105                     41                                             132        218



       Income tax expense                                       17                     26                                              34         50


        Depreciation and amortization                           425                    436                                             866        840



                     Adjusted EBITDA                          (296)                 (583)                                          (481)     (794)


                                                               
        
                Eltek Ltd.


                                                  
              
          Consolidated Statement of  Cash flow


                                                
             
          (In thousands US$, except per share data)




                                                    Three months
                                                        ended                                              Six months ended



                                                      June  30,                                                June  30,



                                                            2018               2017                                              2018       2017





      Cash flows from operating
       activities:





     Net Income (loss)                                    (843)           (1,087)                                          (1,513)   (1,902)





                   Adjustments to reconcile net
                    loss to net


       cash flows provided by
        operating activities:


      Depreciation and amortization                          425                436                                               866        852


      Capital lose on disposal of
       fixed assets, net                                                                                                                 (13)


      Amortization of Intangible
       asset


      Revaluation of long term
       loans                                                   8


      Decrease (increase) in
       Deferred Tax                                                           (12)                                               24          3


                                                             433                424                                               890        842





      Decrease (increase) in trade
       receivables                                            78              1,152                                           (1,491)       209


      Decrease (increase) in other
       receivables and prepaid
       expenses                                              132              (122)                                              851       (64)


      Decrease (increase) in
       inventories                                         (330)             (154)                                            (915)         6


      Increase (decrease) in trade
       payables                                            (205)             (735)                                              770      (206)


      Increase (decrease) in other
       liabilities and accrued
       expenses                                              148                  6                                              (51)     (175)


      Increase (decrease) in
       employee severance benefits,
       net                                                    14                (1)                                               27        (2)


                                                           (162)               146                                             (807)     (232)





                   Net cash provided by (used
                    in) operating activities               (571)             (517)                                          (1,430)   (1,292)











                                                    Three months
                                                        ended                                              Six months ended



                                                      June  30,                                                June  30,



                                                            2018               2017                                              2018       2017





                   Cash flows from investing
                    activities:



     Owners investment


      Purchase of fixed assets                              (30)              (70)                                            (110)     (161)


      Purchase of Intangible asset


                   Net cash used in investing
                    activities                              (30)              (70)                                            (110)     (161)







                   Cash flows from financing
                    activities:


      Increase (decrease) in short-
        term credit                                        1,501            (1,020)                                            1,160      (161)


      Increase (decrease) in short-
        term shareholder loan                                                1,430                                             1,156      1,430


      Repayment of long-term loans
       from bank                                           (229)             (207)                                            (465)     (407)


      Proceeds from long-term
       loans                                                   1                131                                                 1        167


      Repayment of credit from
       fixed asset payables                                 (73)              (24)                                            (159)     (129)


                   Net cash provided by (used
                    in) financing activities               1,200                310                                             1,692        900





                   Effect of translation
                    adjustments                             (42)                40                                              (48)       111




                   Net increase (decrease) in
                    cash and cash equivalents                556              (237)                                              104      (442)





                   Cash and cash equivalents at
                    beginning of the period                  435              1,029                                               887      1,234






                   Cash and cash equivalents at
                    period end                               991                792                                               991        792

Investor Contact:

Amnon Shemer
Chief Financial Officer
amnons@nisteceltek.com
+972-3-9395023

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SOURCE Eltek Ltd.