Eltek Reports 2019 Second Quarter Financial Results

PETAH TIKVA, Israel, Sept. 4, 2019 /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, 2019.

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Mr. Eli Yaffe, Chief Executive Officer, commented: "We are pleased that this quarter's results reflect the continuing trend of improved results. The improved results are a consequence of the implementation of our turnaround plan. We are continuing our efforts to maintain the trend of improved operating efficiencies, while increasing sales by expanding our business into the vertical markets we currently service."

Highlights of the Second Quarter of 2019 compared to the Second Quarter of 2018

    --  Revenues for the second quarter of 2019 were $8.2 million compared to
        revenues of $8.7  million in the second quarter of 2018;
    --  Gross profit increased from $578,000 (6.7% of revenues) in the second
        quarter of 2018 to $1,256,000 (15.3% of revenues) in the second quarter
        of 2019;
    --  Operating profit was $7,000 as compared to an operating loss of $721,000
        in the second quarter of 2018;
    --  Other Income was $871,000 in the second quarter of 2019, mainly
        attributable to receipt of payment on an insurance claim made in 2018
        for damage to one of our manufacturing machines and the resulting losses
        that occurred as a result of this event;
    --  Net profit was $790,000, or $0.19 per fully diluted share in the second
        quarter of 2019 compared to a net loss of $843,000, or ($0.42) per fully
        diluted share, in the second quarter of 2018;
    --  EBITDA was $1.25 million in the second quarter of 2019 compared to
        negative EBITDA of $295,000  in the second quarter of 2018;
    --  Net cash used in operating activities amounted to $301,000 in the second
        quarter of 2019 compared to net cash used in operating activities of
        $572,000 in the second quarter of 2018.

Highlights for the First Six Months of 2019

    --  Revenues for the first six months of 2019 were $16.9 million compared to
        $17.6 million in the first six months of 2018;
    --  Gross profit was $2.8 million (16.5% of revenues) compared to gross
        profit of $1.0 million (5.8% of revenues) in the first six months of
        2018;
    --  Operating profit was $440,000 compared to an operating loss of $1.3
        million in the first six months of 2018;
    --  Other Income was 877,000 in the first six months of 2019 compared to nil
        in the first six months of 2018;
    --  Net profit was $1.0 million, or $0.33 per fully diluted share compared
        to a net loss of $1.5 million, or ($0.75) per fully diluted share in the
        first six months of 2018;
    --  EBITDA was $2.1 million in the first six months of 2019, compared to
        negative EBITDA of $481,000 in the first six months of 2018;
    --  Net cash provided by operating activities amounted to $1.3 million
        compared to net cash used in operating activities of $1.4 million in the
        first six months of 2018.

Conference Call

Today, Wednesday, September 4, 2019, at 8:30 a.m. 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: 1-888-668-9141
Israel: 03-9180609
International: +972-3-9180609

At:

8:30 a.m. Eastern Time
5:30 a.m. Pacific Time
15:30 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 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.

(Tables follow)


                                                                      
          
              Eltek Ltd.


                                                            
           
         Consolidated Statements of Operations


                                                          
           
         (In thousands US$, except per share data)




                                                     Three months
                                                         ended                                            Six months ended



                                                       June  30,                                              June  30,



                                                             2019               2018                                             2019        2018



                 Revenues                                   8,198              8,667                                           16,934      17,610


                 Costs of revenues                        (6,942)           (8,089)                                        (14,139)   (16,588)



                 Gross profit                               1,256                578                                            2,795       1,022


      Selling, general
       and administrative
       expenses                                           (1,249)           (1,299)                                         (2,355)    (2,367)


      R&D expenses, net                                         -                                                                          (1)



                 Operating profit
                  (loss)                                        7              (721)                                             440     (1,347)


      Financial expenses,
       net                                                   (78)             (105)                                           (263)      (132)


      Other income, net                                       871                                                                877



                 Profit (loss)
                  before income tax                           800              (825)                                           1,054     (1,479)


      Tax expenses                                           (10)              (17)                                            (22)       (34)



                 Net Profit (loss)                            790              (843)                                           1,032     (1,513)






     
              Earnings per share


      Basic and diluted
       net loss per
       ordinary share                                        0.19             (0.42)                                            0.33      (0.75)




     Weighted average number of ordinary shares



     used to compute basic and diluted net loss per


      ordinary share (in
       thousands)                                           4,148              2,029                                            3,088       2,029


                                                  
              
               Eltek Ltd.


                                          
              
               Consolidated Balance Sheets


                                              
              
               (In thousands US$)




                                                                                     June  30, December 31,



                                                                                          2019          2018




              
                Assets



              
                Current assets


               Cash and cash equivalents                                                 1,837           992


               Receivables:   Trade, net of
                provision for doubtful accounts                                          7,587         5,682


                                       Other                                               110           868



              Inventories                                                               3,910         3,611



              Prepaid expenses                                                            266           292



                            Total current assets                                        13,710        11,445




              
                Long term assets



              Severance pay fund                                                           57            53


               Long term prepaid expenses                                                    -           39


               Operating lease right of use
                assets                                                                   3,054             -


                            Total long term assets                                       3,111            92


                            Fixed assets, less accumulated
                             depreciation                                                6,271         6,623



                            Total Assets                                                23,092        18,160




              
                Liabilities and Shareholder's equity



              
                Current liabilities


               Short-term credit and current
                maturities of long-term debts                                            3,056         6,606


               Short-term credit from related
                party                                                                    3,365         2,668


               Accounts payable: Trade                                                   4,312         4,108


                                              Other                                      3,691         3,377


               Short-term operating lease
                liabilities                                                              1,139             -



                            Total current liabilities                                   15,563        16,759




              
                Long-term liabilities


               Long term debt, excluding
                current maturities                                                         116           308


               Employee severance benefits                                                 214           211


               Long-term operating lease
                liabilities                                                              1,903             -



                            Total long-term liabilities                                  2,233           519




              
                Equity


               Ordinary shares, NIS 3.0  par
                value authorized 10,000,000                                              3,964         1,985
    shares, issued and outstanding
     2,028,552


               Additional paid-in capital                                               18,583        17,270


               Cumulative foreign currency
                translation adjustments                                                  2,339         2,340



              Capital reserve                                                             891           800



              Accumulated deficit                                                    (20,481)     (21,513)


                            Shareholders' equity                                         5,296           882



                            Total liabilities and
                             shareholders' equity                                       23,092        18,160


                                                           
              
                Eltek Ltd.


                                                     
     
               Unaudited Non-GAAP EBITDA Reconciliations


                                                        
             
                (In thousands US$)




                     Non-GAAP EBITDA Reconciliations      Three months
                                                           ended                                             Six months ended



                                                            June  30,                                            June  30,



                                                                  2019                 2018                                     2019     2018



                                                            Unaudited                                            Unaudited



                     GAAP net Income (loss)                        790                (843)                                   1,032  (1,513)


                                    Add back items:

    ---


       Financial expenses, net                                     78                  105                                      263      132



       Income tax expense                                          10                   17                                       22       34


        Depreciation and amortization                              372                  425                                      744      866



                     Non-GAAP EBITDA                             1,250                (296)                                   2,061    (481)


                                                             
          
                Eltek Ltd.


                                                  
            
            Consolidated Statement of  Cash flow


                                                
           
            (In thousands US$, except per share data)




                                                    Three months
                                                        ended                                              Six months ended



                                                      June  30,                                                June  30,



                                                            2019               2018                                             2019      2018



                   Cash flows from operating
                    activities:


                   Net Income (loss)                         790              (843)                                           1,032   (1,513)


                   Adjustments to reconcile net
                    loss to net


       cash flows provided by
        operating activities:


      Depreciation and amortization                          375                425                                              748       866


      Stock-based compensation                                31                                                                 62


      Transaction with controlling
       shareholder                                            15                                                                 29


      Revaluation of long term
       loans                                                 (8)                 8                                             (24)       24


                                                             413                433                                              815       890



                                                             (3)                                                              (12)

      Changes in operating leases,
       net


      Decrease (increase) in trade
       receivables                                       (1,838)                78                                          (1,598)  (1,491)


      Decrease  in other
       receivables and prepaid
       expenses                                              560                132                                              875       851


      Decrease (increase) in
       inventories                                           302              (330)                                           (114)    (915)


      Increase (decrease)  in trade
       payables                                            (652)             (205)                                             194       770


      Increase (decrease) in other
       liabilities and accrued
       expenses                                              136                149                                              139      (50)


      Increase (decrease) in
       employee severance benefits,
       net                                                   (9)                14                                              (9)       27



                                                         (1,504)             (162)                                           (525)    (808)



                   Net cash provided by (used
                    in) operating activities               (301)             (572)                                           1,322   (1,431)



                   Cash flows from investing
                    activities:



     Owners investment


      Purchase of fixed assets                              (91)              (30)                                           (250)    (110)


                   Net cash used in investing
                    activities                              (91)              (30)                                           (250)    (110)



                   Cash flows from financing
                    activities:


      Short- term bank credit, net                       (1,787)             1,501                                          (3,394)    1,160


      Short- term shareholder loan                                                                                             555     1,156


      Issuance of ordinary shares
       in rights offering, net                             3,298                                                              3,298


      Repayment of long-term loans
       from bank                                           (231)             (228)                                           (456)    (464)


      Repayment of credit from
       fixed asset payables                                 (98)              (73)                                           (194)    (159)


                   Net cash provided by (used
                    in) financing activities               1,182              1,200                                            (191)    1,693



                   Effect of translation
                    adjustments                             (21)              (42)                                            (37)     (48)



                   Net increase (decrease) in
                    cash and cash equivalents                769                556                                              844       104



                   Cash and cash equivalents at
                    beginning of the period                1,068                435                                              993       887



                   Cash and cash equivalents at
                    period end                             1,837                991                                            1,837       991

Investor Contact:

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

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SOURCE Eltek Ltd.