PR Newswire | Aug 12, 2020 07:30AM EDT

08/12 06:30 CDT

Eltek Reports 2020 Second Quarter Financial Results- Revenues of $8.8 million- Gross profit of $1.9 million- Net Profit of $704,000 PETACH-TIKVA, Israel, Aug. 12, 2020

PETACH-TIKVA, Israel, Aug. 12, 2020 /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, 2020.

Mr. Eli Yaffe, Chief Executive Officer, commented: "We are pleased that our second quarter reflects the continuing trend of improved results. We are gratified that despite the global Covid-19 pandemic and its related challenges, we were able to grow our top line by 7.2% compared to the second quarter of 2019 and improve our gross margins from 15.3% in Q2 2019 to 21.6% in Q2 2020."

"We are operating in a challenging business environment and making the necessary adjustments to protect our staff, expand our business, improve customer satisfaction, increase revenues, maintain the trend of improved operating efficiencies and reach sustained profitability," concluded Mr. Yaffe.

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

* Revenues for the second quarter of 2020 were $8.8 million compared to revenues of $8.2 million in the second quarter of 2019; * Gross profit increased from $1.3 million (15.3% of revenues) in the second quarter of 2019 to $1.9 million (21.6% of revenues) in the second quarter of 2020; * Operating profit increased to $809,000 during the second quarter of 2020 as compared to operating profit of $7,000 in the second quarter of 2019; * Other expenses were nil during the second quarter of 2020 as compared to other income of $871,000 in the second quarter of 2019 that was mainly attributable to receipt of a non-recurring insurance payment relating to the damage to one of our manufacturing machines and the resulting losses; * Net profit was $704,000, or $0.16 per fully diluted share in the second quarter of 2020 compared to net profit of $790,000, or $0.19 per fully diluted share, in the second quarter of 2019; * EBITDA was $1.2 million in the second quarter of 2020 compared to EBITDA of $1.25 million in the second quarter of 2019; * Net cash provided by operating activities amounted to $1.4 million in the second quarter of 2020 compared to net cash used in operating activities of $301,000 in the second quarter of 2019.

Highlights for the First Six Months of 2020

* Revenues for the first six months of 2020 were $17.9 million compared to $16.9 million in the first six months of 2019; * Gross profit was $3.7 million (20.6% of revenues) compared to gross profit of $2.8 million (16.5% of revenues) in the first six months of 2019; * Operating profit was $1.4 million compared to operating profit of $440,000in the first six months of 2019; * Other expenses were $1,000 in the first six months of 2020 as compared to other income of 877,000 in the first six months of 2019; * Net profit was $1.2 million, or $0.28 per fully diluted share compared to net profit of $1.0 million, or $0.33 per fully diluted share in the first six months of 2019; * EBITDA was $2.2 million in the first six months of 2020, compared to EBITDA of $2.1 million in the first six months of 2019; * Net cash provided by operating activities amounted to $2.9 million in the first six months of 2020 compared to net cash provided by operating activities of $1.3 million in the first six months of 2019.

Conference Call

Today, Wednesday, August 12, 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 Time5:30 a.m. Pacific Time15:30 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, 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.

Investor Contact:

Alon MualemChief Financial Officeralonm@nisteceltek.com+972-3-9395023

(Tables follow)

Eltek Ltd.

Consolidated Statements of Operations

(In thousands US$, except per share data)

Three months Six months ended ended

June 30, June 30,

2020 2019 2020 2019

Revenues 8,792 8,198 17,949 16,933

Costs of revenues (6,892) (6,942) (14,246) (14,139)

Gross profit 1,900 1,256 3,703 2,795

Selling, general and administrative expenses (1,095) (1,249) (2,284) (2,355)

R&D expenses, net 4 - 2 -

Operating profit 809 7 1,421 440

Financial expenses, net (83) (78) (139) (263)

Other income, net - 871 - 877

Profit before income tax 726 800 1,282 1,054

Tax expenses (22) (10) (38) (23)

Net Profit 704 790 1,244 1,032

Earnings per share

Basic and diluted net profit per ordinary share 0.16 0.19 0.28 0.33

Weighted average number of ordinary shares

used to compute basic and diluted net profit per

ordinary share (in thousands) 4,380 4,148 4,380 3,088



Eltek Ltd.

Consolidated Balance Sheets

(In thousands US$)

June December 30, 31,

2020 2019

Assets

Current assets

Cash and cash equivalents 3,407 1,628

Receivables: Trade, net of provision for doubtful accounts 7,307 7,480

Other 246 145

Inventories 3,474 3,735

Prepaid expenses 238 530

Total current assets 14,672 13,518

Long term assets

Restricted deposits 58 -

Severance pay fund 59 60

Operating lease right of use assets 2,029 2,490

Total long term assets 2,146 2,550

Fixed assets, less accumulated depreciation 6,407 6,761

Total Assets 23,225 22,829

Liabilities and Shareholder's equity

Current liabilities

Short-term credit and current maturities of long-term debts 1,303 2,120

Short-term credit from related party 2,885 3,472

Accounts payable: Trade 3,983 4,673

Other 3,653 3,118

Short-term operating lease liabilities 1,141 1,383

Total current liabilities 12,965 14,766

Long-term liabilities

Long term debt, excluding current maturities 1,468 387

Employee severance benefits 307 268

Deferred tax liabilities 57 45

Long-term operating lease liabilities 872 1,094

Total long-term liabilities 2,704 1,794

Equity

Ordinary shares, NIS 3.0 par value authorized 10,000,000 3,964 3,964shares, issued and outstanding 4,380,268

Additional paid-in capital 18,583 18,583

Cumulative foreign currency translation adjustments 2,479 2,479

Capital reserve 1,006 963

Accumulated deficit (18,476) (19,720)

Shareholders' equity 7,556 6,269

Total liabilities and shareholders' equity 23,225 22,829

Eltek Ltd.

Unaudited Non-GAAP EBITDA Reconciliations

(In thousands US$)

Non-GAAP EBITDA Reconciliations Three months ended Six months ended

June 30, June 30,

2020 2019 2020 2019

GAAP net Income (loss) 704 790 1,244 1,032

Add back items:

Financial expenses, net 83 78 139 263

Income tax expense 22 10 38 22

Depreciation and amortization 391 372 786 744

Non-GAAP EBITDA 1,200 1,250 2,207 2,061

Eltek Ltd.

Consolidated Statement of Cash flow

(In thousands US$)

Three months Six months ended ended

June 30, June 30,

2020 2019 2020 2019

Cash flows from operating activities:

Net Income 704 790 1,244 1,032

Adjustments to reconcile net profit to net

cash flows provided by operating activities:

Depreciation and amortization 391 375 786 748

Stock-based compensation 17 31 43 62

Transaction with controlling shareholder - 15 - 29

Revaluation of long term loans (6) (8) 4 (24)

Increase in deferred tax liabilities 6 - 12 -

408 413 845 815

Decrease in operating lease right-of-use assets 1 (4) (9)

Decrease (increase) in trade receivables 280 (1,838) 149 (1,598)

Decrease in other receivables and prepaid expenses 49 564 187 879

Decrease (increase) in inventories 27 302 248 (114)

Increase (decrease) in trade payables (113) (652) (370) 194

Increase in other liabilities and accrued expenses 17 129 538 132

Increase in employee severance benefits, net 24 (9) 40 (9)

285 (1,504) 788 (525)

Net cash provided by operating activities 1,397 (301) 2,877 1,322

Cash flows from investing activities:

Purchase of fixed assets (250) (91) (454) (250)

Restricted deposits (58) - (58) -

Net cash used in investing activities (308) (91) (512) (250)

Cash flows from financing activities:

Short- term bank credit, net (326) (1,787) (765) (3,394)

Proceeds from short- term shareholder loan - - - 555

Repayment of short- term shareholder loan (571) - (571) -

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

Repayment of long-term loans from bank (35) (231) (108) (455)

Proceeds from long-term loans 1,141 - 1,141 -

Repayment of credit from fixed asset payables (152) (98) (304) (194)

Net cash used in financing activities 57 1,182 (607) (190)

Effect of translation adjustments 47 (21) 21 (37)

Net increase (decrease) in cash and cash equivalents 1,193 769 1,779 845

Cash and cash equivalents at beginning of the period 2,214 1,068 1,628 992

Cash and cash equivalents at period end 3,407 1,837 3,407 1,837

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SOURCE Eltek Ltd.