Eltek Reports Revenues of $7.7 Million in Q3 of 2017


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Eltek Ltd. announced today its financial results for the quarter ended September 30, 2017.

Chairman of the Board and Chief Executive Officer Mr. Yitzhak Nissan, 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).

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, click here.

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