Eltek Reports 2017 Third Quarter Financial Results

              Eltek Reports 2017 Third Quarter Financial Results

Revenues of $7.7 million in the third quarter of 2017

Net loss of $1.2 million

PR Newswire

PETACH-TIKVA, Israel, Nov 27, 2017

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

  o 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).
  o 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.
  o Operating loss was $1.2 million, compared to an operating loss of $338,000
    in the third quarter of 2016 ($193,000 excluding Kubatronik).
  o 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);
  o 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).
  o 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)
  o 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

  o 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).
  o 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).
  o 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).
  o 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).
  o 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).
  o 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    (1,166)    (1,185)  (3,399)   (3,569)
expenses
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,     (1,204)    (452)    (3,071)   (599)
net
Other income, net                      0          0        16        0
Profit (loss) before income tax        (1,204)    (452)    (3,055)   (598)
expenses
Tax expenses                           (2)        (29)     (52)      (77)
Net Profit (loss)                      (1,206)    (481)    (3,107)   (675)
Net loss attributable to non           0          (34)     0         (58)
controlling interest
Net Profit (loss) attributable to      (1,206)    (446)    (3,107)   (617)
Eltek Ltd.
Earnings per share
Basic and diluted net gain (loss) per  (0.12)     (0.04)   (0.31)    (0.06)
ordinary share
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      2,029      2,029    2,029     2,029
split (in thousands)
Basic and diluted net gain (loss) per  (0.59)     (0.22)   (1.53)    (0.30)
post-reverse-split share

 

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     5,871           6,786
for doubtful accounts
                     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       54              51
benefits
Fixed assets, less accumulated             8,624           9,611
depreciation
Intangible asset                           0               330
Total assets                               21,198          24,129
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current maturities   6,659           1,244
of long-term debts
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          1,402           2,205
maturities
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   1,985           1,985
outstanding 10,142,762 
Additional paid-in capital                 17,270          17,270
Cumulative foreign currency translation    2,348           2,287
adjustments
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'        21,198          24,129
equity

 

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       -                   (13)      -
assets, net
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            168         928     377       1,502
receivables
Decrease (increase) in other            (738)       (132)   (802)     (114)
receivables and prepaid expenses
Decrease (increase) in inventories      (76)        (108)   (70)      (214)
Increase (decrease) in trade payables   (99)        171     (305)     (183)
Increase (decrease) in other            (118)       (206)   (294)     (255)
liabilities and accrued expenses
Increase (decrease) in employee         3           (5)     2         (2)
severance benefits, net
                                        (859)       649     (1,092)   734
Net cash provided by (used in)          (1,283)     643     (2,575)   1,495
operating activities
                                        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      2,109       (158)   1,948     (67)
credit 
Increase (decrease) in short- term      -           -       1,430     -
shareholder loan
Repayment of long-term loans from bank  (230)       (176)   (636)     (506)
Proceeds from long-term loans           (36)        -       167       -
Repayment of credit from fixed asset    (8)         (158)   (173)     (552)
payables
Net cash provided by (used in)          1,836       (491)   2,736     (1,125)
financing activities
Effect of translation adjustments       (271)       50      (160)     38
Net increase (decrease) in cash and     211         (52)    (230)     (196)
cash equivalents
Cash and cash equivalents at beginning  792         894     1,234     1,038
of the period
                                                            -         -
Cash and cash equivalents at period     1,003       842     1,003     842
end

 

 

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    (1,166)    (1,030)  (3,399)   (3,100)
expenses
Operating profit (loss)                (1,201)    (193)    (2,850)   (162)
Financial expenses, net                (3)        (95)     (221)     (160)
Profit (loss) before other income,     (1,204)    (289)    (3,071)   (323)
net
Other income, net                      0          0        16        0
Profit (loss) before income tax        (1,204)    (289)    (3,055)   (323)
expenses
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      2,029      2,029    2,029     2,029
split (in thousands)
Basic and diluted net gain (loss) per  (0.59)     (0.16)   (1.53)    (0.20)
post-reverse-split share

 

 

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    5,871     6,512
accounts
                     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  6,659     1,244
debts
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    1,985     1,985
as of December 31, 2011.
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        -                   (13)      -
assets, net
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             168         753     377       1,415
receivables
Decrease (increase) in other receivables (738)       (115)   (802)     (104)
and prepaid expenses
Decrease (increase) in inventories       (76)        (51)    (70)      (205)
Increase (decrease) in trade payables    (99)        182     (305)     (266)
Increase (decrease) in other liabilities (118)       (183)   (294)     (265)
and accrued expenses
Increase (decrease) in employee          3           3       2         7
severance benefits, net
                                         (859)       589     (1,092)   581
Net cash provided by (used in)           (1,283)     705     (2,575)   1,497
operating activities
                                         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       2,109       (158)   1,948     (67)
credit 
Increase (decrease) in short- term       -           -       1,430
shareholder loan
Repayment of long-term loans from bank   (230)       (176)   (636)     (506)
Proceeds from long-term loans            (36)        -       167       -
Repayment of credit from fixed asset     (8)         (118)   (173)     (442)
payables
Net cash provided by (used in)           1,836       (452)   2,736     (1,016)
financing activities
Effect of translation adjustments        (271)       31      (160)     52
Net increase (decrease) in cash and      211         33      (230)     (74)
cash equivalents
Cash and cash equivalents at beginning   792         891     1,234     998
of the period
Cash and cash equivalents at period      1,003       923     1,003     923
end

 

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.

Website: http://www.nisteceltek.com
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