PETACH-TIKVA, Israel,
Dec. 20, 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 September 30, 2018.
Mr. Eli Yaffe, Chief
Executive Officer, commented: "The third quarter of 2018
was the first quarter in my role as the CEO of Eltek. During this
quarter our revenues were $8.5
million, up 10% from Q3-2017 and the net loss decreased to
$463,000 from a net loss of
$1.2 million in Q3-2017.
"As recently announced, we have established a new leadership
team to implement our turnaround plan. We have begun a process of
identifying the products that were underpriced and they are being
addressed. In addition, efficiency measures have been
implemented in order to reduce our break-even-point. Though there
may be an initial reduction in sales volume, this should improve
our on-time delivery performance, increase customer satisfaction
and build sales from there and return to profitability."
"I see significant potential for Eltek in the high-end PCB
market with our skilled engineers and experienced management. I am
optimistic that we will be able to capitalize on our strengths in
returning the Company to profitability and to renew our position as
a leading high-end PCB manufacturer," Mr. Yaffe
concluded.
Highlights of the Third Quarter of 2018
- Revenues for the third quarter of 2018 were $8.5 million, compared to $7.7 million in the third quarter of 2017;
- Gross profit was $973,000 (11.4% of revenues),
compared to gross loss of $32,000
(0.4% of revenues), in the third quarter of 2017. Excluding a
$348,000 one-time amortization of a
software system in Q3-2017 gross profit for the third quarter of
2017 was $316.000.
- Operating loss was $307,000, compared to an operating
loss of $1.2 million, in the third
quarter of 2017;
- Net loss was $463,000, or $0.23 per fully diluted share, compared to a net
loss of $1.2 million, or $0.59 per fully diluted share in the third
quarter of 2017;
- EBITDA was $109,000 (1.3%
of revenues), compared to a negative EBITDA of $422,000 (5.5% of revenues) in the third quarter
of 2017;
- Net cash provided by operating activities amounted to
$164,000, compared to net cash used
in operating activities of $1.3
million in the third 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 September 30, 2018 were $1.2 million, compared to $1.0 million as of September 30, 2017.
Highlights for the First Nine Months of 2018
- Revenues for the first nine months of 2018 were
$26.1 million, compared to
$23.7 million in the first nine
months of 2017;
- Gross profit was $2.0
million (7.6% of revenues), compared to gross profit of
$587,000 (2.5% of revenues) in the
first nine months of 2017;
- Operating loss was $1.7
million, compared to an operating loss of $2.9 million in the first nine months of
2017;
- Net loss was $2 million,
or $0.97 per fully diluted share,
compared to a net loss of $3.1
million, or $1.53 per fully
diluted share, in the first nine months of 2017;
- EBITDA was a negative $374,000 (1.4% of revenues) compared to a
negative EBITDA of $1.2 million (5.1%
of revenues) in the first nine months of 2017;
- Net cash used in operating activities amounted to
$951,000 million compared to net cash
used in operating activities of $2.6
million in the first nine months of 2017.
Financial Status
As of September 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
$215,000 were reclassified from
long term to short term.
In April 2018, Nistec, our
controlling shareholder, 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 has 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 goals.
Nasdaq Continued Listing Status
On December 11, 2018, the Company
announced that it intends to increase its shareholders' equity
through a rights offering to shareholders, as part of the plan
submitted to Nasdaq Listing Qualifications Department to
regain compliance with the Nasdaq minimum stockholders' equity of
$2.5 million requirement for
continued listing. As reported, NASDAQ has notified the Company
that it has until March 31, 2019, to
regain compliance. We also announced that Nistec Ltd., the
Company's controlling shareholder, intends to exercise the rights
to be offered to it in the rights offering, by converting
approximately $2.5 million of debt
owed to it by the Company, into ordinary shares of the Company. As
is customary in rights offerings, it is expected that the rights
offering will be made at a discount to market.
The Ordinary Shares to be issued by Eltek in the proposed rights
offering have not been registered under the Securities Act of 1933,
as amended, and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. The Company
intends to file a registration statement with the Securities and
Exchange Commission for purposes of registering the Ordinary Shares
issuable in connection with the proposed rights offering.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these ordinary shares in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction.
Conference Call
Today, Thursday, December 20,
2018, 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 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:
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.
(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
|
|
Nine months
ended
|
|
|
Sep
30,
|
|
Sep
30,
|
|
|
2018
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Revenues
|
|
8,503
|
7,703
|
|
26,112
|
|
23,662
|
Costs of
revenues
|
|
(7,530)
|
(7,734)
|
|
(24,118)
|
|
(23,075)
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
973
|
(32)
|
|
1,994
|
|
587
|
|
|
11.4%
|
-0.4%
|
|
7.6%
|
|
2.5%
|
Selling, general and
administrative expenses
|
|
(1,280)
|
(1,166)
|
|
(3,648)
|
|
(3,399)
|
|
|
|
|
|
|
|
|
R&D expenses,
net
|
|
0
|
(3)
|
|
(1)
|
|
(38)
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
|
(307)
|
(1,201)
|
|
(1,655)
|
|
(2,850)
|
|
|
|
|
|
|
|
|
Financial expenses,
net
|
|
(132)
|
(3)
|
|
(264)
|
|
(221)
|
|
|
|
|
|
|
|
|
Profit (loss)
before other income, net
|
|
(439)
|
(1,204)
|
|
(1,919)
|
|
(3,071)
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
0
|
0
|
|
0
|
|
16
|
|
|
|
|
|
|
|
|
Profit (loss)
before income tax expenses
|
|
(439)
|
(1,204)
|
|
(1,919)
|
|
(3,055)
|
|
|
|
|
|
|
|
|
Tax
expenses
|
|
(24)
|
(2)
|
|
(57)
|
|
(52)
|
|
|
|
|
|
|
|
|
Net Profit
(loss)
|
|
(463)
|
(1,206)
|
|
(1,976)
|
|
(3,107)
|
|
|
|
|
|
|
|
|
Net loss attributable
to non controlling interest
|
|
0
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
Net Profit (loss)
attributable to Eltek Ltd.
|
|
(463)
|
(1,206)
|
|
(1,976)
|
|
(3,107)
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
gain (loss) per ordinary share
|
|
(0.23)
|
(0.59)
|
|
(0.97)
|
|
(1.53)
|
|
|
(0.23)
|
(0.59)
|
|
(0.97)
|
|
(1.53)
|
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$)
|
|
|
|
|
|
|
Sep
30,
|
Sep
30,
|
|
|
2018
|
2017
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
1,201
|
1,003
|
Receivables: Trade, net of provision for
doubtful accounts
|
|
7,055
|
5,871
|
Other
|
|
1,060
|
956
|
Inventories
|
|
4,330
|
4,342
|
Prepaid
expenses
|
|
367
|
348
|
|
|
|
|
Total current
assets
|
|
14,013
|
12,520
|
|
|
|
|
Deferred
taxes
|
|
0
|
0
|
|
|
|
|
Assets held for
employees' severance benefits
|
|
54
|
54
|
|
|
|
|
Fixed assets, less
accumulated depreciation
|
|
7,634
|
8,624
|
|
|
|
|
Intangible
asset
|
|
0
|
0
|
|
|
|
|
Total
assets
|
|
21,701
|
21,198
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholder's equity
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Short-term credit and
current maturities of long-term debts
|
|
9,799
|
6,482
|
Accounts payable:
Trade
|
|
6,300
|
5,242
|
Other
|
|
3,805
|
3,852
|
|
|
|
|
Total current
liabilities
|
|
19,904
|
15,576
|
|
|
|
|
Long-term
liabilities
|
|
|
|
Long term debt,
excluding current maturities
|
|
151
|
1,402
|
Employee severance
benefits
|
|
252
|
159
|
|
|
|
|
Total long-term
liabilities
|
|
403
|
1,561
|
|
|
|
|
Equity
|
|
|
|
Ordinary shares, NIS
0.6 par value authorized 50,000,000
shares, issued and outstanding 10,142,762
|
|
1,985
|
1,985
|
Additional paid-in
capital
|
|
17,270
|
17,270
|
Cumulative foreign
currency translation adjustments
|
|
2,298
|
2,348
|
Capital
reserve
|
|
723
|
695
|
Accumulated
deficit
|
|
(20,882)
|
(18,237)
|
Shareholders'
equity
|
|
1,394
|
4,061
|
Non controlling
interest
|
|
0
|
0
|
Total
equity
|
|
1,394
|
4,061
|
Total liabilities
and shareholders' equity
|
|
21,701
|
21,198
|
Eltek
Ltd.
|
Unaudited Non-GAAP
EBITDA Reconciliations
|
(In thousands
US$)
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA
Reconciliations
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
Sep
30,
|
|
Sep
30,
|
|
|
2018
|
2017
|
|
2018
|
|
2017
|
GAAP net Income
(loss)
|
|
(463.24)
|
(1,206)
|
|
(1,976)
|
|
(3,107)
|
Add back
items:
|
|
|
|
|
|
|
|
Financial expenses
(income), net
|
|
131.94
|
3
|
|
264
|
|
221
|
Income tax
expense
|
|
24.38
|
2
|
|
57
|
|
52
|
Depreciation and
amortization
|
|
415.64
|
780
|
|
1,282
|
|
1,619
|
Adjusted
EBITDA
|
|
108.72
|
(422)
|
|
(374)
|
|
(1,215)
|
|
|
1.3%
|
-5.5%
|
|
-1.4%
|
|
-5.1%
|
Eltek
Ltd.
|
Consolidated
Statement of Cash flow
|
(In thousands US$,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
Sep
30,
|
|
Sep
30,
|
|
|
2018
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(loss)
|
|
(463)
|
(1,206)
|
|
(1,976)
|
|
(3,107)
|
|
|
|
|
|
-
|
|
|
Adjustments to
reconcile net loss to net
|
|
|
|
|
-
|
|
|
cash flows
provided by operating activities:
|
|
|
|
|
-
|
|
|
Depreciation and
amortization
|
|
416
|
432
|
|
1,282
|
|
1,284
|
Capital lose on
disposal of fixed assets, net
|
|
-
|
-
|
|
-
|
|
(13)
|
Amortization of
Intangible asset
|
|
-
|
348
|
|
-
|
|
348
|
Revaluation of long
term loans
|
|
(1.00)
|
2
|
|
-
|
|
(0)
|
Decrease (increase)
in Deferred Tax
|
|
-
|
-
|
|
23
|
|
5
|
|
|
415
|
782
|
|
1,305
|
|
1,624
|
|
|
|
|
|
|
|
|
Decrease (increase)
in trade receivables
|
|
1,016
|
168
|
|
(474)
|
|
377
|
Decrease (increase)
in other receivables and prepaid expenses
|
|
(538)
|
(738)
|
|
313
|
|
(802)
|
Decrease (increase)
in inventories
|
|
253
|
(76)
|
|
(661)
|
|
(70)
|
Increase (decrease)
in trade payables
|
|
(440)
|
(99)
|
|
645
|
|
(305)
|
Increase (decrease)
in other liabilities and accrued expenses
|
|
(84)
|
(118)
|
|
(134)
|
|
(294)
|
Increase (decrease)
in employee severance benefits, net
|
|
5
|
3
|
|
32
|
|
2
|
|
|
212
|
(860)
|
|
(279)
|
|
(1,092)
|
|
|
|
|
|
|
|
|
Net cash provided
by (used in) operating activities
|
|
164
|
(1,283)
|
|
(951)
|
|
(2,575)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
Sep
30,
|
|
Sep
30,
|
|
|
2018
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Owners
investment
|
|
|
|
|
|
|
|
Purchase of fixed
assets
|
|
(86)
|
(71)
|
|
(196)
|
|
(232)
|
Purchase of
Intangible asset
|
|
|
-
|
|
-
|
|
|
Net cash used in
investing activities
|
|
(86)
|
(71)
|
|
(196)
|
|
(232)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Increase (decrease)
in short- term credit
|
|
113
|
2,109
|
|
956
|
|
1,948
|
Increase (decrease)
in short- term shareholder loan
|
|
275
|
-
|
|
1,431
|
|
1,430
|
Repayment of
long-term loans from bank
|
|
(225)
|
(230)
|
|
(690)
|
|
(636)
|
Proceeds from
long-term loans
|
|
0
|
(36)
|
|
1
|
|
167
|
Repayment of credit
from fixed asset payables
|
|
(74)
|
(8)
|
|
(233)
|
|
(173)
|
Net cash provided
by (used in) financing activities
|
|
89
|
1,836
|
|
1,465
|
|
2,736
|
|
|
|
|
|
|
|
|
Effect of
translation adjustments
|
|
43
|
(271)
|
|
(5)
|
|
(160)
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash
equivalents
|
|
210
|
211
|
|
314
|
|
(230)
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of the period
|
|
991
|
792
|
|
887
|
|
1,234
|
|
|
|
|
|
-
|
|
-
|
Cash and cash
equivalents at period end
|
|
1,201
|
1,003
|
|
1,201
|
|
1,003
|
Investor Contact:
Eli
Yaffe
|
|
Amnon
Shemer
|
Chief Executive
Officer
|
|
Chief Financial
Officer
|
eliy@nisteceltek.com
|
|
amnons@nisteceltek.com
|
+972-3-9395023
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content:http://www.prnewswire.com/news-releases/eltek-reports-2018-third-quarter-financial-results-300769509.html
SOURCE Eltek Ltd.