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Operator
Ladies and gentlemen, thank you for standing by. Welcome to the LTCH Limited Third Quarter 2020 Financial Result Conference Call. All participants are present in the listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded. Before I turn the call over to Mr. Eliafeh, Chief Executive Officer, and Alon Mualim, Chief Financial Officer, I'd like to remind you that LTAC earnings released today on this call includes forward-looking statements within the meaning of Private Security Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest fillings with the SEC for important material assumptions. Expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements. These forward-looking statements are projections and reflect the current beliefs and expectations of the company, actual events or results may differ materially. LTCH undertakes no obligation to publicly release revisions to such forward-looking statements to reflect events or circumstances occurring subsequent to this date. I will now turn the call over to Mr. Eli Yaffe. Mr. Yaffe, please go ahead.
Eliafeh
Thank you. Good morning, everyone. Thank you for joining us and welcome to LTCH 2020 Third Quarter Running Call. With me is Alon Mualem, our Chief Financial Officer. We will begin by providing you with an overview of our business, a summary of the principal factor that affected our results, in the third quarter of 2020 and an update on how COVID-19 has impacted our business, followed by the details of our financial results. After our prepared remarks, we will be happy to answer any of your questions. By now, everyone should have access to our third quarter earnings press release, which was released earlier today. The release will be also available on our website at www.nistecheltech.com. This is the seventh quarter in a row that we achieved both operating and net profits. Our revenues in the third quarter of 2020 were $9.3 million, consistent with our revenue in the third quarter of 2018. Revenues for the first nine months of 2020 were $27.2 million, compared to $26.2 million in the first nine months of 2018. This increase is mainly as a result of 15% growth in the sales of customers in Israel and reflects growth of 8% in sales to the defense segment and to the contract manufacturers with 22% decline in the Indian-Italian market as a result of customer shutdown due to the COVID-19. I am also pleased with the continued improvement in production efficiency that is evidence in our improved operation profit, which is more than double year over year. Our diversified end market allowed us to grow revenue year over year, despite the weakness of the Indian and Italian market. In addition, strong operational execution overcame production inefficiencies and extra costs due to COVID-19. The COVID-19 pandemic has created operational difficulties macroeconomic uncertainty and employee concern. I'm extremely proud of our employees' efforts to deliver excellent performance despite the formidable and unexpected challenges of this environment. We also had four employees who had tested positive for COVID-19 this year, with others returning to work after being cleared following testing and quarantine protocols. We continue to use content contact tracing and quarantine individuals who are in close contact with an infected team member, in addition to the deep cleaning affected area areas. We also continue to employ other measures, such as extensive internal communication, masking, temperature check, and proper distancing in our facility worldwide. Because of the strict preventing measures, measures in place and our culture of transparency in communication, COVID-19 has had minimal impact in our manufacturing operation to date. I would like to remind you that Eltech was declared as a sessional enterprise, therefore we fully continue our operation and did not lose any working day since the beginning of the pandemic. The outbreak of the coronavirus had affected new operational and business challenges, which required quick adjustments that allowed us to maintain our production of PCBs while maintaining the safety of our workforce. We see both risk and new opportunities in the existing business environment and are making the necessary adoption to meet customers' demand and our revenue and profit margin goals. As we said in the past, We also see an opportunity to grow our business in the U.S. market due to the worsening relationship between the U.S. and China. The impact of any trade war between the U.S. and China will also impact the Israeli market since we see a U.S. pressure on the Israeli government to reduce the Israel-China trade activity. We believe that the new administration in the U.S. will continue the same route as the previous administration, at least in the military and communication PCB segments. At the same time, we are facing slowdown from some of our customers in India and Italy due to the continued negative impact of COVID-19. Eltech continues to invest in the new equipment in order to get the benefits of soft market in the capital equipment manufacturing. During quarter three, Eltech started the installation of a new and fast modern desk line, which is one of the main PCB production lines. and the new line is now running in testing mode in parallel to the old one. So far, we have financed our growth strategy by our positive operating cash flow and our own internal resources. During 2020 and 2021, we plan to continue our investment in new equipment and expansion of our facility and infrastructure to support our long-term sales course. The increase on in the top line of 2020 reflects the continued market recognition of our high-quality and reliable products, mainly in the flex PCB sector. Our revenue from the defense sector and contract electronic manufacturers grew from $21.7 million during the first nine months of 2019 to $23.5 million in the first nine months of 2020, 8% growth year over year. The medical sector contributes 8.7% of revenue during the nine months of 2020, representing 13% growth year over year. Our customers continue to see the value proposition of our products and have a great deal of trust in our company and its capability. We are continuing to pursue new business opportunities and increase customers' design engagement activity with that will leverage the advantage technology capability. We remain focused on operational excellence and financial discipline, as well as our strategic growth goals. We are all focused on addressing the challenges that the widespread health crisis has on us, and we are working delightfully on expanding our business while maintaining the trend of improved growth and operational results. I will now turn the call over to Alon Mualem, our CFO, to discuss our financial.
Alon Mualem
Thank you, Eli. I would like to draw your attention to the financials of the third quarter of 2020. During this call, I will also be discussing certain non-GAAP financial measures. LTEC uses EBITDA as a non-GAAP financial performance measurement. Please see our earnings release for its definition and the reasons for its use. Now I will go over the highlights of the third quarter of 2020 compared to the third quarter of 2019. As Elie mentioned, revenues for the third quarter of 2020 were 9.3 million, consistent with our revenues in the third quarter of 2019. Gross profit increased from $1.75 million or 18.9% of revenues in the third quarter of 2019 to $1.82 million or 19.7% of revenues in the third quarter of 2020. During the third quarter of 2020, we had an operating profit of $638,000 which are 6.9 percent of revenues as compared to operating profit of 568,000 or 6.1 percent of revenues in the third quarter of last year. Net profit was 598,000 or 14 cents per share in the third quarter of 2020 compared to net profit of 391,000 or 9 cents per share in the third quarter of 2019. EBITDA was approximately $1 million in the third quarter of 2020 as compared to EBITDA of 940,000 in the third quarter of 2019. During the third quarter of 2020, we had a positive operating cash flow of 873,000 compared to 1.4 million during the third quarter of 2019. During the nine-month period of 2020, the company achieved a positive operating cash flow of $3.7 million as compared to positive operating cash flow of $2.7 million in the nine months of 2019. As Eddie mentioned before, we remain focused on operational excellence and financial discipline as well as our long-term strategic growth goals. As previously announced, we filed the shelf registration statement during the third quarter of 2019 to provide the company with the ability to raise additional funds to support our planned growth and accelerate the expansion of our business. In addition, last week we issued a prospectus to our shareholders of record on November 9, 2020. Shareholders received one non-transferable subscription right for each three ordinary shares held or deemed held on the record date. Each right entitles the holder to purchase one ordinary share at a subscription price of $3.90 per ordinary share. The subscription rights are non-transferable and may be only exercised during the period ending 5 p.m. Eastern Time on December 2, 2020. We are now ready to take your questions.
Operator
Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the headset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we pull for your questions. I repeat, if you have a question, please press star one. There are no questions at this time. Before I ask Mr. Yaffe to go ahead with his closing statement, I would like to remind the participants that a replay of this call will be available tomorrow on LTCH's website at www.ltch.com. Mr. Yaffe, would you like to make your concluding statement?
Eliafeh
Before we conclude our call, I would like to thank all of our employees for all their efforts during this difficult period and their contribution in renewing our position in leading IAM PCB manufacture and making Eltech profitable again. I would like to thank once again to our customers, partners, investors, and the Eltech team of their continued support. I wish everyone good health. Thank you for all joining us on today's call. Have a good day.
Operator
This concludes the LTCH Limited Third Quarter 2020 Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
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