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Operator
Ladies and gentlemen, thank you for standing by. Welcome to the LTCH Limited 2022 Full Year and Fourth Quarter Financial Results Conference Call. All participants are at present in a 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. Elie Yaffe, Chief Executive Officer, and Ron Freund, Chief Financial Officer, I would like to remind you that they will be referring to forward-looking information in today's presentation and in the Q&A. By its nature, this information contains forecasts, assumptions, and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in LTCH's public disclosure filings. These forward-looking statements are projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. We'll also be referring to non-GAAP measures. LTAC 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.
Elie Yaffe
Thank you. Good morning, everyone. Thank you for joining us and welcome to LTCH 2022 Full Year and Fourth Quarter Earning Call. With me is Ron Freund, our Chief Financial Officer. We will begin by providing you with an overview of our business and summary of the principal factors that affected our results during 2022, 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 press release, which was released earlier today. The release will be also available on our website at www.nistecheltech.com. 2022 was a year of great growth in the company activities. This year, thanks to the growing demand for our products and the execution of our dedicated team of employees, we were able to achieve sales of almost $40 million. In the last two quarters of 2022, we achieved sales of over $10 million per quarter. These results are the results of our successful plan to keep pace with increased demand for our products. We ended 2022 with a backlog of 70% higher than the backlog of the beginning of the year. The increase in demand for the company product is mainly due to two trends that have prevailed over the past few years and which we anticipate will continue in 2023. The first one is the shift to manufacturing complex PCB in manufacturing plants in Western countries from the East due to the IP and security consideration. We are mainly active in the military aerospace industry aerospace, aviation, defense market, which put our importance on these aspects, and therefore we have benefited and continue to benefit from this trend. The second trend that occurred during the last year is the political situation in Eastern Europe, which led many governments to increase their defense budget and issue orders for defense products. We estimate that about 60% of our revenues are PCBs for the defense industry. We continue to notice high demand from the Indian market for high reliability flex rigid PCB. We are constantly working on expanding our range of products while adopting the latest production technologies using new raw materials and adopting our range of products due to the change needs in the market. 2022, we continue to invest in new machines and equipment as well as the optimization of our manufacturing processes. In the first quarter of 2022, we decided to accelerate our investment plan and enter a phase one of the plan where we will invest approximately $8 million with the aim to enable us to increase sales. This phase includes installation of new production lines, and machines and will allow for increased output, increased efficiency, and manufacturers of products at higher technological level. We expect that anticipating increased efficiency and increase in sales will support our long-term plan for gross margin of target of 24%. In June and July 2022, we successfully dealt with the fire that broke out one of our production rooms. As of today, we have not finished the negotiation with the insurance company to receive a full compensation for the damages we suffered. We hope to conclude this negotiation soon. During Q4, we received final approval from the Israeli Innovation Authority, IIA, for 40% royalty-bearing participation in approximately $800,000 one-year development program, which started in January 2023. This program is part of our investment in research and development activity to bring new high-quality products to the market and drive future growth. We ended 2022 with a net profit of $3.2 million, EBITDA of $4.5 million, a cash balance of approximately $7.4 million, and Edcash provided operating activity of 3.8 million. Our strong balance sheets and consistent profitability are an excellent starting point for 2023, in which we plan to continue the growth in the company revenue and profitability. I will now turn the call over to Ron Freund, our CFO, to discuss our financial results.
Ron Freund
Thank you, Eli. I would like to draw your attention to the financial statements for the year ended December 31st, 2022, and for the fourth quarter of 2022. During this call, I will also discuss certain non-GAAP financial measures. LTCH uses EBITDA as a non-GAAP financial performance measurement. Please see our earnings release for its definition and the reasons for its use. First, I will go over the highlights of 2022 All numbers mentioned are in U.S. dollars. Revenues for the full year of 2022 totaled $39.6 million compared to $33.8 million in 2021, an increase of 17%. The increase in revenues is mainly due to the effect of the COVID-19 crisis on our customers' demand for products during 2021, the shortage in raw materials in Q1 2021, and the increased demand for our products in 2022, as Eddie mentioned before. Gross profit increased by 20%, reaching $8.3 million, compared to a gross profit of $6.9 million in 2021. The increase is mainly due to the increase in revenue. Operating profit amounted $3 million in 2022, compared to $1.9 million in 2021. In 2022, we have recorded financial income in the amount of $0.9 million compared to financial expense of $0.5 million in 2021. The increased income is due to devaluation of the NIS against the US dollar. Profit before income tax amounted $3.9 million in 2022 compared to $1.5 million in 2021. Tax expenses amounted to $0.7 million compared to tax income of $3.5 million in 2021. The tax income in 2021 is due to recording a deferred tax assets in regard to the company's tax loss carry forwards. Net profit was $3.2 million or 55 cents per share in 2022. compared to net profit of $5 million or 86 cents per share in 2021. EBITDA was $4.5 million in 2022 compared to $3.8 million in 2021. During 2022, we enjoyed positive cashflow for operating activities of $3.8 million compared to $3.9 million in 2021. As of December 31st, 2022, we had cash and cash equivalents of $7.4 million compared to $9.3 million at the end of 2021. This decrease is due to dividend distribution of $1 million, the devaluation of Denise against the U.S. dollar, and the investment in new machines for which we still did not receive compensation from our insurance company. I will now go over the highlights of the fourth quarter of 2022 compared to the fourth quarter of 2021. Revenues for the fourth quarter of 2021 were $10.5 million compared to $9.5 million in the fourth quarter of 2021. Gross profit amounted to $2.2 million in the fourth quarter of 2022 compared to $2 million in the fourth quarter of 2021. Net profit in the fourth quarter of 2022 was $0.8 million, or 14 cents per fully diluted share, compared to net profit of $3.8 million, or 65 cents per fully diluted share, in the fourth quarter of 2021. In the fourth quarter of 2021, we have recorded a tax benefit in the amount of $3.6 million. EBITDA was $1.2 million in the fourth quarter of 2022, compared to EBITDA of $1.1 million in the fourth quarter of 2021. Cash flow for operating activities was $1.3 million, compared to $0.4 million provided by operating activities in the fourth quarter of 2021. 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 handset before pressing the numbers. Your questions will be answered in the order they are received. Please stand by. The first question is from Shuki Hazan of Hazan Capital Markets. Please go ahead.
Shuki Hazan
Hi, hello. I would like to ask, please, about the penalty of $0.6 million. If the expenses of this penalty, it was in the fourth quarter, or you will recognize the expenses in the first quarter of 2023?
Ron Freund
Hi, Shuki. As reported during January 2023, we received a notification from the Ministry of Environmental Protection about its intention to impose a penalty of approximately $0.6 million for an alleged breach of the Clean Air Law during the years 2019 and 2020. We invest many resources in compliance with environmental laws and constantly improve what is required in order to prevent future violations. As of today, we believe that we comply with the laws. We intend to seek a reduction in the amount of the penalty in accordance with provisions of the Clean Air Law. We have recorded in our annual financial statement an allowance in regard to the penalty based on management estimation and its legal advisor opinion.
Shuki Hazan
Okay. And question about the business. Based on your magnificent backlog, can you say that Double-digit growth in 2023 is something that you can predict.
Elie Yaffe
Hi, Shuki. As you know, we don't give a forecast. If you look on all our history, we never forecast it. But as I mentioned during my call, We sound positive about the business, but I cannot give any expectation or estimation about the growth rate that we will be.
Shuki Hazan
Okay, and is there anything about the dividend policy for the next year?
Ron Freund
We don't have any dividend policy in hand. So basically, or currently, we do not anticipate any future dividend unless it will be decided otherwise by our board of directors.
Shuki Hazan
Okay, thank you. Good luck.
Ron Freund
Thank you.
Operator
The next question is from Tom Curra of Zacks. Please go ahead.
Tom Curra
Hello, several quick questions. Can you comment on the backlog components, like what products comprise that large growth and backlog? Is it spread across all product lines?
Elie Yaffe
Yeah, thank you. It's a good question. It's spread all over the product line. We focused about 60% on flex-rigid type PCB. OK, 60%. 60% of it is flex-rigid, yes.
Tom Curra
Okay. Got it. And I think I heard you say gross margin goal is 24%. Yes. And I know you don't give projections, but is that a near-term or long-term goal, or can you give us any guidance when that could happen?
Elie Yaffe
We are on the way to be there. Once the investment that we announced, about the $8 million investment, will be accrued and finished, we will be there. But on the way, we will be on the way to 2024.
Ron Freund
So we anticipate that within two to three years we'll be there.
Tom Curra
Okay, that's fair enough. Okay, I think all my other questions have been answered. Thank you. Thank you.
Operator
If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we poll for more questions. There are no further questions at this time. Before I ask Mr. Jaffe 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 www.nistecheltek.com.
Elie Yaffe
Before we conclude our call, I would like to thank all our employees for their continued efforts to meet our strategy of increased sales and profitability. I would like also to thank all our customers, partners, investors, and to the Eltech team for their continued support. Thank you all for joining us on today's call. Have a good day.
Operator
This concludes the LTCH Limited 2022 Full Year and Fourth Quarter Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
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