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Operator
Ladies and gentlemen, thank you for standing by. Welcome to the LTCH Limited 2023 First 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. Eli Yaffe, Chief Executive Officer, and Ron Freund, Chief Financial Officer, I'd 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.
Eli Yaffe
Thank you. Good morning, everyone. Thank you for joining us, and welcome to LTAC's 2023 First Quarter Earnings 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 our principal factors that affected our results during the first quarter, 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 also be available on our website at www.nishtecheltech.com. The trend of high demand for our company products that we witnessed in 2022 continue into the first quarter of 2023. I'm pleased to report that the efforts of our dedicated employees and the strong demand have resulted in record sales of $11.5 million during this quarter. Our backlog today is 10% higher than it was in the beginning of the year. We are currently experiencing a significant trend we identified in recent years and we have prepared to. The shift back of PCBs manufactured to Western countries. In the segments in which we prepared, mainly the military, defense, aerospace and medical market, this policy of shifting manufacturing back to the Western countries began in recent years due mainly to the security consideration. This trend supported our forecast of sustained high demand and is the reason for our significant efforts to enhance our operation and efficiencies as well as for our ongoing accelerated investment plan. During the first quarter of 2023, we finished issuing orders for all the machines and production lines planned to be purchased as part of the first phase of our accelerated investment plan. Some of these machines are already operational and are contributing to our production capacity, while the rest of the machines are scheduled to arrive by the end of 2025. It is important to note that the installation of these machines will take place gradually through this period, resulting in a gradual contribution to our sales and profitability. The increase in our gross profit margin to 26% in Q1 2023 is mainly attributed to the growth of our sales. Our fixed expenses, such as rent, municipal tax, and insurance, do not vary in the same ratio as sales. As a result, the higher our sales, the greater our company gross profitability. We ended the first quarter of 2023 with a record pre-tax income of $1.9 million and net income of $1.6 million. This results and the high profitability during the last quarters of 2022 resulted in high cash flow from operating activity. In light of this, we decided to repay $1.6 million of long-term loans in order to reduce our financial expenses given the high prevailing interest rates. I will now turn the call over to one point, 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 first quarter of 2023. During this call, I will also discuss 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. I will now go over the highlights of 2023 first quarter. All numbers mentioned are in U.S. dollars. Revenues for the first quarter of 2023 were $11.5 million, compared to $9.8 million in the first quarter of 2022. Gross profit increased by 54%, reaching $3 million, compared to a gross profit of $2 million in the first quarter of 2022. The increase is mainly due to the increase in revenue and the fixed component of part of the expenses included in cost of revenues. Operating profit amounted $1.6 million in Q1 2023, compared to $0.7 million in Q1 2022. We recorded financial income of $0.3 million during Q1 and $0.1 million in Q1 2022 due to the devaluation of the NIS against the US dollar. Profit before income tax amounted $1.9 million in Q1 2023 compared to $0.8 million in Q1 2022. Net profit was $1.6 million or $0.27 per share in Q1 2023 compared to net profit of $0.6 million or $0.11 per share in Q1 2022. EBITDA was $1.9 million compared to $1.1 million in Q1 2022. During the first quarter of 2023, we enjoyed positive cash flow for operating activities of $2.8 million, compared to $0.3 million in Q1 2022. As of March 31st, 2023, we had cash and cash equivalents of $8 million, compared to $7.4 million at the end of 2022. 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 pulled in the order they are received. Please stand by. The first question is from Tom Kerr of Zacks Investment Research. Please go ahead.
Tom Kerr
Good morning, everybody. The first question is on gross margins. That 26% seems to almost exceed one of your long-term goals or near-term goals. Do you feel that's sustainable in coming quarters or coming years, and can it improve from there?
Ron Freund
Yes, we think that we achieved this goal, and we are targeting this gross profit margin. We hope that we can improve our efficiency and even reach higher, although currently we are satisfied with this percentage.
Tom Kerr
Okay. Thank you. And on the capital, the accelerated investment plan, kind of where are we in terms of spending? And then related to that, what does that show up on the financial statements? Because capital expenditures were $305,000. So where are we on sort of the timeline of accelerated investment plan, and where does that spending show up?
Eli Yaffe
Thank you, Tom. Good morning. As I mentioned before, we commit ourselves already to most of the investment and it's in a form of PO so nothing is still yet on our books but the planning is done most of the critical machine is already defined and PO already issued we start to get some of the machine earlier and that results some of our sales increase during Q1 and we can assume that linearly or in It will be ended by the end of 2025. This is the plan.
Tom Kerr
Okay. And one more question. Any thoughts on paying the remaining debt balances since cash balances have become so high?
Ron Freund
I didn't understand your question fully.
Tom Kerr
Oh, yes. plans to repay the remaining amount of long-term debt.
Ron Freund
Yeah, so as you saw, we have a 6 million shekels balance of long-term debt. We have a plan for financing the accelerated investment plan. However, we will consider repaying this amount during the current quarter and decide whether we stay with the long-term loan or repay it. We have unutilized credit lines, so this would be a pretty easy decision.
Tom Kerr
Okay, thank you. I'll get back in the queue.
Ron Freund
Okay, thank you, Tom.
Operator
The next question is from Michael Wu. Please go ahead.
Michael Wu
Hello, hi. Congrats for a great quarter. So my first question is, can you give some color on the product revenue mix? What is the percentage of the revenues from the defense sector?
Eli Yaffe
I didn't analyze it, but I can estimate it. Approximately 60% is aerospace and defense.
Michael Wu
Oh, okay, great. So any updates going forward? Do you have any on the sector, like any color on this?
Eli Yaffe
Sorry, I didn't get your last sentence.
Michael Wu
Oh, yeah, just like what's the trend? Do you see any trend on the defense sector?
Eli Yaffe
We believe the defense sector will only grow and will not decline in the coming years.
Michael Wu
Okay, great. Thank you very much. So follow-up questions on the capital expenditure. So you said it will be fully invested until like 2025, right?
Eli Yaffe
Yes.
Michael Wu
Okay, so it's sort of like a linear investment for all those accelerated investment plan, right?
Eli Yaffe
Yeah, as I said, we commit... ourselves an issued po for the balance of the equipment that is going to arrive step by step between now and the year 2025 some of the equipment already arrived in q1 2023 and it's partially reflected in our results okay great uh any update on the labor side do you have you know like you'll be able to enough to acquire enough I mean workers for you guys yes we decided that in the next month we will decide if we will continue to grow the growth only in the facility that we have here or will go to the other facility most of It seems to me, and I cannot commit it to right now, that we'll give up the site in the north and we'll focus on one site because the market is very strong and we would like to react to the market as fast as possible and we don't have time to build something that will take longer. But there is no final decision about it yet, but in the next weeks we will decide about it.
Michael Wu
Okay, so do you have numbers on how many, you know, like, employees you have right now, like, whereas last year, you know, how many added?
Ron Freund
Yeah, we added approximately 50 employees during 2022, and we maintain the same amount of employees as we were in the end of 2022. Okay, great.
Michael Wu
Thank you very much, Rachel.
Ron Freund
Thank you, Michael.
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. The next question is a follow-up from Tom Kerr of Zacks Investment Research. Please go ahead.
Tom Kerr
Just a quick follow-up on the backlog or the components of backlog. Is it still the majority of flex-rigid? or did those components make a change?
Eli Yaffe
Yes, it's the same mix.
Tom Kerr
Okay, that's all I have for today. Thank you. Thank you.
Operator
There are no further 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 Eltech's website, www.nistecheltech.com.
Eli Yaffe
Before we conclude our call, I wish to thank our employees for the continued to contribute to Eltech and our critical mission of inspiring innovation for our customers. I would also like to thank all our customers, partners, investors, and 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 2023 First Quarter Financial Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
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