Eltek Ltd.

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.

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.

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.