ELTK - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd First Quarter 2022 Financial Results Conference Call. All participants are present in a listen-only mode.

Following management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded.

call Mr. the turn I over to Before statements Eli Financial XXXX, well you Officer, Executive Litigation measures. Officer; Reform include that Private financial XXXX, as of Freund, and Chief and Ron Exchange forward-looking call certain I'd this the earnings Act today non-GAAP Yaffe, the Securities as release meaning the Chief Eltek's and within and like Securities of to remind of Act

anticipated statements differ the obligation such as expectations statements. events occurring disclosures or on These this beliefs current assumptions, Before at described forward-looking forward-looking filings expectations, to well now you full cause making in earnings with material circumstances any read will to non-GAAP would factors I and may the of strongly Mr. decisions, Eltek statements the subsequent to please? risk Yaffe. for those reflect the our are that forth may to statements you important company. encourage forward-looking differ financial latest and investment revisions we of our and to to Actual begin, actual turn release, Eli reflect date. such the over review set results publicly like events call release and like to Yaffe, materially. undertakes of use projections as and results SEC to from materially our to forward-looking measures end Mr. no or

Eli Yaffe

Financial Officer. first you. Freund, Chief is earnings me joining and call. Ron Thank us, welcome to Thank everyone. quarter Eltek's XXXX Good morning, for you our With

be million Web our of increase quarter, that labor will our recorded to The relative release, XXXX By overview to the should on be answer of XX% the results. XXXX. environment. revenue questions. first now, We of quarter chain followed despite In with in our challenging our everyone we results of our of annual in any will also the earlier and begin and reflects an available site, you will first remarks, summary supply released affected prepared which providing of at access by After an financial of happy have details your are to today. the our factors principal was we $X.X by release revenue www.nisteceltek.com. press our This revenue the business

Our forecast better in and perform the sectors in year. is the that defense aerospace XXXX than will last space

of Our increased an maximization job throughput of in production did employees hour, maximizing efficiency. excellent resulting the by per

in through raw during price of process, we all savings, cost quarter adjustment mix first additional price the XXXX, the materials mitigate of increase and During the used adjustments. product of material manufacturing the

of in The first XXXX the year-end. our the the order customers. with backlog a than received of We reflects XXXX backlog continued of increase ended greater XX% quarter from quarter

which our customers for X.X factors. that Israel, isolation most revenue to The of India. requirements. was ratio the customers East, in our quarter several not the business due normal in including of book-to-bill number significant to PCB status XXXX, than our orders the accumulation new Our means the recognition. first current is one; the due backlog was Factor face increase of in absence to of of of the return our In level enable operation, Far did COVID-XX significant particular and employees to pandemic higher we

significant number budget, defense we by influenced XXXX a production increase PCBs flexibility a market. positively and the in more Factor components and supplier and as increase of Factor shift two; In system create QX during had to cycles. addition, situation to no in political delays number us three; governments of security our to the allowed military inventory in it. materials supply, caused pandemic China levels Europe their western Eltek of manufacturers, order in the [reimbursement] the [Ph] in and non-defense manufacturing raw COVID-XX our of

Far In addition, to help the number increase price continued [Ph] [Ph] back lead consideration. PCB manufacturing, the to western due the a in in force which competitive request [countries] pressures [heightened] in redesign strength we in four; critical of in East, previously their time. America the and of the labor the suffered Furthermore, the from challenges to customers performed the us [inflationary] being Factor demand North of for available components components. and some shifting security to won. continued of This some due quotation, [Ph] led which to redesign them lack further using our PCB

should won quarter tier four All the will first outsourcing mention fully these new to growth provide one recently XXXX. be that X customers order requested. contribute I also we to assembly our service factors we a sales backlog turnkey of a our during of by the of product and revenue wherein

investigate to the the will further to and its this for product potential led us decide The future. We our has demand need for company investment program. increased accelerate

This program, million. well During $X is company to as capability which investment include investment the two order amount in the new first well of as the quarter, program in in infrastructure lines, enable production last years. efficiency. to increase of production The first to as the began expected as phase we its include phase in us

$X will The by yearly phase of our increased on based We expect that -- to allowed to for allowed sales the million. million, us is $XX total products. that the our the us program to million phase demand continuity $X will the investment first increase amount

industry, sometimes employees level flexible impair achieve efforts processes significant materials. our our pricing in the to price efficiency more in We to improving experience situation for in a in order one. adjusted this to communicated similar During and wages our our our to to The manufacturing quarter, of force in be invest we our our continue and policy. target. increase production selling order in Demand we the high Nevertheless, and our prices. customers first capability, and to be us in raise raw main increase continued to even continue

include focused now on in mentioned our unchanged our remain I PCB long-term in technology differentiation over customers. capability the to us difficulty. CFO to Freund, to our call as highly our turn maintain financial before to valued high program service investment help partner will Eltek’s automation statements. deal order to Ron strategy order discuss and this component Our to

Ron Freund

Thank financial for I draw like would the the quarter you, Eli. statement XXXX. first of to attention to your

During our this for and I financial reasons will its financial call, non-GAAP definition as discuss non-GAAP release Eltek uses also EBITDA see certain for use. the measurement. its a Please measures. performance earnings

$X.X the XXXX QX $X.X of income the XXXX; of profit to XXXX. to raw million. the and highlights gross amount contributed XXXX will quarter The compared million result XXXX. the million [indiscernible] XXXX go the in first dollar difficulty] in in million, XXXX quarter material mainly of of on increase the XXXX $X.X first Shekels to in XXXX. of $X.X increase QX we quarter amounted the first Revenue it outcome in [Technical I increase of of shortage Fluctuation And negative operation. in totaled of due the to in sales U.S. effect compared Now, over of profit our XX%. revenues. Operating of QX in in the is the for million the an revenue financial recorded Israeli million our $X.X had $X.X against QX the in

difficulty] share year-end. $X.XX in the $X.X QX utilize that in more [technical or based for flow asset million of in [Technical profit on to due tax was it XXXX. million company $X.X technical first forward difficulty] the likely recorded that in compared or recorded to $X.X was in compared to difficulty] $X.X in difficulty] cash million [technical Net we deferred time carry profit the is have QX per $X.XX years. future XXXX We recorded million was per XXXX million EBITDA $X.X XXXX. share net XXXX will

cash of financing Eli and we the difficulty] operating business $X.X million. March cash cash had accelerated our in XX, program As anticipation from mentioned balance This operating investment equivalent our flexibility and activities and of earlier. XXXX, flow that [technical cash

We ready take now questions. are your to

Operator

Thank Instructions] from Please gentlemen, first begin will this [Wood] question you. The ahead. we Michael Ladies question-and-answer is and [Operator go at [Ph]. session. the time

Unidentified Analyst

questions. Hello. thanks for taking Hi, my

cannot you estimate orders got you you? [indiscernible] revenue from of issue my of quarter guys they have question the this So, is as first ship because manufacturing in China do any to guys

Eli Yaffe

No, but [indiscernible] to us to And we [indiscernible] back that don’t is don’t from because we how Israel. ask [technical you? number, I customers -- exact we to it but back shift we -- Hi, estimate have But have don’t Israel China got that difficulty], by number. exact are to Mike. approached have

Unidentified Analyst

translates like customers more issues about Do that’s of Okay, the try see -- continuing this you carry to this do manufacturing China? fine. in kind -- have you any

Eli Yaffe

Yes.

previous my that during I told continue. comments, I will shift the forecast As

Unidentified Analyst

great. Thank you. Okay,

now? in capacity is So, running, is manufacturing how capacity second like, full question right are you guys the

Eli Yaffe

yet. not No,

Unidentified Analyst

yet. Not

capacity for left? So, I like, you like [Ph]? to] if basis, can many can enough what steer [you the mean, how capacity run is

Eli Yaffe

of can produce we manpower And IPOs we level we that more. rely according We adjust our to have. employees, on the more if

Unidentified Analyst

do Or a bit you can more? little

Eli Yaffe

be it yes. we'll If sales we'll more employees, will hire and products, increase more manufacturing our by justified

Unidentified Analyst

Okay.

So, I another have question.

for about U.S. so like a total $XXX spend? it So, said million for it -- CapEx, totally period is the the sounds new two-year you

Eli Yaffe

No, years. whole million program. is the the two the X. for $X That's million is over Phase $XX The

Unidentified Analyst

that's great. okay, Oh, okay,

get once a first for nine need and setup like, capacity the have wait and you the is up stage around expect running? so is -- to like fully be years or years meeting, do facility So, will then and in you you two running, invested, fully two the just when and to

Eli Yaffe

good question. very It's

We be of will in end slowly go but the the there program, between a will the program. the jump and of end now

Unidentified Analyst

Okay.

were and can that's right? right, year, up you like capacity, my basically running, some incrementally you maybe this more So, getting during see understanding,

Eli Yaffe

have down, to the capacity the dependent [indiscernible] equipment, The like break we we on would install which If new to in right invest have is program. we manpower. now a

Unidentified Analyst

Okay.

new You adding increase right? mean end need basically, to years you during capacity the right? time, the until don't the right? equipment, wait So, you're use adding I equipment, to of the the more two program, can

Eli Yaffe

equipment, but old replace that equipment. more will It's

Unidentified Analyst

Okay, okay.

mean? So what's I why the difference,

Eli Yaffe

the efficiency of equipment, and more adapted less precise. more automation, required demand for kind more precise, quality, It's market be to the manpower more new

Unidentified Analyst

Okay.

the you replace is like, my So, once basically capacity, understanding also you also old right, the right? equipment, increase

Eli Yaffe

Exactly, we to able new equipment, more be panels. produce our with will the

Unidentified Analyst

Okay, efficiency, right? so also increase the

Eli Yaffe

mentioned Exactly, as before, yes. I

Unidentified Analyst

great. that's Okay,

do you of color you So on kind color could give any have defense of on more kind -- contract, the this? any

Eli Yaffe

name don't Well, usually we of our disclose defense the contractors.

that activity can in is market with going the all there of we the of our names contractors, security mentioned Europe. see XXth, you and the the defense but On because them, with the situation some

Unidentified Analyst

how I is amount the flow and like the inflows? you do increase mean, trend what is do percentage see big the you order like So see how -- like

Eli Yaffe

mentioned than last the backlog more book-to-bill the order I As and the is right XX end year X.X. now of ratio is flow now, right

than more we what XX% orders gained produce. we So

Unidentified Analyst

pressure, can great about great. pass your inflation so last you like to any expenses? see price that's inflation to question, you have my you Okay, labor That's know. any if pressure, can customer, And

Eli Yaffe

Yes. before, States. Yes, as and in I the between mentioned a difference United inflation there Israel rate is

because inflation difficulty, but succeed in in in based do prices So lower inflation is more United adjustment push of States, it of United easier Israel prices in so to Israel than on in it's with increase -- the the it's United And the the easily the up we States. we to States cost cost.

Unidentified Analyst

it. Sorry, I didn't get

[indiscernible] [indiscernible]? the catch you the you So, to price increase

Eli Yaffe

exists in United do it we to accepted inflation in rate Israel the and than that in there do in Israel, we is inflation inflation rate it it's In States, because it easily States, which Israel. United Israel. up is rate in do because higher the we different the In

Unidentified Analyst

Okay.

got Okay, it.

questions. my the taking very questions. Thank good Congratulations all that's much Okay, for quarter. you my for

Eli Yaffe

Thank Thank you, you. Michael.

Operator

are further no this time. questions at There Instructions] [Operator

will I make that to concluding would on participants Mr. Eltek's the site, available replay like Mr. www.nisteceltek.com. Yaffe be Yaffe, your like to Web of a statement? ahead go tomorrow with I Before statement, would closing call to remind ask this you his

Eli Yaffe

their our for on conclude investors, Have the us the today I support. team to all to thank continuing like would and for calls. of joining Thank also we all I our thank calls, good our company for Before for you growth. Eltek a like in employees day. partners, would this customers, continued efforts their

Eltek (ELTK) 18 May 222022 Q1 Earnings call transcript