Eltek Ltd. (NASDAQ:ELTK) Q3 2022 Earnings Call Transcript November 16, 2022
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. 2022 Third Quarter Financial Results Conference Call. All participants are present in listen-only mode. Following management’s formal presentation instructions will be given for the question-and-answer session. 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 forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in Eltek’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. Eltek 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. Please go ahead.
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Eli Yaffe: Thank you. Good morning, everyone. Thank you for joining us, and welcome to Eltek’s 2022 third 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 the principal factors that affected our results in the third 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.nisteceltek.com. In the third quarter of 2022, we recorded a revenue of $10.3 million, pretax income of $1.2 million and a net income of $1 million.
This is consistent with our efforts to increase revenue and profitability. Our backlog remained strong and we are forecasting that the overall demand for high-end products will continue to support our sales efforts. The company’s commercial activity is growing quarter-over-quarter and we continue to concentrate efforts in this area as well. We have concluded the negotiation with the government authority regarding the continuation of the projects in 2023 and 2024, but we did not receive yet official PO. This third phase of the project will include among other things, manufacturing and products and procurement of capital equipments. During the third quarter, we successfully installed three new manufacturing machines and intend to install two additional machines in the fourth quarter of 2022.
As you’re aware, we are working to implement the first phase of our accelerated investment program, which will allow us to increase sales and profitability. We are focusing in the discussion with our insurance company to recover the expenses incurred during the fire in our plant earlier this year. We have received $1 million as advanced payment, which covered part of our expenses. Since the beginning of 2022, we have managed to increase our workforce by 18% to meet the increased production demand. The training process for new employees is long and complicated, but I estimate that our recruitment efforts will continue for several more months. I will now turn the call over to Ron Freund, our CFO, to discuss our financial statement.
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Ron Freund: Thank you, Eli. I would like to draw your attention to the financial statements for the third quarter of 2022. During this call, I will also discuss certain non-GAAP financial measures. Eltek 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 Q3 2022 and the first nine months of 2022. Revenues for the third quarter of 2022 totaled $10.3 million compared to $8 million in the third quarter of 2021, an increase of 30%. Revenues for the first nine months of 2022 totaled $29.2 million compared to $24.3 million in the same period last year, an increase of 20%. Gross profit for the third quarter of 2022 totaled $2.4 million compared to a gross profit of $1.4 million in the third quarter of 2021.
The increase in gross profit is due to increase in revenues. Gross profit for the first nine months of 2022 totaled $6.1 million compared to $4.9 million in the same period last year. Operating profit amounted to $1.1 million in Q3 2022 compared to $0.1 million in 2021. Operating income in the first nine months of 2022 totaled $2.1 million compared to $1.3 million in the same period last year. Net profit was $1 million or $0.70 per share in Q3 2022 compared to net profit of $0 million in Q3 2021. Net profit for the first nine months of 2022 was $2.4 million compared to $1.2 million in the first nine months of 2021. EBITDA was $1.4 million in Q3 2022 compared to $0.6 million in Q3 2021. For the first nine months of 2022, EBITDA was $3.3 million compared to $2.7 million in the same period last year.
As of September 30, 2022, we had cash and cash equivalents of $7.8 million compared to $9.3 million at December 31, 2021. The decrease is mainly due to the revaluation of the U.S. dollar against the NIS. We are now ready to take your questions.
Operator:
Operator: 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 Eltek’s website, www.nisteceltek.com. Before we conclude our call, I would like €“ Mr. Yaffe, would you like to make your concluding statement?
Eli Yaffe: Yes. Thank you. Before we conclude our call, I would like to thank all our employees for their continued effort to meet our strategy of increased sales and profitability. I would like also to thanks all our customers, partners, investors and Eltek team for their continued support. Thank you all for joining us on today’s call. Have a good day.
Operator: This concludes the Eltek Ltd. 2022 third quarter financial results conference call. Thank you for your participation. You may go ahead and disconnect.