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Eltek Announces First-Quarter 2008 Financial Results
PETACH-TIKVA, Israel --(Business Wire)-- Eltek Ltd. (Nasdaq:ELTK), the leading Israeli manufacturer of advanced flex-rigid circuitry solutions, today announced its financial results for the first quarter of 2008.
Eltek reported revenues for the three months ended March 31, 2008 of $10.5 million compared with $10.2 million for the first quarter of 2007. The increase in revenues is attributable to the receipt of new orders from new and existing customers, reflecting recovery from the loss of the Company's former major customer.
The Company incurred a net loss for the first quarter of $809,000 compared with net profit of $565,000 in the first quarter in 2007. The loss in the first quarter of 2008 is mainly attributable to the devaluation of the U.S. dollar against the NIS. If the exchange rate had remained the same as in the comparable 2007 period, the Company's net loss for Q1-2008 would have been approximately $84,000 on a non-GAAP basis. The Company's revenues are primarily denominated in U.S. dollars, while its operating expenses, mainly salaries and energy costs are primarily denominated in NIS. In addition to the effect of the devaluation of the US dollar against the NIS, the Company's cost of sales increased due to the replacement of its former major customer's single product with many new items; and incurred additional sales and marketing expenses due to the expansion of the Company's sales force in the US and Europe, which is expected to generate increased sales of high-end products in the near future.
EBITDA:
In the first quarter of 2008, Eltek had a negative EBITDA of $180,000 compared to EBITDA of $1.3 million in first quarter of 2007.
ELTEK uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation and amortization. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP.
Management Comments:
Arieh Reichart, President and Chief Executive Officer of Eltek, commented: "During the first quarter we continued our growth and experienced an increase in our backlog. We achieved a growth in revenues due to our efforts to broaden our customer base by adding diversified small and medium sized companies to our customer list. Driven by continued demand and market share growth we improved our ability to deliver high quality products and services to all sorts of customers, including a major Fortune100 US manufacturer and a foreign defense conglomerate."
Mr. Reichart noted: "The continued delivery of revenue growth is encouraging considering the fact that we lost a major customer in 2007 and are facing a negative macroeconomic environment. In 2008, we plan to follow our existing business model while we continue to support our marketing efforts to broaden our distribution channels and customer base. We remain confident of our ability to grow our revenues due to our leading products and technologies."
Amnon Shemer, CFO of Eltek, commented: "The favorable revenue growth was offset by increased operating and manufacturing costs, due to the impact of the dollar-shekel exchange rates. The average exchange rate of the US dollar in the first quarter of 2008 was approximately 15% lower than in 2007. If the exchange rate had remained the same as in the comparable 2007 period, our net loss for Q1-2008 would have been approximately $84,000 on a non-GAAP basis. The replacement of one major customer's product by many new items resulted in diversification of our customer base, but at the same time, it increased our cost of sales, as normally new projects require (mainly due to the learning curve encountered with such products)."
"In order to compensate for the adverse impact of the dollar's plunge against the NIS, we have executed plans to increase our selling prices wherever possible, along with increasing the actual exchange rates underlying our price lists. In addition, although our manufacturing processes are in line with the industry, we also initiated plans to improve our production yields, thus decreasing our cost of sales," Mr. Shemer concluded.
About the Company
Eltek is Israel's leading manufacturers of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end of PCB manufacturing, i.e., HDI, multilayered and flex-rigid boards. Eltek's technologically advanced circuitry solutions are used in today's increasingly sophisticated and compact electronic products. For more information, visit Eltek's World Wide Web site at www.eltekglobal.com.
Eltek ltd.
Consolidated Statements of Operations
(In thousands US$, except per share data)
Year ended Three months ended
-------------------
December 31, March 31,
------------ -------------------
2007 2007 2008
------------ --------- ---------
Audited Unaudited Unaudited
------------ --------- ---------
Revenues 37,476 10,223 10,465
Costs of revenues (31,879) (8,075) (9,418)
------------ --------- ---------
Gross profit 5,597 2,148 1,047
Research and development expenses,
net (74) (29) 0
Selling, general and administrative
expenses (5,683) (1,426) (1,793)
------------ --------- ---------
Operating profit (loss) (160) 693 (746)
Financial expenses, net (145) (116) (73)
------------ --------- ---------
Profit (loss) before other income,
net (305) 577 (819)
Other income, net 8 4 0
------------ --------- ---------
Profit (loss) before tax expenses (297) 581 (819)
Income tax expenses 0 0 0
------------ --------- ---------
Profit (loss) after taxes on income (297) 581 (819)
Minority interests (4) (16) 10
------------ --------- ---------
Net profit (loss) for the period (301) 565 (809)
============ ========= =========
Basic net earnings (loss) per
ordinary share (0.05) 0.10 (0.12)
============ ========= =========
Diluted net earnings (loss) per
ordinary share (0.05) 0.09 (0.12)
============ ========= =========
Weighted average number of ordinary
shares used to compute basic net
earnings (loss) per ordinary share
(in thousands) 6,247 5,624 6,610
============ ========= =========
Weighted average number of ordinary
shares used to compute diluted net
earnings (loss) per ordinary share
(in thousands) 6,247 6,624 6,610
============ ========= =========
Eltek ltd.
Consolidated Balance Sheets
(In thousands US$)
December 31, March 31,
------------ -------------------
2007 2007 2008
------------ --------- ---------
Audited Unaudited Unaudited
------------ --------- ---------
Assets
Current assets
Cash and cash equivalents 2,467 2,040 2,774
Receivables: Trade, net of provision
for doubtful accounts 8,173 9,050 8,400
Other 742 182 212
Inventories 4,271 3,593 4,510
Prepaid expenses 204 157 257
------------ --------- ---------
Total current assets 15,857 15,022 16,153
------------ --------- ---------
Assets held for employees' severance
benefits 1,319 1,139 1,371
------------ --------- ---------
Fixed assets, less accumulated
depreciation 10,997 8,722 11,818
------------ --------- ---------
Goodwill 1,009 914 1,084
------------ --------- ---------
Total assets 29,182 25,797 30,426
============ ========= =========
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current
maturities of long-term debts 4,623 2,779 4,850
Accounts payable: Trade 7,354 6,842 7,767
Other 3,147 3,852 3,707
------------ --------- ---------
Total current liabilities 15,124 13,473 16,324
------------ --------- ---------
Long-term liabilities
Long term debt, excluding current
maturities 4,243 2,829 4,313
Employee severance benefits 1,388 1,206 1,525
------------ --------- ---------
Total liabilities 20,755 17,509 22,162
------------ --------- ---------
Minority interests 353 329 369
------------ --------- ---------
Shareholders' equity
Ordinary shares, NIS 0.6 par value
authorized 50,000,000 shares, issued
and outstanding 6,609,807 as of
March 31,2008, 5,624,011 as of March
31,2007 and 6,609,807 as of December
31, 2007 1,384 1,236 1,384
Additional paid-in capital 14,328 14,152 14,328
Cumulative translation adjustment
related to change in reporting
currency 2,412 1,801 3,060
Cumulative foreign currency
translation adjustments 451 406 433
Capital reserve 695 695 695
Accumulated deficit (11,196) (10,330) (12,005)
------------ --------- ---------
Total shareholders equity 8,074 7,960 7,895
------------ --------- ---------
Total liabilities and shareholders
equity 29,182 25,797 30,426
============ ========= =========
Non-GAAP Earnings Reconcilliations Year ended Three months ended
-------------------
December 31, March 31,
------------ -------------------
2007 2007 2008
------------ --------- ---------
Audited Unaudited Unaudited
------------ --------- ---------
GAAP net profit (loss) (301) 565 (809)
Add back items:
-------------------------------------
Financial expenses, net 145 116 73
Tax expenses 0 0 0
Impairment loss on goodwill 0 0 0
Depreciation 2,264 577 556
------------ --------- ---------
Adjusted EBITDA 2,108 1,258 (180)
============ ========= =========
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