Eltek (NasdaqCM:ELTK) Q3 2025 Earnings Call November 18, 2025 09:00 AM ET Company ParticipantsRon Freund - CFOEli Yaffe - CEOConference Call ParticipantsMark Sergustanski - AnalystNone - AnalystOperatorLadies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd 2025 Third 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 assist ...

Financial Data and Key Metrics Changes - Company reported sales of $13.3 million for Q3 2025, a slight decrease from $13.5 million in Q3 2024 [9] - Gross profit for Q3 2025 was $1.6 million, down from $3.5 million in the same quarter last year [9] - Operating profit for Q3 2025 was $50,000 compared to $1.9 million in Q3 2024 [9] - Net loss for Q3 2025 was $0.2 million, or $0.03 per share, compared to net income of $1.7 million, or $0.25 per share in Q3 2024 [10] - EBITDA for Q3 2025 amounted to $0.6 million, down from $2.3 million in the prior year [10] - Positive cash flow from operating activities was $2 million in Q3 2025, compared to $1.6 million in Q3 2024 [10] Business Line Data and Key Metrics Changes - Demand for products remains strong, particularly in the defense sector, which accounted for 63% of quarterly sales [6] - RigidFlex products represented 66% of quarterly sales and 65% of sales for the first nine months of the year [6] Market Data and Key Metrics Changes - Company is experiencing increased competition from new foreign entrants, particularly in the defense sector [6][23] - Delivery times across the industry remain extended due to strong global demand and constrained manufacturing capacity [6] - In low-volume, high-complexity production, competition remains limited, allowing for greater pricing flexibility [6] Company Strategy and Development Direction - Company is in a transition period, absorbing significant additional capacity and technology upgrades [5] - Production capacity expansion program is progressing well, with the new production hall nearing completion [7] - The RP project is on track to go live in 2026, aiming to integrate all company platforms for improved operational efficiency [8] Management's Comments on Operating Environment and Future Outlook - Management noted that operational instability is primarily due to the ramp-up of new equipment and the integration of new staff [5] - The impact of currency depreciation on operational profit was approximately $800,000 compared to Q3 2024 [4] - Management expects the revised pricing model to positively impact results in the coming quarters [4] Other Important Information - Company is facing pressure from large Israeli customers to extend credit terms, increasing working capital requirements [6] - Recent improvements in regional security have positively affected logistics, allowing for reduced inventory levels [6] Q&A Session Summary Question: What is the status of operational issues? - Management clarified that previous operational issues were related to construction and are now due to engineering and manpower challenges [12] Question: When will the pricing lift due to USD depreciation be realized? - Management indicated it typically takes six to nine months for pricing adjustments to translate into profits [13] Question: When will operational difficulties be resolved? - Management stated it is difficult to predict, as it depends on employee absorption rates and engineering proficiency [14] Question: When can gross margins of 26-27% be expected? - Management expects to stabilize production processes and improve gross margins by mid-2026 with the integration of new equipment [15] Question: What is the impact of new competition? - Management noted that competition is increasing from foreign entrants, particularly in the defense sector, affecting pricing flexibility [23] Question: Will currency and foreign exchange impacts continue? - Management confirmed that as long as the dollar remains weak, financial expenses and operating income will be negatively affected [27]

PETACH TIKVA, Israel , Nov. 18, 2025 /PRNewswire/ -- Eltek Ltd. (NASDAQ: ELTK), a global manufacturer and supplier of technologically advanced solutions in the field of printed circuit boards (PCBs), today announced its financial results for the quarter ended September 30, 2025. ...

Core Points - Eltek Ltd. will release its financial results for Q3 2025 on November 18, 2025, before market opening [1] - A conference call will be held on the same day at 9:00 a.m. Eastern Time to discuss the results, featuring remarks from the CEO and CFO [1][2] Company Overview - Eltek is a global manufacturer and supplier of advanced solutions in printed circuit boards (PCBs), specializing in complex and high-quality PCBs for high-end markets [4] - The company is ITAR compliant and holds AS-9100 and NADCAP Electronics certifications, serving customers in defense, aerospace, and medical industries across multiple regions [4][5] - Founded in 1970, Eltek's headquarters, R&D, production, and marketing center are located in Israel, with operations in North America and various international markets [5]

Company Overview - Eltek Ltd. is a global manufacturer and supplier of technologically advanced solutions in the field of printed circuit boards (PCBs) and is recognized as a leading company in Israel's PCB industry [3][4] - The company specializes in complex and high-quality PCBs, including HDI, multilayered, and flex-rigid boards for high-end markets [3] - Eltek is ITAR compliant and holds AS-9100 and NADCAP electronics certifications, serving customers in defense, aerospace, and medical industries across Israel, the United States, Europe, and Asia [3] Recent Developments - Eltek announced it received orders totaling $2.4 million from a leading Israeli defense company, with product deliveries scheduled mainly for 2026 and 2027 [1][2] - The order pertains to critical PCB components that have been previously supplied to the customer, highlighting the advanced technological capabilities required for these products [2] Historical Context - Eltek was founded in 1970 and has its headquarters, R&D, production, and marketing center located in Israel, with additional operations through a subsidiary in North America and agents in Europe, India, South Africa, and South America [4]

Financial Data and Key Metrics Changes - Revenues for Q2 2025 totaled $12.5 million, representing a 20% increase compared to the same period last year, maintaining strong momentum from Q1 2025 [5][6] - Gross profit reached $3 million, nearly double the results from the same quarter last year, with gross margin expanding to 24.1% from 15.6% in Q2 2024 [6][13] - Operational income rose to $1.5 million, up from $400,000 in Q2 2024, while net income was $400,000 or $0.05 per fully diluted share [7][14] - EBITDA for the quarter was $2 million, representing 15.6% of revenue, a significant decrease compared to Q2 2024 and Q1 2025 [8][14] Business Line Data and Key Metrics Changes - Commercial sales saw a modest increase, while defense and medical markets continued strong performance [8] - The revenue mix for the quarter included a higher percentage of rigid flex products, accounting for 65% to 70% of total revenues, which typically have higher prices and profits [19] Market Data and Key Metrics Changes - The company observed strong demand in the defense sector, which constitutes around 65% of total revenues, with expectations for continued demand from both Israeli and foreign markets [19][22] Company Strategy and Development Direction - The company is focused on expanding production capacity to support annual revenues of $55 million to $65 million, with significant investments in infrastructure and equipment [6][10] - A new 40-meter coating line is expected to arrive towards the end of 2025, with production ramp-up planned immediately upon arrival [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the strong demand in the defense sector and anticipated continued growth in military budgets, particularly from the US and European markets [22] - The company is addressing challenges in recruiting qualified manufacturing personnel by seeking to employ foreign workers through a government program [11] Other Important Information - The company recorded one-time financial expenses of $1 million due to a 9% devaluation of the U.S. Dollar against the Israeli shekel [7] - Cash flow used in operating activities amounted to $2.9 million, primarily due to an increase in trade receivables and inventory [14] Q&A Session Summary Question: Update on capital investment for the rest of 2025 and 2026 - The remaining investment includes the installment of the coating line, with an accelerated investment plan balance of around $6 million [18] Question: Revenue mix percentage for international and defense sectors - The defense sector accounts for approximately 65% of total revenues, with a higher mix of rigid flex products contributing to overall revenue [19] Question: Impact of strong defense demand on business in 2025 and 2026 - Strong demand is expected to continue, with military budgets increasing in both Israeli and foreign markets [22] Question: Backlog or order pipeline quantification - The backlog has increased by about 10% since the beginning of the year, but specific figures are not disclosed [24] Question: Annual revenue capacity after installing the coating line - The annual revenue potential is expected to reach up to $55 million to $60 million once the coating line is fully operational [30] Question: Reasons for negative cash flow from operating activities - Negative cash flow was attributed to delayed payments from a major customer and increased inventory levels due to the current situation in Israel [31] Question: Change in inventory levels - Inventory levels were increased mainly in lamination and aluminum due to the war in Israel, with no anticipated issues [35]

Core Insights - Eltek Ltd. reported a 20% increase in revenue for Q2 2025, reaching $12.5 million compared to $10.5 million in Q2 2024, driven by strong performance in defense and medical segments [2][5] - The gross margin expanded significantly to 24.1%, up from 15.6% in the same quarter last year, reflecting operational improvements and a favorable product mix [2][6] - Operating income surged by 259% to $1.5 million, more than tripling from $0.4 million in Q2 2024, indicating robust operational efficiency [2][6] Financial Performance - Revenues for the first six months of 2025 totaled $25.3 million, a 14% increase from $22.2 million in the same period of 2024 [2][10] - Gross profit for the first half of 2025 was $5.2 million, representing 21% of revenues, compared to $4.9 million (22% of revenues) in the first half of 2024 [10][11] - Net income for Q2 2025 was $0.4 million or $0.05 per diluted share, down from $0.8 million or $0.11 per diluted share in Q2 2024 [7][20] Operational Developments - The company is committed to expanding production capacity, with successful installation of new equipment and ongoing construction of new coating lines [3][4] - Staffing has increased by approximately 10% since January to meet growing demand while maintaining lead times [4] - A non-cash financial expense of $1.0 million was incurred due to the appreciation of the Israeli shekel, prompting a proactive update to the pricing model to protect margins [5][7] Non-GAAP Financial Metrics - EBITDA for Q2 2025 was $2.0 million, or 15.6% of revenues, compared to $0.8 million (7.6% of revenues) in Q2 2024 [9][22] - For the first six months of 2025, non-GAAP EBITDA was $3.1 million (12% of revenues), slightly up from $2.9 million (13% of revenues) in the same period of 2024 [12][22]

Core Viewpoint - Eltek Ltd. is set to release its financial results for Q2 2025 on August 14, 2025, before market opening, highlighting its ongoing operations in the printed circuit board industry [1] Company Overview - Eltek is a global manufacturer and supplier of advanced solutions in printed circuit boards (PCBs), specializing in complex, high-quality PCBs, HDI, multilayered, and flex-rigid boards for high-end markets [3] - The company is ITAR compliant and holds AS-9100 and NADCAP Electronics certifications, serving customers in defense, aerospace, and medical industries across Israel, the United States, Europe, and Asia [3] - Founded in 1970, Eltek's headquarters, R&D, production, and marketing center are located in Israel, with operations in North America and through agents and distributors in Europe, India, South Africa, and South America [4] Financial Results Announcement - The financial results will be discussed in a conference call on August 14, 2025, at 9:00 a.m. Eastern Time, featuring remarks from the CEO and CFO [2] - A replay of the conference call will be available on Eltek's corporate website approximately 24 hours after the call and archived for 30 days [2]

Financial Data and Key Metrics Changes - Revenues for Q1 2025 totaled $12.8 million, an increase from $11.8 million in Q1 2024 [15] - Gross profit decreased to $2.2 million from $3.3 million in the same period last year, primarily due to higher labor costs and lower production yields [16] - Operating profit for the quarter was $700,000 compared to $1.7 million in the prior year [16] - Net income for Q1 2025 was $1 million or $0.15 per share, down from $1.7 million or $0.27 per share in Q1 2024 [17] - EBITDA for the quarter was $1.2 million, a decline from $2.1 million in the previous year [17] - Cash flow from operating activities totaled $100,000, with $15.7 million in cash and equivalents as of March 31, 2025, and no outstanding debt [17] Business Line Data and Key Metrics Changes - The company faced challenges in optimizing machine performance and production yield due to the installation of new equipment in the Soldier Mask Application department [5][6] - Production has resumed at a stable pace since May, with efficiency levels returning to pre-transition standards [6] Market Data and Key Metrics Changes - Strong demand for products across all segments has led to increased lead times for customer delivery [8] - The company anticipates that the competitive position in the U.S. market may benefit from higher tariffs on products from other exporting countries [9][10] Company Strategy and Development Direction - The company is diversifying its supply base in the Far East to support commercial activity expansion and exploring opportunities for partial production abroad [11] - A company-wide process to replace the core information system is underway, expected to take approximately 18 months [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged operational difficulties in Q1 due to reduced yield affecting gross margin but expressed confidence in overcoming these issues with local support [28] - The new production lines expected to arrive by August 2025 will significantly increase production capacity and efficiency [31][33] Other Important Information - The company is continuing construction work for new plating lines, with a delay of approximately two months reported for the first significant coating line [7] Q&A Session Summary Question: Will the new line impact profitability? - Management confirmed that the new line will positively impact profitability by significantly increasing production capacity [21] Question: Will the new line interfere with existing production? - Management clarified that the new line will not interfere with current production [23] Question: How do you see sales picking up after resolving operational difficulties? - Management indicated that the holdback in Q1 was due to reduced yield affecting gross margin, but they expect to overcome these issues [28] Question: What is the timeline for the new plating lines? - Management expects the first plating line to arrive by August 2025, with installation taking several months [31] Question: Will the new lines only help operational efficiency or also increase revenues? - Management stated that the new lines will increase capacity, quality, and efficiency, supporting revenue growth [33]

Financial Data and Key Metrics Changes - Revenues for Q1 2025 totaled $12.8 million, an increase from $11.8 million in Q1 2024 [15] - Gross profit decreased to $2.2 million from $3.3 million in the same period last year, primarily due to higher labor costs and lower yields [16] - Operating profit for the quarter was $700,000 compared to $1.7 million in the prior year [16] - Net income for the quarter was $1 million or $0.15 per share, down from $1.7 million or $0.27 per share in Q1 2024 [17] - EBITDA for the quarter was $1.2 million compared to $2.1 million in the prior year [17] - Cash flow from operating activities totaled $100,000, with $15.7 million in cash and equivalents as of March 31, 2025, and no outstanding debt [17] Business Line Data and Key Metrics Changes - The company faced challenges in optimizing machine performance and achieving precise technical adjustments due to the installation of new equipment, leading to lower production yield [6] - Production has resumed at a stable pace since May, with efficiency levels returning to pre-transition levels [6] Market Data and Key Metrics Changes - Strong demand for products across all segments has led to increased lead times for customer delivery [8] - The company anticipates that the competitive position in the U.S. market may benefit from higher tariffs on products from other exporting countries [9] - There is uncertainty regarding the tariff rate that may apply to products from Israel under the new U.S. tariff policy [8] Company Strategy and Development Direction - The company is working to diversify its supply base in the Far East to support commercial activity expansion [11] - A company-wide process to replace the core information system is underway, expected to take approximately 18 months [12] - The company aims to optimize internal workflow and implement efficient methodologies through this IT transformation [12] Management's Comments on Operating Environment and Future Outlook - Management noted that operational difficulties in Q1 were due to reduced yield affecting gross margin, but local engineers have helped overcome some challenges [28] - The company expects to increase capacity and efficiency with the arrival of new plating lines by the end of 2025 [31] - There is confidence in the demand to support increased capacity [34] Other Important Information - The company is continuing construction work on the basement floor for new plating lines, with delays in equipment delivery from European suppliers [7] - The Israeli labor market remains challenging for attracting qualified candidates, impacting hiring efforts [7] Q&A Session Summary Question: Will the new line impact profitability? - Management confirmed that the new line, expected to be operational by mid-2026, will positively impact profitability by significantly increasing production [21] Question: Will the new line interfere with current production? - Management clarified that the new line will not interfere with existing production [23] Question: How do operational difficulties affect sales? - Management indicated that reduced yield in Q1 affected gross margin, but local support has helped mitigate some issues [28] Question: What is the timeline for new plating lines? - The first plating line is expected to arrive by August, with installation taking several months, aiming for stability by the end of 2025 [31] Question: Will new lines help in increased revenues? - Management stated that the new lines will significantly increase capacity, quality, and efficiency, supporting revenue growth [33]