Financial Position - As of December 31, 2024, the company had 25.8 million[32]. - The company raised 2.4 million in unused revolving lines of credit[207][208]. - Net cash provided by operating activities was 8.9 million in 2023, primarily due to a decrease in pre-tax income[212][213]. - Net cash used in investing activities rose significantly to 3.0 million in both 2023 and 2022, mainly for fixed asset purchases[215]. - Capital expenditures were approximately 2.4 million in 2023, reflecting increased investment in production equipment[218]. - The company expects to finance its 2025 operations through cash flow from operations and cash balances, although liquidity may be affected by external factors such as geopolitical tensions[219]. Revenue and Sales - Revenues decreased by 0.4% to 46.7 million in 2023, primarily due to operational challenges associated with new equipment installation[188]. - The company generated 20 million (42.7%) in 2023 and 23.1 million, up from 36.2 million for the year ended December 31, 2024, from 10.3 million for the year ended December 31, 2024, with gross profit margin dropping to 22.2% from 28.1% in 2023, attributed to increased manufacturing costs and a shift in product mix[190]. - Operating profit fell to 7.3 million in 2023, primarily due to the decrease in gross profit[191]. - Selling, general and administrative expenses were 5.7 million in 2023, maintaining a stable expense ratio[191]. - Research and development expenses were 0.4% of revenues in 2024, up from 0.2% in 2023, reflecting increased investment in innovation[186]. Market and Competition - Competition in the PCB market is intense, with significant pressure from manufacturers in Southeast Asia, which have lower production costs[40]. - The company competes with PCB manufacturers in Asia that have lower production costs, which could limit pricing power and affect financial results[88]. - Rapid changes in the electronics industry and recessionary pressures may lead to intensified price competition and reduced margins, adversely affecting financial results[65]. - The company has a strategy to focus on high-end PCB markets, particularly flex-rigid PCBs, which offer better margins[164]. Risks and Challenges - The company may require additional capital in the future, which may not be available, potentially affecting competitiveness and expansion plans[32]. - The company is dependent on unique machinery that may malfunction, affecting manufacturing activities and financial results[34]. - The company does not currently engage in hedging transactions, exposing it to risks from currency fluctuations[44]. - Political and military instability in Israel may disrupt operations and negatively affect business conditions and share price[41]. - The ongoing Israel-Hamas war may disrupt operations, delay shipments, and harm sales, potentially leading to a material adverse effect on the company's financial results[45]. - Travel advisories and restrictions could impact the ability to receive supplies and materials, adversely affecting timely product manufacturing[46]. - Unfavorable national and global economic conditions may reduce customer demand, leading to longer sales cycles and increased price competition[47]. - The company may face increased costs and resource expenditure due to new tariffs and trade policy uncertainties, particularly with countries like China and Canada[49]. - The Russian invasion of Ukraine has led to sanctions and geopolitical instability, which could disrupt operations and adversely affect financial condition[50]. - Cybersecurity breaches and natural disasters pose significant risks that could disrupt operations and lead to financial losses, with potential impacts on market share[70]. - International operations are subject to regulatory restrictions and economic instability, which may adversely affect sales and profitability[71]. - The company may face significant costs related to potential infringement claims on intellectual property, which could adversely affect its financial condition[94]. - The company relies on trade secrets and non-disclosure agreements for intellectual property protection, as it does not hold any patents[92]. - The company is affected by rising labor costs due to high demand for high-tech personnel in Israel[97]. - The company may be classified as a passive foreign investment company (PFIC), which could impose adverse tax implications for U.S. investors[109]. - The company has faced challenges in obtaining directors' and officers' insurance on reasonable terms, which may impact its ability to retain key personnel[103]. - The company is subject to the Israeli Companies Law, which limits dividend distributions based on profitability and solvency thresholds[112]. - The obligation of personnel to perform military reserve service could disrupt operations if a significant number of employees are called up[124]. - The company has been affected by restrictions on travel and business operations due to heightened unrest, impacting agreements with partners[120]. - Tax benefits provided by the Israeli government may be reduced or eliminated, adversely affecting operating costs and financial results[131]. Investments and Development - The company has received a 40% royalty-bearing participation grant from the Israel Innovation Authority for an 800,000 R&D program aimed at improving production rates, extended until September 2025[64]. - The company invested approximately 15 million in new equipment and facility expansion over the three years ending December 31, 2024, and plans to invest an additional 0.22 per share in November 2023, totaling approximately $1.3 million, paid on December 21, 2023[110]. - The company has experienced significant fluctuations in its ordinary shares' market price and volume, influenced by various external factors[106].
Eltek .(ELTK) - 2024 Q4 - Annual Report