Eltek (ELTK) Q1 2025 Earnings Call May 20, 2025 08:30 AM ET Company Participants Eli Yaffe - Chief Executive OfficerRon Freund - Chief Financial OfficerEthan Etzioni - CEO Conference Call Participants None - Analyst Operator Ladies and gentlemen, thank you for standing by. Welcome to the Eltec Ltd. Twenty twenty five First 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 an ...

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]