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Eltek .(ELTK) - 2020 Q2 - Earnings Call Transcript
Eltek .Eltek .(US:ELTK)2020-08-12 18:20

Financial Data and Key Metrics Changes - Revenue for Q2 2020 increased to $8.8 million from $8.2 million in Q2 2019, reflecting a year-over-year growth [7][18] - Gross profit rose from $1.3 million (15.3% of revenues) in Q2 2019 to $1.9 million (21.6% of revenues) in Q2 2020 [18] - Operating profit for Q2 2020 was $809,000, compared to $7,000 in Q2 2019 [19] - Net profit was $704,000 ($0.16 per share) in Q2 2020, down from $790,000 ($0.19 per share) in Q2 2019, affected by non-recurring income in the previous year [19] - EBITDA for Q2 2020 was approximately $1.2 million, slightly down from $1.25 million in Q2 2019 [20] - Positive operating cash flow of $1.4 million in Q2 2020, compared to a cash outflow of $301,000 in Q2 2019 [20] Business Line Data and Key Metrics Changes - Revenue from the defense sector and contract electronic manufacturers grew from $13.8 million in the first half of 2019 to $15.3 million in the first half of 2020, an 11% year-over-year increase [14] - Medical sectors contributed 9.7% of revenue in the first half of 2020, representing a 4% growth year-over-year [14] Market Data and Key Metrics Changes - Sales to customers in Israel grew by 11%, contributing to overall revenue growth despite weaknesses in Indian markets [7][8] - The company is facing a slowdown from some customers in India due to ongoing COVID-19 impacts [12] Company Strategy and Development Direction - The company plans to increase investment in new equipment and facility expansion to support long-term sales growth [13] - The company aims to leverage opportunities in the U.S. market due to deteriorating U.S.-China relations [12] - Focus remains on operational excellence and financial discipline while pursuing new business opportunities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in employee performance during the COVID-19 pandemic, which has created operational challenges [9][11] - The company sees both risks and opportunities in the current business environment and is adapting to meet customer demands [11] - Management refrained from providing specific forward-looking statements regarding future capital expenditures [34] Other Important Information - The company has maintained operational efficiency despite COVID-19 challenges, with minimal impact on manufacturing operations [10] - The company has not made provisions in financials for a pending insurance claim related to equipment damage [23] Q&A Session Summary Question: Status of the insurance claim for damaged equipment - The company received payment for one manufacturing machine and has a pending claim for another, but cannot predict the outcome [23] Question: Impact of the equipment incident on operations - The company overcame water damage to machines relatively quickly and has moved past the incident [24] Question: Clarification on major customers and order processes - The company has a group of major customers that operate as one entity, with orders coming from different divisions [26][28] Question: Capital expenditures and equipment spending - The company clarified that the $1.7 million figure refers to total spending over three years, with annual CapEx around $800,000 to $900,000 [31][33] Question: Current capacity and potential for revenue increase - The company is operating close to full capacity with opportunities to increase output by working weekends [35]