Eltek .(ELTK) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for the full year of 2019 increased to $34.8 million from $33.9 million in 2018, while fourth quarter revenues rose to $8.6 million from $7.8 million in Q4 2018 [6][13][15] - Gross profit more than doubled in 2019, reaching $6 million or 17.3% of revenues compared to $2.6 million or 7.7% in 2018 [13] - Net profit was $1.8 million or $0.48 per share in 2019, compared to a net loss of $2.6 million or $1.28 per share in 2018 [13] - EBITDA was $3.8 million in 2019 compared to negative EBITDA of $420,000 in 2018 [13] - Cash flow from operating activities was positive at $2.6 million in 2019, compared to an outflow of $813,000 in 2018 [14] Business Line Data and Key Metrics Changes - The company achieved cumulative 12 months EBITDA of $3.8 million, marking the fourth consecutive quarter of operations and net profit [6] - Gross profit for Q4 2019 was $1.5 million compared to $603,000 in Q4 2018 [15] Market Data and Key Metrics Changes - The company noted an opportunity to grow its business in the U.S. due to the trade war between China and the U.S., which was possibly accelerated by the COVID-19 pandemic [9] - The company reported that some competitors in Europe were shut down due to the virus, indicating potential market share gains [9] Company Strategy and Development Direction - The company is focused on expanding its business in traditional areas such as defense, aerospace, and medical devices, with a significant increase expected in medical devices for the coming year [19] - A shelf registration statement was filed to raise additional funds to support growth and expansion plans [9][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the operational challenges posed by the COVID-19 pandemic but expressed confidence in maintaining production and safety [7] - The company is involved in developing new medical devices related to COVID-19, which has positively impacted revenues in early 2020 [8] Other Important Information - The company completed a rights offering in 2019, raising a net amount of $3.3 million to improve working capital and reduce debt [16] Q&A Session Summary Question: Where does the company see the biggest uptick in demand in the coming year? - Management indicated that the biggest increase in demand is expected in traditional areas such as defense, aerospace, and particularly medical devices, with a significant shift towards medical devices anticipated for the next year [19] Question: How did exchange rates affect the company this year? - Management noted that the devaluation of the Israeli shekel against the U.S. dollar had a positive impact on financial expenses, as most labor and operational costs are in shekels [22]