Eltek .(US:ELTK)2025-08-14 14:00Financial 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]