Eltek Ltd (ELTK) 2023 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Eltek Ltd., 2023 second-quarter financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded.

女士們先生們，感謝你們的支持。歡迎參加 Eltek Ltd 2023 年第二季度財務業績電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。

Before I turn the call over to Mr. Eli Yaffe, Chief Executive Officer; and Ron Freund, Chief Financial Officer, I'd like to remind you that they will be referring to forward-looking information in today's presentation and in the Q&A. By its nature, this information contains forecasts, assumptions, and expectations about future outcomes, which are subject to risks and uncertainties outlined here and discussed more fully in Eltek's public disclosure filings.

在我將電話轉給首席執行官 Eli Yaffe 先生之前；和首席財務官 Ron Freund，我想提醒您，他們將在今天的演示和問答中提到前瞻性信息。就其性質而言，這些信息包含對未來結果的預測、假設和預期，這些結果受到此處概述的風險和不確定性的影響，並在 Eltek 的公開披露文件中進行了更全面的討論。

These forward-looking statements are projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. We'll also be referring to non-GAAP measures. Eltek undertakes no obligation to publicly release revisions to such forward-looking statements to reflect events or circumstances occurring subsequent to this date.

這些前瞻性陳述是預測，反映了公司當前的信念和期望。實際事件或結果可能存在重大差異。我們還將提及非公認會計原則措施。 Eltek 沒有義務公開發布對此類前瞻性陳述的修訂，以反映此日期之後發生的事件或情況。

I will now turn the call over to Mr. Eli Yaffe. Please go ahead.

我現在將把電話轉給 Eli Yaffe 先生。請繼續。

Thank you. Good morning. Thank you for joining us for our second-quarter fiscal year 2023 earnings call.

謝謝。早上好。感謝您參加我們的 2023 財年第二季度財報電話會議。

With me is Ron Freund, our Chief Financial Officer. We will begin by providing you with an overview of our business and summary of the principal factors that affected our results during the second quarter followed by the details of our financial results. After our prepared remarks, we will be happy to answer any of your questions.

和我在一起的是我們的首席財務官 Ron Freund。我們將首先向您提供我們的業務概述和影響我們第二季度業績的主要因素的摘要，然後是我們財務業績的詳細信息。在我們準備好發言後，我們將很樂意回答您的任何問題。

By now, everyone should have access to our press release, which was released earlier today. The release will also be available on our website at www.nisteceltek.com.

到目前為止，每個人都應該可以訪問我們今天早些時候發布的新聞稿。該版本也將在我們的網站 www.nisteceltek.com 上發布。

In the second quarter of 2023, revenue were $11 million due to the continued strengths in the aerospace and the defense end market. The trend of high demand for our company products, which we witnessed in 2022, continues into 2023. The efforts of our dedicated employee and the strong demand enabled us to meet our sales target.

由於航空航天和國防終端市場的持續強勁，2023年第二季度收入為1100萬美元。我們在 2022 年見證了對我們公司產品的高需求趨勢，這一趨勢將持續到 2023 年。我們敬業的員工的努力和強勁的需求使我們能夠實現我們的銷售目標。

Also, the second quarter usually has fewer working days due to the holidays. As we look into the rest of 2023 and into 2024, we see an increased demand in the semiconductor segment, which we hope will be translated into purchase orders and increased sales.

此外，由於假期，第二季度的工作日通常較少。展望 2023 年剩餘時間和 2024 年，我們看到半導體領域的需求增加，我們希望這將轉化為採購訂單和銷量增加。

During the second quarter of 2023, we repaid the balance of our bank loans to the amount -- in the amount of $1.8 million. And as of June 30, 2023, we had no bank loans outstanding. The decision to repay our bank loans was based on our strong cash flows and the prevailing high interest rates.

2023 年第二季度，我們償還了銀行貸款餘額 180 萬美元。截至2023年6月30日，我們無未償還銀行貸款。償還銀行貸款的決定是基於我們強勁的現金流和當前的高利率。

The erosion of the shekel against the dollar continued during the second quarter of 2023 and allowed us to record financial income. This erosion has continued into the third quarter of 2023.

謝克爾兌美元匯率在 2023 年第二季度持續貶值，使我們能夠錄得財務收入。這種侵蝕一直持續到 2023 年第三季度。

I would like now to expand a little bit on our strategy. The high-end PCB sector is expected for substantial growth in the upcoming years driven primarily by the defense, aerospace, and medical device domain. The defense sector is driven by the increased complexity and sophistication of military electronics. The aerospace industry, which we are active in, is expecting growth and creating new opportunities for us such as satellite and other spacecraft that require complex electronic systems with high-end and reliable PCBs. The medical device industry is in a position of steady growth with global annual sales forecast rise by over 5% a year. These projections reflect increasing demand for innovative new devices.

我現在想稍微擴展一下我們的戰略。高端 PCB 行業預計在未來幾年將大幅增長，主要由國防、航空航天和醫療設備領域推動。軍用電子設備日益複雜和精密，推動了國防部門的發展。我們活躍的航空航天業正在期待增長並為我們創造新的機遇，例如衛星和其他航天器，它們需要具有高端可靠 PCB 的複雜電子系統。醫療器械行業處於穩定增長狀態，全球年銷售額預計每年增長超過5%。這些預測反映了對創新新設備日益增長的需求。

We believe that the high-end PCB sector is expected to grow significantly in the coming years, with these sectors being major drivers of the growth. The key trends that are expected to shape the future of the PCB industry in these sectors include increasing demands of high-performance PCBs, miniaturization, growing importance of reliability and safety, and the increasing demand for sustainability.

我們認為，高端PCB行業預計在未來幾年將顯著增長，這些行業將成為增長的主要驅動力。預計將塑造這些領域 PCB 行業未來的主要趨勢包括對高性能 PCB 的需求不斷增長、小型化、可靠性和安全性的日益重要以及對可持續性的需求不斷增長。

In light of this, we continue to invest in our growth. In recent years, we have invested heavily in improving profitability and operational efficiency. At the beginning of 2022, we decided on an accelerated investment plan to expand the capacity and efficiency of our manufacturing lines, which will enable increase in sales. At the same time, we invested a lot of efforts on increasing our workforce. As of today, we have increased our workforce by 24% since the beginning of 2022.

有鑑於此，我們繼續投資於我們的增長。近年來，我們在提高盈利能力和運營效率方面投入了大量資金。 2022年初，我們決定實施一項加速投資計劃，以擴大生產線的產能和效率，從而實現銷售額的增長。與此同時，我們在增加員工隊伍方面投入了大量精力。截至今天，自 2022 年初以來，我們的員工數量已增加 24%。

Our strategy to increase growth also include M&A activity. Our initial goal in this area is an acquisition of a company with manufacturing capacity in North America that will allow us to expand our activities in this territory.

我們促進增長的戰略還包括併購活動。我們在這一領域的最初目標是收購一家在北美擁有製造能力的公司，這將使我們能夠擴大在該地區的活動。

Earlier this month, we were informed by the Ministry of Environmental Protection that it rejected our claim to reduce the clean air penalty imposed on us on January this year. Therefore, we have provided the full allowance for the penalty in our Q2 interim financial statement and record a one-time expense in the amount of $350,000. We have decided to file an administrative appeal, which we hope will reduce the penalty amount.

本月初，我們接到環保部通知，駁回了我們今年一月份減少清潔空氣罰款的要求。因此，我們在第二季度中期財務報表中提供了全額罰款準備金，並記錄了一筆 350,000 美元的一次性費用。我們決定提起行政上訴，希望能夠減少罰款金額。

I will now turn the call over to Ron Freund, our CFO, to discuss our financial results.

我現在將把電話轉給我們的首席財務官羅恩·弗羅因德 (Ron Freund)，討論我們的財務業績。

Thank you, Eli. I would like to draw your attention to the financial statement for the second quarter of 2023. During this call, I will also discuss certain non-GAAP financial measures. Eltek uses EBITDA as a non-GAAP financial performance measurement. Please see our earnings release for the definition and the reasons for its use.

謝謝你，伊萊。我想提請您注意 2023 年第二季度的財務報表。在這次電話會議中，我還將討論某些非 GAAP 財務指標。 Eltek 使用 EBITDA 作為非 GAAP 財務業績衡量標準。請參閱我們的收益報告，了解其定義及其使用原因。

I will now go over the highlights of the 2023 second quarter. All numbers mentioned are in US dollars.

我現在回顧一下2023年第二季度的亮點。所有提及的數字均以美元為單位。

Revenues for the second quarter of 2023 were $11 million compared to $9.1 million in the second quarter of 2022. Gross profit increased by 76%, reaching $3 million compared to a gross profit of $1.7 million in the second quarter of 2022. The increase is mainly due to the increase in revenues.

2023 年第二季度的收入為1100 萬美元，而2022 年第二季度為910 萬美元。毛利潤增長76%，達到300 萬美元，而2022 年第二季度的毛利潤為170 萬美元。增長主要是由於收入增加。

Operating profit amounted to $1.4 million in Q2 2023 compared to $0.3 million in Q2 2022. We recorded financial income of $0.2 million during Q2 2023 and $0.6 million in Q2 2022 due to the devaluation of the NIS against the US dollar. Profit before income tax amounted to $1.6 million in Q2 2023 compared to $1 million in Q2 2022. Net profit was $1.3 million or $0.22 per share in Q2 2023 compared to net profit of $0.8 million or $0.13 per share in Q2 2022.

2023 年第二季度的營業利潤為140 萬美元，而2022 年第二季度為30 萬美元。由於新謝克爾兌美元貶值，我們在2023 年第二季度的財務收入為20 萬美元，2022 年第二季度的財務收入為60 萬美元。 2023 年第二季度所得稅前利潤為160 萬美元，而2022 年第二季度為100 萬美元。2023 年第二季度淨利潤為130 萬美元，即每股0.22 美元，而2022 年第二季度淨利潤為80 萬美元，即每股0.13 美元。

EBITDA was $1.7 million compared to $0.8 million in Q2 2022. During the second quarter of 2023, we enjoyed positive cash flow from operating activities of $0.1 million compared to $0.5 million in Q2 2022. The decrease is mainly due to an increase in trade receivables and inventory levels, which derives from the increase in revenues. As of June 30, 2023, we had cash and cash equivalents of $8.3 million compared to $7.4 million at the end of 2022.

EBITDA 為170 萬美元，而2022 年第二季度為80 萬美元。2023 年第二季度，我們的經營活動產生的正現金流為10 萬美元，而2022 年第二季度為50 萬美元。減少的主要原因是應收賬款和庫存水平，源自收入的增加。截至 2023 年 6 月 30 日，我們的現金和現金等價物為 830 萬美元，而 2022 年底為 740 萬美元。

We are now ready to answer your questions.

我們現在準備回答您的問題。

Thank you. Ladies and gentlemen at this time we will begin the question-and-answer session. (Operator Instructions) Tom Kerr, Zacks Investments.

謝謝。女士們、先生們，現在我們將開始問答環節。 （操作員說明）Tom Kerr，Zacks Investments。

Good morning. Can you talk about the current capital improvement plan and where you are in the spending on that? I think the total was $15 million. Where are we in that? And when should that be completed?

早上好。您能談談當前的資本改善計劃以及您在這方面的支出情況嗎？我認為總額為 1500 萬美元。我們在哪裡？什麼時候應該完成？

Hi, Tom. Good morning. Yes, I can elaborate about it.

你好湯姆。早上好。是的，我可以詳細說明一下。

As we spoke about in the previous call, we had put POs for most of the equipment. And the balance of the equipment is going to arrive in '24 and '25. Some of the equipment is going to arrive between now and the end of the year 2023. You don't see it in our books yet, but the POs were already issued to the manufacturers in Europe.

正如我們在上一次電話會議中談到的，我們已經為大多數設備放置了採購訂單。其餘設備將於 24 年和 25 年到達。一些設備將從現在到 2023 年底到達。您還沒有在我們的書中看到它，但採購訂單已經發給歐洲的製造商。

Okay. And what does that mean? Where do we stand in terms of revenue capacity? I think last year, it was in the $40 million to $55 million range. Has that increased recently?

好的。這意味著什麼？就收入能力而言，我們處於什麼位置？我認為去年的金額在 4000 萬至 5500 萬美元之間。最近有增加嗎？

No, we're still in this range. We hope to be in $55 million when we'll -- capacity, production capacity, when we'll finish these capital investments.

不，我們仍然在這個範圍內。當我們完成這些資本投資時，我們希望達到 5500 萬美元的目標。

Okay. And then can you provide more color on the entry into the US market? Did you say you were looking for acquisitions, have found one, or just still in the process of searching?

好的。那麼您能提供更多有關進入美國市場的信息嗎？您是說您正在尋找收購、已經找到收購，還是仍在尋找過程中？

Hi, Tom. No, we still did not find one. We are in the stage of searching and trying to find a target company which will be good for us to acquire.

你好湯姆。不，我們還是沒有找到。我們正處於尋找並試圖尋找有利於我們收購的目標公司的階段。

Okay. One more question. Do you -- have you outlined gross margin goals for the rest of this year or perhaps in the next year? Have you set targets for what gross margin could reach?

好的。還有一個問題。您是否列出了今年剩餘時間或明年的毛利率目標？您是否設定了毛利率可以達到的目標？

Yes, we -- our target for this year will be around the 27% as was in the first half of 2023. And we hope that with increased sales, it will be even higher. But as of now, 27% is our target.

是的，我們今年的目標將是 2023 年上半年的 27% 左右。我們希望隨著銷售額的增加，這個數字會更高。但截至目前，27% 是我們的目標。

Okay. Thanks. That's all the questions I have for this morning.

好的。謝謝。這就是我今天早上要問的所有問題。

Thank you, Tom.

謝謝你，湯姆。

Thank you, Tom.

謝謝你，湯姆。

(Operator Instructions) Shuki Hazan, Hazan Capital Markets.

（操作員指令）Shuki Hazan，Hazan 資本市場。

Hi. Hello. I wanted to ask, the operating income was $1.4 million after deduction of $350,000?

你好。你好。我想問一下，扣除35萬後，營業收入是140萬美元？

Yes.

是的。

Yes, you're right, Shuki.

是的，你說得對，舒琪。

Okay. And let's say -- the third quarter, if I compare it to the second quarter, in the third quarter, there's more working days than the second quarter, I'm correct?

好的。假設第三季度，如果我將其與第二季度進行比較，第三季度的工作日比第二季度要多，我是對的嗎？

Yes, you are.

是的，你是。

I understand. Okay. And about your production capacity in 2023, let's say for the second half of this year, the maximum capacity that you can produce is around $12 million, $12.5 million, $13 million. Do you have any range that is the maximum that you can sell in a quarter -- in the next two quarters, the maximum that you can sell?

我明白。好的。至於2023年的產能，比如說今年下半年，你可以生產的最大產能約為1200萬美元、1250萬美元、1300萬美元。您是否有一個季度內可以出售的最高限額 - 在接下來的兩個季度中可以出售的最高限額？

The range of our sell capacity, depends upon the mix, is $11 million to $13 million per quarter.

我們的銷售能力範圍為每季度 1100 萬美元至 1300 萬美元，具體取決於產品組合。

$11 million to $13 million?

1100萬美元到1300萬美元？

$11 million to $13 million, yeah.

1100萬到1300萬美元，是的。

Yeah. Okay, okay. I understand.

是的。好吧好吧。我明白。

But it depends upon the mix of the products.

但這取決於產品的組合。

I understand. Okay. Thank you very much and good luck. Thank you.

我明白。好的。非常感謝，祝你好運。謝謝。

Thank you, Shuki

謝謝你，舒琪

Thank you, Shuki

謝謝你，舒琪

There are no further questions at this time. Before I ask Mr. Yaffe to go ahead with his closing statement, I would like to remind the participants that a replay of this call will be available tomorrow on Eltek's website, www.nisteceltek.com. Mr. Yaffe, please go ahead.

目前沒有其他問題。在我請 Yaffe 先生繼續其結束語之前，我想提醒與會者，明天將在 Eltek 網站 www.nisteceltek.com 上重播本次電話會議。亞菲先生，請繼續。

So in closing, I would like to thanks our employees, our customers, and our investors for your continued support as we continue to move forward as a company. Thank you again. Thank you for joining us. Take care.

最後，我要感謝我們的員工、客戶和投資者在我們作為一家公司不斷前進的過程中給予我們的持續支持。再次感謝你。感謝您加入我們。小心。

Thank you. This concludes the Eltek Ltd., 2023 second-quarter financial results conference call. Thank you for your participation. You may go ahead and disconnect.

謝謝。 Eltek Ltd. 2023 年第二季度財務業績電話會議至此結束。感謝您的參與。您可以繼續並斷開連接。