Eltek Reports Revenues of $7.5 Million in Q2 of 2017

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Eltek Ltd. announced today its financial results for the quarter ended June 30, 2017.

Highlight:

• Revenues of $7.5 million in the second quarter of 2017
• Gross profit of $134,000
• Net loss of $1.1 million

Mr. Yitzhak Nissan, Chairman of the Board and Chief Executive Officer, commented: "Our sales in the second quarter were $7.5 million, 14.6% lower than the second quarter of 2016, excluding Kubatronik. The decrease was primarily attributable to the continued competition in the local market and weakness in our global operations.

The Company is vigorously continuing the implementation of efficiency measures to its operating systems, which now support a higher sales rate relative to the rate prior to such implementation. Furthermore, the market is indicating a positive momentum with an increase in the frequency of incoming orders beginning this July. This increase includes a significant order from a governmental authority that we announced on July 24, 2017.

As previously released, we have enhanced our marketing and sales forces in Israel, Europe and the United States, alongside our efforts made to streamline expenses.

We are determined to bring the Company back to profitability in the near future. I believe that our actions to date, along with the renewal of manufacturing equipment that we are currently implementing, will assist us to reach these goals quickly and efficiently.

"When comparing the results to the second quarter and the first six months of 2017, please note that the operations of Kubatronik Leiterplatten GmbH were included in Eltek's results during the comparable period in 2016. Therefore, selected financial information is also presented on a proforma basis, excluding Kubatronik's results in 2016 (first six months and second quarter)," Mr. Nissan concluded.

Highlights of the Second Quarter of 2017

• Revenues for the second quarter of 2017 were $7.5 million compared to $9.9 million in the second quarter of 2016 ($8.8 million excluding Kubatronik);
• Gross profit was $134,000 (1.8% of revenues) compared to gross profit of $1.5 million (14.8% of revenues) in the second quarter of 2016 ($1.4 million or 16.3% of revenues excluding Kubatronik); The decrease in gross profit and gross profit margins reflects the decreased sales, while a significant portion of our cost of sales remained constant.
• Operating loss was $1 million compared to operating profit of $244,000 in the second quarter of 2016 ($373,000 excluding Kubatronik);
• Net loss was $1.1 million or $0.11 per fully diluted share compared to net profit of $213,000 or $0.02 per fully diluted share in the second quarter of 2016 ($327,000 or $0.03 per fully diluted share excluding Kubatronik);.
• EBITDA amounted to $(583,000) compared to EBITDA of $754,000 in the second quarter of 2016 ($809,000 excluding Kubatronik);
• Net cash used by operating activities amounted to $516,000 compared to net cash used by operating activities of $37,000 in the second quarter of 2016. The decline is mainly attributable to the operating results in this quarter.
• Cash and cash equivalents as of June 30, 2017 were $792,000 compared to $894,000 as of June 30, 2016.

Highlights for the First Six Months of 2017

• Revenues for the first six months of 2017 were $16 million compared to $19.7 million in the first six months of 2016 ($17.4 million excluding Kubatronik);
• Gross profit was $619,000 (3.9% of revenues) compared to gross profit of $2.4 million (12.2% of revenues) in the first six months of 2016 ($2.2 million or 12.5% of revenues excluding Kubatronik);
• Operating loss was $1.6 million compared to operating loss of $49,000 in the first six months of 2016 ($31,000 profit excluding Kubatronik);
• Net loss was $1.9 million, or $0.19 per fully diluted share compared to net loss of $171,000, or $0.02 per fully diluted share in the first six months of 2016 ($82,000 or $0.01 per fully diluted share excluding Kubatronik);
• EBITDA amounted to $(794,000) compared to EBITDA of $921,000 in the first six months of 2016 ($871,000 excluding Kubatronik);
• Net cash used by operating activities amounted to $1.3 million compared to net cash provided by operating activities of $853,000 in the first six months of 2016. The decline is mainly attributable to the operating results in this period.

About Eltek

Eltek – "Innovation across the board", is a global manufacturer and supplier of technologically advanced solutions in the field of Printed Circuit Boards, and is the Israeli leader in this industry. PCBs are the core circuitry of most electronic devices. Eltek specializes in the manufacture and supply of complex and high quality PCBs, HDI, multilayered and flex-rigid boards for the high-end market. Eltek has ITAR, AS-9100 and NADCAP Electronics permits and its customers include top-of-the-line companies in the defense, aerospace and medical industries in Israel, the United States, Europe and Asia.