Eltek Ltd. (NASDAQ:ELTK) Q2 2022 Earnings Conference Call August 17, 2022 8:30 AM ET
Company Participants
Eli Yaffe – Chief Executive Officer
Ron Freund – Vice President of Finance & Chief Financial Officer
Conference Call Participants
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. 2022 Second Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. 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 forecast assumptions and expectations about future outcomes which are subject to the risks and uncertainties outlined here and discussed more fully in Eltek’s public disclosure filings. 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.
I will now turn the call over to Mr. Eli Yaffe. Mr. Yaffe, please go ahead.
Eli Yaffe
Thank you. Good morning, everyone. Thank you for joining us and welcome to Eltek 2022 second quarter earnings call. 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 in 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. 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.
In the second quarter of 2022, we recorded a revenue of $9.1 million lower than what we forecasted due to the fire that broke out in one of our manufacturing department in June. We managed to contain the fire without any injuries and have completed the repairs of the damaged line and our manufacturing capacity was returned to normal levels. Our employees did an excellent job of finding and stabilizing an alternative manufacturing process while repairing the damages line and we are thankful about it. I should also note that we are still discussing the amount of compensation to be received from our insurance company.
The second quarter of 2022 was characterized by a continuation of the strong demand trend. As I previously said, we are enjoying substantial increase in orders from customers and we are making efforts at all level to deal with the increased demand of our products. We are also making efforts to increase our commercial activity and opted in the — in the upcoming quarters, we will see the results on these efforts. Since March 31, 2022, we have managed to increase our workforce by 10% to meet the increased production demands. We believe that the political and security situation in Europe caused government to increase their military budget and Eltek is a supplier of significant components to defense system manufacturer, is influenced positively by this. We further expect that the political tension that arose recently between China and Taiwan will strengthen the trend of transferring PCB production from the East to Western countries and with support of the increased demand to our products.
During the second quarter, we continued to implement an accelerated investment plan that we detailed earlier this year. On July 27, we filed a new F-3 with the SEC. This self-regulation statement will allow us to raise capital when market condition and our share price will be appropriate.
I will now turn the call over to Ron Freund, our CFO, to discuss our financial results.
Ron Freund
Thank you, Eli. I would like to draw your attention to the financial statement for the second quarter of 2022. 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 its definition and the reasons for its use.
Now, I will go over the highlights of Q2 2022 and the first six months of 2022. Revenues for the second quarter of 2022 totaled $9.1 million, same as in Q2 2021. Revenues for the six — the first six months of 2022 totaled $18.8 million compared to $16.3 million in the same period last year. Gross profit for the second quarter of 2022 totaled $1.7 million compared to a gross profit of $2.4 million in the second quarter of 2021. The decrease in gross profit is due to a higher efficiency achieved during the second quarter of 2021, while our operations were negatively impacted by the fire in June 2022. Gross profit for the first six months of 2022 totaled $3.6 million compared to $3.5 million in the same period last year. Operating profit amounted $0.3 million in Q2 2022 compared to $1 million in 2021. Operating income in the first six months of 2022 totaled $1 million compared to $1.2 million in the same period last year.
The increase in the second quarter of the U.S. dollar exchange rate against the NIS contributed to our Q2 2022 results of operation as we recorded financial income in the amount of $0.6 million. Since our functional currency is the NIS, we record financial income in regard to our U.S. dollar cash balances and customer balances whenever there is a revaluation of the U.S. dollar against the NIS. For the first six months of 2022, we recorded financial income in the amount of $0.7 million. Net profit was $0.8 million or $0.13 per share in Q2 2022 compared to net profit of $0.9 million or $0.16 per share in Q2 2021. Net profit for the six months of 2022 was $1.4 million compared to $1.2 million in the first six months of 2021.
EBITDA was $0.8 million in Q2 2022 compared to $1.5 million in Q2 2021. For the six months of 2022, EBITDA was $1.9 million compared to $2.1 million in the same period last year. As of June 30, 2022, we had cash and cash equivalents of $8.2 million compared to $9.3 million at December 31, 2021. The decrease compared to December 31, 2021, is mainly due to the revaluation of the U.S. dollar against the NIS.
As previously mentioned, our functional currency is the NIS. Therefore, each balance sheet item is translated into our reporting currency which is the U.S. dollar, using the U.S. dollar exchange rate at the end of the period. As of December 31, 2021, this exchange rate was NIS 3.1 per $1. While as of June 30, 2022, the exchange rate was NIS 3.5 to $1.
We are now ready to take your questions.
Question-and-Answer Session
Operator
Eli Yaffe, please go ahead.
Eli Yaffe
Before we conclude our call, I would like to thank all our employees for their efforts in overcoming the fire that took place in the plant. I would also like to thank our customers, partners, investors and Eltek team for their continued support. Thank you for all joining us on today call. Have a good day.
Operator
This concludes the Eltek Ltd. 2022 second quarter financial results conference call. Thank you for your participation. You may go ahead and disconnect.
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