Yitzhak Nissan – Chairman and Chief Executive Officer Amnon Shemer – Vice President, Chief Financial Officer

Ladies and gentlemen thank you for standing by. Welcome to the Eltek Ltd First Quarter 2016 Financial Results Conference Call. All participants are at present in listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, May 18, 2016. Before I turn the call over to Mr. Yitzhak Nissan, Chairman of the Board and Chief Executive Officer and Amnon Shemer, Chief Financial Officer, I would like to remind participants that comments made during this conference call may contain projections or other forward-looking statements regarding future events or the future financial performance of Eltek Limited. These statements are only projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. With that said, it is routine for internal projections and expectations to change as quarters progress. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements. Please refer to the documents the company files from time to time with the SEC, specifically the company’s annual report on Form 20-F, its periodic reports on Form 6-K, and the Safe Harbor language contained in the company’s press releases. These documents contain and identify important factors that could cause the company’s actual results to differ materially from those contained in the projections are forward-looking statements, which the company urges all investors to consider. Eltek undertakes no obligation to publicly release their revisions to such forward-looking statements that may be made to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. I will now turn the call over to Mr. Yitzhak Nissan. Mr. Nissan, please go ahead,

Thank you. Good morning everyone. Thank for joining us and welcome to Eltek’s 2016 first quarter earnings call. With me, Amnon Shemer, our Chief Financial Officer, we will begin by providing you with overview of our business and summary of principle sectors that affected our results in the first 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 first quarter press release which was released earlier today. The release is also available on our website at www.nisteceltek.com. I’m please to share with you our results for the first quarter of 2016. Our total revenues in the first quarter of 2016 amounted to $9.8 million and were slightly higher than our revenues in the same period last year. During the first quarter, we continued to increase our efforts to penetrate global markets especially the North American market. These marketing activities resulted in $1.8 million of sales in North America, an increase of 17% as compared to the first quarter of 2015. Our total sales to global markets were $5 million, an 8% increase over the first quarter of 2015 which accounted for 51% of our total revenues in the first quarter of 2016, compared to 48% of total revenues in the first quarter of 2015. Our growth strategy and continued marketing efforts in global markets are proving themselves in light of the current competitive pressure in Israel that has affected our results in the first quarter of 2016. Despite this competitive local environment, our technological advantages in providing cutting edge PCBs and advanced solutions enhance us to win more projects and sell more products to the Israeli market in the first quarter as compared to the first quarter in last year. Looking forward, we are also continuing to focus on increasing manufacturing flexibility to support small quantities of diverse parts what we call low volume high yields orders in order to receive more orders from the current and new customers. We will remain committed to growth in global markets as our ITAR license together with prestigious AS-9100C and NADCAP Electronics our coordinators support our penetration of a leading defense aerospace and medical customers in North America in which we expect to continue in future quarters. We believe that our continuing efforts for growth in sales in orders and -- improved manufacturing flexibility will support the return of profitability in the next quarters. I will now turn the call over to Amnon Shemer, our CFO to discuss our financials. Amnon Shemer, please.

Thank you, Yitzhak. Let me please turn your attention to the financials for the first quarter of 2016. I will be discussing also non-GAAP financial results such as EBITDA. Eltek uses EBITDA as a non-GAAP financial performance measurement. Please see our earnings release for our definition of and the reason for its use. I will only go into detail on the most important financial statement items. Revenues for the first quarter of 2016 were $9.8 million compared to $9.7 million in the first quarter of 2015. Sales to global markets increased to 8% compared to the first quarter of 2015 and amounted to $5 million including $1.8 million to the North American market, a 17% growth. This was offset by a 6% decrease in sales to the local Israeli market which amounted to $4.8 million in the first quarter of 2015. Gross profit was $938,000, 9.6% of revenues, compared to a gross profit of $1.2 million, 12.6% of revenues in the first quarter of 2015. The decrease in gross profit and gross margins reflect the pricing challenges we faced in this quarter. In the first quarter of 2016 our revenues increased slightly. This was the result of selling more products at lower prices. Accordingly, manufacturing costs in the first quarter of 2016 were higher than in the parallel quarter in 2015. Operating loss was $293,000 compared to an operating loss of $108,000 in the first quarter of 2015. Net loss was $384,000 or $0.04 per share, compared to a net loss of $234,000 or $0.02 per share in the first quarter of 2015. EBITDA amounted to $167,000, 1.7% of revenues, compared to EBITDA of $316,000, 3.2% of revenues in the first quarter of 2015. Net cash provided by operating activities amounted to $890,000, compared to net cash used by operating activities of $171,000 in the first quarter of 2015, mainly due to a decrease in working capital requirements. Shareholders’ equity as of March 31, 2016 amounted to $10.3 million, similar to the $10.3 million recorded at December 31, 2015. Cash and cash equivalents as of March 31, 2016 were $938,000, compared to $1 million as of December 31, 2015. That concludes the formal part of our call. We are now ready to take your questions.

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions]. The first question is from Sufi Hassan of Hassan Capital Markets. Please go ahead.

Hi, I would like to ask Yitzhak about the price pressure environment and when do you think Eltek would be profitable again? And how do you see the price pressure these days?

Hi, how are you?

Hope to be in better days after these results.

When you compare it to our competitors it’s not so bad, but anyway, as we said the – pressure, and we don’t follow the prices which our competitors are trying to lead us to. We still can receive better prices than usual but we don’t continue, we cannot keep the regular prices which we are used to. We have to match ourselves to the market. It is slightly, it’s not so bad as it sounds but I believe when we will fill up the lines with more export orders then we will be able to be even more stronger by standing against the pressure in Israel with the prices. So it is now in the first quarter, first quarter usually is not the strongest quarter that we usually have. I believe in the future we will see better numbers and even profitability as we showed last year as you remember.

Yeah, so if we are talking about last year, do you think Eltek can bring numbers I don’t say like last year but let’s say do you think that Eltek can be profitable in 2016 or it’s too early to know?

First, I can tell you that I’m a shareholder as you are with a bigger amount. I’m working very hard that Eltek won’t lose money but will earn money and I believe that 2016 will be, in the end, a good year too but it’s really early to sign it as you know right now.

Yeah, I understand. Well, okay. And last question actually, what kind of measures are you going to do to prevent the stock – to change lease because of the price under US$1, are you going to do any measure?

Right now, it’s not under $1, little bit higher. I’ll tell you I believe if the company will be strong and good in the end, our shareholders will be happy with it and the price will go up. It is right that our shareholders expected that the total revenues will go up last year and that’s why when they show you that we wouldn’t raise our total revenues so they were disappointed, but I believe when the company is strong and because of – then in the end of it I believe the results will be also with the price of the share. Let’s hope so.

I understand. Well okay, wish you good luck.

Thank you very much.

The next question is from Robert Temco[ph]. Please go ahead.

Yes. I had a question about margins. If sales are increasing in North America, are the margins better in North America than in Israel?

Hello, Robert. First of all yes and – American market is a huge market I think as long as we sell in that market we don’t expect anybody – any competitors. We have very, very I would say unique projects in the America and they are very good in earnings and profits. Of course, as we can expect but they are good.

Are margins higher in North America than in Israel?

It depends on what products, because you cannot compare the products, but they are good in profits.

Do you see the future of the company selling more to North America than to Israel?

It could be. It could be. In a better – I would lead to that because right now as you know we made the rise of 70% in North America. If you remember last year, we were up with the 7% compared to 2014. So I believe that we will continue because we are pushing ahead all our efforts in order to sell more and more to the North American markets and if we have to go even lower in Israel, at least we’ll have a better position in North America.

Thank you.

You’re welcome.

[Operator Instructions]. There are no further questions at this time. Before I ask Mr. Nissan to go ahead with his closing statements, 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. Nissan, would you like to make a concluding statement?

Yes please. I would like to thank all of you for joining us on today’s call. We look forward to announcing our business activity in the next quarters. We continue to focus on the growth in global markets and increasing manufacturing flexibility along with continued focus on profitability and competitiveness. Before we conclude our call, I would like to thanks once again all of our customers, partners, investors and of course, Eltek team for their continued support. Have a wonderful day. See you in the future. Thank you very much.

This concludes the Eltek Ltd First quarter 2016 financial results conference call. Thank you for your participation. You may go ahead and disconnect.