Yitzhak Nissan - Chairman & CEO Roberto Tulman - Deputy CEO & CTO Amnon Shemer - CFO

Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. First Quarter 2017 Financial Results Conference Call. All participants are at present in a 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 17, 2017. Before I turn the call over to Mr. Yitzhak Nissan, Chairman of the Board and Chief Executive Officer; Roberto Tulman, Deputy CEO and Chief Technology Officer; and Amnon Shemer, Chief Financial Officer, I would like to remind the 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, and 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 its projections or forward-looking statements, which the company urges all investors to consider. Eltek undertakes no obligation to publicly release 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 over the call to Mr. Yitzhak Nissan. Mr. Nissan, please go ahead.

Thank you. Good morning everyone. Thank for joining us and welcome to Eltek’s 2017 first quarter earnings call. With me are Amnon Shemer, our Chief Financial Officer and Roberto Tulman, Deputy CEO and Chief Technology Officer. We will begin by providing you with an overview of our business and a summary of the principal 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. Our results for the first quarter of 2017 are, sales in the first quarter were $8.5 million approximately 1% lower than the first quarter of 2016 excluding Kubatronik and approximately 15% increase over the $7.3 million revenues we recorded in the fourth quarter of 2016 again excluding Kubatronik. We are pleased to report that since the end of the quarter we have noticed revitalization in certain of our customers' activity, which we hope to benefit from during the remainder of the year. The low exchange rate of the U.S. dollar compared to the New Israeli Shekel is a matter of concern to us. Our New Israeli Shekel denominated expenses, such as salaries, building lease, energy, etc., have increased in dollar terms. We are taking actions to: one, increase incoming orders; two, continue the increase in manufacturing efficiency; three, continue attempting to lower raw material purchase prices; and four, explore different methods of protecting us, as much as possible, against the decrease in the dollar exchange rate. We continue to strive to leverage our marketing and operating capabilities in all areas, and especially in the defense sectors, where we have experienced an increase in the demand for our products. We expect that the steps we are taking will bear fruit later this year, for the benefit of our shareholders. We will request a 180 calendar day extension in order to regain compliance with NASDAQ's requirement that listed securities maintain a minimum bid price of $1 per share as set forth in the quarterly listing rules. I will now turn the call over to Amnon Shemer our CFO to discuss our financials. Amnon please.

Thank you, Yitzhak. Let me please turn your attention to the financials for the first quarter of 2017. During this conference call I will be discussing also our 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 reasons for its use. Before going into detail on the most important financial statement items please note that the consolidated financial statements for the first quarter of 2016 included Kubatronik however then German subsidiary. Therefore selective financial information is also presented on a pro forma basis excluding Kubatronik's results in Q1 2016. Revenues for the first quarter of 2017 were $8.5 million compared with revenues of $9.8 million in the first quarter of 2016, and $8.6 million excluding Kubatronik. Gross profit was $485,000, 5.7% of revenues compared with gross profit of $938,000, 9.6% of revenues in the first quarter of 2016, and $734,000 or 8.5% of revenues excluding Kubatronik. Operating loss was $630,000 compared to an operating loss of $293,000 in the first quarter of 2016, and $342,000 excluding Kubatronik. Net loss was $814,000 or $0.08 per share, compared with net loss of $384,000 or $0.04 per share in the first quarter of 2016, and $409,000 or $0.04 per share excluding Kubatronik. EBITDA was a negative amount of $210,000, 2.5% of revenues compared with EBITDA of $167,000, 1.7% of revenues in the first quarter of 2016, and $88,000, 1% of revenues excluding Kubatronik. Net cash used in operating activities amounted to $775,000 compared to net cash provided by operating activities of $890,000 in the first quarter of 2016. That concludes the formal part of our call. We're now ready to take your questions.

There are no further questions at this time. Before I ask Mr. Nissan 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. Nissan, would you like to make your concluding statement?

Yes, I would like to thank all of you for joining us on today's call. We believe that our selfless efforts of growth in the sales and orders and so improved manufactured flexibility alongside the tightly managed expenses will help us being profitable on the long-term -- on the long run. Before we conclude our call, I would like to thank once again all our customers, partners, investors, and the Eltek team for their continued support. Have a good day and thank you very much.

This concludes the Eltek Ltd. first quarter 2017 financial results conference call. Thank you for your participation. You may go ahead and disconnect.