Yitzhak Nissan - Chairman Eli Yaffe - Chief Executive Officer Amnon Shemer - Chief Financial Officer

Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. second quarter 2018 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 Instruction] As a reminder, this conference is being recorded September 27, 2018. Before I turn the call over to Mr. Yitzhak Nissan, Chairman of the Board of Directors; Mr. Eli Yaffe, 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 its projections or forward-looking statements, which the company urges all investors to consider. Eltek undertakes no obligation to publicly release the 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 would now like to turn over the call to Mr. Yitzhak Nissan. Mr. Nissan, please go ahead.

Thank you. Good morning everyone. Thank you for joining us and welcome to Eltek’s 2018 second quarter earnings call. With me are Eli Yaffe, our Chief Executive Officer, and Amnon Shemer, 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 second quarter press release, which was released earlier today. The release will also be available on our website at www.nisteceltek.com. Our revenues in the second quarter of 2018 were $8.7 million, up 16% from the second quarter of 2017, and we incurred a net loss of $843,000 which is 22% less than the loss on the second quarter 2017. We recently appointed Mr. Eli Yaffe, who has a proven track record as a CEO in the defense and aerospace industries, as Chief Executive Officer in order to create and implement a turnaround plan that will focus on our future improving operating results and cash flow. Mr. Yaffe is establishing a new leadership team and has appointed already a VP Sales and Marketing, an Operating Manager, an IT and Procurement Manager. I will now turn the call over to Eli Yaffe, our CEO, to discuss our financials. Eli, please.

Thank you, Yitzhak. I am pleased to join Eltek as CEO. In accepting this position, I am aware of the challenges that face the company, and I am determined and committed to return the company back to profitability and to renew the industry’s recognition of Eltek as a leading high end PCB manufacturer. Regarding the financial results, as of June 30, 2018, the company was not in compliance with financial covenants with its bank and does not expect to be compliant at December 31, 2018. The company has initiated discussions with its bank to obtain waivers for such non-compliance. As a result, long-term bank loans amounting to $417,000 were reclassified from long term to short term. In April 2018, Nitec provided a letter of commitment to the company to provide additional financing, in the amount of up to $2.5 million, [indiscernible] for one year of which $2.2 million has been utilized. It should be noted that the company is making efforts to improve operations and its cash position, including applicable [indiscernible]. Also, there is no certainty that the company will be able to attain this. I will now turn the call over to Amnon Shemer, our CFO to discuss our financials.

Thank you, Eli. Let me please turn your attention to the financials for the second quarter of 2018. During this 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 [indiscernible]. Revenues for the second quarter of 2018 were $8.7 million compared to $7.5 million in the second quarter of 2017. Gross profit was $578,000, 6.7% of revenues compared to gross profit of $134,000, 1.8% of revenues in the second quarter of 2017. Operating loss was $721,000 compared to an operating loss of $1 million in the second quarter of 2017. Net loss was $843,000 or $0.42 per share compared to a net loss of $1.1 million or $054 per share in the second quarter of 2017. EBITDA was a negative amount of $286,000, 3.4% of revenues compared to a negative EBITDA of $583,000, 7.8% of revenues in the second quarter of 2017. Net cash used in operating activities amounted to $571,000 compared to net cash used in operating activities of $517,000 in the second quarter of 2017. The change is mainly attributable to the operating results in this quarter and changes in asset and liability accounts. Cash and cash equivalents as of June 30, 2018 were $991,000 compared to $792,000 as of June 30, 2017. We are now ready to take your questions.

I would like to thank all of you for joining us on today’s call. Before we conclude our call, I would like to say thank again to all our customers, partners, investors, and the Eltek team for their continued support. Have a good day.

Thank you. This concludes the Eltek Ltd. second quarter 2018 financial results conference call. Thank you for your participation. You may go ahead and disconnect.