Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. First Quarter 2020 Financial Results Conference Call. All participants are 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. Before I turn the call over to Mr. Eli Yaffe, Chief Executive Officer; and Alon Mualem, Chief Financial Officer, I'd like to remind you that Eltek's earnings release today and this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest filings with the SEC for important material assumptions, expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements. These forward-looking statements are projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. Eltek undertakes no obligation to publicly release revisions to such forward-looking statements to reflect events or circumstances occurring subsequent to this date. I would now like to turn the call over to Mr. Eli Yaffe. Mr. Yaffe, please go ahead.

Thank you. Good morning, everyone. Thank you for joining us and welcome to Eltek's 2020 first quarter earning call. With me is Alon Mualem, 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 first quarter of 2020, followed by the details of our financial results. After our prepared remarks, we'll be happy to answer any of your questions. By now, everyone should have access to our first quarter earnings press release, which was released earlier today. The release will be also available on our website at www.nisteceltek.com. This is the fifth quarter in a row that we achieved both operations and net profit. Our revenue in the first quarter of 2020 rose to $9.2 million from $8.7 million in the first quarter of 2019. I'm pleased that our revenue reflects year-over-year growth in the defense and aerospace segments. I'm also pleased with the continuous improvement in production efficiency that is evidenced in our improved gross margin. The outbreak of the coronavirus created new operational and business challenges, which require a quick adjustment to enable us to maintain our production of PCBs while maintaining the safety of our workforce. We see both risk and new opportunities in the existing business environment and are making the necessary adoptions to meet customers’ demand and our revenue and profit margin goals. As we said in the past, we also see an opportunity to grow our business in the U.S. due to the worsening of the relationship between the U.S. and China. The impact of any trade war between the U.S. and China will also impact the Israeli market, since we see the U.S. pressure on the Israeli government to reduce the Israel-China trade activity. At the same time, we also are facing slowdown from some of our customers in India, and are expected to be closed -- that are expected to be closed through the end of June 2020 due to the COVID-19 virus. So far, we've financed our growth strategy by our own internal resources. During 2020 and 2021, we plan to increase our investment in new equipment and expansion of our facility and infrastructure to support our long-term sales growth. As previously announced, we filed a shelf legislation statement during the third quarter of 2019 to provide the company with the ability to raise additional funds to support our plan to grow and expand our business. We expect that any proceeds from this will be used in part for additional investment and to accelerate our long-term growth. The increase in our top-line in Q1 2020 reflects the continued market recognition of our high-quality and reliable products, mainly in the flex PCB sector. Our defense revenue grew from $4.1 million during Q1 2019 to $4.6 million in Q1 2020, 12% growth year-over-year. Our customers continue to see the value proposition of our products and have a great deal of trust in our company and its capabilities. We are continuing to pursue new business opportunities and increase customer design engagement activity that will leverage the advanced technology capabilities. We remain focused on operational excellence and financial discipline as well as our strategic growth goals. We are all focused on addressing the challenges that the widespread health crisis had on us and we are working diligently on expanding our business, while maintaining the trends of improved operational efficiency. I will now turn the call over to Alon Mualem, our CFO, to discuss our financials.

Thank you, Eli. I would like to draw your attention to the financials of the first quarter of 2020. During this call, I will also be discussing 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 the first quarter of 2020 compared to the first quarter of 2019. Revenues for the first quarter of 2020 were $9.2 million, up from revenues of $8.7 million in the first quarter of 2019. Gross profit was $1.8 million in the first quarter of 2020, compared to $1.5 million in the first quarter of last year. Net profit was $541,000 or $0.12 per share in the first quarter of this year, compared to a net profit of $242,000 or $0.12 per share in the first quarter of 2019. EBITDA was approximately $1 million in the first quarter of 2020 compared to EBITDA of $811,000 in the first quarter of 2019. Cash flow provided by operating activities was $1.5 million compared to $1.6 million in the first quarter of 2019. As Eli mentioned before, we remain focused on operational excellence and financial discipline, as well as our long-term strategic growth goals. We are now ready to take your questions.

[Operator Instructions]. The first question is from [Mark Stoker]. Please go ahead.

Yes. Good afternoon, Eli. [Mark Stoker], private investor. I see your profit has gone from $0.08 a share to $0.12 a share quarter-over-quarter. My question is really, what are you planning to use this F-3 for, what initiatives?

As we mentioned, the F-3, the proceeds from such transaction may be used to general corporate purpose, which may include working capital expenditure, repayment of debt, acquisition of investments. The amount of any offering will be limited based on the results of this act to one-third of our public float. So, we are going to use it in order to accelerate our growth because right now we grow based on our internal resources. And if we'll get the funds that we try to raise, we'll accelerate our growth. That is the main purpose of the -- raising the fund.

The next question is from Roni Lifshitz of Techtime. Please go ahead.

Hello. This is Roni from Techtime. Congratulations on your good results. Can you gauge some more background about your expansion programs?

Roni, again, expansion?

Yes, in your PR you said that you are -- you plan to increase your investment in equipment and expansion of your facilities. Can you give some more background about those plans?

Yes, we speak mainly about investment in equipment, in order, empowering equipment to double the capacity. If, for example, we would like to double the capacity, we have to double the amount of machines that we have installed. So it's very simple. It's capital investment that we are going to put in role in parallel to existing equipment. And by doing it, we'll increase our capacity.

Sorry. So then you are planning to double your capacity, this is -- or it was just an example?

It is just an example.

The next question is from [Alton Sur] of PBS Holdings. Please go ahead.

I'm looking at the gross margin increase between '19 and '20 and this happened despite the potential inventory and operating disruptions in the quarter. So how can we expect to think about margins going forward?

In general, our gross margin has improved during 2019 and even in the first quarter of 2020. We are making effort to increase our operational efficiency. But we cannot provide any other looking-forward statement. So at this point, we cannot give any forecast for 2020.

[Operator Instructions]. The next question is from [Dean Chin]. Please go ahead.

Congratulations on growing the company and surviving COVID-19. Recently in the Israeli press or the Hebrew press, Siemens was mentioned partnering with Nistec in terms of its AI board process and testing. Is Eltek participating in this program since Eltek is a part of Nistec?

Hi, [Mr. Chin]. No. We are not part of -- Nistec is a major stakeholder in -- stockholder in Eltek, but we don't participate in their program about AI. We have our own AI program that we develop in order to have some alignment between the layers, but this is technological issue that we develop here internally in order to improve our production, but it's not related to Nistec.

And my second question is, in terms of your shifts, as you mentioned in the 6-K, are you still running on three shifts?

Yes. We are running mainly 2.5 shifts.

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

Before we conclude our call, I would like to thank all our employees for all their efforts during this difficult period and their contribution in renewing our position as a leading high end PCB manufacturer and making Eltek profitable again. I would like to thank once gain to all our customers, partners, investors and the Eltek team for their continued support. I wish everyone good health. Thank you all for joining us on today's call. Have a good day.

This concludes the Eltek Ltd. first quarter 2020 financial results conference call. Thank you for your participation. You may go ahead and disconnect.