Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. First Quarter 2021 Financial Results Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. Before I turn over the call 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 our non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and the 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 will now turn over the call to Mr. Eli Yaffe. Mr. Yaffe, please go ahead.

Thank you. Good morning, everyone. Thank you for joining us, and welcome to Eltek's 2021 First Quarter Earnings Call. With me is Alon Mualem, our Chief Financial Officer. We will begin by providing you with an overview of our business and a summary of the principal factors that affected our results in the first quarter of 2021, 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 earnings press release, which was released earlier today. The release will also be available on our website at www.nisteceltek.com. This quarter was very challenging, both operationally and business-wise. In addition to the COVID-19 pandemic that was affecting certain areas that some of our customers located, we have quickly addressed the shortage of our -- of key raw material. And yet, we were able to maintain operational efficiency and record both operational and net profit for ninth quarter in a row. Also, our revenue declined from $9.2 million in the first quarter of 2020 to $7.2 million in the first quarter of 2021. The spread of the COVID-19, which still affects some of our customers and the shortage of Pyralux AP, the laminate produced by DuPont, that is used in the production of flexible and flex 3D printed circuit boards with new operational and business challenges, which required quick adjustment to enable us to maintain our production and delivery of PCBs to our customers. We are making the necessary adoptions to meet customers' demand and maintain our operational efficiency. The COVID-19 pandemic created operational difficulties, and we are facing a continued slowdown in order from some of our customers in India due to the continuous negative impact of COVID-19 in this territory. Eltek is prepared to the point that the Indian market will recover and ready to react operationally to the expected high demand that was accumulating India in the last months. Due to the raw material shortage, we already purchased an enough inventory of alternative raw materials that was preapproved by Eltek 2 years ago as a backup plan for our production of PCB and introduce it to our customers. We expect that revenues will be rebound during the rest of the years and loss sales of Q1 2021 will be recovered upon the expected availability of Pyralux AP and the authorization of the alternative raw material by our customers. Once alternative raw material will be fully approved by all our customers, we expect some reduction in our cost of production, which will give Eltek the flexibility to offer our customers more options of production as well as better pricing and better secure sources of raw material. Eltek sales force already shifted its focus to non-flex PCB, which will contribute to how our future revenue growth as soon as the interruption in flex raw material will be eliminated. As we stated in the past, we also see an opportunity to grow our business in the U.S. due to the shift back to the western production by the defense, aerospace space and communication PCB sectors, due to the cyber threats by China and the lack of production capacity in U.S.A., Europe and Israel. So far, we have financed our growth strategy from our own internal resources and through right offering to our shareholders. During 2021, we plan to continue investing in sales activity that will enable us to grow revenue with focus on U.S. market as well as continue investing in new equipment and the expansion of our facility and infrastructure to support our long-term sales growth. In yesterday's Board meeting, our Board of Directors approved our obtaining a loan of NIS 10 million. It's approximately $3.1 million from Bank Leumi, Israel. The loan has 10 years -- term of 10 years with favorable returns, including the repayment schedule that start after 12 months grace period and carried interest of prime plus 1.5, which is waived for the first year of the loan. As we have previously reported, a major portion of our investment program that is under the grant program are expected to be completed and become operational by mid-2021. This recent investment and the planned future investment will be strengthening Eltek manufacturing capability and increase our competitiveness by implementing improved production processes and adoption of Industry 4.0 technologies. In addition, as we already announced, Eltek received final approval from the Israeli Innovation Authority for 50% royalty-bearing participation in the R&D program which already started on March 1, 2021, and we already closed its first milestone having the full technical definition. This 2021 R&D program is meant to enable Eltek to achieve a significantly faster production rate and reduced spread. This 2021 R&D program, if succeeded, will enhance Eltek ability to offer highly reliable printed circuit boards at a shorter production time and its reduced cost. We are continuing to pursue new business opportunities and increase customer design engagement activities that will leverage our advanced technology capabilities. In addition, we are already -- as we already announced, Eltek applied to the Israeli Land Authority for allocation of land in the north of Israel where Eltek intends to build the second production facility. This is a major part of our long-term and strategic road map in order to grow and accelerate the expansion of our business. We remain focused on operational excellence by using advanced technology and financial discipline and making all the necessary adjustments to address the challenges we face from the widespread crisis and the shortage of raw material. We are continuing to work delightedly on expanding our business, while maintaining operational efficiency and maintain profitability. 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 2021. During this call, I will be also 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 2021 compared to the first quarter of 2020. Revenues for the first quarter of 2021 were $7.2 million compared to revenues of $9.2 million in the first quarter of 2020. Gross profit was $1.1 million in the first quarter of 2021 compared to $1.8 million in the first quarter of 2020. Net profit was $223,000 or $0.04 per share in the first quarter of 2021 compared to a net profit of $541,000 or $0.12 per share in the first quarter of 2020. EBITDA was $577,000 in the first quarter of 2021 compared to EBITDA of approximately $1 million in the first quarter of 2020. Cash flow provided by operating activities was $2.5 million in the first quarter of 2021 compared to $1.5 million in the first quarter of 2020. As previously announced, we filed a share registration 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 will be used in part for additional investments and to accelerate our long-term growth. 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 Michael Wu of [indiscernible].

Yes, I have a question about the alternative material. So currently, how -- what's the percentage of customers currently approved the new material? You guys -- you could give us some color on that?

As you know, we don't provide looking for statement. However, as you know, we are facing shortage of key raw material that is used in the production of flexible and flex 3D printed circuit boards. But we do expect that revenues will rebound during the rest of the year and lost sales will be recovered from the full availability of Pyralux AP, which was in short supply. And with the utilization of the use of alternative raw material by our customers, and as I mentioned before, we have the alternative raw material in stock right now, and we're working with this raw material already.

Yes. My question is about -- so currently, how many customers -- kind of like what is the customers' percentage kind of accepted the new material, like agreed here to new material? Like is there anyone like doesn't want to use the new material?

I would say it in this world, majority of the customers already accepted.

Okay. That's great. That's great. So you expect it by the end of the year, mainly, roughly, could it be [indiscernible] the new ones, right?

Yes. Alternatively, Pyralux AP will continue to supply raw material. And then the rest of the customers that don't approve the alternative raw material, they will get the Pyralux AP.

Okay. Okay. So -- okay. Okay. That's great. So how about -- I have a second question about the new factory. So I don't have any -- could you give more kind of detailed plan, what's the target for the new factory, second facility, when is the time line?

It's very, very early stage. And this stage of the game, the Board of Directors of Eltek allowed us to purchase the lots. And it's in north of Israel, and it's in very nice lots. And it's a long-term plan. And we'll put the -- first milestone is buying the lands. And then we'll start [indiscernible] We don't have a full budget appropriate.

Okay. Okay. So it's kind of still pretty early yet, right?

Yes. We made the application to the Israeli authority lend management. And the application is there. We have recommendation for government to get the land at subsidized cost, subsidized development cost. And I hope that we'll go there soon.

Okay. Great. So do you have any -- can you give some rough number, what is the capacity running currently like now in your existing factories?

Right now, the existing capacity is approximately 2/3. We -- 66%.

Okay. So -- but any -- I mean, do you guys have any, like, interruption or the current situation in Israel, like -- is there that you think of?

No, not at all. I'll say -- Eltek is considered as a sectional enterprise and working at this time so far with no impact on our operation. We are very closely following the security situation and hope that soon the life return to normal. But you have to -- also to remember that a large portion of our revenue are coming from the security and defense sectors, but we cannot know if it will have impact on orders received in the future.

[Operator Instructions]. There are no further questions at this time. Before I ask Mr. Yaffe 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 at www.nisteceltek.com. Mr. Yaffe, would you like to make your concluding statement, please?

Yes. Before we conclude our call, I would like to thank all our employees for the efforts to make Eltek profitable again and even in these challenging times. I would like to thank again to all our customers, partners, investors and Eltek team for their continued support. Thank you all for joining us today's call. Have a good day.

Thank you. This concludes the Eltek Ltd. first quarter and full year 2021 financial results conference call. Thank you for your participation. You may go ahead and disconnect.