Eltek: Net loss of USD 1.1 million

Mr. Yitzhak Nissan, Chairman of the Board and Chief Executive Officer, commented: "Our sales in the second quarter were $7.5 million, 14.6% lower than the second quarter of 2016, excluding Kubatronik. The decrease was primarily attributable to the continued competition in the local market and weakness in our global operations. The company is vigorously continuing the implementation of efficiency measures to its operating systems, which now support a higher sales rate relative to the rate prior to such implementation. Furthermore, the market is indicating a positive momentum with an increase in the frequency of incoming orders beginning this July. This increase includes a significant order from a governmental authority that we announced on July 24, 2017." "As previously released, we have enhanced our marketing and sales forces in Israel, Europe and the United States, alongside our efforts made to streamline expenses. We are determined to bring the Company back to profitability in the near future. I believe that our actions to date, along with the renewal of manufacturing equipment that we are currently implementing, will assist us to reach these goals quickly and efficiently. When comparing the results to the second quarter and the first six months of 2017, please note that the operations of Kubatronik Leiterplatten GmbH were included in Eltek's results during the comparable period in 2016. Therefore, selected financial information is also presented on a proforma basis, excluding Kubatronik's results in 2017 (first six months and second quarter)." Highlights of the Second Quarter of 2017

• Revenues for the second quarter of 2017 were USD 7.5 million compared to USD 9.9 million in the second quarter of 2016 (USD 8.8 million excluding Kubatronik);
• Gross profit was USD 134,000 (1.8% of revenues) compared to gross profit of USD 1.5 million (14.8% of revenues) in the second quarter of 2016 (USD 1.4 million or 16.3% of revenues excluding Kubatronik); The decrease in gross profit and gross profit margins reflects the decreased sales, while a significant portion of our cost of sales remained constant.
• Operating loss was $1 million compared to operating profit of $244,000 in the second quarter of 2016 ($373,000 excluding Kubatronik);
• Net loss was USD 1.1 million or USD 0.11 per fully diluted share compared to net profit of USD 213,000 or USD 0.02 per fully diluted share in the second quarter of 2016 (USD 327,000 or USD 0.03 per fully diluted share excluding Kubatronik);.
• EBITDA amounted to USD (583,000) compared to EBITDA of USD 754,000 in the second quarter of 2016 (USD 809,000 excluding Kubatronik);
• Net cash used by operating activities amounted to USD 516,000 compared to net cash used by operating activities of USD 37,000 in the second quarter of 2016. The decline is mainly attributable to the operating results in this quarter.
• Cash and cash equivalents as of June 30, 2017 were USD 792,000 compared to USD 894,000 as of June 30, 2016.

Highlights for the First Six Months of 2017

• Revenues for the first six months of 2017 were USD 16 million compared to USD 19.7 million in the first six months of 2016 ($17.4 million excluding Kubatronik);
• Gross profit was USD 619,000 (3.9% of revenues) compared to gross profit of USD 2.4 million (12.2% of revenues) in the first six months of 2016 (USD 2.2 million or 12.5% of revenues excluding Kubatronik);
• Operating loss was USD 1.6 million compared to operating loss of USD 49,000 in the first six months of 2016 (USD 31,000 profit excluding Kubatronik);
• Net loss was USD 1.9 million, or USD 0.19 per fully diluted share compared to net loss of USD 171,000, or USD 0.02 per fully diluted share in the first six months of 2016 (USD 82,000 or USD 0.01 per fully diluted share excluding Kubatronik);
• EBITDA amounted to USD (794,000) compared to EBITDA of USD 921,000 in the first six months of 2016 (USD 871,000 excluding Kubatronik);
• Net cash used by operating activities amounted to USD 1.3 million compared to net cash provided by operating activities of USD 853,000 in the first six months of 2016. The decline is mainly attributable to the operating results in this period.