Eltek Announces Record Second-Quarter 2006 Financial Results with 338% Net Income Growth and 27% Revenue Growth.PETACH-TIKVA, Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. -- Eltek Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ELTK): --Quarterly revenues rise 27% year-over-year to $9.7 million on strong organic growth --Quarterly EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. up 360% to $ 0.06 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share --Quarterly net income rises 338% to $ 456,000 - seventh consecutive quarter of profitability Eltek Ltd. (NASDAQ:ELTK), the leading Israeli manufacturer of advanced flex-rigid circuitry solutions, today announced its financial results for the second quarter of 2006. Second - Quarter 2006 Financial Highlights: --Revenues of $ 9.7 million, up 27%. --Quarterly operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $ 563,000, up 126% --Quarterly net income up 338% to $ 456,000, or $ 0.06 per fully diluted share --EBITDA of $ 1.2 million in Q2 2006 compared to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $ 917,000 in Q2 2005 Eltek reported revenues for the three months ended June June: see month. 30, 2006 of NIS Niš or Nish (both: nēsh), city (1991 pop. 175,391), SE Serbia, on the Nišava River. An important railway and industrial center, it has industries that manufacture textiles, electronics, spirits, and locomotives. 43.1 million ($ 9.7 million) compared with NIS 33.8 million ($ 7.6 million) for the second quarter of 2005. The increase in revenues is attributed to obtaining new customers and new projects with existing customers, along with increased sales for existing projects. Net income for the second quarter totaled NIS 2.0 million ($ 456,000), or $ 0.06 per fully diluted share compared with net income of NIS 461,000 ($ 103,000), or $ 0.01 per fully diluted share for the same quarter in 2005. The second quarter of 2006 was the Company's seventh consecutive quarter of profitability. First Six Months 2006 Financial Highlights: --Revenues of $ 19.5 million, up 27%. --Six months operating income of $ 1.4 million, up 140% --Six months net income up 275% to $ 1.1 million, or $ 0.16 per fully diluted share --EBITDA of $ 2.6 million in compared to EBITDA of $ 1.9 million in 2005 Revenues for the six-month period ended June 30, 2006, were NIS 86.4 million ($ 19.5 million) compared with revenues of NIS 68.2 million ($ 15.4 million) for the comparable period in 2005. Net income for the six-month period ended June 30, 2006 was NIS 4.9 million ($ 1.1 million), or $ 0.16 per fully diluted share, compared with a net income of NIS 1.3 million ($ 292 thousand) or $ 0.04 per fully diluted share for the same period in 2005. In the second quarter of 2006, Eltek had EBITDA of $ 1.2 million compared to EBITDA of $917,000 in the second quarter of 2005. In the first six months of 2006, Eltek had EBITDA of $ 2.6 million compared with EBITDA of $ 1.9 million in the same period in 2005. ELTEK uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation and amortization. EBITDA is provided to investors to complement results provided in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. Arieh Arieh (ārī`ə), in the Bible, one of the two guards murdered with King Pekahiah. Reichart, President and Chief Executive Officer of Eltek, commented, "Eltek continues to deliver increasing quarterly sales and earnings, and we managed to accelerate our overall growth rate in a quarter that traditionally has the least number of working days." "During the last part of the second quarter and into Q3, we have made further progress towards ramping up the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue contribution of our emerging U.S. flex - rigid This article is about mathematics. For the materials sense, see Stiffness. In mathematics, suppose C is a collection of mathematical objects (for instance sets or functions). PCB PCB: see polychlorinated biphenyl. PCB in full polychlorinated biphenyl Any of a class of highly stable organic compounds prepared by the reaction of chlorine with biphenyl, a two-ring compound. activity. An example is win we previously announced with a major U.S. industrial company for the serial production of flex - rigid PCBs," he concluded. Amnon Amnon. In the Bible, David's eldest son. He raped his half sister Tamar and was killed for it by her brother Absalom. Amnon ravishes his sister, Tamar. [O.T.: II Samuel 13:14] See : Incest Shemer Shemer (shē`mər), in the Bible. 1 Owner and eponym of the hill of Samaria. 2 Founder of a clan in the tribe of Asher. Alternate forms are Shamer and Shomer. , CFO See Chief Financial Officer. of Eltek commented, "We delivered the best second quarter in Eltek's history and we grew our quarterly operating and net income by 126% and 338%, respectively, from the corresponding quarter in 2005. We managed to increase our net income although we faced two major challenges: an increase in raw material costs arising from the increase in oil and metal prices world-wide, and a devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the U.S. dollar against the NIS resulting in our receiving less NIS for each dollar nominated nom·i·nate tr.v. nom·i·nat·ed, nom·i·nat·ing, nom·i·nates 1. To propose by name as a candidate, especially for election. 2. To designate or appoint to an office, responsibility, or honor. sales." "With expansion of high - end production capacity proceeding on schedule, we are well prepared to meet the ramp-up in demand for our flex-rigid PCBs. These incremental higher margin revenue streams will play a significant role in our overall progress towards reaching new levels of revenue, net income and cash flows," he concluded. About the Company Eltek is Israel's leading manufacturers of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of PCB manufacturing, i.e., HDI HDI Human Development Index (UNDP yardstick of human welfare) HDI Help Desk Institute HDI Humpty Dumpty Institute (New York, New York) HDI High Density Interconnect , multi-layered and flex-rigid boards. Eltek's technologically advanced circuitry solutions are used in today's increasingly sophisticated and compact electronic products. For more information, visit Eltek's World Wide Web site at www.eltekglobal.com.
ELTEK LTD.
Consolidated Statements of Operations
(In thousands, except per share data)
Convenience
translation
------------
Six months ended
Reported amounts June 30,
--------------------------------------
2005 2006 2006
(Unaudited) (Unaudited) (Unaudited)
NIS NIS U.S. $
------------ -------------------------
Revenues 68,237 86,445 19,469
Costs of revenues (55,829) (68,671) (15,466)
------------ ------------ ------------
Gross profit 12,408 17,774 4,003
Research and development, net (351) (308) (69)
Selling, general and
administrative
expenses (9,205) (11,320) (2,549)
Amortization of goodwill (300) - -
------------ ------------ ------------
Operating income 2,552 6,146 1,384
Financial expenses, net (1,380) (1,260) (284)
------------ ------------ ------------
Income before other expenses,
net 1,172 4,886 1,100
Other income (expenses), net (24) 31 7
------------ ------------ ------------
Income before taxes on income 1,148 4,917 1,107
Taxes on income - - -
Income after taxes on income 1,148 4,917 1,107
------------ ------------ ------------
Minority share in subsidiary's
net results 152 (36) (8)
------------ ------------ ------------
Net income for the period 1,300 4,881 1,099
============ ============ ============
Basic earnings per 1 ordinary
share (a)0.23 0.87 0.20
============ ============ ============
Diluted earnings per 1 ordinary
share (a)0.19 0.70 0.16
============ ============ ============
Weighted average share capital
used to compute basic net
earnings per share (in
thousands) (a)5,547 5,611 5,611
============ ============ ============
Weighted average share capital
used to compute diluted net
earnings per share (in
thousands) (a)6,949 7,023 7,023
============ ============ ============
Convenience
Translation
------------
Three months ended
Reported amounts June 30,
--------------------------------------
2005 2006 2006
(Unaudited) (Unaudited) (Unaudited)
NIS NIS U.S. $
------------ ------------ ------------
Revenues 33,842 43,080 9,703
Costs of revenues (27,746) (34,714) (7,818)
------------ ------------ ------------
Gross profit 6,096 8,366 1,885
Research and development, net (160) (151) (34)
Selling, general and
administrative
expenses (4,686) (5,721) (1,288)
Amortization of goodwill (148) - -
------------ ------------ ------------
Operating income 1,102 2,494 563
Financial expenses, net (766) (501) (113)
------------ ------------ ------------
Income before other expenses,
net 336 1,993 450
Other income (expenses), net (13) 41 9
------------ ------------ ------------
Income before taxes on income 323 2,034 459
Taxes on income - - -
Income after taxes on income 323 2,034 459
------------ ------------ ------------
Minority share in subsidiary's
net results 138 (14) (3)
------------ ------------ ------------
Net income for the period 461 2,020 456
============ ============ ============
Basic earnings per 1 ordinary
share (a)0.08 0.36 0.08
============ ============ ============
Diluted earnings per 1 ordinary
share (a)0.06 0.28 0.06
============ ============ ============
Weighted average share capital
used to compute basic net
earnings per share (in
thousands) (a)5,603 5,614 5,614
============ ============ ============
Weighted average share capital
used to compute diluted net
earnings per share (in
thousands) (a)7,006 7,021 7,021
============ ============ ============
(a) The implementation of Israeli Accounting standard no. 21
regarding earnings per share, requires restatement of comparative
data, in accordance with the new standard.
Eltek Ltd.
Consolidated Condensed Balance Sheets
(In thousands)
Convenience
Translation
-----------
December 31, June 30, June 30,
------------- ----------------------- -----------
Reported amounts 2005 2005 2006 2006
(Audited) (Unaudited) (Unaudited) (Unaudited)
NIS NIS NIS U.S. $
------------------------- ----------- -----------
Assets
Current assets
Cash and cash
equivalents 4,274 2,309 6,119 1,378
Receivables: Trade 23,835 25,249 31,958 7,198
Other 1,158 1,174 1,267 285
Inventories 13,633 13,788 16,393 3,692
Prepaid expenses 563 1,200 1,707 384
------------- ----------- ----------- -----------
Total current assets 43,463 43,720 57,444 12,937
------------- ----------- ----------- -----------
Deferred taxes 753 708 723 163
------------- ----------- ----------- -----------
Property and
equipment, net 31,569 27,155 32,334 7,282
------------- ----------- ----------- -----------
Goodwill 4,656 4,084 3,871 872
------------- ----------- ----------- -----------
Total assets 80,441 75,667 94,372 21,254
============= =========== =========== ===========
Liabilities and
Shareholder's equity
Current liabilities
Short-term credit and
current maturities
of long-term debts 19,589 18,830 16,139 3,635
Trade payables 23,577 19,338 26,241 5,911
Other liabilities and
accrued expenses 11,083 11,317 12,193 2,746
------------- ----------- ----------- -----------
Total current
liabilities 54,249 49,485 54,573 12,292
------------- ----------- ----------- -----------
Long- term
liabilities
Long term debt,
excluding current
maturities 6,687 3,815 8,237 1,855
Employee severance
benefits 1,048 1,131 694 156
------------- ----------- ----------- -----------
Total liabilities 61,984 54,431 63,504 14,303
------------- ----------- ----------- -----------
Minority interests 1,900 1,636 1,676 376
------------- ----------- ----------- -----------
Convertible note 1,566 1,720 1,844 415
------------- ----------- ----------- -----------
Shareholder's equity
Ordinary shares, NIS
0.6 par value.
Authorized 50,000,000
shares, issued and
outstanding 5,602,511
shares at June 30, 2005
and 5,491,711 shares at
June 30, 2004 and at
December 31, 2004 29,698 29,765 29,778 6,707
Additional paid in
capital 52,500 54,553 54,981 12,383
Capital reserves
related to loans
from controlling
shareholders 10,010 10,010 10,010 2,255
Cumulative foreign
currency translation
adjustments 2,574 2,043 2,229 502
Capital reserve 6,685 6,685 6,685 1,506
Accumulated deficit (86,476) (85,176) (76,335) (17,193)
------------- ----------- ----------- -----------
Total shareholder's
equity 14,991 17,880 27,348 6,160
------------- ----------- ----------- -----------
Total liabilities and
shareholders' equity 80,441 75,667 94,372 21,254
============= =========== =========== ===========
Non-GAAP Earnings Six Months ended
Reconciliations June 30,
--------------------------------------
2005 2006 2006
(Unaudited) (Unaudited) (Unaudited)
NIS NIS U.S. $
------------ ------------ ------------
GAAP net income 1,300 4,881 1,099
Add back items:
-----------------
Financial
expenses, net 1,380 1,260 284
Tax benefit - - -
Amortization of
goodwill 300 - -
Depreciation 5,587 5,218 1,174
------------ ------------ ------------
Adjusted EBITDA 8,567 11,359 2,557
============ ============ ============
Non-GAAP Earnings Three Months ended
Reconciliations June 30,
--------------------------------------
2005 2006 2006
(Unaudited) (Unaudited) (Unaudited)
NIS NIS U.S. $
------------ ------------ ------------
GAAP net income 461 2,020 456
Add back items:
-----------------
Financial
expenses, net 766 501 113
Tax benefit - - -
Amortization of
goodwill 148 - -
Depreciation 2,699 2,615 589
------------ ------------ ------------
Adjusted EBITDA 4,074 5,136 1,158
============ ============ ============
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