Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. Second Quarter 2020 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 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 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 second quarter earning call. With me is Alon Mualem, our Chief Financial Officer. We will begin by providing you with an overview of our business, a summary of the principal factors that affect our results in the second quarter of 2020, and then update how COVID-19 has impacted our business, 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 earning press release, which was released earlier today. The release will be also available on our website at www.nisteceltek.com. This is the sixth quarter in row that we achieved both operating and net profit. Our revenue in the second quarter of 2020 rose to $8.8 million from $8.2 million in the second quarter of 2019. Revenues for the six months of 2020 were $17.9 million, compared to $16.9 million in the first six months of 2019. This growth is a result of 11% growth in sales to customers in Israel and reflects year-over-year growth in sales to defense segments in the [contract electronics manufacturers]. I'm also pleased with the continued improvement in production efficiency that is evidenced in our improved gross margins and operating profits. Our diversified end market allowed us to grow revenue year-over-year despite the weakness in Indian markets. In addition, strong operational execution overcome production inefficiency and extra costs due to the COVID-19. The COVID-19 pandemic has created operational difficulties, macroeconomic uncertainty, and employees concern. I'm extremely proud how Eltek’s employees have worked to deliver excellent performance despite challenging environments. We have had three employees who had tested positive for COVID-19 this year, with other returning to work after being…

Thank you, Eli. I would like to draw your attention to the financials of the second 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 reason for its use. Now, I will go over the highlights of the second quarter of 2020, compared to the second quarter of 2019. As Eli mentioned, revenues for the second quarter of 2020 were 8.8 million, up from revenues of 8.2 million in the second quarter of 2019. Gross profit increased from 1.3 million or 15.3% of revenues in the second quarter of 2019 to 1.9 million or 21.6% in the second quarter of 2020. During the second quarter of 2020, we had an operating profit of 809,000, as compared to an operating profit of 7,000 in the second quarter of 2019. Net profit was 704,000 or $0.16 per share in the second quarter of 2020, compared to a net profit of 790,000, or $0.19 per share in the second quarter of 2019. The results of the second quarter of 2019 were positively affected by non-recurring other income of 871,000 as a result of a receipt of an insurance payment associated with damage incurred to one of our manufacturing machines. EBITDA was approximately 1.2 million in the second quarter of 2020, as compared to EBITDA of 1.25 million in the second quarter of 2019. During the second quarter of 2020, we had positive operating cash flow of 1.4 million, compared to net cash used in operating activities of 301,000 in the second quarter of 2019. During the first half of 2020, the company achieved a positive operating cash flow of $2.9 million as compared to positive operating cash flow of $1.3 million in the first half of 2019. As Eli mentioned before, we remain focused on operational excellence and financial discipline, as well as our long-term strategic growth goals. As previously announced, we filed a registration statement during the third quarter of 2019 to provide the company with the ability to raise additional funds. The company is also considering different options to fund raising to support our plan to grow and expand our business. We are now ready to take your questions.

Thank you. [Operator Instructions] The first question is from [Michael Wu]. Please go ahead.

Hello. Hi. Thanks for taking my question. So I have [Technical Difficulty] the first question about the insurance claim you can have last year, so based on your filing, you said during 2018 you have two [indiscernible] equipment was damaged. So, you received the claim for one equipment. So, my question is, like the claim is over, I mean, [indiscernible] they are waiting for negotiation with the other claim?

Hi, yes. We indeed received payment from insurance for one manufacturing machine. We still have a pending claim with our insurance company, but we cannot predict or know how this claim will end up. So, so far, there's no provision in our financials for it.

Okay, so can you give us a little detail on the – what’s the incident, I mean, what's going to happen to like [target], your margins done or affecting your – I mean how that incident affect your operation now?

These machines were affected by water damages included in our plant. We overcome this damage relatively fast in the third quarter of 2018 and long time ago we are over it.

Okay, okay, great. Thank you. So, my second question is about, your [indiscernible] biggest customer use, based on the last quarter – last year [2019] number, so you roughly have like 30% by two biggest customer, but I check your [indiscernible] and you said there's two [Technical Difficulty] of customers, which can have – I'm not quite sure what is the two groups? Is that the one customer too big customer, also what's your relationship with them?

In deed we have group of major customers related companies that are all in one group and presented in one – as one group in our 20 years.

So, they order differently or they order just through one channel like, I mean, they act like differently or they can change order – do they make one order or they may, I mean different orders from different times from different companies.

This is a one group of companies that are combined of few companies in it.

How is the order [indiscernible]? I mean, maybe I'm asking too much like, they're ordering like in one batch or something like, so one kind of person or something?

So it’s not the company that has a few division and theoretically they are one company, but we get the POS from different divisions. So, we combine it because in the end of the day it's one company.

Okay. Can you [Technical Difficulty] there from U.S. to Israel?

Their headquarter is based in Israel, but we get all the majority of it from Israel and some of it from other parts in the world, including Brazil, United States, and Israel.

Okay, great. That’s really helpful. So, I have another question about your capital [Technical Difficulty] around one 1.6 million right? [Indiscernible] It's like 800,000 to 900,000, but I, there's an indication in the annual report says, you have spent 1.7 million on equipment. So, basically your cash CapEx around 800,000 is kind of a little bit different. So, can you expand a bit on that? Like, what is that 1.7 million on equipment spending?

You were cut in the middle of your question. Can you repeat please?

Sure. So, the year 2019, so your CapEx is around 800,000, 900,000. This [indiscernible] has been 1.7 million on equipment for new equipment. So, can you expand a little bit on the different numbers?

I think the 1.7 that you refer to is in the last three years all together. I'm not sure, but we will need to look into it.

Okay. So, basically it is not [indiscernible] you are always around 800,000 and 900,000 for the last year.

Yes. You’re right.

Okay. [Technical Difficulty] also says 2 million [indiscernible] the same number [Technical Difficulty] it's not like that, right. So this year, what's your, I mean what’s your [indiscernible] like? How much you can spend on your equipment?

We do not provide looking forward statements. So, we cannot provide the numbers for the second half, but as you can see in our cash flow for the first six months, we add approximately 450,000 in cash investment in fixed assets.

Okay, okay, that’s great. So, basically [indiscernible] I mean, I remember [last quarter], you indicated that you want to, you know, increase the spending. So, do you have any plan to, I mean buy new equipment, or are you just basically maintaining the current capacity?

Yes, yes, as I mentioned in my discussion, we have the goal and we have the means and we clearly look on increasing our capacity based on our internal sources. If we will raise money, we will accelerate it. We love money, we'll do it in organic growth without our own resources.

Okay. I would [indiscernible] ask about capacity, so you're running more like, I mean in full capacity or you can add in like 10% more revenue with new machines or new equipment?

Right now, work in some of our departments two shifts, some of our department three shifts.

[Technical Difficulty]

Sorry, I didn't hear your last question, you were cut.

I mean you [Technical Difficulty] in full capacity?

It's close to full capacity. It's five days a week. So, we still have opportunity to go over the weekends.

Okay. Thank you so much. That's all my question. Thank you. Congratulations. Thank you.

Thank you, Michael.

[Operator Instructions] 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 of our employees of all their efforts during the difficult period and their contribution in renewing our position as a leading high end PCB manufacturers 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 for all joining us on today's call. Have a good day.

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