Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd First Quarter 2022 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 Ron Freund, 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 will now like to turn the call over to Mr. Eli Yaffe. Mr. Yaffe, would you like to begin, please?

Thank you. Good morning, everyone. Thank you for joining us, and welcome to Eltek's 2022 first quarter earnings call. With me is Ron Freund, 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 are first quarter, 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 press release, which was released earlier today. The release will also be available on our Web site, at www.nisteceltek.com. In the first quarter of 2022 we recorded revenue of $9.8 million despite the challenging supply chain and the labor environment. This revenue reflects an annual increase of 15% relative to our revenue in 2021. Our forecast is that the defense aerospace and space sectors will perform better in 2022 than in the last year. Our employees did an excellent job of maximizing the production by maximization of throughput per hour, resulting in increased efficiency. During the first quarter of 2022, we mitigate all of the material price increase through additional cost savings, adjustment in the mix of raw materials used during the manufacturing process, and product price adjustments. The first quarter of 2022 reflects the continued increase in order received from our customers. We ended the quarter with a backlog of 50% greater than the backlog of 2021 year-end. Our PCB book-to-bill ratio was 1.4 for the first quarter of 2022, which means that our accumulation of new orders was higher than our revenue recognition. The significant increase in the backlog is due to several factors. Factor number one; the current status of the COVID-19 pandemic enable most of our customers to return to normal level…

Thank you, Eli. I would like to draw your attention to the financial statement for the first quarter of 2022. During this call, I will discuss also 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 Q1 2022. Revenue for the first quarter of 2022 totaled $9.8 million, compared to $7.2 million in Q1 2021; an increase of 35%. The increase in revenue is mainly due to the shortage in raw material in 2021 and the negative effect it had on our sales in the first quarter of 2021. [Technical difficulty] the gross profit of $1.1 million in the first quarter of 2021 [indiscernible] outcome of the increase in revenues. Operating profit amounted $0.7 million in Q1 2022 compared to $0.1 million in 2021. Fluctuation of the U.S. dollar against the Israeli Shekels contributed to our Q1 2022 result of operation. And we recorded the financial income in the amount of $0.1 million. We have recorded for the first time [technical difficulty] $0.1 million due to the deferred tax asset we recorded in 2021 year-end. [Technical difficulty] was recorded based on technical difficulty] that it is more likely [technical difficulty] that the company will utilize cash flow carry forward in future years. Net profit was $0.6 million or $0.11 per share in Q1 2022 compared to net profit of $0.2 million or $0.04 per share in Q1 2021. EBITDA was $1.1 million in 2022 compared to $0.6 million in 2021. As of March 31, 2022, we had cash and cash equivalent of $1.9 million. This cash balance and the anticipation cash flow from operating activities [technical difficulty] flexibility in operating our business and financing our accelerated investment program that Eli mentioned earlier. We are now ready to take your questions.

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question is from Michael [Wood] [Ph]. Please go ahead.

Hello. Hi, thanks for taking my questions. So, my first question is do you guys have any estimate of [indiscernible] revenue you guys got from this quarter because of the manufacturing issue in China as they cannot ship orders to you?

Hi, Mike. And how are you? No, [technical difficulty], but -- we don’t have exact number, but we estimate that it is [indiscernible] to shift back from China to Israel because we got approached by customers that ask us to [indiscernible] back to Israel. But we don’t have -- I don’t have exact number.

Okay, that’s fine. Do you have any like -- do you see continuing this kind of translates more customers try to carry about this -- the manufacturing issues in China?

Yes. As I told during my previous comments, I forecast that the shift will continue.

Okay, great. Thank you. So, second question is how the manufacturing capacity is running, like, are you guys in full capacity right now?

No, not yet.

Not yet. So, like, what is the capacity left? I mean, if you can run enough for capacity basis, how many like [you can steer to] [Ph]?

We adjust our manpower according to the level of IPOs that we have. And if we rely on more employees, we can produce more.

Or you can do a little bit more?

If it will be justified we'll hire more employees, and we'll increase our sales by manufacturing more products, yes.

Okay. So, I have another question. So, about the new CapEx, so you said totally it is $115 million for -- it sounds like a two-year period for the total U.S. spend?

No, the $9 million is over two years. That's the Phase 1. The $15 million is for the whole program.

Oh, okay, okay, that's great. So, around the first two years is nine meeting, once you fully invested, so when do you expect the capacity will be fully setup and running, is like in a stage or -- and just like, you need to have to wait for two years and then get the facility up and running?

It's very good question. We will go slowly between now and the end of the program, but there will be a jump in the end of the program.

Okay. So, basically you were like incrementally during this year, maybe you can see some more capacity, getting up and running, right, that's my understanding, right?

The capacity right now is dependent on the manpower. If we would like to have a break down, we have to invest in new equipment, which we [indiscernible] install the program.

Okay. So, basically, you're adding the program, adding more equipment, right? I mean you don't need to wait until the end of two years to use the new equipment, right? You can increase the capacity during the time, right?

It's more equipment, but that will replace old equipment.

Okay, okay. So what's the difference, why I mean?

It's kind of efficiency quality, less manpower required for the new equipment, more automation, more precise, more adapted to the market demand and be more precise.

Okay. So, basically also like, once you replace the old equipment, you also increase the capacity, right, is my understanding right?

Exactly, with the new equipment, we will be able to produce our more panels.

Okay, so also increase the efficiency, right?

Exactly, as I mentioned before, yes.

Okay, that's great. So do you have any kind of color on the defense contract, any -- could you give more kind of color on this?

Well, usually we don't disclose the name of our defense contractors. On the 28th, you can see some of the names there and the activity that we mentioned with them, but with all our defense contractors, the market is going because of the security situation in Europe.

So like I mean, how big is the trend do you see like how -- what is the amount and like percentage increase do you see the order flow inflows?

As I mentioned the order flow right now, the backlog is 10 more than the end of last year and book-to-bill ratio right now is 1.4. So we gained 40% more orders than what we produce.

Okay, that's great. That's great to know. And my last question, so about inflation pressure, you can see any inflation pressure, can you pass price to your customer, if you have any like labor expenses?

Yes. Yes, as I mentioned before, there is a difference in the inflation rate between Israel and United States. So in United States it's easier because inflation in Israel is lower than the inflation in United States, so it's easily to increase prices in United States. And in Israel we do it with more difficulty, but we succeed to push the prices up based on the cost of -- the adjustment of the cost.

Sorry, I didn't get it. So, you catch the [indiscernible] you increase the price to [indiscernible]?

In United States, we do it easily because there is different in the inflation rate in United States, which is higher than the inflation rate in Israel. In Israel we do it because it's accepted in Israel, and we do it up to the inflation rate that exists in Israel.

Okay. Okay, got it. Okay, that's all my questions. Thank you very much for taking my questions. Congratulations for the good quarter.

Thank you, Michael. Thank you.

[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 Web site, www.nisteceltek.com. Mr. Yaffe, would you like to make your concluding statement?

Before we conclude our calls, I would like to thank all of our employees for their efforts in continuing the company growth. I would like also to thank our customers, partners, investors, and the Eltek team for their continued support. Thank you for all for joining us on this today calls. Have a good day.