Eltek Ltd (ELTK) saw its loss widen to $0.81 million, or $0.08 a share for the quarter ended Mar. 31, 2017. In the previous year period, the company reported a loss of $0.38 million, or $0.04 a share. Revenue during the quarter dropped 13.60 percent to $8.47 million from $9.80 million in the previous year period. Gross margin for the quarter contracted 384 basis points over the previous year period to 5.73 percent. Operating margin for the quarter stood at negative 7.44 percent as compared to a negative 2.99 percent for the previous year period.
Operating loss for the quarter was $0.63 million, compared with an operating loss of $0.29 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at negative $0.21 million compared with $0.17 million in the prior year period. At the same time, adjusted EBITDA margin stood at negative 2.48 percent for the quarter compared to 1.70 percent in the last year period.
Mr. Yitzhak Nissan, chairman of the board and chief executive officer, commented: "Our sales in the first quarter were $8.5 million, approximately 1% lower than the first quarter of 2016 excluding Kubatronik, and an approximately 15% increase over the $7.3 million revenues we recorded in the fourth quarter of 2016 (excluding Kubatronik). We are pleased to report that since the end of the quarter we have noticed revitalization in certain of our customers' activity, which we hope to benefit from during the remainder of the year. The low exchange rate of the US dollar compared to the NIS is a matter of concern to us. Our NIS denominated expenses, such as salaries, building lease, energy, etc., have increased in dollar terms. We are taking actions to: (1) increase incoming orders; (2) continue the increase in manufacturing efficiency; (3) continue attempting to lower raw material purchase prices; and (4) explore different methods of protecting us, as much as possible, against the decrease in the dollar exchange rate. We continue to strive to leverage our marketing and operating capabilities in all areas, and especially in the defense sectors, where we have experienced an increase in the demand for our products. We expect that the steps we are taking will bear fruit later this year, for the benefit of our shareholders.
Operating cash flow turns negative
Eltek Ltd has spent $0.78 million cash to meet operating activities during the quarter as against cash inflow of $0.89 million in the last year period. The company has spent $0.09 million cash to meet investing activities during the quarter as against cash outgo of $0.10 million in the last year period.
Cash flow from financing activities was $0.59 million for the quarter as against cash outgo of $0.90 million in the last year period.
Cash and cash equivalents stood at $1.03 million as on Mar. 31, 2017, up 9.70 percent or $0.09 million from $0.94 million on Mar. 31, 2016.
Debt increases substantially
Eltek Ltd has witnessed an increase in total debt over the last one year. It stood at $5.72 million as on Mar. 31, 2017, up 61.47 percent or $2.18 million from $3.54 million on Mar. 31, 2016.
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