Eltek Reports 83% Growth in Net Income for Full Year 2006


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Eltek Ltd. (NasdaqCM:ELTK), the leading Israeli manufacturer of advanced Flex-Rigid circuitry solutions, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2006.

Highlights for the Quarter:

  • 10th consecutive quarter of year-over-year revenue growth - revenues reached the Company's highest fourth quarter levels ever

  • 9th consecutive quarter of profitability

  • Quarterly net income of $632,000, $0.11 per basic share or $0.09 per fully diluted share

Eltek reported revenues for the three months ended December 31, 2006 of NIS 43.4 million ($10.3 million) compared with NIS 39.6 million ($9.4 million) for the fourth quarter of 2005. The increase in revenues primarily reflects the growth of Eltek's internationally sourced flex - rigid PCBs sales in general, and in the U.S. in particular.

Net income for the fourth quarter totalled NIS 2.7 million ($632,000), or NIS 0.38 per fully diluted share ($0.09) compared with a net income of NIS 2.3 million ($544,000), or NIS 0.34 per fully diluted share ($0.08) for the same quarter in 2005. The fourth quarter of 2006 was the Company's 9th consecutive quarter of profitability.

Highlights for the Year:

  • Significantly improved profitability in 2006

  • 2006 net income increased to $2.3 million from net income of $1.2 million in 2005

  • 2006 operating income increased to $2.9 million from operating income of $1.8 million in 2005

Revenues for the year ended December 31, 2006, were NIS 173.9 million ($41.2 million) compared with revenues of NIS 144.4 million ($34.2 million) in 2005. The increase in revenues primarily reflects the growth of Eltek's internationally sourced flex - rigid PCBs sales in general, and in the U.S. in particular.

Net income for the year ended December 31, 2006 was NIS 9.6 million ($2.3 million), or NIS 1.39 per fully diluted share ($0.33) compared with net income of NIS 5.3 million ($1.2 million) or NIS (0.81) per share ($0.19) in 2005.

Arieh Reichart, President and Chief Executive Officer of Eltek, commented, "2006 was a successful year for us in which we achieved record revenue, consistently delivered y-o-y quarterly growth and increased profitability. I am especially pleased with the improvement in our gross margin and profitability in Q4 06 in light of the continued adverse impact of the ongoing weakness of the U.S. dollar versus the Israeli shekel."

Reichart concluded, "Going forward, we believe that 2007 will be an important year for Eltek. We see various new long-term growth opportunities in our existing markets in the U.S. and Europe, via relationships we fostered and strengthened throughout 2006 and successful deliveries of several strategic pilot runs. With the measures we are taking in the first half of 2007 to grow our production capacity along with strengthening our sales team, we believe that we are well positioned to capitalize on the higher margin opportunities in the high-end PCB market."

Amnon Shemer, CFO of Eltek commented: "We concluded a strong year on the financial front, as 2006 sales reached a new level and we managed to grow our yearly operating and net income by 63% and 83%, respectively, from 2005. During Q4 we improved our gross and operating margins in spite of the negative impact of the continued devaluation of the U.S. dollar against the NIS, and to a lesser extent higher raw material costs."

Shemer concluded, "During 2006 we invested $3.0 million in new capital expenditures, including $1.1 million in the fourth quarter, mainly for manufacturing equipment. In order to meet the growing demand for our high end PCBs, we are now expanding our operation facility by approximately 15,000 square feet, which expansion is expected to bear fruit in the second half of 2007, and selectively adding employees to our manufacturing, supply chain and sales groups to manage expected sales increases in the second-half of 2007."

About the Company

Eltek is Israel's leading manufacturer of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end of PCB manufacturing, i.e., HDI, 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 http://www.eltekglobal.com/.

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