Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. Third Quarter 2021 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 includes 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 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 2021 third quarter earnings call. With me is Alon Mualem, our Chief Financial Officer. We will begin by providing you with an overview of our business in summary of the principal factors that affected our results in the third quarter of 2021, 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 third quarter earnings press release, which was released earlier today. The release was also available on our website at www.nisteceltek.com. This quarter was very challenging both operationally and business wise. In addition to the COVID-19 pandemic that was affecting us, our results were affected by the reduced number of working days during the quarter compared to the number of working days in the third quarter of 2020. In addition, our results were impacted by the strength of the new Israeli shekel compared to the U.S. dollars during the third quarter. Nevertheless, we were able to maintain operation -- operating profitability, also our revenue declined from $9.3 million in the third quarter of 2020 to $8 million in the third quarter of 2021. The spread of COVID-19 was still affecting some of our customers in India while during quarter three 2021 with possibly recovery of the Pyralux AP supply compared to the shortage that we faced during Q1 2021. These shortage created operational and business challenges during the nine months ended September 30, 2021, which required quick adjustment to enable us to maintain production and deliveries of PCB to our customers. Due to the raw material worldwide shortage, we purchased due in Q3 2021 a sufficient amount of inventory ahead of time and also alternative…

Thank you, Eli. I would like to draw your attention to the financials of the third quarter of 2021. During this call, I will be discussing certain non GAAP financial measures. Eltek Q3's 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 the third quarter of 2021 compared to the third quarter of 2020. As Eli mentioned, revenue for the third quarter of 2021 were $8 million compared to revenues of $9.3 million in the third quarter of 2020. Gross profit was $1.4 million or 17.5% of revenues in the third quarter of 2021 compared to $1.8 million or 19.7% of revenues in the third quarter of 2020. During the third quarter of 2021, we had an operating profit of $65,000 as compared to an operating profit of $638,000 in the third quarter of 2020. Net loss was $26,000 or $0.00 per share in the third quarter of 2021 compared to net profit of $598,000 or $0.14 per share in the third quarter of 2020. EBITDA was $553,000 in the third quarter of 2021 as compared to EBITDA of $1 million in the third quarter of 2020. During the third quarter of 2021, we had positive operating cash flow of $598,000 compared to net cash provided by operating activities of $873,000 in the third quarter of 2020. During the nine months of 2021, our operating cash flow was $3.4 million as compared to operating cash flow of $3.7 million in the first nine months of 2020. During the second quarter of 2021, we obtain the loan of 10 million new Israeli Shekels of approximately $3.1 million from Bank Leumi that enables us to support our growth plan. The loan is a term of 10 years with favorable trends, including a repayment schedule that starts after 12 month grace period and interest which is waived for the first year of the loan. As previously announced, we filed a share registration statement during the third quarter of 2019 to provide us with the ability to raise additional funds to support our plan to grow and expand our business. As Eli mentioned before, we remain focused on operational excellence and financial discipline as well as our long-term strategic growth goals. We are now ready to take your questions.

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

Hello. Hi. I just have a question on the reduced working days. So could you just give me more detail about what is that?

Can you please repeat the question reduction in what?

The working days, the reduction of working days, so what is that? I don't check it actually. Thanks.

Okay. During September, there were Jewish holidays that unfortunately happened during the working days and not over the weekend and this is the rare situation and we faced significant amount of working days that we were not able to work because of this holiday days, Jewish holidays.

So it's -- I mean you have kind of a reduction on to the revenue actually from that, like I mean it's like $1.2 million to $3 million less revenue, is that cost breakdown or totally breakdown or --

The number of working days that we lose during this time was approximately 10% of the days.

That's quite a delay. Okay. So you don't lose any customers or any contracts or something. It's just…

No…

.. net working days, right?

There were two effects, first of all, Eltek didn't work during these days and also our Israeli customers didn't work during these days.

Okay. That's great. So I didn't find the -- your exchange rates increased that much compared to last year, just like 100K. So basically [indiscernible] because of the currency fluctuation?

In general during the third quarter, we had a negative impact on the profitability since salaries, bidding lease, energy costs are dominated in new Israeli Shekel that was reevaluated in Q3 as compared to the U.S. dollar. The financial expenses we present during Q3 is mostly related to the effect of the devaluation of the U.S. dollar and the Euro against the new Israeli Shekel.

Okay. That's great. So, on constant margin, so it's down a little bit, it's not because of you will be doing [indiscernible].

No, it doesn't impact our margin because we try to pass some of this devaluation cost on our customers in slow mode.

Yes. So, yes, my question is it's a little bit lower, like, I mean, this quarter it's around 17.5% like gross margin, right, last year it's like 19.7%. So what's that…

The main reason is that we had some fixed cost included in our cost of revenues. And whenever the revenues are down, this has become a larger part in our expenses as a percentage.

Okay, great. So, how about this quarter? So, I mean, in the fourth quarter – so your working days should be, I mean, the same as last year, right? So I assume like you are working full time, so it should be -- I mean there should be lost any revenue because of that, right?

During quarter four, there is no lost revenue because of Jewish holidays. It's going to be full quarter.

In the fourth quarter right?

For the quarter four - all right four is full quarter, yes.

Okay. Okay. That's great. That's great. Okay. Thank you. Thank you very much.

Thank you, Michael.

The next question is from Dean Chin of RU Group International. Please go ahead.

Hi, everyone. I want to thank you for your service. I noticed with your past 6-K that that you're resigning from your position as CFO. So, Alon, thank you for your service…

Thank you.

…for working very, very long-term for Eltek. But my question is there is no reason for your resignation stated in the 6-K. I'm just kind of curious on why you chose to resign?

In the last three years that as being part of Eltek management, the company implemented significant turnaround plan, raised funds and improved the financial position. I'm very proud of this achievement and I'm sure that the company will go ahead with its long-term growth plan. I personally decided to pursue other business opportunities, but again I will follow Eltek and look forward to its success. Dean?

Dean, is there any other question? [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 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 for their effort to make Eltek profitable again even of these challenging times. I would like to thank once again to our customers, partners, investors and Eltek team for their continued support. I also personally would like to thank Alon Mualem, our CFO, for three years of service, in which implementing together with the management team, the turnaround plan and improved the company financial position. Thank you all for joining us on today's call. Have a good day.

This concludes the Eltek Ltd third quarter and full year 2021 financial results conference call. Thank you for your participation. You may go ahead and disconnect.