Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. Second Quarter 2021 Financial Results Conference Call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. 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 second quarter earnings call. With me is Alon Mualem, 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 the second quarter of 2021, followed by 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 earnings press release which was released earlier today. The release will be also available on our website at www.nisteceltek.com. This quarter reflects the return to improved results and the fact that we have succeeded in making the necessary adjustments to overcome most of our operational and business challenges which will add a positive impact on our business in the long run. Despite the global COVID-19 pandemic that results mainly in the short supply of various critical raw materials we were able to grow our top line and improve our gross margin. During the second quarter of 2021 revenue was $9.1 million compared to $8.8 million in the second quarter of 2020 and compared to $7.2 million in the first quarter of 2021. The spread of COVID-19, which still affects some of our customers, and the shortage of Pyralux AP, a laminate produced by DuPont that is used in the production of flexible and flex-rigid printed circuit boards created operational and business challenges which required quick adjustments to enable us to maintain our production and deliveries of PCBs to our customers. Due to the raw material worldwide shortage, we purchased enough inventory of alternative raw material that was preapproved by Eltek two years ago as a backup plan for the production of PCB, and we now introduce it to our customers. During the second quarter we were able to obtain authorization for a majority of our customers to use alternative raw material. Once the alternative raw material is fully approved by all of our customers, we expect a reduction in our cost of production which gives us the flexibility to offer our customers more options for production as well as better pricing and a more secure source of raw materials. During the second quarter we faced significant price increases of some of our raw materials. In addition, some of our operating expenses are denominated in new Israeli Shekels (NIS) and were negatively affected by the devaluation of the U.S. dollar against the NIS. Nevertheless, we were able to improve our gross margin from 21.6% in Q2 2020 to 25.9% in Q2 2021. As we mentioned in the past, we also see an opportunity to grow our business in the U.S. due to the shift back to production in the Western world by the defense aerospace, space communication, and PCB sectors as a result of cyber threats from China and the lack of production capacity in the USA, Europe, and Israel. To date, we financed our growth strategy from our internal resources and through rights offerings done in the past to our shareholders. During 2021 and 2022, we plan to continue investing in sales activities that will enable us to grow revenue with a focus on the U.S. market. We also intend to continue to invest in new equipment and an expansion of our facility and infrastructure to support long-term sales goals. As we have previously reported, we are conducting several R&D programs and are seeking to become an innovative industry leader. A major portion of our investment program that is under the grant program is expected to be completed and become operational in the second half of 2021. We believe that these recent investments and the planned future investments will strengthen our manufacturing capability and increase our competitiveness by implementing improved production processes. In addition, as we already announced, we received final approval from the Israeli Innovation Authority for 50% royalty-bearing participation in an R&D program that began on March 1, 2021, and has already achieved its first milestone. This R&D program is designed to enable Eltek to achieve significantly faster production rates and reduce scrap. If successful, this R&D program will enhance our ability to offer highly reliable printed circuit boards in a shorter production time and reduce costs. I'm glad to report that this R&D program has progressed as planned and around 50% of the program is already completed. We have continued to pursue new business opportunities and increase customer design engagement activities that will leverage our advancing innovative and technology capabilities. In addition, as previously reported, we applied to the Israeli land authority for an allocation of land in the north of Israel, where Eltek intends to build a second production facility. This is a major part of our long-term and strategic roadmap in order to grow and accelerate the expansion of our business. We remain focused on operational excellence by using advanced technology and financial discipline and in making the necessary adjustments to address the challenges we face from the widespread health crisis and the global supply chain crisis. We are continuing to work diligently in expanding our business while maintaining operational efficiency and continuing the trend of improved operational results. Eltek continues its long-term machinery investment program from 2021 to 2023 with new and modern machinery, and we are glad that one of our significant investments in 2020 improved our yield more than originally planned. Eltek is focused on investments that will further increase Eltek's total yield and power production capacity. We are focused on our business goals, and now that we have positive cash flow and strong working capital, we expect to further increase our future investment program as long as we achieve clear and high positive returns on our investments. I will now turn the call over to Alon Mualem, our CFO, to discuss our financials.

Thank you, Eli. I would like to draw your attention to the financials of the second quarter of 2021. During this call, I will also be discussing certain non-GAAP financial measures. Eltek Q2's EBITDA is 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 second quarter of 2021 compared to the second quarter of 2020. As Eli mentioned, revenues for the second quarter of 2021 were $9.1 million, up from revenues of $8.8 million in the second quarter of 2020 and up from $7.2 million in the first quarter of 2021. Gross profit increased to $2.4 million or 25.9% of revenues in the second quarter of 2021 compared to $1.9 million or 21.6% of revenues in the second quarter of 2020. During the second quarter of 2021, we had an operating profit of $944,000 as compared to an operating profit of $809,000 in the second quarter of 2020. Net profit was $825,000 or $0.14 per share in the second quarter of 2021 compared to a net profit of $704,000 or $0.16 per share in the second quarter of 2020. EBITDA was approximately $1.4 million in the second quarter of 2021 as compared to EBITDA of $1.2 million in the second quarter of 2020. During the second quarter of 2021, we had operating cash flow of $380,000 compared to operating cash flow of $1.4 million in the second quarter of 2020. During the first half of 2021, we achieved an operating cash flow of $2.8 million as compared to operating cash flow of $2.9 million in the first half of 2020. During the second quarter of 2021, we obtained a loan of NIS10 million, approximately $3.1 million from Bank Leumi; this loan will enable us to support our growth plan. The loan has a term of 10 years with favorable trends, including repayment scheduled costs after a 12-month grace period and interest which is waived for the first year of the loan. As previously announced, we filed a self-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. We expect that any proceeds will be used in part for additional investment in our production facilities and to accelerate our long-term growth. 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.

There are no 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?

Yes, thank you. Before we conclude our call, I would like to thank all our employees for their efforts to make Eltek profitable even in these challenging times. I would also like to thank once again our customers, partners, investors, and Eltek's team for their continued support. Thank you all for joining us on today's call. Have a good day.

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