ELTK — Eltek Ltd.

Eltek Ltd. Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $10.4 million, down from $12.8 million in Q1 2025.
• Gross Loss: $1.9 million, a decline from a gross profit of $2.2 million in the previous year.
• Operating Loss: $3.3 million, compared to an operating profit of $0.7 million in Q1 2025.
• Net Loss: $2.9 million or $0.42 per share, down from net income of $1.0 million or $0.15 per share in the prior year.
• EBITDA Loss: $2.7 million, compared to EBITDA of $1.2 million in Q1 2025.
• Cash Position: $11.1 million in cash and cash equivalents, with no outstanding debt.

2. Strategic Updates and Business Highlights:

• Eltek experienced a significant backlog growth, more than doubling since the beginning of the year, driven by new orders expected for delivery in 2026 and 2027.
• The company is actively managing supply chain challenges and has adjusted pricing structures to address rising raw material costs.
• A new production line was partially installed, with installation expected to resume and complete in the coming weeks after delays due to regional conflict.

3. Forward Guidance and Outlook:

• Eltek aims to return to normalized profitability levels, targeting revenues of $60 million to $65 million in the future, with expected gross margins of 26% to 28% under stable conditions.
• The company remains optimistic about long-term demand, supported by a strong backlog and strategic investments in operational improvements.

4. Challenges and Points of Concern:

• Revenue was impacted by backlog conversion timing, logistical constraints, and foreign exchange effects, particularly the weakness of the U.S. dollar against the Israeli shekel, which increased operational losses by approximately $1.3 million.
• Ongoing supply chain issues, particularly related to fiberglass materials driven by AI demand, continue to pose risks to production efficiency and cost management.
• The geopolitical situation and its impact on labor availability and logistics remain a significant concern.

5. Notable Q&A Insights:

• Management indicated uncertainty in forecasting due to external factors such as conflict duration and currency fluctuations.
• There is a focus on securing orders from U.S. markets, with competition noted against major players like TTM.
• The company is facing challenges in passing increased costs onto customers, requiring extensive communication and justification for price adjustments.
• Future sourcing issues may persist if the geopolitical situation worsens, affecting material availability and pricing strategies.

In summary, while Eltek faces significant short-term challenges, particularly in logistics and foreign exchange, the company is positioned for potential recovery and growth, supported by a robust backlog and strategic investments.