Eltek (ELTK) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue declined to $10.4 million from $12.8 million in Q1 2025, with a net loss of $2.9 million or $0.42 per share, driven by backlog conversion timing, logistics constraints, and FX impacts rather than demand shifts.

• Product mix was affected by prioritizing certain deliveries and shipping lower-priced backlog, reducing average selling price and profitability.

• Backlog more than doubled compared to the start of the year, enhancing revenue visibility for 2026 and 2027, though late phasing and logistical constraints delayed revenue recognition.

• Ongoing supply chain and logistics disruptions, including air and sea freight constraints, material shortages, and regional security issues, impacted production efficiency.

• Results were impacted by sharp USD depreciation against the Israeli shekel, increasing NIS-based expenses by $1.3 million.

Financial highlights

• Q1 2026 revenue was $10.4 million, down from $12.8 million in Q1 2025.

• Gross loss of $1.9 million, compared to $2.2 million gross profit (17% margin) in Q1 2025.

• Operating loss of $3.3 million, versus $0.7 million operating profit last year.

• Net loss of $2.9 million ($0.42/share), compared to net income of $1 million ($0.15/share) in Q1 2025.

• EBITDA loss of $2.7 million, versus EBITDA of $1.2 million (9% margin) in prior year period.

• Cash and equivalents at $11.1 million with no debt as of March 31, 2026; net cash used in operating activities was $0.4 million.

Outlook and guidance

• Management expects margin normalization as supply chain and FX headwinds ease, with gross margin targets of 26%-28% at $60-$65 million revenue, assuming stable conditions.

• Management expects to convert the increased order backlog into revenue in coming periods and anticipates gradual improvement as logistical challenges are addressed.

• Strategic focus remains on securing new orders at higher prices reflecting increased costs and FX impacts.

• Installation and qualification of new production line delayed by regional conflict but expected to complete in coming weeks, with gradual ramp-up planned.

• Ongoing investments in capacity expansion and operational improvements to support long-term growth.