Eltek (ELTK) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $10.5 million, down from $11 million in Q2 2023, with net profit at $0.8 million ($0.11/share) versus $1.3 million ($0.22/share) last year.

• Decrease attributed to a shift in customer demand toward medium technology PCBs and timing shifts by key customers, resulting in lower prices, margins, and delayed high-margin orders to late Q2 and Q3.

• Manpower shortages and fewer working days (59 vs. 62 in Q2 2023) limited production and delivery of high-margin orders.

• Backlog increased by 30% since the start of 2024, driven by strong defense sector demand, reshoring trends, and supporting expected growth in H2.

Financial highlights

• Q2 2024 gross profit was $1.6 million (16% margin), down from $3 million (27%) in Q2 2023.

• Operating profit was $0.4 million, down from $1.4 million year-over-year.

• EBITDA was $0.8 million (7.6% margin), down from $1.7 million (15.3%) in Q2 2023.

• Cash and equivalents totaled $18.3 million as of June 30, 2024, including $8.9 million in cash and $9.4 million in short-term deposits, with no debt.

• Positive operating cash flow of $1.8 million in Q2 2024; net cash from operations in H1 2024 was $2.9 million.

Outlook and guidance

• Expectation to return to previous profitability and gross margin levels (27%) in Q3 and Q4 2024 as product mix normalizes.

• Increased backlog and anticipated higher-margin orders in H2 2024 support revenue and profit growth.

• Plan to add 50 manufacturing employees and extend to a third shift to address capacity constraints.