Eltek Q2 2026 Earnings Report

Eltek EPS Results

• Actual EPS: -$0.41
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Eltek Revenue Results

• Actual Revenue: $11.53 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Eltek Announcement Details

• Quarter: Q2 2026
• Date: 8/18/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 18, 2026
• Conference Call Time: 8:30AM ET

Eltek (NASDAQ:ELTK) manufactures, markets, and sells printed circuit boards (PCBs) in Israel, Europe, North America, India, the Netherlands, and internationally. It offers a range of custom designed PCBs, including rigid, double-sided and multi-layer PCBs, and flexible circuitry boards. The company also provides high density interconnect, flex-rigid, and multi-layered boards. It primarily serves medical technology, defense and aerospace, industrial, telecom, and networking equipment industries, as well as contract electronic manufacturers. The company markets and sells its products primarily through direct sales personnel, sales representatives, and PCB trading and manufacturing companies. Eltek Ltd. was incorporated in 1970 and is headquartered in Petah Tikva, Israel. Eltek Ltd. operates as a subsidiary of Nistec Golan Ltd.

Eltek Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Q2 revenue fell to $11.5 million from $12.5 million a year earlier, while the company posted a $2.7 million net loss versus $0.4 million of net income in the prior-year quarter.
• Positive Sentiment: Management said demand remains strong, with a high backlog, and emphasized that the primary constraint is converting orders into production and shipments rather than a lack of customer demand.
• Neutral Sentiment: Gross loss improved to $1.0 million from $1.8 million in Q1, supported by higher revenue and improved average selling prices; however, roughly one-third of the backlog is tied to historical exchange rates and is expected to continue weighing on profitability.
• Positive Sentiment: Eltek installed its first new plating line and began acceptance testing, expects customer qualification to start in Q3, and plans to install a second line by year-end while adding approximately 30 foreign employees to expand production capacity.
• Negative Sentiment: Raw-material availability and pricing remain challenging, particularly for fiberglass-based materials, while production inefficiencies, currency effects, and underutilization of fixed costs continue to pressure margins.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Eltek Ltd. 2026 second quarter 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. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded. Before I turn the call over to Mr. Eli Yaffe, Chief Executive Officer, and Ron Freund, Chief Financial Officer, I'd like to remind you that they will be referring to forward-looking information in today's presentation and in the Q&A. By its nature, this information contains forecasts, assumptions, and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in Eltek's public disclosure filings. These forward-looking statements are projections and reflect the current beliefs and expectation of the company.

[Operator]

Actual events or results may differ materially. We'll also be referring to non-GAAP measures. 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.

[Eli Yaffe, CEO at Eltek]

Good morning, and thank you for joining us for our 2026 second quarter earning call. With me is Ron Freund, 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 during Q2 2026. After our prepared remarks, we will be happy to answer any of your questions. By now, everyone should have access to our press release, which was released earlier today. The release will be also available on our website. As we stated in our press release, our second quarter results continue to reflect a loss as we remain in important transition period, focused on stabilization and manufacturing operation, and building the human and the operational infrastructure required to support our next phase of growth. I would like to provide some additional context on this transition and the progress we are making.

[Eli Yaffe, CEO at Eltek]

The market environment remains strong, with continued high demand for our products and strong backlog. The challenge we are facing is not demand, but our ability to consistently convert this demand and our backlog into production and shipments at the level we would like. Second quarter revenue were $11.5 million, bringing revenue for the first half of 2026 to approximately $22 million. We recognize that this level of revenue is below the level that the current demand environment would support. Given our cost structure, the company required a significantly higher level of revenue than we achieved during the first half of the year, and in order to fully leverage our fixed operation expenses and reach our full profitability potential. At the same time, we're beginning to see some kind of development in our gross margin performance.

[Eli Yaffe, CEO at Eltek]

Gross loss in the second quarter was $1 million, compared to $1.8 million loss in the first quarter. This improvement was driven by the higher level of revenue, as well as improvement in the average selling price of the PCBs. The improvement in the average selling price reflects the gradual adjustment of our pricing to higher cost environment. This capture both the impact of the weaker US dollar and the significant pressure we have seen across raw materials, production overhead, and depreciation. As a newer order booked under our updated pricing structure moves through production and become a larger part of our sales mix, we expect this pricing adjustment to increase ability, which reflect our results. At the same time, the supply environment remained challenging.

[Eli Yaffe, CEO at Eltek]

We continue to experience limitation in our availability to certain raw materials, particularly fiber glass-based material, which also in a strong demand from the rapidly growth AI infrastructure industry. In the same cases, we are facing significantly raw material price increase, while other cases, supply is subject to allocation quotas. We have been able to secure the material required to continue operation and serving our customers. But doing so has become significantly more difficult and required much closer coordination with our suppliers. Beyond our defense portfolio, we remain firmly focused on driving growth in our medical and high-end industrial market. In the medical sector, we have secured key certification that position us well to capture future demand. Meanwhile, our high-end industrial business continue to perform strongly, backed with a robust demand for our offering.

[Eli Yaffe, CEO at Eltek]

Together, these strategic initiatives will help balance our market mix and diversify our revenue stream going forward. We are making steady progress in strengthening our operational infrastructure. We are well involved in the implementation of our new ERP system, which we believe will provide a stronger foundation for managing and scaling our operations. We have also completed the installation of our newly arrived PCB plating line and have started acceptance testing in parallel with the initial trial production for customers' qualifications. We expect to kick off the official qualification process during the third quarter. As we have previously discussed, this process is expected to take several months before the line reaches full commercial production. Additionally, our second plating line is currently scheduled by our supplier to arrive to Israel by the end of this year, backed with contractual penalties for this delayed installation.

[Eli Yaffe, CEO at Eltek]

We are also continuing to strengthen our workforce. During the quarter, we successfully integrated approximately 15 foreign employees into our operation, and we are continuing the process of bringing in an additional approximately 15 foreign employees. Strengthening workforce is important component in our ability to improve production capacity and operational efficiency and support the growth of the business. Taken together, these initiatives are limited aims by strengthening the foundation of our manufacturing operation and providing us with the capacity, workforce, and infrastructure required to support higher production levels. We remain encouraged by the strong demand environment and the high level of our backlog. Our focus now is on completing the transition and improving our ability to convert that demand into a higher level of production and revenue.

[Eli Yaffe, CEO at Eltek]

As we achieve greater operational stability and higher revenue level, we believe we will be able to leverage our existing cost structure more efficiently. Together with the improvement we are seeing in the average selling price and the continued adjustment of our pricing to reflect the current cost environment, we believe this will provide path toward a return to profitability level the company achieved historically. We are making steady progress across these areas and remain confident that the steps we are taking are building a stronger foundation for improved operational and financial performance in the period ahead. I will now turn the call over to Ron Freund, our CFO, to discuss our financial results.

[Ron Freund, CFO at Eltek]

Thank you, Eli. I would now like to review the financial results for the second quarter of 2026. During this call, I will also refer to certain non-GAAP financial measures. Eltek uses EBITDA as a non-GAAP measure of financial performance. Please refer to our earnings release for the definition of EBITDA and the reasons for its use. I will now review the key financial highlights for the second quarter. All figures are presented in USD. Revenues for the second quarter of 2026 were $11.5 million, compared to $12.5 million in the second quarter of 2025. Gross loss was $1 million, compared to gross profit of $3 million in the prior year period. The year-over-year decline in gross profitability was driven by lower revenue volume, production inefficiencies, and depreciation of the US dollar against the Israeli shekel.

[Ron Freund, CFO at Eltek]

Operating loss was $2.5 million, compared to operating profit of $1.5 million in the second quarter of 2025. Financial expenses were $0.7 million compared to $1 million in the prior year period. The financial expense in the current quarter primarily reflected the depreciation of the US dollar against the Israeli shekel, partly offset by interest income earned on our cash balances. Net loss for the quarter was $2.7 million, or $0.41 per share, compared to net income of $0.4 million or $0.05 per share in the second quarter of 2025. EBITDA loss was $1.9 million compared to EBITDA of $1.9 million in the prior year period. Despite the net loss, operating activities generated $0.7 million of cash during the quarter. As of June 30, 2026, we had $11.5 million in cash and cash equivalents and no outstanding debt, providing us with strong and solid balance sheet.

[Ron Freund, CFO at Eltek]

We are now ready to answer your questions.

[Operator]

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly leave the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by. The first question is from Mark Shergatzky of Kaplan Capital. Please go ahead.

[Mark Shergatzky, Analyst at Kaplan Capital]

Hello, guys. Nice to speak to you again. I have two questions. The first one, when will we begin to see any improvement, especially in the gross margin, because we invested a lot of money in the production lines, and for now, we are not seeing any improvement, even deterioration in the operating results. The next question, if you already finished to install all the coating lines, and can you give us some update on this? What you see on the demand side?

[Eli Yaffe, CEO at Eltek]

Hi, Mark, good morning. Regarding your first question, we expect the improvement to be gradual as several key factors come together. This includes increased production volume, improved production efficiency, better utilization of our existing capacity, the ramp-up of our new production lines, as I will explain later in your second question, and improved availability of critical raw materials. At the same time, we are working to secure new orders, this pricing level that better reflects the current cost environment, and the value of our products. While the timing of the improvement may vary from quarter to quarter, we believe that as these factors that stabilize our investment become fully operational, we will be in a stronger position to return to a more normalized level of revenue and profitability. Regarding your question number 2, as I mentioned in detail during the discussion, the first plating line is already fully installed.

[Eli Yaffe, CEO at Eltek]

Acceptance test is already start, and by this coming Thursday, we are going to make the first plating just for demonstration. The second step is to call customers and certify the lines by customer, by customer. The second plating line is right now built abroad in Europe and is going to be shipped to Israel and installed and finish the installation before the year-end. The process of the second line is going to continue as well. In question number 2, you also ask about the demand. As I mentioned before, the demand become and continue strong demand.

[Mark Shergatzky, Analyst at Kaplan Capital]

I don't understand, Eli, if the demand is so strong, and we hear about a huge demand also in U.S.A. and in Europe, especially PCB for data center and specialized PCB for defense. Why the gross margin is still negative? Why you are not ready to fight to be at normal gross price? Because I don't think the customer has any alternatives.

[Eli Yaffe, CEO at Eltek]

I think that I answer it. The issue is the operational side, not the demand side.

[Ron Freund, CFO at Eltek]

Mark, you cannot increase prices. We are working in a competitive environment. Even if the demand is so strong, there is still competition against local and foreign competitors. You can't just double your price and remain at the position that you get purchase orders. We are working in a competitive environment, and we now need to deliver and to convert the current backlog that we have, which is I think the highest since I arrived to the company. Our mission is to convert it to sales and to be in quarters with increased revenues and not at the level that we saw in the first half of 2026.

[Mark Shergatzky, Analyst at Kaplan Capital]

Okay, amazing. Ronny, can you speak a little bit about the backlog pricing? Because I assume that last two quarters you worked on backlog that you built 2025 when the USD was much higher. Now when you go to Q3, you are working to begin to work on orders you have got from Q1 and maybe end of Q1 when USD was much lower. So if you will see it in the next quarter revenue and gross profit?

[Eli Yaffe, CEO at Eltek]

It's now Eli. I have to say that approximately one-third of our backlog is unrelated to the current exchange rate. It's historic exchange rate, and this is long-term POs that we got for something, supply of 2 years, something like that. Until it's going to be ended, this one-third is going to be a heavy weight on our profitability. The second third is in the range of exchange rates, approximately 3.2, and the last third of our backlog is in the current exchange rate of today of around 3. This is the most profitable backlog is the last third, as I mentioned.

[Mark Shergatzky, Analyst at Kaplan Capital]

Okay. We expect to see improvement in the current quarter, if I understand correctly.

[Ron Freund, CFO at Eltek]

We don't give any forecast, Mark. As we said earlier this call, we saw improvement in our average selling price during the second quarter of 2026, and we hope that we will see additional increase in the mid, say, average prices.

[Mark Shergatzky, Analyst at Kaplan Capital]

Okay. I don't have additional questions.

[Ron Freund, CFO at Eltek]

Great. Thank you, Mark.

[Eli Yaffe, CEO at Eltek]

Thank you.

[Operator]

If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by on the phone for more questions. 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 the participant that a replay of this call will be available tomorrow on our website.

[Eli Yaffe, CEO at Eltek]

In summary, we remain encouraged by the underlying strengths of our business and the opportunities ahead. Our strong backlog continue to provide solid visibility, reflecting sustained demand for our products and solutions. At the same time, we are making meaningful progress in expanding our capacity and strengthening the operational foundation needed to support the growth. I would like to thank our employees for their continued dedication, professional liability, and reliance, and our investors for their ongoing confidence and support. Thank you all for joining us on today's call. Have a good day.

[Operator]

Thank you. This concludes the Eltek Ltd. 2026 second quarter financial results conference call. Thank you for your participation. You may go ahead and disconnect.

Participants

Executives

• Eli Yaffe, CEO
• Ron Freund, CFO

Analysts

• Mark Shergatzky, Analyst at Kaplan Capital