Eltek NASDAQ: ELTK reported a sharp year-over-year decline in first-quarter 2026 results, with management attributing the weaker performance to backlog timing, logistics constraints, raw-material shortages and foreign exchange pressure rather than a change in underlying demand.
Chief Executive Officer Eli Yaffe said revenue for the quarter came in below the company’s expectations, primarily because a larger share of shipments came from older orders booked at lower average pricing levels. He said higher-value programs and more advanced products added recently to the backlog are scheduled for delivery later in 2026 and into 2027.
“The product mix in the quarter was primarily a function of a backlog release timing, rather than any change in the price discipline, customer's quality, or market positioning,” Yaffe said.
Revenue Falls as Gross Profit Swings to Loss
Chief Financial Officer Ron Freund said revenue for the first quarter totaled $10.4 million, down from $12.8 million in the first quarter of 2025. The company posted a gross loss of $1.9 million, compared with gross profit of $2.2 million in the prior-year period.
Operating loss was $3.3 million, compared with operating profit of $0.7 million a year earlier. Eltek recorded financial expenses of $0.1 million, versus financial income of $0.5 million in the first quarter of 2025, which Freund said was primarily due to the devaluation of the U.S. dollar against the Israeli shekel, net of interest earned on interest-bearing accounts.
Net loss for the quarter was $2.9 million, or $0.42 per share, compared with net income of $1 million, or $0.15 per share, in the year-ago quarter. EBITDA loss was $2.7 million, compared with EBITDA of $1.2 million in the first quarter of 2025.
Freund said cash used in operating activities totaled $0.4 million during the quarter. As of March 31, 2026, Eltek had $11.1 million in cash and cash equivalents and no outstanding debt.
Backlog More Than Doubles
Despite the weak quarter, Yaffe said underlying demand remains strong. He said Eltek’s backlog more than doubled compared with the beginning of the year, including two orders the company had previously announced, with deliveries expected across 2026 and 2027.
Yaffe said the backlog growth improves revenue visibility and provides a foundation for future growth, though he cautioned that revenue recognition may continue to fluctuate from quarter to quarter.
During the question-and-answer portion of the call, an analyst asked about the outlook for margin normalization and the company’s ability to raise prices in a strong printed circuit board demand environment. Yaffe said Eltek does not provide forecasts and noted that the timing of a return to normal operations depends on several external factors, including the length of the conflict with Iran, labor market conditions and movements in the shekel against the dollar.
Freund reiterated that, assuming completion of the company’s investment plan and no additional adverse changes in current conditions, Eltek continues to expect that revenue could rise to roughly $60 million to $65 million, with gross profit in the 26% to 28% range, consistent with prior comments.
Logistics, Materials and Currency Weigh on Operations
Yaffe said the company continued to operate in a difficult supply chain and logistics environment during the quarter. He cited constraints in sourcing, transportation and material flow, which affected Eltek’s ability to manufacture at sufficient volume to absorb fixed operating costs efficiently.
He said air freight capacity from the Far East, Europe and the United States remained constrained, while some chemicals that previously could be transported by air can no longer be shipped that way. Extended sea freight transit times and a global shortage of prepreg material also lengthened supply cycles.
Yaffe said the prepreg shortage is being driven in part by strong demand for fiberglass materials from the rapidly expanding artificial intelligence hardware infrastructure market. In response, Eltek has updated its pricing structure and is selling relevant fiberglass products at adjusted price levels and under allocation quotas, with the goal of securing supply continuity and protecting operational efficiency.
In response to an investor question, Yaffe said the sourcing issue had two components: the global shortage of fiberglass and the challenge of bringing raw materials with limited shelf life to Israel under cooling conditions during the conflict. He said the company chose to pay higher “AI prices” for fiberglass to avoid remaining under supplier quotas, though passing those higher costs on to customers has been difficult.
Yaffe also said the continued weakness of the U.S. dollar against the Israeli shekel had a significant negative impact on operating results, increasing operating loss by approximately $1.3 million compared with the corresponding quarter last year.
Production Line Installation Resumes After Conflict-Related Delay
Yaffe said Eltek continues to advance its investment plan. The first new production line has been delivered and partially installed, but the installation was delayed after the supplier’s installation team temporarily left Israel because of the war with Iran.
He said the supplier’s team returned to Israel the day before the earnings call and installation work had resumed. Eltek expects the installation process to be completed over the coming weeks, followed by a qualification process for commercial production.
Yaffe said the qualification process is expected to take several months, after which the line will be gradually ramped into commercial production. In the Q&A session, he said the prior expectation that the line would be standing and running by July 1 needs to be updated because the supplier team had been away for roughly six or seven weeks.
The company is also continuing efforts to bring foreign workers into its operations, which Yaffe said should help address challenges in Israel’s local labor market and support planned production growth and operational efficiency.
In closing remarks, Yaffe said Eltek remains confident in the business despite near-term challenges related to timing, logistics and foreign exchange. He said the company continues to invest in capacity expansion and supply chain stability, and believes it is positioned to translate demand into improved financial performance as external constraints ease.
About Eltek NASDAQ: ELTK
Eltek Ltd. 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.
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