Eltek (NASDAQ:ELTK) reported a wider loss for the second quarter of 2026 as production inefficiencies, lower revenue volume and currency pressures weighed on profitability, even as management said demand and backlog remained strong.
Revenue totaled $11.5 million for the quarter, down from $12.5 million in the second quarter of 2025. First-half revenue was approximately $22 million. Chief Executive Officer Eli Yaffe said the company’s central challenge was not market demand, but its ability to convert backlog into production and shipments at targeted levels.
Loss Narrows Sequentially at Gross-Profit Level
Eltek posted a gross loss of $1 million in the second quarter, compared with gross profit of $3 million a year earlier. However, the gross loss improved from a $1.8 million loss in the first quarter of 2026, which management attributed to higher sequential revenue and an improvement in average selling prices for printed circuit boards.
The company said its pricing adjustments are intended to address a higher-cost environment that includes a weaker U.S. dollar, raw-material costs, production overhead and depreciation. Yaffe said the impact of revised pricing should become more visible as newer orders booked under the updated structure account for a larger share of sales.
Operating loss was $2.5 million, compared with operating income of $1.5 million in the prior-year quarter. Net loss was $2.7 million, or $0.41 per share, versus net income of $400,000, or $0.05 per share, in the second quarter of 2025. EBITDA loss was $1.9 million, compared with EBITDA of $1.9 million a year earlier.
Chief Financial Officer Ron Freund said the year-over-year deterioration in gross profitability reflected “lower revenue volume, production inefficiencies, and depreciation of the U.S. dollar against the Israeli shekel.” Financial expenses totaled $700,000, down from $1 million in the prior-year period, primarily reflecting the dollar’s depreciation against the shekel, partly offset by interest income on cash balances.
Backlog Mix and Pricing Remain Key Factors
During the question-and-answer session, management emphasized that Eltek operates in a competitive market and cannot substantially raise prices without regard to competitors. Freund said the company’s near-term mission is to convert its backlog into sales and lift revenue above the levels recorded during the first half of the year.
Yaffe said approximately one-third of the company’s backlog is tied to long-term purchase orders using historical exchange rates, and that this portion would remain a drag on profitability until completed. Another third of backlog is associated with exchange rates around 3.2, while the final third is priced closer to the current exchange rate of about 3.0. Yaffe characterized that final portion as the most profitable backlog.
Management did not provide a financial forecast. Freund said the company had seen an increase in average selling prices during the second quarter and hoped to see additional improvement.
Capacity Expansion and Supply Constraints
Eltek is working to increase manufacturing capacity through new plating lines, workforce additions and the implementation of a new enterprise resource planning system. The first new PCB plating line has been installed and is undergoing acceptance testing and initial trial production for customer qualification. Management expects to begin the formal customer qualification process in the third quarter, with full commercial production expected to take several months.
A second plating line is being built in Europe and is scheduled to arrive in Israel and complete installation by the end of 2026. Yaffe said the supplier is subject to contractual penalties related to the delayed installation.
The company also integrated about 15 foreign employees during the quarter and is working to bring in approximately 15 additional employees. Yaffe said the additions are intended to improve production capacity and operating efficiency.
Raw-material availability remains difficult, particularly for fiberglass-based materials that are also in demand from the artificial intelligence infrastructure industry. Eltek said it has secured enough materials to maintain operations and serve customers, but that doing so has required closer coordination with suppliers amid price increases and allocation quotas.
Beyond defense-related business, Eltek said it is targeting growth in medical and high-end industrial markets. The company said it obtained certifications in the medical sector that could position it for future demand, while high-end industrial demand continues to be strong.
Liquidity Position
Despite the quarterly net loss, Eltek generated $700,000 in cash from operating activities. As of June 30, the company had $11.5 million in cash and cash equivalents and no outstanding debt.
Yaffe said management believes that higher production volumes, improved efficiency, better utilization of capacity, new production-line ramp-ups and stronger material availability can support a return toward historically achieved profitability levels over time.
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.
