Eltek Ltd. reported a net loss of $2.7 million for the second quarter of 2026, a sharp reversal from a $400,000 profit in the same period a year earlier, as revenue declined 8% to $11.5 million. The company’s earnings per share dropped to a loss of $0.41 from a profit of $0.05 in Q2 2025.
Gross margin deterioration persisted, with the company posting a gross loss of $1 million compared with a $3 million gross profit in Q2 2025. However, gross losses improved sequentially from a $1.8 million deficit in Q1 2026, driven by higher revenue and a modest increase in average selling prices for printed circuit boards (PCBs). Operating losses widened to $2.5 million from a $1.5 million profit a year earlier, while EBITDA swung to a loss of $1.9 million from a $1.9 million profit in the prior-year quarter.
Cash flow from operations generated $700,000 during the quarter, leaving cash and cash equivalents at $11.5 million as of June 30, 2026. The company maintained a zero-debt balance sheet and reported a current ratio of 2.84.
Management attributed the challenges to operational constraints rather than demand weakness. Eli Yaffe, CEO, noted that the company’s primary hurdle was converting backlog into production and shipments at desired levels. "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," Yaffe said during the earnings call.
Pricing power remained constrained by competitive pressures, according to Ron Freund, CFO, who emphasized the difficulty of raising prices despite strong demand. "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," Freund stated.
Operational milestones included the installation of the first PCB plating line, which is undergoing acceptance testing with a demonstration run scheduled for the week of the call. Customer qualifications are expected to begin in Q3 2026. A second plating line is under construction in Europe and is slated to arrive in Israel by year-end, supported by contractual penalties for delayed installation. The company is also advancing the implementation of a new ERP system and has integrated approximately 15 foreign employees during the quarter, with plans to add another 15.
Backlog composition remained uneven, with roughly one-third tied to 2025 exchange rates and long-term purchase orders, another third at exchange rates of approximately 3.2, and the final third at current rates near 3—described as the most profitable segment.
Shares of Eltek fell 2.43% in premarket trading to $8.83, extending declines from the prior close of $9.05. The stock remains 23.8% below its 52-week high of $11.59 and 21.0% above its low of $7.30.
