Eltek Ltd.

Welcome to the LTEC LTD 2026 First 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 risk and uncertainties outlined here and discussed more fully in LTCH's public disclosure filing. These forward-looking statements are projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. We'll also be referring to non-GAAP measures. LTCH 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.

Thank you. Good morning. Thank you for joining us for our 2026 first quarter running call. With me is Ron Freund, our Chief Financial Officer. We will begin by providing you with an overview of our business and a summary of the principal factors that affected our results during Q1, 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 previously indicated, revenue in the quarter were below our expectations. This was primarily driven by the mix of timing of backlog conversion, ongoing logistic constraints, and foreign exchange impacts, rather than any change in the underlying demand. The product mix in the quarter was primarily a function of the backlog release timing, rather than any change in the price discipline. customers' quality or market positioning. During the quarter, a larger portion of our shipments originated from the orders received in a prior period at lower-average pricing levels, while a significant portion of the higher-value programs and advanced products added more recently to the backlog are scheduled for delivery later in the year and into the year 2027. In addition, Due to the supply change and material allocation constraints, we prioritize certain deliveries in order to maintain customers' commitment and production continuity, which also impacted our quarterly mix. As a result, the average selling price of products delivered during the quarter declined negatively impacts profitability. We believe that the current quarter does not reflect the normalized margin profile, of the business is going to be. Importantly, underlying management. During the quarter, our backlog more than doubled compared to the beginning of the year. This increase includes the two orders we publicly announced, with deliveries expected across 2026 and the year 2027. This substantial level of growth enhances our revenue visibility and provides a strong foundation for future growth.

Even so, the timing of revenue accumulation may continue to vary between quarters.