Elmor Electric: How Backlog Turns Into Credit, Guarantees, and Working Capital
This follow-up isolates the funding chain behind Elmor's 2025 growth. Customers did not pre-fund the activity ramp, suppliers covered only part of it, and banks closed the gap through credit lines and guarantees, which makes 2026 less a volume story than a cash-conversion and balance-sheet story.
The 2025 Funding Chain
The main article already established the core tension: Elmor's growth moved faster than cash. This continuation isolates the funding chain itself. Who actually carried the bridge between execution in the field and cash in the bank. In 2025 the answer was fairly sharp. Customers did not finance the ramp, shareholders certainly did not, and suppliers provided only a partial layer. Banks closed the gap, through straight credit and through a guarantee machine that grows alongside projects.
The cleanest way to read that is through the balance sheet rather than the earnings line. Trade receivables plus contract assets rose to NIS 351.6 million from NIS 308.2 million. At the same time, customer advances fell to NIS 11.4 million from NIS 12.1 million. On the other side, suppliers plus accrued contract payables rose to NIS 266.0 million from NIS 248.1 million. That means the operating gap between cash effectively parked with customers and cash pushed back to suppliers widened to NIS 74.3 million, up from NIS 48.0 million a year earlier.
| Item | 2024 | 2025 | Change | What it means |
|---|---|---|---|---|
| Receivables plus contract assets | 308.2 | 351.6 | +43.5 | More work was recognized or executed before turning into cash |
| Customer advances | 12.1 | 11.4 | -0.7 | Customers did not increase their share of funding |
| Suppliers plus accrued contract payables | 248.1 | 266.0 | +17.9 | Suppliers provided only partial financing |
| Net operating gap | 48.0 | 74.3 | +26.3 | The balance-sheet burden got heavier |
This is not customer-funded growth. It is growth that consumes more working capital at every intermediate step.
Customers Still Do Not Close the Gap
The cash-flow statement makes the point more explicit. The change in receivables and contract assets absorbed about NIS 43.7 million of operating cash in 2025. The change in other receivables absorbed another NIS 4.1 million. Against that, the company got NIS 17.9 million of support from suppliers and accrued payables, and NIS 5.6 million from inventory release. Customer advances actually declined by NIS 0.7 million. The practical takeaway is simple: cash collection still lags the pace at which the activity base consumes resources.
Still, the type of pressure matters. This does not yet look like a broad collapse in collections quality. The impairment allowance edged down to NIS 5.865 million from NIS 5.898 million. Most open receivables, NIS 99.4 million, were not overdue at all. The core issue sits more in billing and collection timing than in an obvious blow-up in credit quality.
But there is still a yellow flag. Open receivables overdue by up to 120 days almost doubled to NIS 24.0 million from NIS 11.1 million. That is not a credit crisis, but it is a real timing drag. Fast growth is still pulling more cash into the customer line even without a dramatic jump in provisions.
The company says average customer credit terms are 60 to 120 days, while average supplier credit terms are 90 to 120 days. On paper that sounds almost balanced. In practice the balance sheet shows that receivables and contract assets grew faster than the supplier-funded layer. The problem is therefore not unusually aggressive terms by sector standards. The problem is that the growth profile sits on the long side of the cycle.
Banks Closed the Gap, Not Shareholders
This is where the story becomes more direct. Short-term and long-term bank credit rose to NIS 92.8 million from NIS 40.6 million. The cash-flow statement shows NIS 47.4 million of new short-term borrowing and NIS 18.6 million of new long-term borrowing, against NIS 13.8 million of long-term repayments. That is not working-capital self-help. That is bank funding.
It is important to separate two cash readings. On a normalized basis, the business still generated NIS 30.6 million of operating cash, so this is not a dried-up operating platform. On an all-in basis, the picture is tighter: the operating cash flow also had to carry NIS 17.2 million of dividends paid, NIS 6.2 million of lease-principal repayments, NIS 3.2 million of property and right-of-use asset purchases, and about NIS 28.7 million net of investments, loans to investees, and investment property under construction after repayments from investees. At that level, the year relied on external funding.
Shareholders did not fund 2025. If anything, cash moved the other way. In addition to the NIS 17.2 million paid during the year, the board approved another dividend of about NIS 8.3 million on March 17, 2026 that was not yet paid at the reporting date.
| Funding channel | What happened in 2025 | The right read |
|---|---|---|
| Customers | Advances fell to NIS 11.4 million while receivables and contract assets rose by NIS 43.5 million | Customers received credit rather than providing it |
| Suppliers | Suppliers and accrued contract payables rose by NIS 17.9 million | Partial funding, not enough to close the gap |
| Banks | Bank credit rose by NIS 52.2 million | The main financier of the bridge period |
| Shareholders | No equity raise, but NIS 17.2 million of dividends paid and another NIS 8.3 million declared after year-end | Not growth capital, but cash extraction |
Guarantees Are the Next Bottleneck
Anyone looking only at debt is missing the deeper point. In this kind of projects business, backlog does not turn first into profit. It turns first into guarantees, pledged collateral, and bank-line usage. By year-end 2025 the group had about NIS 198 million of bank guarantees outstanding for tenders, performance, warranty, and customer advances. That is already more than twice the year-end bank-debt balance.
On one hand, not every shekel of guarantees traps a full shekel of cash. Restricted deposits fell to NIS 13.7 million from NIS 23.2 million, and the directors' report attributes part of the release to a lower deposit ratio required against bank guarantees. On the other hand, the existence of a guarantee machine at this scale means the next growth leg is likely to hit bank support and balance-sheet capacity before it lifts operating cash flow.
That point becomes sharper in the late-2025 and early-2026 events. In November 2025 the group approved a dedicated renewable-project framework with an NIS 83 million guarantee line and NIS 75 million of project credit, backed by a parent guarantee up to NIS 165 million. In February 2026 Elmor signed about NIS 135 million of high-voltage substation agreements for storage projects, with standard payment terms, performance and warranty guarantees, and delay penalties. In other words, the next wave of growth already arrives with an explicit demand for more guarantee capacity and bridge financing before revenue becomes cash.
The good news is that this is not yet a near-term covenant problem. The company states that it complies with all financial covenants. Tangible equity stood at about 47.5% of the balance sheet versus a 20% requirement, and tangible equity was about NIS 236 million versus a NIS 30 million floor. In addition, the secured borrowing of consolidated entities and equity-accounted investees is described as lacking cross-default. So the immediate question is not whether the bank shuts the tap tomorrow morning. The immediate question is whether 2026 can turn these credit lines and guarantees into billing and collection faster than 2025 did.
Conclusion
If the continuation brief is answered as directly as possible, the 2025 picture is clear: customers did not fund the growth, suppliers funded part of it, and banks funded the core bridge period. Shareholders did not provide a new equity cushion. They received cash through dividends.
That matters because in electrical and infrastructure execution businesses, growth quality is not defined only by revenue or gross profit. It is defined by who finances the road between execution and collection. As long as receivables and contract assets keep growing faster than customer advances and supplier funding, and as long as the next backlog wave arrives wrapped in guarantees and credit lines before it arrives as cash collections, Elmor remains a strong-execution story with a balance sheet doing a lot of the work.
The next filings need to answer three concrete questions: whether the operating gap stops widening, whether the November 2025 framework turns into profitable progress rather than just more guarantees, and whether the 2026 projects shorten the path from notice to proceed to cash. Until that happens, backlog still supports the business, but it continues to demand more bank support than it generates on its own.
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