Inter Industries Follow-Up: Can The New Project Backlog Actually Earn Money
Inter’s backlog got a real boost from roughly NIS 72 million and NIS 83 million project wins, but the more important datapoint is that cumulative gross margin on the large projects completed in 2025 was only 3%. As long as most unrecognized revenue still sits in the project bucket that closed 2025 at 1.46%, a bigger backlog is not yet the same thing as proven project profitability.
Why The Project Backlog Needs Its Own Read
The main article argued that services are now carrying Inter, while the projects segment still has not proved that it can turn work volume into clean earnings and cash. This follow-up isolates one question only: can the new wins and the current backlog actually earn money, or do they mainly extend execution time and risk.
The opening number is not backlog size. It is project economics. In the disclosure on large projects completed in 2025, cumulative estimated revenue stood at NIS 640.8 million and cumulative gross margin stood at just 3%. That was better than 2% in 2024, but still well below the 5% shown on those projects in 2023. Inter is not short of work. The problem is that its largest work is still leaving too little room for overruns.
The internal split is even sharper. In integrated projects, cumulative gross margin was 6% in 2025. In planning and installation of electrical systems for industry and energy infrastructure, the bucket that usually sits at the center of the story when investors think about substations, energy jobs, and large infrastructure execution, cumulative gross margin was only 1.46%. That is not a cosmetic difference between project groups. It is the difference between two very different economic profiles inside the same backlog.
Where The Economics Still Break Down
At first glance, 2025 can look like a year in which the project problem eased. Segment loss narrowed, backlog stayed large, and two material contracts were signed in February. But the cumulative disclosure on the large projects completed in 2025 shows that this is still not a true margin reset.
In integrated projects, cumulative estimated revenue on projects completed in 2025 stood at NIS 225.4 million, with a 6% cumulative gross margin. That is workable, even if it remains below the 9.5% recorded on the same project group in 2023. The real pressure point sits in electrical systems and energy infrastructure. There, cumulative estimated revenue on the projects completed in 2025 stood at NIS 385.4 million, but cumulative gross margin was only 1.46%. In 2024 that same group had already been close to breakeven, with a small cumulative gross loss on NIS 358.5 million of cumulative estimated revenue. In other words, 2025 does not prove a full reset. It proves only a partial repair, and in the largest project bucket the margin is still barely there.
That is the core issue. If Inter had entered 2025 with a large backlog after closing its electricity and energy infrastructure jobs at a solid mid single-digit margin, scale would be a constructive story. When the margin is 1.46%, a large backlog means larger responsibility, more subcontractors, more guarantees, and more months in which even a modest delay can erase what is left of profitability.
The Unrecognized Backlog Still Sits Mostly In The Weaker Bucket
This is where the read moves from history to forward economics. In the cumulative disclosure on material project groups for the reporting year, total revenue expected but not yet recognized at the end of 2025 stood at NIS 289.7 million. Of that, NIS 102.8 million sat in integrated projects, while NIS 186.9 million sat in electrical systems and energy infrastructure. In other words, most of the work still left to be executed and recognized sits in the lower-margin project bucket.
There is one important caveat. The company explicitly says that the multi-year comparison is not necessarily built on the same projects in each year. So this is not a perfect through-cycle bridge on one fixed set of contracts. Still, the end-2025 cut says something very clear about risk concentration. Even after a year of improvement, the larger share of future unrecognized revenue sits in the project category whose economics still look weak.
That matters because backlog is not only a measure of demand. It is also a measure of what kind of work is entering the system. If most of the future revenue still to be recognized sits in electricity and energy infrastructure projects, then 2026 and 2027 will be a test not of whether Inter can win work, but whether it can close that work at a margin that survives the execution path.
The New Contracts Add Volume, But Not By Themselves A Better Risk Profile
This is where the two easiest bullish headlines sit. On February 5, 2025, a subsidiary signed a subcontract to design, supply, and build a dedicated high-voltage substation as part of a ground-mounted solar-and-storage project in Israel. Expected execution time is 27 months, and estimated consideration is about NIS 72 million. On February 24, 2025, another subsidiary signed an electromechanical works contract with a 42-month execution period and estimated consideration of about NIS 83 million. Together, that is roughly NIS 155 million of new work. Demand is clearly there. The company can still win material jobs.
But the filing also shows why headline value alone does not solve the economics. The customer section for the projects segment describes a shift from measured-quantity contracts toward design-build work, milestone contracts, lump-sum contracts, and EPC structures in energy projects. Under milestone billing, the invoice is submitted only once a defined milestone has been completed, meaning the company carries cost until that point. In lump-sum contracts, price is fixed in advance. In EPC, the company takes full responsibility for design, procurement, execution, and output, and payment is usually milestone-based there as well.
That is critical for backlog quality. A new NIS 72 million or NIS 83 million contract does not tell investors whether the job enters the book on terms that can absorb delays, scope changes, input-cost inflation, or slower milestone approvals. In some cases, it means exactly the opposite: the contractor finances the bridge period until payment is released.
| Contract structure | How cash comes in | Where the risk sits | What it means for backlog quality |
|---|---|---|---|
| Measured quantities | Ongoing billing based on actual executed work, usually after customer approval and payment within 30 to 90 days | Lower fixed-price risk, higher dependence on measurement and approval | Easier backlog to manage when execution stays orderly |
| Milestones | Billing only after completion of a defined milestone | The company carries cost until the milestone is achieved | Backlog can look large while consuming more working capital along the way |
| Lump-sum | Fixed agreed price, usually against an agreed execution split | Cost overruns stay with the contractor | Backlog that is highly sensitive to pricing discipline and execution control |
| EPC | Full responsibility for design, procurement, execution, and output, usually with milestone billing | More layers of risk, not just execution but also design and output | High-quality backlog only if execution discipline is strong |
There is another layer on top. The company says that in some contracts it provides performance guarantees or security instruments of up to 10% of order value before execution starts, and then quality or warranty guarantees of about 2.5% to 5% after delivery. In some cases it also gives guarantees tied to customer advances. So new backlog does not only consume labor and equipment. It also consumes guarantee lines and financial capacity.
The Litigation Layer Shows Where Project Economics Leak
Most infrastructure contractors carry disputes, arbitrations, and claims. So the fact that Inter has legal proceedings is not the story by itself. The real story is the type of proceedings. In Inter’s case, several of the matters described in note 23A sit exactly on the lines where project economics usually erode: deductions, delays, completion disputes, and compensation for prolonged execution.
| Proceeding | Main amount | Status | Why it matters |
|---|---|---|---|
| Three subcontractor claims from September 2023 | NIS 3.10 million against the company, versus NIS 7.24 million of counterclaims | In mediation, with the company saying it sees good odds of rejection | Shows that disputes over execution and payment are not ending at site handover |
| Customer claim from February 2024 | NIS 5.0 million for damages and delays, versus a counterclaim of about NIS 6.7 million | In mediation, with the company saying the risk cannot yet be estimated | This is exactly the type of case where schedule slippage eats the margin |
| Arbitration claims from July 2025 across two projects | NIS 3.68 million and NIS 4.07 million by the subsidiary, versus an NIS 8.2 million counterclaim in one project and an expected counterclaim in the second | At this stage the risk cannot be estimated | Suggests the tension is not only about collection, but also about prolongation compensation and liquidated damages |
This connects directly to the risk section. The company itself defines exposure to compensation for delays and postponements in execution, and says it tries to limit that exposure through capped damages and stricter terms. The fact that the topic appears both as an industry risk factor and as a live issue in multiple proceedings matters. It says the pressure on margins is not only the residue of one unusual year. It is a core operating feature that still needs tighter control.
That is the difference between a full backlog and a healthy backlog. A full backlog is signed work. A healthy backlog is signed work that can be executed without being pulled into the loop of delays, deductions, mediation, and counterclaims. The 2025 filing does not yet prove that Inter is there.
Bottom Line
The two new February 2025 contracts prove that Inter still has demand, bidding ability, and a real position in energy and electromechanical infrastructure work. They do not prove by themselves that project economics have been fixed. To prove that, the filing would have needed to show that large project margins had moved to a level that can absorb delays, subcontractors, guarantees, and disputes with customers. Instead, it shows that cumulative gross margin on the completed large projects was only 3%, and that most revenue still to be recognized sits in the project bucket that closed 2025 at just 1.46%.
So the right test for the new backlog is not how much signed value entered the book. The real test is whether electrical systems and energy infrastructure can move through the next cycle without returning to the same friction points of delay claims, deductions, and compensation disputes. Until that happens, the new backlog is proof of demand. It is not yet proof of healthy project economics.