Rapac’s Elmor: Record Backlog, Data Centers, and What It Really Means for Margin and Cash
Elmor enters 2026 with NIS 1.621 billion of backlog, but the quality of that backlog has changed: renewables jumped to NIS 780 million, Nagev 1 is still barely recognized, and an NIS 86 million gap between customer assets and supplier credit keeps the margin and cash test open. The counterweight is data-center work, where the disclosed gross-margin range is higher.
What This Follow-Up Is Isolating
The main article argued that Elmor is the engine carrying Rapac’s reported numbers, but also the place where a large backlog still has to prove itself in cash. This follow-up isolates backlog quality at Elmor: not whether the work exists, but what kind of work sits inside the backlog, how much of it is concentrated in mega-projects and a small number of customers, how much working capital it consumes, and whether data-center jobs can rebuild the margin mix.
The key conclusion up front: Elmor’s backlog looks real, not inflated. The company says it has not recorded material deviations over time between backlog and the revenue eventually recognized from it, and it also says it is not dependent on a single supplier. But the composition of that backlog changed sharply. Renewables rose to NIS 780 million, almost 2.3 times the level at the end of 2024, and a meaningful part of that jump sits in large, early-stage, procurement-heavy projects. So the 2026 debate is no longer whether Elmor can win work. The debate is whether it can turn that work into margin and cash without letting working capital absorb too much of the value on the way.
What supports the thesis is that the general electrical-projects side, where data centers sit, still carries a higher disclosed average gross-margin range of 13% to 18%, versus 10% to 15% in renewables. Elmor also reports involvement in 10 data centers in Israel and, after the balance-sheet date, two additional awards with combined value of about NIS 184 million. If data centers gain weight quickly enough, they can rebalance the mix. If not, 2026 starts with a heavier backlog, not necessarily a better one.
What Actually Changed Inside the Backlog
The headline number, NIS 1.621 billion of backlog at year-end 2025, can be misleading because it hides a major mix shift. In classic electrical projects, including data centers, substations, and electrical infrastructure, backlog increased to NIS 841 million from NIS 795 million at the end of 2024, a modest increase of about 5.8%. In renewables the story is completely different: backlog jumped from NIS 336 million to NIS 780 million, an increase of about 132%.
That is not the same kind of growth. In electrical projects, Elmor is adding volume to an engine it already knows how to run. In renewables, it is moving deeper into EPC work, major equipment procurement, storage systems, project finance, and a heavier dependence on the pace of progress at large sites. The backlog is no less binding. It is simply more complex.
| Activity | 2025 revenue | Year-end 2025 backlog | Average 2025 gross-margin range | What it means |
|---|---|---|---|---|
| Electrical projects | NIS 417.8 million | NIS 841 million | 13% to 18% | Includes data centers and general electrical work, with better potential to support margin |
| Renewables | NIS 358.9 million | NIS 780 million | 10% to 15% | The main growth engine, but also a heavier execution and working-capital burden |
That table is the core of this continuation. Elmor did not move from low backlog to high backlog. It moved from a story where most backlog sat in more standard electrical projects to a story where almost half of the backlog sits in renewables, where the quality questions are harder.
Why a Record Backlog Does Not Mean Every Shekel Is Equal
The timing split matters more than the total. Out of NIS 1.621 billion of backlog, about NIS 1.001 billion is scheduled for execution already in 2026. But inside that amount, roughly NIS 600 million sits in renewables and only NIS 401 million in electrical projects. In other words, almost 60% of the backlog scheduled for the coming year sits דווקא in the activity where the disclosed average gross-margin range is lower.
By 2027 and later, the picture flips. There, electrical projects account for NIS 440 million versus NIS 180 million in renewables. That means Elmor still has a long-dated and meaningful electrical-projects layer. But the year the market will read first starts with a relatively high renewables weight. So backlog quality in 2026 will not be judged only by size. It will be judged by how much of that backlog converts into revenue in a healthier margin mix, and how much remains execution-heavy.
Nagev 1 shows why backlog and cash are not the same thing
The project that explains this best is Nagev 1. In Elmor’s table of very material projects, the company shows estimated total revenue of about NIS 525 million, completion of only 0.6% as of December 31, 2025, and cumulative recognized revenue of just NIS 3 million. That is not a footnote. It means a meaningful portion of the renewables backlog sits in a very large project that is still at a very early stage.
On one hand, this supports backlog quality. After the balance-sheet date, the project signed approximately NIS 850 million of financing, received the electricity authority’s approval for financial close, and disclosed an EPC agreement with Elmor Renewables for about NIS 274 million, a storage-equipment procurement component of about $72 million, and an annual O&M contract of about NIS 3.5 million. So this is not a theoretical project.
On the other hand, this is exactly where the quality question lives. A project like this can support a huge backlog number without producing recognized revenue, accounting margin, and free cash at the same speed. So when reading Elmor’s renewables backlog, the question is not only how much of it is binding, but how much of it already cleared financing, how much is physically moving, and how much still needs equipment procurement, guarantees, and working capital before it starts paying for itself.
Customer concentration did not disappear, it just moved
In general electrical projects Elmor describes a broad customer base of public bodies, developers, contractors, and industrial customers. But in renewables it separately discloses one material customer, Customer A, that generated NIS 136.3 million of revenue in 2025. The company notes that this amount does not exceed 20% of its revenue, but it is still roughly 38% of Elmor’s renewables revenue for the year.
The issue is not only the percentage. The issue is that the identity is not disclosed. The company does note that this is a repeat customer across different projects, which is a positive sign. But as long as the name remains undisclosed, it is harder to judge whether this is a particularly strong anchor customer, a harder-to-replace customer, or simply a timing concentration around a few projects in one year.
At the same time, one of the flagship projects disclosed by the company is Nagev 1, where Elmor Renewables signed the EPC agreement with Rapac Energy. That matters because it shows that backlog quality is not only a question of outside demand. Part of it also depends on how quickly the broader group can finance, advance, and draw a large project. That can improve execution certainty, but it also ties backlog quality to funding quality elsewhere in the group.
Where working capital starts to bite into the backlog
This is the point that is easiest to miss when the backlog headline gets most of the attention. In the supplier-credit and customer-credit table as of December 31, 2025, Elmor shows NIS 352 million of customer receivables and contract assets against NIS 266 million of supplier credit and accrued expenses. The gap, NIS 86 million, does not look like a liquidity crisis, but it does say something simple: growth is not rolling entirely on supplier finance. Elmor is carrying part of the bridge between performing the work and collecting the cash.
There is an important nuance here. The company explains that the gap stems mainly from differences in credit days, the group’s commercial margin, and the VAT embedded in goods and services sold. So not every shekel of the NIS 86 million is pure financing stress in the blunt sense. Even so, the core point holds: a larger EPC backlog does not self-fund just because it is binding.
What softens that yellow flag is that, at least on the disclosed covenant metrics, Elmor did not look close to a banking limit at year-end 2025. Total bank credit stood at NIS 93 million, and the disclosed debt-coverage ratio was 2.38 versus a ceiling of 5.0. So, on the disclosed evidence, this looks less like an immediate covenant issue and more like a quality-of-growth question. If execution volume keeps growing faster than the company’s ability to rotate it into cash, the backlog can keep looking excellent in the filing while looking less impressive in the cash account.
What this means for margin, and why data centers matter so much
Elmor ended 2025 with revenue of NIS 795.1 million, gross profit of NIS 113.4 million, and operating profit of NIS 48.0 million. That translates into a gross margin of about 14.3% and an operating margin of about 6.0%, versus roughly 16.4% and 7.5% in 2024. The company also explains part of the operating-profit decline through stock-based compensation, a loss at a Polish affiliate, and the completion of higher-margin projects in the prior year. This continuation does not replace that explanation. It adds another layer to it.
That layer says the market should not look only at backlog size, but at the kind of backlog entering first execution. If 2026 opens with a heavy renewables weight and a lower disclosed average gross-margin range, margin can stay under pressure even without an unusual execution failure. If, at the same time, data-center and general electrical projects gain more weight, the story can improve. Not because data centers are more attractive as a theme, but because they sit in the higher-margin side of the business.
That is also why the two post-period data-center awards, worth about NIS 80 million and NIS 104 million, matter more than they may seem at first glance. They do not just add more work. They add exactly the type of work that can rebalance the 2026 mix if it starts moving into execution quickly enough.
Bottom Line
Elmor’s backlog quality is better than the first skeptical read suggests, but it is not equally strong in every layer. On the positive side, the backlog is binding, history does not point to material realization gaps, the supplier side is diversified, and Nagev 1 crossed several post-period milestones that reduce the risk of “paper backlog.” On the less comfortable side, 2026 opens with a heavy renewables mix, one material customer in that activity, and a working-capital bridge that Elmor still carries partly on its own balance sheet.
That is the point to carry forward: Elmor’s backlog has already proved that demand exists. What it has not yet proved is that every extra shekel of backlog also becomes a better shekel of margin and cash. Data centers matter precisely because they may be the corrective mechanism for that, not because they are just another growth headline.
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