Aug 13, 2026 earnings call — Record backlog and rising revenue from critical materials
Revenue increased 35% to $66.4 million, and open order backlog stands at $131.5 million.
Revenue $0.1B (est $0.1B) · EPS $0.18 (est $0.06)
Key quotes
"Additionally, our strategic tungsten sourcing agreements have kept us highly protected from material input pricing changes."
"Our firm order backlog grew to approximately $131.5 million at the end of Q2 2026 compared to approximately $113.3 million at the end of Q1 2026 and approximately $84.6 million at the end of Q2 2025."
"Within the quarter, we incurred approximately $14.2 million associated with equity-based compensation compared to $0.4 million in Q2 2025."
Analyst Q&A 4
missile munitions flow-down and orbital compute
Q (Colin Canfield · Cantor): Analyst asked how much of big missile defense prime awards are flowing down to the company and when those orders might hit. He also asked about talks with SpaceX and domestic versus international sourcing for orbital compute satellites.
A: Management said they have not yet seen significant flow-down from the large multiyear prime awards, only some RFQ activity and modest sweep-funding orders. They said nothing material from the new appropriation cycle is in backlog yet. On orbital compute, they have no orders from SpaceX, bought a new production line with "$3 million in CapEx" that is just starting to produce and see related drone-defense work expanding into satellite areas.
"We really haven't seen a significant amount of those larger multiyears the primes are being awarded flow down to us yet." — Michael Lee (CFO)
backlog changes and margin drivers
Q (James Ricchiuti · Needham & Company): Analyst asked why backlog declined outside ADG and whether the large medical customer will increase orders. He also asked how much pricing helped gross margin and why EMP EBITDA lags CMC.
A: Management said one large medical customer causes big swings in the "other" bucket; demand volume is consistent but order timing is inconsistent and can create volatility. They said in Q2 2025 that customer drove almost $12 million of backlog down to about $5.5 million at end of Q2 '26. On margins, they credited operational execution, capturing some material price spikes through supply agreements and selling material at market, plus factory productivity; EMP margins were hurt by operational issues in a factory that handles higher-margin ADG and semiconductor products and they are working to correct that.
"Q2 2025 in our CMC division, driven by this customer, we had almost $12 million of backlog." — Michael Lee (CFO)
industrial demand and raw material moves
Q (Alfred Moore · ROTH MKM): Analyst asked which parts of industrial are strongest and what trends they see. He also asked about near-term movements in raw materials like tungsten and their effect on margins.
A: Management said industrial demand is up in both EMP and CMC, with tungsten and moly selling into industrial and ADG markets; pricing uplift is flowing through and they have not seen a major pullback in industrial demand. They said they are in a good CapEx cycle and customers are finding more uses for their products. On raw materials, one manager said material costs spiked faster than expected for some EMP work tied to large projects (CERN, Fermi), which caught them off guard, and they are digging into backlog and gross margin improvement.
"But in general, we're seeing -- we haven't seen a real pull -- a major pullback on demand in industrial at CMC and the pricing uplift definitely flows through there." — Michael Lee (CFO)
gross margin ramp and defense funding
Q (Austin Moeller · Canaccord Genuity): Analyst asked how to think about gross margin improvement as larger production awards arrive over the next 12 to 24 months. He also asked whether upcoming budget or reconciliation bills could provide funds to increase capacity.
A: Management said long-term growth driven by ADG will bring more end-component work and higher-margin business, which should lift overall margins; productivity gains and capture of material-price spikes should help over the next 6 to 12 months. They reiterated prior S-1 messaging about offering both engineering services and materials, and said they monitor government funding closely and will be prepared if defense investment opportunities arise.
"So as we see our growth being driven predominantly over the long term, by ADG, we expect the new business to be coming at a differentiated margin, and that will end up lifting our overall average." — Michael Lee (CFO)