Oct 29, 2026 earnings call — Record Q1 revenue and backlog growth
Q1 revenue hit $403 million (a Q1 record) with backlog rising to $2.1 billion and adjusted EPS of $1.66.
Revenue $0.4B (est $0.4B) · EPS $1.66 (est $1.65) · Next-quarter revenue outlook $1.9B–$1.9B
Key quotes
"Our book-to-bill ratio was 1.4, and our backlog increased to a record $2.1 billion from approximately $1.9 billion at June 30."
"We have received initial delivery orders totaling approximately $21 million under these contracts and expect more orders as we start delivering."
"We continue to expect strong double-digit service revenue growth in fiscal 2027 with growth accelerating throughout the year."
Analyst Q&A 6
Backlog and timing of future sales
Q (Josh Nichols · B. Riley): Is the bigger backlog just conservatism because the guidance is second-half weighted, or do new orders add clarity for fiscal '28 and '29? Also, were the Middle East orders that delayed last quarter shipped or still expected in the second half?
A: Management said they kept guidance because of ongoing geopolitical conflicts, but they see upside and that the larger backlog helps for fiscal '28 and beyond. They shipped about $8 million of the roughly $50 million pushed from Q4 and expect the balance mostly in the second half and into fiscal '28. They also said orders are materializing in other places and that conflict could increase future orders once it ends.
"Going into our guidance, with still conflicts going on in the Middle East and other geopolitical events, we just thought it prudent to maintain that revenue guidance at this time." — Alan Edrick (CFO)
Services revenue growth and Middle East impact
Q (John Godyn · Citi): Can you explain the recent services revenue trend and how it will affect margins? Also, if the Middle East conflict escalates, how would that affect your business?
A: They said service revenue was modest at around 5% in Q1 but they expect a significant pickup in Q2, Q3, and Q4 driven by products coming off warranty, aviation services, SaaS (CertScan), RF work, and other items. Management said they have good visibility and confidence in strong double-digit service growth starting in Q2. On the Middle East, they said conflicts tend to increase demand over the long run but they cannot predict escalation and will wait to see; they feel confident about the next three quarters.
"Yes, while our service revenue growth was modest at around 5% in Q1, we see a significant pickup year-over-year in each of Q2, Q3, and Q4." — Alan Edrick (CFO)
RF competitiveness and order pacing
Q (Christopher Glynn · Oppenheimer): How unique is your RF offering and how dependent are programs on you? Also, how are the $235 million and $90 million orders pacing to revenue?
A: They said they are limited in what they can disclose but customers view their RF products favorably, they have unique products others do not, and they dominate in certain areas. On orders, they are recognizing revenue on the $235 million contract now and will continue to see revenue from it through the fiscal year; the $90 million order will contribute this year and more in future years. Management added that the RF wins give good visibility into 2027 and beyond.
"In certain areas, we definitely do dominate the market." — Ajay Mehra (CEO)
Where bookings come from and funding
Q (Lawrence Solow · CJS): Is the backlog mostly U.S. or international this year? And is there funding risk from reconciliation or other bills, especially for Golden Dome?
A: They noted the company operates in 150 countries so international business will continue, but the Middle East is a current blip and the split can vary by quarter. On funding, they said much is out of their control but funding for DHS and Golden Dome was already in the Big Beautiful Bill and programs have started, though orders are still to be released; they feel pretty good about near- to short-term programs. When asked if guidance increase is driven more by buybacks, management said that would be a fair statement.
"Keep in mind, with the Big Beautiful Bill, a lot of the funding for DHS as well as the Golden Dome programs was already there." — Alan Edrick (CFO)
Q2 mix, margins and capital plan
Q (Seth Seifman · JPMorgan): How should we model Q2 mix and margin progression, given services recovery? Also, how are you thinking about capital deployment: M&A versus share buybacks?
A: They said service revenue should accelerate meaningfully in Q2, likely doubling or more, with further acceleration in the second half, and that will help expand margins through the year. On capital, organic growth is the top priority but they remain open to strategic acquisitions that build momentum and market penetration. They said they are always opportunistic on share repurchases and consider all three uses of capital without a fixed rule.
"We do see service revenue accelerating meaningfully in Q2, probably that type of growth doubling, if not more than doubling in Q2, with continued acceleration in the second half of the year as well." — Alan Edrick (CFO)
RF manufacturing capacity and R&D
Q (Jeff Martin · ROTH Capital Partners): With RF success, do you have enough manufacturing capacity now or will you expand? Also, what about R&D and future investment in RF?
A: They said they will keep investing in future products and are actively looking at opportunities for R&D. For capacity, they moved into a second new facility and feel they have a robust pipeline they can meet with current requirements; they can add a second shift or add another facility fairly straightforwardly if needed. They added that this ability to meet demand helps when talking to customers.
"We feel that we have a very robust pipeline that we can meet with the current requirements that we have, and we can always go into a second shift and meet it." — Ajay Mehra (CEO)