LightPath Technologies, Inc. Q1 FY2026 earnings call

• LightPath is transitioning from a component supplier to a vertically integrated provider of high-value infrared optics and camera systems. - Utilizes proprietary BlackDiamond chalcogenide glass as a domestic alternative to germanium for infrared imaging. - Acquisitions of G5 Infrared and Visimid Technologies have enhanced capabilities. - Secured $8 million strategic investment from Ondas Holdings and Unusual Machines. - Record backlog of approximately $90 million, with over 2/3 in systems and subsystems. - Specific programs include border surveillance, counter-UAS, naval domain SPEIR program, and Lockheed Martin collaboration. - Scaling production with facility expansions in Texas and Orlando, and appointed new manufacturing VP. - Appointed Mark Caylor to the Board of Directors.

Revenue for the first quarter of fiscal 2026 increased 79% to $15.1 million. Sales of Infrared Components were $4.3 million or 28% of the company consolidated revenue. Revenue from Visible Components was $3.8 million or 25% of consolidated revenue. Revenue from Assemblies & Modules were $5.9 million or 39% of consolidated revenue. Revenue from Engineering Services was $1.1 million or 7% of consolidated revenue. Gross profit increased 58% to $4.5 million or 30% of total revenues in the first quarter of 2026 as compared to $2.8 million or 34% of total revenues in the same year ago quarter.

• Focus on go-to-market strategy to target high-growth areas. - Expect margin expansion as mix shifts to higher-value systems. - Strategic investment supports increased capacity and production scaling. - Priorities include shipping on time, expanding germanium-free product variants, hardening supply chain, and converting backlog to revenue at healthy margins.

• Supply chain challenges, including constraints on detector companies and reliance on germanium. - Geopolitical issues affecting germanium availability and potential disruptions. - Uncertainty due to government shutdowns impacting timelines for government contracts.

Q: About germanium and BlackDiamond glass, any reaction to China potentially opening up germanium acquisition and how fast converting portfolio to BlackDiamond?

A: China making it clear germanium won't be freely available for defense apps; customers are cautious and likely to stay with BlackDiamond. Transition of cameras is resource-dependent with ongoing redesigns but prioritizing current revenue delivery first.

Q: Addressing supply chain resiliency and capacity, where else needing capacity improvement?

A: Need to add capacity in fabrication in Latvia and Orlando, invest in glass capacity, work with detector vendors for focal plane arrays, with most elements vertically integrated.

Q: September quarter sales above model, thoughts on December quarter sales progression and EBITDA follow-through?

A: Not giving guidance but positive on Q2 sales and EBITDA continuing to improve.

Q: NGSRI timeline and Texas facility upgrade confidence?

A: Government shutdown impacts timelines; Lockheed and LightPath investing in preparation as down selection depends on flight tests; investment helps scale up for potential awards.

Q: Gross margin impact and medium/long-term direction?

A: Q1 gross margin impacted by sales mix (high IR Components sales), but aiming for 35% gross margin by end of fiscal year; satisfied with Q1 revenue performance despite mix change.

Q: Scaling operations and OpEx impact?

A: OpEx not expected to have major impact; CapEx for glass and assembly stations, rationalizing U.S. footprint.

Q: Number of $10 million-plus annual revenue opportunities in pipeline?

A: Approximately 7-8 programs, including counter-UAS and defense airborne programs.

Q: Gross margin noise with capacity expansion?

A: No major noise expected, with margins expected to improve.

Q: Backlog composition, still ~2/3 from G5?

A: Pretty much, with G5 pushing product more aggressively now.

Q: Drivers behind $10 million-plus deals, trends?

A: Majority driven by BlackDiamond glass improving performance of existing systems, including counter-UAS and large system programs.

Q: Systems integration for drones, do they do surveillance and countermeasure calculations?

A: Yes, systems are integrated into pan-tilts/tracking controls, with calculations on azimuth, distance, and atmospheric conditions.

Q: Other missile programs in pipeline?

A: 2 more missile programs at earlier stages, but with credibility from developed product passing environmental tests.