On Thursday, LightPath Technologies (NASDAQ:LPTH) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

LightPath Technologies reported a 93% revenue increase for fiscal 2026, reaching $71.7 million, with a significant improvement in gross margin from 27% to 36%.

The company's backlog grew 197% to $110.9 million, with strategic shifts focusing on high-margin products like assemblies and modules.

LightPath is divesting its China operations, focusing on Western-aligned facilities, and enhancing its capacity to meet increased demand, particularly for Black Diamond glass.

The company secured two large orders worth $24 million and anticipates continued backlog growth as defense programs move from qualification to production.

CEO Sam Rubin highlighted ongoing strategic initiatives, including increased production capacity and a focus on defense-related applications, while CFO Al Miranda noted a strong balance sheet with $93.2 million in cash and no debt.

Full Transcript

OPERATOR

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LightPath Technologies' fiscal fourth quarter and full year 2026 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This conference is being recorded today, September 10, 2026, and the earnings press release accompanying this conference call was issued after the market closed today.

I'd like to remind you that during the course of this conference call, the company will be making a number of forward-looking statements that are based on current expectations, involve various risks and uncertainties, and are discussed in its periodic SEC filings. Although the company believes that the assumptions underlying these statements are reasonable, any of them could be proven to be inaccurate, and there can be no assurances that the projected results will be realized.

In addition, references may be made to certain financial measures that are not in accordance with Generally Accepted Accounting Principles, or GAAP. We refer to these as non-GAAP financial measures. Please refer to our SEC reports and certain areas of our press releases, which include reconciliations of non-GAAP financial measures and associated disclaimers. CEO Sam Rubin will begin today's call with a strategic overview of the business and recent developments for the company, while CFO Al Miranda will then review financial results for the quarter and the fiscal year.

Following the prepared remarks, there will be a formal question-and-answer session. I'd like to now turn the conference over to CEO Sam Rubin. Sam, the floor is yours.

Sam Rubin, Chief Executive Officer

Thank you, operator. Good afternoon to everyone and welcome to LightPath Technologies Fiscal Fourth Quarter and Full Year 2026 Financial Results Conference Call. The last few calls I typically opened by talking about the strategy and how the strategy is working and where it's taking us. Tonight, instead, I let the numbers talk and let the fiscal year results do the talking. Fiscal 2026 is a first year in which the transformation we have been describing shows up cleanly in every line of the financial statements, not just the backlog.

Four numbers frame the year. Revenue grew 93% from $37 million to nearly $72 million, gross margin expanded from 27% to 36%. Adjusted EBITDA moved from a $5.1 million loss to a $4.2 million profit, a swing of more than $9 million, and backlog finished at $110.9 million, up 197% from where we started the year. The fourth quarter was our best quarter in every one of those categories. Revenue of $21.2 million was a company record and our fourth consecutive quarter of sequential growth.

Gross margin was 39.4%. Adjusted EBITDA was $2.1 million or 10% of revenue, which was our fourth straight profitable quarter on that measurement. All great results which we expect will continue to grow and improve. Now I'd like to spend a moment on the quality of that margin because it is the part that I am most pleased with. The 39.4% margin did not come from a one-time favorable contract or from raising prices. It did come from two things we did.

First is the mix of products. Assemblies, modules, and cameras were 43% of the fourth quarter revenue and 44% of the full year compared to 23% of the revenue in fiscal 2025. These products, which our strategy has really took us towards, have both higher prices and higher margins as a result of the significant value add compared to our legacy component business. Second is execution. The yield and throughput problems that dragged our component margins in the past are well in the past, and every one of our four product groups improved its margin year over year.

The mix improvement is a result of strategy. The margin improvement is the result of operation. We needed both and this year we got both. And while the backlog has not grown sequentially, shortly after we closed the quarter we reported two large orders totaling $24 million and have been continuing to book and grow our backlog. So the backlog you will see for the quarter ending in about three weeks’ time will show already some more growth while we continue securing new customers, both by converting them to Black Diamond and by providing them with assemblies and systems.

Much of the orders coming now, like the two large orders I just mentioned from July, are for production, as many of the programs we have been working on move from qualification to production. We have said in the past that a design and qualification of a new program, whether it's a redesign to use Black Diamond or a new program altogether, can take up to two years. Much of the growth in our backlog and bookings recently that we are seeing is the result of such new programs beginning to move into production two years ago.

In late 2024, China imposed the first restrictions on export of germanium and gallium and we began to see a growth in demand for Black Diamond and systems using Black Diamond glass. Now we are beginning to see the transition of some of those into production, a trend I expect will intensify as most customers did not start their redesign and substitution effort until much after the initial export ban on germanium. To that end, I will provide now an update on some of our key programs we have in the pipeline and their status.

As mentioned in recent calls, due to the good problem of experiencing exponential growth in all our sales fronts, I can't really cover all the large programs, so instead I will focus on ones where we had some changes or recent developments. NGSRI, our 3-year-old interceptor program with Lockheed Martin: as many have heard, the Army has pushed out the timeline by a few months in an effort to potentially explore other options. We do not see this as a risk to us, only a delay.

We have seen this happen in multiple other programs where the Army wants to foster a truly competitive environment. Our confidence continues to be very high and, given that our seeker is being designed and evaluated into multiple platforms now, we have little concern here. In the last few months we have relocated the group that works on that seeker into a new building and have begun investing in increasing capacity for building seekers, knowing that any program that moves into production will need to scale very quickly.

More broadly about seekers and munitions, our camera systems are now being designed into or actively evaluated in seven different platforms, three of which are with Lockheed Martin, the remainder are with primes or, as they're sometimes referred to recently, neo-primes—newer companies entering the defense market. The full qualification of our low-cost seeker that was completed as a result of the NGSRI flight test, as expected, opened the door to many other opportunities.

The same manufacturing facility in Texas will support all of those opportunities. In Border Patrol or border tower, we have seen funding being released from DHS to the primes; however, that has not yet translated into orders for cameras. What we have seen is a growth in demand for similar towers and cameras that end up installed outside the U.S., primarily in the Middle East. A few other programs: we have an unnamed airborne program which has completed qualification and we await the production order for elep.

The Apache program is looking like it might make a comeback soon with a renewed interest in that system. Drones, and in particular drone dominance programs, are generating significant demand which we are addressing by starting to add automation to some of our processes for high-volume assemblies. And counter-UAS programs continue to move along well, with two of the programs now transitioning to a cadence of deliveries of tens of systems a month, in parallel to more design wins of our existing products.

The teams have been working on designs and redesigns of additional products, all of which leverage our Black Diamond glass and make use of our supply chain resilience and having alternative materials instead of depending on germanium. On the camera front, we have been redesigning the last of the G5-cooled cameras we use—Black Diamond instead of germanium. That program is progressing well technically, though behind schedule. However, all the results we have seen so far indicated the cameras will work at least as well as the germanium-based cameras.

We have also been working on zoom lenses and zoom cameras in what is called long-wave infrared, often referred to as uncooled cameras. Here too we identified an area of the market in which we can leverage our position to provide products without supply chain constraints. An effort that has been ongoing for the last year is now coming to fruition with our first orders for zoom lenses and complete uncooled zoom cameras to be delivered soon. Once those are fully production ready, we expect to see the need in the market translate into orders fairly quickly.

Let me now turn to the structural changes we have completed after year end, which is the divestiture of our China operation. In July we signed a definitive agreement to sell our China subsidiary to an entity owned by the local management team that has run the facility for us for $4.5 million, payable in installments over five years, and that transaction is expected to close later this month. Financially it is a modest event. Roughly $4.5 million of annual third-party revenue leaves our consolidated results, and it will continue to supply us as a third-party vendor for our commercial customers in the U.S. and Europe, so there is no disruption to those customers. Strategically it is not modest at all. Six years ago most of our manufacturing footprint was in China and more than a third of our revenue came from China. As of this fall, LightPath now does everything—melts glass, coats optics, builds cameras and assemblies—exclusively outside of China in Orlando, in Plano, Texas, in Hudson, New Hampshire, and in Riga, Latvia. We have no ownership, no facility, and no commercial activity in China.

For a customer base that is now dominated by the defense primes and public safety agencies, that is no longer a nice-to-have talking point, but something that will now open up significant bid opportunities where that is a condition for participation. That connects directly to our regulatory backdrop. Defense programs are required to move off optical glass and optical components sourced from covered nations before the end of the decade. What has changed over the last year is not the rule, it is the timing.

Qualification cycles for an optical system run two to three years, so the sourcing decisions that determine who supplies those programs in 2029, 2030 are being made now in this fiscal year and in the next one. However, several executive orders around waivers for germanium and classification of material as critical and specific tariffs applied will likely pull that timeline even closer. Now to address that, let me talk about capacity a bit, because capacity is our single biggest operational theme going into fiscal 2027.

When we acquired Amorphous Materials in January, we increased our Black Diamond melting capacity and, just as importantly, we unlocked large-diameter melting up to 10 inches and beyond versus the 5 inches we could produce before. In optics, the further you need to see, the larger the optics need to be. Large diameter is what opens up long-range camera systems, large assemblies, and space-based missile detection and tracking. I told you in May that doubling the glass capacity was nowhere near enough.

That is still true. Demand for glass is running ahead of supply even after the acquisition, so we are adding melting capacity in Orlando and Texas. We are moving the AML (Amorphous) operation into a larger building near our Visimid camera business in the Dulles area, and we're expanding downstream capacity in optical fabrication, coating, and assembly across the U.S. and Latvian sites, including adding shifts in all locations. Al will talk about what that means for capital spending.

The short version is that fiscal 2027 capex will be higher than fiscal 2026, and that is a deliberate choice made against a visible order book and pipeline. Before I hand it to Al, I'd like to discuss the balance sheet. In June we raised $50 million in a primary offering alongside a secondary sale by North Fund Capital, who funded our acquisition of G5. We ended the fiscal year with $93.2 million of cash and effectively no debt. Some of that capital will be used to fund the capacity and working capital required to convert our growing backlog that has now grown over five consecutive quarters and continues to grow.

And some will be to pursue accretive capability-adding acquisitions such as the ones similar to G5 and AML that have proven we can execute and integrate. With that, now I will turn the call over to Al Miranda, CFO, to walk through the fourth quarter and full fiscal year 2026 financial results. Go ahead.

Albert Miranda, Chief Financial Officer

Thank you, Sam. As always, I'll keep my review to a succinct highlight of the financials. Much of what we're discussing was also included in our press release issued earlier today and will be included in the 10-K for the period. I encourage you to visit our Investor Relations webpage to access both documents. In the fourth quarter, revenue increased 73% to 21.2 million as compared to 12.2 million in the same year-ago quarter. Sales of infrared components were 7.1 million, or 34% of consolidated revenue.

Visible components were 4.2 million, or 20% of consolidated revenue. Assemblies and modules were 9.1 million, or 43% of consolidated revenue. Engineering services were 0.8 million, or 4% of consolidated revenue. Gross profit increased 210% to 8.3 million, or 39.4% of revenue in the fourth quarter, as compared to 2.7 million, or 22% of revenue in the same year-ago quarter. Sam mentioned the reasons for our gross margin increase. In addition to better absorption on higher production volume, we also had a quarter carry-through of a half-million-dollar inventory reserve charge last year that didn't recur this year.

Operating expenses for the fourth quarter of fiscal 2026 were 12.6 million as compared to 7.2 million in the prior-year period. Of the 5.4 million increase, 2 million relates to non-cash fair value adjustment to the acquisition earnout liabilities, which are remeasured through operating expenses until fully settled. The increase is primarily related to G5 Infrared, reflecting its strong performance against the earnout targets. The final earnout amount was agreed to and accrued in the fourth quarter of fiscal 2026 to be paid in January 2027.

The remaining operating expense increase of 3.4 million is primarily comprised of increased selling, general and administrative expenses, where the fourth quarter of fiscal 2026 included the addition of AML operations, incentive compensation accruals, additions to the senior leadership team, higher sales and marketing investments, and continued information technology spend to meet customer security requirements. Net loss for the fourth quarter was 4.1 million, or 0.06 per basic and diluted share, compared to a net loss of 7.1 million, or 0.16 per share in the same year-ago quarter.

Adjusted EBITDA for the fourth quarter was 2.1 million, or 10% of revenue, compared to an adjusted EBITDA loss of 2 million in the year-ago quarter. This is our fourth consecutive quarter of positive adjusted EBITDA. As I've said before, adjusted EBITDA is non-GAAP and not a perfect measure, but it is the better indicator of core operating performance because it strips out the non-cash acquisition accounting that otherwise dominates our reported results.

For the fiscal year, revenue for 2026 increased 93% to 71.7 million as compared to 37.2 million in fiscal 2025. Sales of infrared components were 21.2 million, or 30%, an increase of 52% year over year. Visible components were 15.5 million, or 22% of consolidated revenue, an increase of 32%. Assemblies and modules were 31.9 million, or 44% of consolidated revenue, an increase of 281%. Engineering services were 3.1 million, or 4% of consolidated revenue, roughly flat with the prior year.

Operating expenses for fiscal 2026 were 45.5 million as compared to 22 million in the prior year. Of the 23.5 million increase, 14.1 million relates to the non-cash fair value adjustment to acquisition earnout liabilities, which I will discuss further in a minute. The remaining operating expense increase of 9.4 million reflects a full year of G5 Infrared operating cost, the addition of AML operating costs, higher sales and marketing spend, information technology investments to meet heightened customer security standards, and increased personnel costs associated with filling executive roles and accruing for incentive compensation plans.

In addition, new product development costs also increased, which management views as an important part of execution of our strategy. We continue to grow our investments in new product development. I want to be direct about the earnout accounting because it is the largest single line in our income statement this year and the least reflective of our operating performance. The 15.6 million charge in fiscal year 26 is a remeasurement of what G5 sellers earned, and it moved because G5 is outperforming the amount estimated at the time of acquisition, which per GAAP was largely weighted based on historical financials.

It is not an ongoing operating cost, and the majority of it is behind us as we've now accrued for the final G5 earnout to be paid in January 2027. There may be small adjustments in future quarters related to AML and Visimid still to come. Adjusted EBITDA for fiscal 2026 was a profit of 4.2 million compared to a loss of 5.1 million in fiscal 2025. As Sam said, a swing of 9.3 million, a good indicator of where we're heading. Backlog at June 30 was 110.9 million, up 197% from 37.4 million a year ago.

Approximately 85.6 million of that is requested by customers for delivery within 12 months. And then I'll touch on CapEx. As Sam mentioned, it is an indicator of how we are managing growth. In fiscal year 26 we spent 6.3 million in CapEx, 4.4 million in Q4 alone. The last time we spent at that level was in calendar year 2023 when we expanded the Orlando facility and doubled the size of the manufacturing and the clean room. The fiscal 27 plan is larger and more ambitious.

We will expand all of our locations to meet the backlog we have and the demand we foresee. And through fiscal 27 and into fiscal year 28, the plan is to get ahead of demand in some key areas, like the production of Black Diamond glass. With that in mind, let me close with the frame I would use if I were on your side of the call. Two years ago this was a 32 million per year revenue business with negative adjusted EBITDA, 3.5 million of cash. This fiscal year it is a 72 million revenue business with positive adjusted EBITDA, 93 million cash, no debt and a 111 million order book that continues to grow.

The work in fiscal 2027 is to add capacity fast enough, hold the margin gains and convert the book. That is a straightforward execution mandate and it is fully funded. With that, I'll turn the call back to Sam for some closing remarks.

Sam Rubin, Chief Executive Officer

Thank you, Al, and thank you to everyone for joining us today. Fiscal 2026 was the year the pieces came together: a full year of G5, the addition of AML, a fortified balance sheet, a Western-aligned manufacturing base, and a set of programs that are moving from qualification into production. The upcoming fiscal 2027 will be a different kind of year. It is less about proving the thesis and more about scaling against it. Doubling a manufacturing business in 12 months is hard.

Doing it twice in a row is harder, and it will require capacity we are still building and people we are still hiring. We are clear-eyed about it. But we are doing it with 93 million of cash, no debt, two domestic glass plants, the broadest portfolio of infrared materials available, and a customer base that increasingly cannot source for what they make from anyone else on acceptable terms. With that in mind, I want to close before we open for Q&A by thanking the LightPath team.

My team delivered a record year while integrating two acquisitions, migrating infrastructure, and building capacity underneath a backlog that tripled. That is a great deal to ask of an organization our size. And you delivered it. With that in mind, I'll turn it back to the operator for Q&A.

OPERATOR

Thank you, Sam. At this time, we will open the floor for questions. If you'd like to ask a question, you may press Star-One on your telephone keypad. To remove yourself from the queue, you may press Star-Two. Again, that is Star-One to ask a question. We'll take our first question from Clark Jeffries with Piper Sandler. Please go ahead, your line is open.

Clark Jeffries, Analyst at Piper Sandler

Hello. Thank you for taking the question. First question, just looking out to 2027, that 86 million that's sort of primed for delivery in 2027, wondering if we could get a sense of programs that are embedded there. And those two large contracts in July, are they set for 2027 delivery? As one follow-up.

Sam Rubin, Chief Executive Officer

Sure. So, on to the second part first: yes, they're for 2027 delivery, the two large contracts that were in July. What's also nice about them, or really encouraging about them: they're already production and both of them are a cadence of deliveries spread over months, and therefore we expect them to be renewed in the years to come as kind of programs of record typically do. Secondly, in terms of breakout of it—Al, I don't know if you have it by product group—but application-wise, C-UAS is still probably one of the biggest parts in there.

Optics for drones and assemblies for drone dominance is a growing part in there. We don't have a lot of Border Patrol in there yet because the funding that has flown through to the client has not come its way to us. So I'd say primarily C-UAS right now is a very big driver.

Clark Jeffries, Analyst at Piper Sandler

Perfect. And then just wondering if, Sam, you could give a little bit of additional context for G5 in the redesign timeline—just any reasons for the delay and maybe just a right-setting on the earliest contribution you'd expect from those redesigned products. Thank you.

Sam Rubin, Chief Executive Officer

I think supply chains are stretched everywhere, and the redesign, while it doesn't require redesigning the entire camera, there's still mechanics and some other lenses that need to be redesigned and some changes. So we're starting to feel supply chain, especially on the detector side, impacting us across the board, so it really impacted that part is one. The second is, while Amorphous are able to melt the glass in that size, it is the first time, or, you know, one of the first times, Amorphous was melting that glass, and melting those kinds of glass is not a plug-and-play recipe.

I mean, even for us, from the moment we licensed novel materials, it took us three years until we started producing them. So there's quite a bit of fine-tuning that once you start melting it. We're lucky to have an incredible team, as we do at Amorphous, that is able to do that at a really record time. But there's still, you know, more effort than just saying, okay, we'll melt it and that's it. Thank you.

OPERATOR

Thank you. And again, as a quick reminder, if you'd like to ask a question, you may press Star-One now. Our next question will come from Austin Mohler with Canaccord. Please go ahead, your line is open.

Austin Mohler, Analyst at Canaccord Genuity

Hi, good afternoon, Sam and Al. So just my first question on the Border Patrol cameras or the equivalent overseas: are the overseas camera opportunities—are those foreign military sales to Middle East allies, or is that the U.S. Air Force and the Army deploying those on bases? And what could the TAM look like compared to Border Patrol?

Sam Rubin, Chief Executive Officer

Those are mostly foreign military sales to allies, the Air Force, and so on. Those are mainly counter-UAS systems, different C-UAS systems. So I was talking about Border Patrol and towers along the borders of different Middle East or North African countries. The TAM is a bit difficult to tell because I don't know that market well enough. We're in it, sort of—we're one down, we're sub-tier there. But I would say that every deal like that that comes in usually is in the tens of millions of dollars for us.

Austin Mohler, Analyst at Canaccord Genuity

And I understand you shipped SPEAR cameras, at least initial prototypes, to the Navy and they installed them immediately. How many more SPEAR cameras can be made available to the Navy in the next 12 months and installed remotely in Southeast Asia, just given this tanker war—they're getting pelted by drones every day?

Sam Rubin, Chief Executive Officer

Well, I can't speak for the Navy about the installation process or timelines. We did ship, I believe, the first camera or maybe two. And I think we have another five cameras in dispatch before we get another order. And those five are expected to ship really in the next few weeks. But beyond that, I really have no visibility into the process once we ship them until they make it onto the ships. Thank you.

OPERATOR

Thank you. We'll take our next question from Richard Shannon with Craig-Hallum. Please go ahead. Your line is open.

Richard Shannon, Analyst at Craig-Hallum Capital Group

Well, great. Thanks, Sam and Albert, let me ask a couple questions. Apologies for any ambient noise here in the loud area. Sam, I want to follow up on NGSR. You made some prepared remarks here about not seeing any risk in the contracting proposal, I think is a term used by the government or the Army for this. Let me get a little more detail as to why you don't think that's a risk here. I think that anyone who read this, as I did the first time, it made it sound like they were just dissatisfied in some manner with the current options here.

And you've expressed a lot of confidence in the solution you're supporting there, so would love to get a sense of why you think that's very low risk here, please.

Sam Rubin, Chief Executive Officer

Yeah. So I'll refer here to an article that was published earlier this week. I can't remember the name of it, but the person described, I think pretty accurately, that there are tens of thousands of launchers deployed in the field of the old Stinger missile. These new missiles need to be reverse-compatible with those launchers. I'm not going to go into details of what the effort it takes to do that and what either Lockheed or Raytheon had to go through to do it.

I will point out that this program has been in the works for three years already or even more. So this isn't something where, even if you have a great missile, you can show up with it tomorrow morning and it will meet all the requirements and get in there. I view this more like, to take an analogy, the XM30—sorry, I forget which—the order of the letters—not tank, sorry, carrier—that just a couple of weeks ago the Army said, okay, so two main primes on this, same thing exactly, and we're going to open it up to see if by any chance anyone has something else, to do our diligence properly.

I think that the military organization as a whole—it seems that some of the new primes go off and often develop some solutions on their own dime as they sort of, if we build it, they will come—and it's doing their work properly, and I applaud them for that, by saying, hey, before we stick to the same way we've been doing this for years, let's just check if someone happened to have developed something that fits the bill here and can do it. So I don't think this has come necessarily from being dissatisfied as much as it has come from the landscape is changing on most systems out there that you see—even if there are two primes, it gets opened up again to an industry day or call for RFIs—to see if there's something else that anyone else developed. I just think that it's highly unlikely that someone has something that was developed here and that can fit the bill exactly in this short timeframe.

Richard Shannon, Analyst at Craig-Hallum Capital Group

I mean, somebody would have to be well down the road in developing something right now if they were going to hit that April timeframe next year. Right. And I mean the community for building these sorts of things is pretty small. I imagine this is probably well known if it exists. And so does that mean you don't think there's anyone out there that has that.

Sam Rubin, Chief Executive Officer

Well, I wouldn't quite say that. I don't know all the players out there and never say never, but I would say that both Lockheed and Raytheon are very, very experienced and really know what they're doing, and they've been working on this for three years. Everyone is welcome to reach their own conclusions. I don't want to jump to conclusions for others.

Richard Shannon, Analyst at Craig-Hallum Capital Group

Okay, that's fair enough. Thanks for that perspective, Sam. Appreciate that. My second question is, in your prepared remarks you also talked about some missile programs here—about seven different platforms are being evaluated, three with Lockheed Martin and some other ones. Maybe you talk about some of these programs if you're able to, and maybe if you can convey either average platform size or total TAM or something just to give us a sense here, because it seems like missile programs can be pretty sizable like the NGSR that you're already on.

Maybe you can talk about the opportunity and kind of timeframes when those might be decided.

Sam Rubin, Chief Executive Officer

Thank you. So yeah, definitely I have to be a bit careful here. First of all, some of them we don't know enough about the end program to relate—we know what we're told, but we don't know enough about it. Others might be very early or in a stage where they really don't want us talking about them. But let's just say that there was a talk by one of the generals recently from the Army talking specifically about air defense being a very layered approach where you have short-range interceptors, mid-range, long-range.

And even recently there was a call for space-based interceptors. So the Army and the Department of War as a whole need an entire range of products and not one, and there isn't one that fits it all. So there is a very big push right now on building up capacity and refilling the inventory of THAAD and PAC-3 Patriot PAC-3. But, you know, there's probably an even bigger push at the next generation of all these interceptors. So I would say we're in almost all different types of interceptors or precision munition.

When I say missiles, it's not only interceptors—some of them are precision munition also. But I unfortunately don't have numbers really I can share at this point.

Richard Shannon, Analyst at Craig-Hallum Capital Group

I sure appreciate all that detail. Thank you, Sam.

OPERATOR

Thank you. We'll take our next question from John Hickman with Ladenburg Thalmann. Please go ahead. Your line is open.

John Hickman, Analyst at Ladenburg Thalmann

Hi, thanks for taking my question. And I probably should know the answer to this, but could you explain to me, what's a zoom camera?

Sam Rubin, Chief Executive Officer

Yeah, zoom camera means it can change its field of view. So like in your iPhone, you can zoom in and out of the picture, like magnify it, as opposed to a fixed-focus camera. So cameras and optics we make for the small drones, those usually cannot zoom. They have a fixed field of view—you see one area—because you're really trying to trade off weight and size. But the larger platforms all have the ability to zoom in and out.

John Hickman, Analyst at Ladenburg Thalmann

Okay, okay. And then I have one more question. In the past you've indicated that you thought you had a multi-year kind of runway before there might be other solutions for germanium, you know, to replace germanium other than your Black Diamond glass. How do you feel about that now?

Sam Rubin, Chief Executive Officer

I feel like we actually have more time than I thought. I recently took a look at some of the announcements about germanium capacity. So you have, on one hand, Umicore, the Belgian company that is considered the most promising in increasing capacity and having a mine in Congo. They recently announced that what they're producing now is really only 3 to 4 tons of germanium a year, and what they expect to produce in a few years—and they're talking about four to five years—is more, but it's definitely nowhere near solving all the problems.

And then you look at some of the awards to companies in the U.S. that are either on the mining or refining, and each one of them is talking about single-digit tons of germanium. So I think we might have more time than I thought.

John Hickman, Analyst at Ladenburg Thalmann

Okay. And then just so my math is correct, you reported a backlog of 110 million, and then you reported these two big contracts for another 21 or 22 million. So if you add that to your backlog and then subtract whatever our estimates are for Q1, that should be close to a backlog for Q1.

Albert Miranda, Chief Financial Officer

Well, except that, you know, we also ship product out and we're continuing to grow. So I wouldn't quite say it's guaranteed that that is the backlog, but, you know, it's definitely—the backlog has been growing quite a bit since 110 million. So I think at the end of this quarter we will have a very healthy backlog to report.

John Hickman, Analyst at Ladenburg Thalmann

Okay, thank you. Appreciate that. Nice quarter.

Sam Rubin, Chief Executive Officer

Thank you. Thank you, John.

OPERATOR

Thank you. We do have a follow-up from Richard Shannon with Craig-Hallum. Please go ahead. Your line is open.

Richard Shannon, Analyst at Craig-Hallum Capital Group

Thanks, Sam and Al, for letting me ask one more here. Sam, to follow up on the supply chain comments here, would love to get a sense of what are the kind of long poles in the tent here, or the most difficult hurdles to overcome, for adding capacity across all the elements of what you're trying to do here—kind of holistically, qualitatively—and over what timeframe do we expect to see this capacity increase completed? Thank you.

Sam Rubin, Chief Executive Officer

Yeah, that's a great question. And adding capacity in a vertically integrated company is kind of like a whack-a-mole game, if you would, because you solve one problem and it pops up elsewhere. However, right now, by far, glass is our biggest capacity constraint. We're adding a lot—that's where spending on capex is coming from. A lot of it is around the glass. We will probably need to add even more. And we're adding it mainly for our systems, but also for some other customers or for subsystems.

After the glass, the detectors are the long pole in the tent, which we don't have much control over. And the lead time on them has been growing from, I think, six months to 10 months, even more now. So you see that in our inventory, where we are building up and preparing parts ahead of time and ordering them, knowing that our vendors can't really react fast enough. After that, it really breaks down pretty quickly into many, many small things. Mechanics—motors have become a really big deal because of the magnets in the bottom.

Now it's the same pain everyone is feeling everywhere, I think, of making an integrated system.

Richard Shannon, Analyst at Craig-Hallum Capital Group

Great. Thank you, Tina.

OPERATOR

Thank you. This concludes our question and answer session and today's event. Thank you for joining LightPath Technologies' fiscal fourth quarter and full year 2026 earnings conference call. You may now disconnect your lines.

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