Executive Summary

Q1 FY2026 revenue declined to $6.31M (-11% YoY; -12.6% QoQ), driving an operating loss of $0.76M and net loss of $0.65M; basic EPS was -$0.27 as mix shifted and fixed costs spread over lower volume .
Gross margin compressed to ~17.9% (vs ~31.1% in Q1 FY2025 and ~22.8% in Q3 FY2025) on lower volumes and higher material costs (gold), while SG&A remained stable YoY .
Management highlighted strong defense end-market prospects, a 25% backlog increase since the start of FY2026, and over $2.5M in recent missile defense orders (Patriot, AMRAAM, LTAMDS) despite uneven quarterly results tied to customer schedule delays and a slow commercial aerospace recovery .
Cash rose 43% YoY to $10.26M with working capital at $19.71M; backlog stood at ~$13.02M with 12–18 month shipping expectations, supporting medium-term visibility .
No Wall Street consensus estimates were available via S&P Global for Q1 FY2026; coverage remains limited for OTC Pink names, so no formal beat/miss framework could be applied for this quarter.*

What Went Well and What Went Wrong

What Went Well

Orders momentum: “we recently booked over $2.5 million in orders in support of various missile defense programs, including Patriot, AMRAAM, LTAMDS and others,” with a strong pipeline and defense long-term projections .
Cash strength: Cash was $10.26M (+43% vs Q1 FY2025), providing liquidity cushion through uneven periods .
Commercial aerospace improvement YoY: mix shifted with commercial aerospace rising to 35.1% of revenue vs 19.4% YoY, reflecting gradual sector recovery despite still below-target production .

What Went Wrong

Revenue and margins compressed: revenue fell 11% YoY to $6.31M; operating swung to a $0.76M loss; gross margin fell to ~17.9% vs ~31.1% YoY, driven by customer schedule delays and higher material costs (gold) .
Defense revenue decline YoY: defense contribution dropped to 55.6% from 69.0%, and management cited customer delivery schedule changes as a principal driver .
Internal control weakness: material weakness in IT general controls (change management and access rights) identified; disclosure controls and procedures deemed not effective as of Q1 FY2026 .

Financial Results

Metric	Q1 2025 (Jun 30, 2024)	Q2 2025 (Sep 30, 2024)	Q3 2025 (Dec 31, 2024)	Q1 2026 (Jun 30, 2025)
Revenue ($USD)	$7.10M	$7.34M	$7.22M	$6.31M
Cost of Products Sold ($USD)	$4.89M	$5.61M	$5.57M	$5.18M
Gross Profit ($USD)	$2.21M (calc from )	$1.73M (calc from )	$1.65M (calc from )	$1.13M (calc from )
Gross Margin %	31.1% (calc from )	23.6% (calc from )	22.8% (calc from )	17.9% (calc from )
Operating Income ($USD)	$0.33M	$0.17M	-$0.13M	-$0.76M
Operating Margin %	4.7% (calc from )	2.4% (calc from )	-1.8% (calc from )	-12.0% (calc from )
Net Income ($USD)	$0.39M	$0.25M	-$0.06M	-$0.65M
Net Margin %	5.5% (calc from )	3.4% (calc from )	-0.9% (calc from )	-10.4% (calc from )
Basic EPS ($)	$0.17	$0.10	-$0.03	-$0.27

Consensus vs Actual (Q1 2026):

Metric	Q1 2026 Consensus	Q1 2026 Actual
Revenue ($USD)	N/A*	$6,308,155
Primary EPS ($)	N/A*	-$0.27

*Wall Street consensus estimates via S&P Global were unavailable for IEHC for this period.

Industry Mix (% of revenue):

Industry	Q1 2025	Q2 2025	Q3 2025	Q1 2026
Defense	69.0%	67.5%	60.8%	55.6%
Commercial Aerospace	19.4%	19.1%	18.7%	35.1%
Space	8.2%	9.8%	17.3%	4.9%
Other	3.4%	3.6%	3.2%	4.4%

Selected KPIs:

KPI	Q2 2025	Q3 2025	Q1 2026
Backlog ($)	~$14.30M	~$12.83M	~$13.02M; ship in 12–18 months
Cash ($)	$8,587,615	$9,041,167	$10,255,005
Inventories, net ($)	$8,188,628	$7,589,249	$7,500,106
Accounts Receivable, net ($)	$3,552,603	$3,544,385	$3,590,807
SG&A ($)	$1,371,941	$1,594,721	$1,693,938

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue (directional)	FY2026	None	“Possible that revenue in FY2026 will be slightly lower than 2025”	New directional commentary
Backlog trajectory	FY2026 YTD	None	Backlog increased ~25% since beginning of FY2026	New qualitative update
Shipments timing	FY2026	None	Backlog expected to ship over 12–18 months	Maintained visibility comment

Note: No formal numerical guidance ranges (revenue, margins, OpEx, tax) were provided in Q1 FY2026 materials .

Earnings Call Themes & Trends

No Q1 FY2026 earnings call transcript was available; themes reflect press release and MD&A disclosures .

Topic	Previous Mentions (Q2 2025)	Previous Mentions (Q3 2025)	Current Period (Q1 2026)	Trend
Defense demand	Growth driven by geopolitical uncertainty; defense ~67.5% of mix	Defense +85% YoY; strong orders; defense ~60.8%	Strong long-term defense projections; $2.5M recent missile defense orders	Stable-to-strong outlook; quarterly unevenness
Commercial aerospace	Recovery granular, sector below target levels	Decline YoY tied to major OEM challenges	Recovery remains slow; mix up to 35.1% of revenue	Improving mix; sector still below targets
Space launch	+137% QoQ; +44% YTD	+366% YoY; robust commercial programs	Continues to grow (qualitative)	Positive, slower in Q1 mix
Tariffs/inflation/materials	Inflation/tariffs noted; cost pressures	Inflation noted; costs impacted	Higher material (gold) costs impacting margins	Persistent headwind
Backlog	~$14.30M; declining vs PY	~$12.83M; 12-month ship	~$13.02M; 12–18 months; +25% vs FY start (qualitative)	Stabilizing
Internal controls	Effective as of Q2	Effective as of Q3	Material weakness in ITGC; not effective	Deteriorated in Q1
Regulatory/legal	SEC 12(j) proceeding ongoing	SEC 12(j) proceeding; CFO litigation settled	SEC 12(j) proceeding; request to expedite Feb 18, 2025	Ongoing risk factor

Management Commentary

“Our results from one quarter to the next may be uneven… revenue was lower… due primarily to customer schedule delays, along with the still slow recovery of the commercial aircraft sector.” — Dave Offerman, President & CEO .
“We recently booked over $2.5 million in orders in support of various missile defense programs, including Patriot, AMRAAM, LTAMDS and others. Our sales pipeline indicates more orders are on the horizon.” — Dave Offerman .
“By almost any discernible metric, IEH’s financial health has improved considerably this past year… it’s possible that revenue in Fiscal Year 2026 will be slightly lower than 2025.” — Annual highlights, management comment .
Cost drivers: “increase in our cost of products sold… impact of higher material costs in the form of primarily gold.” — MD&A .

Q&A Highlights

No Q1 FY2026 earnings call transcript was available; therefore, no analyst Q&A themes or guidance clarifications could be extracted for this quarter [ListDocuments earnings-call-transcript=0].

Estimates Context

No S&P Global (Capital IQ) Wall Street consensus EPS or revenue estimates were available for Q1 FY2026; coverage appears limited for OTC Pink securities. Actual revenue printed $6.31M and EPS was -$0.27, but no formal beat/miss determination can be made .
Future revisions: Given margin compression and defense/commercial aerospace mix shifts, any initiating coverage would likely reduce near-term margin expectations while acknowledging backlog/orders strength. No current estimates to adjust were available.*

*Values retrieved from S&P Global where applicable; consensus data unavailable for IEHC in Q1 FY2026.

Key Takeaways for Investors

Quarterly volatility persists; the sequential revenue decline and margin compression warrant caution until customer schedule normalization and price adjustments offset material cost inflation (gold) .
Defense pipeline remains a core pillar; recent $2.5M orders and management’s strong sector outlook support medium-term revenue visibility despite quarterly unevenness .
Commercial aerospace exposure is rising in mix; recovery is gradual but can catalyze margin improvement if production approaches targets at major OEMs .
Liquidity is solid (cash up 43% YoY; ~$10.26M) and working capital robust, providing flexibility to navigate near-term volatility without external financing .
Internal controls require remediation; the identified ITGC material weakness adds execution risk and should be monitored for remediation progress and potential audit impacts .
Backlog stability and 12–18 month shipment timing underpin revenue visibility; watch conversion pace and mix to gauge gross margin trajectory .
With no sell-side coverage, stock moves may be driven by direct company updates (orders/backlog, control remediation timeline, SEC 12(j) proceeding resolution) rather than consensus beats/misses .

IEH Corp (IEHC)·Q1 2026 Earnings Summary