Executive Summary

Soft start to FY26 as expected: revenue fell 32% year over year to $2.70M and the company posted a net loss of $0.34M ($0.16) EPS; bookings were healthy at $2.80M (+37% YoY) and backlog hit a record $18.26M (+94% YoY) .
Sequentially, revenue declined from $3.13M in Q4 FY25 and EPS improved slightly to ($0.16) from ($0.18) as gross margin compressed further to ~14.4% (from ~18.4% in Q4) on revenue timing/lag between orders and shipments .
Management reiterated revenue cadence commentary: “anticipate sales to pick up at the end of the fiscal second quarter, before reaching a steadier level in the fiscal third quarter,” supported by sustained record backlog .
Strategic/catalyst items: $1.65M investment in CBE LLC tied to a 25% stake in CrossingBridge Advisors, with a ~11.7% initial royalty “cap” rate and CrossingBridge AUM at $4.0B (6/30/25); U.S. Air Force UPL requested AMRAAM production to double by 2028 (Solitron’s largest program)—both potential medium-term tailwinds if executed/approved .

What Went Well and What Went Wrong

What Went Well
- Record backlog and resilient demand: backlog ended Q1 FY26 at $18.26M (+94% YoY) with bookings of $2.80M (+37% YoY), supporting visibility into the coming quarters .
- Management reaffirmed the near-term revenue ramp: “we expected lower revenues in this quarter and anticipate sales to pick up at the end of the fiscal second quarter, before reaching a steadier level in the fiscal third quarter” .
- Strategic investment to diversify cash flows: invested $1.65M for 6.4% of CBE LLC; CBE owns 25% of CrossingBridge Advisors with an initial royalty “cap” rate of ~11.7% on revenue and AUM growth to $4.0B as of 6/30/25 (from $3.4B at 12/31/24) .
What Went Wrong
- Topline and margin pressure: revenue down 32% YoY to $2.70M and gross margin compressed to ~14.4% vs ~42.2% a year ago on timing/production lags; net loss of $0.34M (EPS $-0.16) vs $0.59M ($0.28) in Q1 FY25 .
- Sequential softness continued: revenue fell from $3.13M in Q4 FY25 and gross margin slipped from ~18.4% as shipment cadence lagged robust orders; operating loss widened to ~$0.38M from ~$0.17M in Q4 .
- Limited external estimate coverage inhibits “beat/miss” signaling—no Wall Street consensus EPS or revenue estimates available for Q1 FY26, reducing immediate stock narrative clarity from an expectations standpoint (S&P Global data)*.

Financial Results

Metric	Q1 FY25 (May 31, 2024)	Q3 FY25 (Nov 30, 2024)	Q4 FY25 (Feb 28, 2025)	Q1 FY26 (May 31, 2025)
Revenue ($M)	$3.97	$3.37	$3.13	$2.70
Gross Profit ($M)	$1.68	$1.00	$0.58	$0.39
Gross Margin %	42.2%	29.7%	18.4%	14.4%
Operating Income ($M)	$0.79	$0.33	($0.17)	($0.38)
Net Income ($M)	$0.59	$0.27	($0.37)	($0.34)
Diluted EPS ($)	$0.28	$0.13	($0.18)	($0.16)
Net Income Margin %	14.9%	7.9%	(12.0%)	(12.4%)

Growth vs. Prior Year
Revenue YoY %	—	—	—	(32.0%)
EPS YoY	—	—	—	($0.44) vs $0.28

Growth vs. Prior Quarter
Revenue QoQ %	—	—	—	(13.7%)
EPS QoQ	—	—	—	+$0.02 vs ($0.18)

Results vs. Estimates (S&P Global)

Revenue consensus: N/A*; EPS consensus: N/A*. Actual revenue $2.70M and EPS ($0.16) reported, but no consensus available to compute beats/misses .
Values retrieved from S&P Global.*

KPI and Order Metrics

KPI	Q3 FY25	Q4 FY25	Q1 FY26	YoY (for Q1)
Bookings ($M)	$8.05	$8.92	$2.80	+37% vs $2.04
Backlog ($M, period-end)	$12.28	$18.11	$18.26	+94% vs $9.41

Balance Sheet (selected)

Cash & equivalents: $2.57M at 5/31/25 vs $4.10M at 2/28/25 (decline reflects $1.65M CBE investment and quarterly loss) .
Long-term investment: $1.65M (CBE LLC) recognized in Q1 FY26 .
Mortgage loan: $3.88M total (current + non-current) at 5/31/25 .

Segment breakdown: Not disclosed; business is presented on a consolidated basis .

Guidance Changes

Metric	Period	Previous Guidance/Commentary	Current Guidance/Commentary	Change
Revenue trajectory (timing)	FY26 Q2–Q3	“Expect soft revenues in Q1 FY26… sales to pick up at the end of the fiscal second quarter, before reaching a steadier level in the fiscal third quarter.” (from FY25 Q4 release)	“We expected lower revenues in this quarter and anticipate sales to pick up at the end of the fiscal second quarter, before reaching a steadier level in the fiscal third quarter.”	Maintained
Formal quantitative guidance (revenue, margins, opex, tax)	FY26	Not provided	Not provided	Maintained

Notes: Company does not provide explicit numeric guidance ranges; management provides qualitative cadence commentary anchored by backlog and order timing .

Earnings Call Themes & Trends

No Q1 FY26 earnings call transcript was available or filed; themes below reflect disclosures from Q3 FY25 and Q4 FY25 releases vs current quarter.

Topic	Previous Mentions (Q-2: Q3 FY25)	Previous Mentions (Q-1: Q4 FY25)	Current Period (Q1 FY26)	Trend
Revenue cadence/order-to-ship lag	Revenue down due to lower starting backlog; plating supplier issue weighed on Q2 FY25; adjusted op income discussed	Expect soft Q1 FY26; pickup by end of Q2; steadier Q3	Reiterated: lower Q1; expect pickup end of Q2; steadier Q3	Improving visibility
Bookings/backlog	Bookings $8.05M; backlog $12.28M	Bookings $8.92M; backlog $18.11M (+62% YoY)	Bookings $2.80M (+37% YoY); backlog $18.26M (+94% YoY)	Strong/record
Defense programs (AMRAAM/HIMARS)	Anticipated large program order; demand commentary positive	Positive third-party commentary; RTX noted AMRAAM production to double in CY25 vs CY24; HIMARS demand strong	UPL notes USAF request to double AMRAAM by 2028 (needs Congressional approval)	Positive if approved
New product development (SiC)	Growing interest; prototypes in testing	Continued interest and prototypes	Continued interest and prototypes	Building pipeline
Capital allocation	—	—	$1.65M investment in CBE LLC; royalty-based revenue exposure to CrossingBridge	Diversification

Management Commentary

“We expected lower revenues in this quarter and anticipate sales to pick up at the end of the fiscal second quarter, before reaching a steadier level in the fiscal third quarter.”
“Backlog increased from $18.11 million at the beginning of the fiscal year to $18.26 million at the end of fiscal 2026 first quarter.”
“During the quarter we invested $1.65 million for 6.4% of the units in CBE LLC… CBE will be entitled to a royalty equal to approximately 14.9% of the revenue of CrossingBridge… approximately 11.7% [initial cap rate]. CrossingBridge… AUM were $4.0 billion as of June 30, 2025, versus $3.4 billion as of December 31, 2024.”
“In the… unfunded priorities list… the U.S. Air Force requested an increase in AMRAAM production from 1,200 annually to 2,400 annually by 2028. AMRAAM is the largest defense program that Solitron supplies to… any increase requires Congressional approval.”
“We continue to see increased interest in new product development, including silicon carbide… prototypes for testing… optimistic about creating additional revenue sources.”

Q&A Highlights

No Q1 FY26 earnings call transcript was found or filed for SODI; therefore, there are no Q&A themes or clarifications to report for the period (we searched for SODI earnings-call-transcript documents and none were available).

Estimates Context

S&P Global consensus was not available for Q1 FY26 EPS or revenue; as a result, we cannot compute beats/misses. Actuals: revenue $2.70M; EPS ($0.16) .
Values retrieved from S&P Global.*

Where estimates may need to adjust:

With management reiterating Q2 exit pickup and steadier Q3, model updates should reflect stronger 2H FY26 revenue cadence consistent with record backlog and normal order-to-ship lags, while incorporating current gross margin baseline (~14–18% recent range) until mix/volume leverage improves .

Key Takeaways for Investors

Backlog-led visibility: Record $18.26M backlog and sustained YoY bookings growth support management’s view of a revenue pickup exiting Q2 and steady state in Q3; watch shipment cadence and conversion rates .
Near-term pressure, medium-term leverage: Gross margin compressed to ~14.4% on lower revenue/absorption; as volumes normalize into 2H, margins should benefit from mix and fixed-cost leverage if the cadence unfolds as guided .
Defense program optionality: AMRAAM production increase request (largest SODI program) represents upside if approved and executed; HIMARS/foreign demand remain constructive—track Congressional actions and OEM commentary .
Diversified income stream: The $1.65M CBE/CrossingBridge royalty could add incremental, less cyclical cash flow; monitor realized royalty yields versus the ~11.7% initial cap rate and AUM trajectory (now $4.0B) .
Liquidity and capital allocation: Cash declined to $2.57M (from $4.10M) largely due to the CBE investment and quarterly loss; balance sheet remains manageable with ~$3.88M mortgage debt—ensure working capital supports the anticipated ramp .
Modeling implications: With no Street coverage, investor models should anchor on company disclosures—backlog, bookings cadence, and management’s shipment timing guidance—while keeping gross margin assumptions conservative until volume/mix improve (S&P Global estimates unavailable)*.
Monitoring list for next 1–2 quarters: sequential revenue inflection by late Q2, gross margin stabilization, any AMRAAM/HIMARS order flow, SiC design wins/prototypes to orders, and realized cash yields from the CBE investment .

References: Q1 FY26 8-K and press release ; prior quarters Q4 FY25 and Q3 FY25 materials .

SOLITRON DEVICES INC (SODI)·Q1 2026 Earnings Summary