LightPath's Infrared Pivot: Backlog Tripled on BlackDiamond Systems
From component maker to vertically integrated defense supplier, LightPath is riding the NDAA germanium-alternative imperative – but the market wants to see cash.
LPTH · Earnings Call · 2026-05-08
LightPath Technologies has completed a transformation that most suppliers only talk about. In the March 2026 quarter, revenue hit $19.1M, up 109% YoY, and gross margin expanded to 36.3% from 29.0%. The deeper signal is the backlog: $110.6M, up 196% from June 2025, driven almost entirely by a shift from components to complete infrared cameras and assemblies. Total revenue reached $19M in Q3 FY26, but the composition matters more: assemblies and modules were 44% of the mix, up from essentially zero two years ago.
The Pivot: From Components to Vertically Integrated Systems
CEO Sam Rubin opened the call with the obvious: “The LightPath of today looks very little like the component supplier we were a few years ago.” — Sam Rubin, CEO · 2026-05-08 The change is more than narrative. The company's G5 Infrared acquisition added long-range surveillance cameras, while the Amorphous acquisition brought large-diameter chalcogenide glass melting — the missing piece for redesigning G5's cameras with BlackDiamond glass. Rubin: “So between what we have been doing internally and the Amorphous acquisition, we pretty much doubled our glass capacity, and it is nowhere near enough.” — Sam Rubin, CEO · 2026-05-08 That capacity constraint is the real story; the company is spending $6M of CapEx just to meet current backlog, with more to come. The step function in demand is expected in the next few months as the large-diameter glass unlocks new G5 cameras and larger assemblies. Rubin noted, “we are positioned in a way that we're the only ones that really can produce as many cameras as anyone wants.” — Sam Rubin, CEO · 2026-05-08 The NDAA requirement to eliminate Chinese-sourced optics by 2030 is a tailwind; customers are already placing orders for redesigned cameras before production begins.The Numbers: Momentum vs. Cash
The financials show real momentum but also the cost of growth. Operating income was -$4M, but that includes a $3.4M fair-value adjustment on the G5 earn-out. Adjusted EBITDA turned positive for the third straight quarter at $1.1M. However, free cash flow swung to -$8M, driven by prepayments to suppliers for long-lead materials. CFO Al Miranda explained that excluding the earn-out classification quirk, operating cash outflow was only $1.3M. The balance sheet remains strong: $55.2M in cash, funded by a December raise. Gross margin at 36.3% is the highest in years, and management is targeting 40% in the mid-term, albeit with a quarter or two of slippage due to capacity investments. The stock has returned +12.4% over the last 90 trading days, but remains about 20% below its May 28 peak — the market is waiting to see if the backlog converts into cash flow and net income.The Road Ahead: Execution and the NDAA Window
The strategy is validated by the order book. Counter-UAS orders alone make up roughly $30M of the $110M backlog, and the company is also ramping space-based missile-detection programs. The optical assembly business is growing so fast that LightPath is now using its own capacity internally rather than selling components. But execution risks remain. The Apache program faces funding uncertainty, and border-tower orders are being held up by DHS funding. Management has acknowledged the three-year window before germanium supply alternatives mature. As Rubin said in February, “We have a window of opportunity where everyone is struggling with germanium. We have our solutions that right now put us at an incredible place.” And earlier, on the conversion speed: “Pretty much every customer that has switched over from germanium to our BlackDiamond or is in the process too.”The new leadership additions — Doug Schoen (ex-Elbit, Honeywell) and Ryan Workman (ex-Silent Sentinel/Motorola) — are aimed at converting that technology edge into scale. As Rubin put it, “From here, the work shifts to execution.” The story is no longer about a component maker; it's about a vertically integrated defense-systems supplier with a record backlog and a clear path to margin expansion. The market's question is whether the operational complexity can be managed — and whether the stock's correction is a buying opportunity or a hint that the market is already pricing in the execution risk.We have a window of opportunity where everyone is struggling with germanium. We have our solutions that right now put us at an incredible place.