The Elmet Group Q3 2026 Earnings Call Transcript
The Elmet Group (NASDAQ:ELMT) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
The Elmet Group reported Q3 2026 revenue of $79.6 million, a 55.6% increase from Q3 2025, driven by higher tungsten and molybdenum prices and increased demand.
Adjusted EBITDA surged 130% to $17 million, reflecting operational performance improvements and strategic sourcing agreements.
Strategic initiatives include a $450 million investment from the Department of War to expand tungsten processing, a $2 billion contract with the Defense Logistics Agency, and the acquisition of OSRAM’s metal production operations in Germany.
The new ERT division aims to enhance tungsten supply chain integration, with plans to leverage a 1,000 metric ton annual tungsten concentrate supply agreement with Tungsten West.
Management highlighted the transformational period for the company, emphasizing strengthened supply chain capabilities and future growth potential, with significant investments planned in manufacturing and supply chain expansion through 2031.
Full Transcript
OPERATOR
Good morning, and welcome to The Elmet Group’s third quarter 2026 earnings conference call. Joining us for today’s presentation are the company’s Chairman and CEO, Peter V. Anania, and CFO, Michael Steven Lee. At this time, all participants are in listen-only mode. Following management’s remarks, we will open the call for questions. I would like to remind everyone that this call will be recorded and made available for replay via a link in the Investor Relations section of the company’s website at investors.theelmetgroup.com.
Before I turn the call over to The Elmet Group’s Chairman and CEO, the company would like to remind all participants that statements made by management during the course of this conference call that are not historical facts are considered to be forward-looking statements within the meaning of U.S. securities laws, including the Private Securities Litigation Reform Act of 1995. These statements are predictions, projections, or other statements about future events, or are based on current expectations and assumptions that are subject to risks and uncertainties, including those risks identified in the Risk Factors section of the company’s registration statement on Form S-1 and in its other reports and filings with the Securities and Exchange Commission. Participants on this call are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s beliefs only as of the date hereof.
The company expressly disclaims any duty to update or correct any forward-looking statements. Further, management’s remarks today will include certain non-GAAP financial measures. These measures are calculated by management and do not have any standardized meanings under U.S. GAAP. These non-GAAP measures supplement GAAP measures, which should not be viewed as substitutes for GAAP measures. A reconciliation of the most directly comparable GAAP financial measures to these non-GAAP financial measures is available in the company’s quarterly report on Form 10-Q and in its earnings press release.
I will now turn the call over to The Elmet Group’s Chairman and CEO, Mr. Peter V. Anania, for his comments. Sir, please proceed.
Michael Steven Lee (Chief Financial Officer)
Thank you, Peter, and good morning, everyone. We are pleased to present a strong Q3 performance for fiscal year 2026. Before I begin, please note that all numbers I plan to discuss have been rounded for ease of presentation. Our full financial results for the quarter can be found in our quarterly report filed with the SEC yesterday afternoon. Now let’s get started. Revenue in Q3 2026 increased 55.6% to 79.6 million compared to 55.1 million in Q3 2025. Approximately 70% of the growth was driven by higher tungsten and molybdenum raw material prices, while 30% was driven by increased demand through aerospace, defense, government, industrial, medical, and semiconductor end markets. Excluding the impact of significant material price increases, aggregate shipments grew around 15% compared to Q3 2025.
Gross profit for Q3 2026 increased 124.1% to 24.9 million, or a 31.3% gross margin, compared to 11.1 million, or a 21.7% gross margin, in Q3 2025. The increase is driven primarily by our division where the Q1 2026 rapid rise in tungsten pricing and our management thereof continue to benefit our financial performance. We also delivered meaningful operational improvements through strategic tungsten sourcing agreements and productivity gains. Operating expenses for Q3 2026 increased 67.8% to 12.9 million compared to 7.7 million in Q3 2025, for a net increase of 5.2 million within the quarter. We incurred approximately 1.6 million associated with equity-based compensation compared to 0.4 million in Q3 2025. During the quarter, we also experienced around 0.9 million in one-time expenses associated with acquisition diligence and our transformative agreements with the Department of War. We also saw increases in costs associated with ongoing public company compliance and expenses associated with growth.
Turning to the balance sheet, as of Q2 2026 cash was 105.7 million with an additional 124.7 million of restricted cash, compared to 1.8 million of cash as of December 31, 2025. The increase was driven by 200 million in proceeds from the issuance of Class A redeemable preferred stock to the Department of War. Our restricted cash is related to our investment into Masan, where the cash for the investment was effectively in transit in Q2 on October 2, 2026, with the transaction settling October 5, 2026, the first day of our fiscal Q4.
As of October 2, 2026, we saw inventories grow to 152.8 million, up from 69.7 million as of December 31, 2025. The increase was driven by the CMC division as we saw the full effect of tungsten and molybdenum raw material pricing increases hit our balance sheet, driving approximately 85% of the increase since Q4 by December 31, 2025. The balance of the increase is attributed to our growing demand. To supplement our financial statements presented in accordance with GAAP, we use certain non-GAAP financial measures including adjusted net income, EBITDA, and adjusted EBITDA because we believe these metrics provide investors with additional meaningful methods to evaluate certain aspects of our results.
We define adjusted net income as net income less stock-based compensation and one-time non-recurring costs such as tax impacts of our reorganization, discontinued operations, the costs associated with the IPO, certain acquisition and transaction costs, severance and restructuring costs, other non-recurring costs, and the income tax effect of such adjustments as applicable. Net income for Q3 2026 was 8.3 million, or $0.24 per diluted share, compared to net income of 1.6 million, or $0.08 per diluted share, in Q3 2025. Adjusted net income for Q3 2026 was 11.4 million, or $0.35 per diluted share, compared to 4.7 million, or $0.23 per diluted share, in Q3 2025. It’s worth noting that Q3 2025 was prior to our reorganization in preparation for our IPO, at which time we were organized as a pass-through entity and not subject to corporate income tax.
The share count is also materially different between the comparable periods and we recommend reviewing the schedule within our earnings release to fully understand the changes between the comparable periods. We define adjusted EBITDA as our net income plus interest expense, income taxes, depreciation and amortization, and, as applicable for each period, stock-based compensation and non-cash gains and losses on sale of assets. Adjusted EBITDA also excludes certain non-recurring costs such as costs associated with the IPO, certain acquisition transaction costs, severance and restructuring costs, and other non-recurring costs.
In the first two quarters of this year, we recorded fair value gains and losses that were included in our adjusted net income and adjusted EBITDA that were associated with our equity investment in our strategic supply chain partner EQ Resources. While we believe the size and nature of this investment is core to our sourcing strategy and therefore operational in nature, our transformational agreements, both executed and contemplated, have changed the nature of our relationship with EQ Resources.
Additionally, our subscription agreements with Masan and Blue Moon have transformed our balance sheet and we believe the related flow-through effects of all fair value impacts to our income statement should be, and now have been, excluded from adjusted net income and adjusted EBITDA. Adjusted EBITDA for Q3 2026 increased 129.4% to 17.0 million, compared to 7.4 million in Q3 2025. The increase is driven by operational performance improvements within our CMC Division. A full reconciliation between GAAP net income and adjusted net income and EBITDA and adjusted EBITDA can be found in our quarterly report and in our earnings press release.
As we’ve shared previously, given our susceptibility to quarterly performance fluctuations driven by factors including timing of purchase orders, metal market pricing dynamics, and other drivers across the business, we believe it is also prudent to examine our results over a longer time horizon. To that end, I will now review our results for the trailing 12 months, or TTM. For clarity, the following comparisons will be made between 12-month periods ending October 2, 2026 and July 3, 2026.
Revenue increased 12.4% to 257.0 million compared to 228.5 million in the prior TTM period. Excuse me. As mentioned a few moments ago, approximately 70% of the growth was driven by higher tungsten and molybdenum raw material prices, while the remaining 30% was driven by increased demand across aerospace, defense, government, industrial, medical, and semiconductor end markets. Gross profit increased 27.2% to 64.5 million, or a 25.1% gross margin, compared to 50.7 million, or a 22.2% gross margin, in the prior TTM. The increase in gross profit and gross margin was driven by the aforementioned effects of the tungsten market pricing, our management thereof, and productivity gains within our CMC division. Operating expenses increased 10.3% to 55.7 million compared to 50.5 million in the prior TTM period.
The increase is primarily related to equity compensation associated with the IPO, one-time expenses associated with acquisition diligence and our transformative agreement with the Department of War, expenses associated with ongoing public company compliance, and expenses associated with growth. As mentioned a few moments ago, we changed our adjusted EBITDA and adjusted net income calculations, removing fair value adjustments of equity instruments.
This resulted in the exclusion of a 3.3 million gain through Q2 to date and a 4.7 million gain in Q3 to date. These changes are detailed in the associated schedule in our earnings release. Net income was 5.0 million, or $0.17 per diluted share, compared to a net loss of 1.7 million, or $0.08 per diluted share, in the prior TTM. Adjusting for IPO-related operating expenses, equity compensation, fair value adjustments of equity instruments, and reorganization costs, our adjusted net income increased to 22.7 million, or $0.89 per share, compared to 16.0 million, or $0.71 per share, in the prior TTM. Adjusted EBITDA increased 33.6% to 38.1 million, or 14.8% of revenue, compared to 28.5 million, or 12.5% of revenue, in the prior TTM period.
I’d like to finish with our backlog, where we have seen significant growth over the last year as well as the prior quarter. Our firm order backlog grew to approximately 347.4 million at the end of Q3 2026 compared to 131.5 million at the end of Q2 2026 and approximately 87.3 million at the end of Q3 2025. Our recently formed ERT Division received an IDIQ contract award from the DLA for tungsten offtake in the amount of 2.0 billion, with 161.9 million initially funded and now reflected in backlog.
Our pre-existing divisions, CMC and EMP, were up 98.1 million at the end of Q3 2026 compared to the end of Q3 2025, driven by ADG customers with a separate DLA award for molybdenum products, and a series of new and growing programs such as CERN, Strategic Missile Systems, Prism Standard Missile, Patriot, and Next Gen Interceptor, along with a mix of commercial and defense-related aerospace and radar programs. We also attribute approximately 52.7 million of the 98.1 million of total backlog growth to tungsten and molybdenum material price increases.
That concludes our prepared remarks. Now I’d like to hand it back to the operator for Q&A.
OPERATOR
Thank you. At this time we will open the line for questions from the company’s covering analysts. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you’d like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please, while we poll for your questions.
Our first questions come from the line of Jim Rashuti with Needham and Company. Please proceed with your questions.
Jim Rashuti (Analyst)
Hi, good morning. So a lot to go through, but maybe if we could start on the newer business, the URT business. Thanks for highlighting some of the milestones, but I’m wondering if you can provide any color on the revenue potential for this business as you look out to 2027.
Michael Steven Lee (Chief Financial Officer)
Yeah, thanks, Jim. The ERT business is really two different businesses within the division. One is a trading business that we’re standing up. It is, in effect, what we do today to source for our CMC division, but it’s going to be a multiple of volume, with us selling some to commercial customers, including the DLA. That piece of the business is completely tied to the material availability from Tungsten West, which is a mine in the UK. We’ve signed a commercial agreement with that.
We’re anticipating, you know, there’ll be a time-phase delay from them starting to ramp and us seeing revenue of, depending on how much and how we actually sell it, between I’d say three to six months when they start to ramp. So it’s hard to pinpoint what the impact of 2027 is because it’s not really in our control. They do have published ramp rates that are on their website that you can see. But, you know, again, you know a lot of these mines have, you know, they have plans, but we have to wait until we actually see product delivered. So it’s hard to pinpoint how much the scope and scale of their volume. We have a commitment where we think it’s going to be about three to four times what our internal use is.
We do plan on offsetting our internal use as soon as we can and then start selling the excess. So, again, that pushes the how much shows up as a revenue stream for 2027 to the, you know, towards the end of the year. At full scale, at current pricing, in the current, again current pricing, you know, we could see, you know, a couple hundred million dollars start to manifest at run rate, maybe a little bit more. But again a lot of it is, depending on as far as timing, it’s completely dependent on Tungsten West availability to provide. And then we get to get through a lot of it through processing through Masan. So there is a lag time there.
Jim Rashuti (Analyst)
Right. We can follow up on that further offline. I wonder also if you could help us understand, I mean clearly some of the growth, a good chunk of the growth that you saw in the quarter, was due to higher tungsten and moly prices. Can you help us with the impact on CMC on margins in the materials business from the higher prices?
Michael Steven Lee (Chief Financial Officer)
Absolutely. So I’ll do just a quick bridge from Q3 of 25 to Q3 of 2026. So these are, you know, from going from 21.7 to 31.3 for the total business, which is largely going to be driven by our CMC division. The rough math is about two-thirds of that growth. So going, so I’d say, you know, 600 to 650 basis points is the impact of pricing going up and us therefore marking that material up as we sell it through. And then about a third of our margin growth, so in 300 to 400 basis range, is operational performance, which we still see as quite remarkable.
It’s far better than what we had anticipated given the nature of how difficult it is to move margins in manufacturing, or at least move it quickly. And so yeah, about two-thirds to a third. And so, you know, I think that, yeah, I think that maps it out for us. So we see 600, 650 on material and about 350 to 400 on operational execution.
Jim Rashuti (Analyst)
Got it. Thanks. And last question for me, we’re a couple of months away, I guess, from the new DFARS rules going into effect January 1st. What are you hearing from your A&D customers, and maybe how do you see the new rules impacting CMC and, I guess, longer-term ERT? If you could just talk to that for a moment.
Michael Steven Lee (Chief Financial Officer)
Yeah, so we haven’t seen a significant uptick in orders distinctly tied to that. We have had conversations with customers that are, I’d say, not fully cognizant of the rule change and are starting to respond to it. So we do anticipate we’ll see more, you know, tailwinds in terms of order patterns in the future. But it is, it’s not as straightforward as a rule comes out and every response. It’s often these, especially because there have been some pretty dramatic rules to these NDAAs, both in the way people contract as well as some of the material prohibitions, that the time for that to be digested in these large primes is a lot longer than you may anticipate, and it just takes a little bit longer than you think. And so we haven’t seen the full impact of that yet. So we do think it’s going to be a tailwind for us in the future, and it’s going to be a driver for future backlog growth.
Peter V. Anania (Chairman and CEO)
We are having discussions with many customers about this, but as Mike said, we haven’t received firm orders in the amount that we would have expected.
Jim Rashuti (Analyst)
Okay, thank you.
OPERATOR
Thank you. Our next questions come from the line of Chip Moore with Roth Capital Partners. Please proceed with your questions.
Chip Moore (Analyst)
Hey, morning everybody. Thanks for taking the questions, and congratulations on all the positive developments here and the transformation. I wanted to follow up on ERT as well. And you gave some good color there, Mike, around sort of timing next year potential, but, you know, maybe any more color around Tungsten West and that, I think it was 1,000 MTU. You know, I think that’s going to Masan for processing, but then comes back to you guys. Just kind of walk us through that, and the GAAP accounting on that as well, and implications.
Michael Steven Lee (Chief Financial Officer)
Yeah. So that 1,000 MTU, you can do the math relatively quickly.
Chip Moore (Analyst)
Is it 1,000? It’s 1,000 tons.
Michael Steven Lee (Chief Financial Officer)
Thousand tons, yes.
Chip Moore (Analyst)
MTUs would be 100th of a ton.
Michael Steven Lee (Chief Financial Officer)
Yeah. And so you can do the math on that relatively quick and see what the potential is by just looking at the current market pricing. Per what Peter just said, the accounting flows will vary depending on how we sell it. So if we sell to the DLA, we’re likely going to have a very clean transaction with a short time horizon. We’d see us picking it up in the UK and we’re likely recognizing revenue within 60 days, something in that time horizon. If it’s going through Masan in Vietnam, we could be several months and, depending on the agreement, we may be having to record revenue twice.
So we do have a stack of agreements that have different terms and conditions, and so it makes it a little complex to pinpoint where we’ll be because, in terms of what that thousand profile looks like, we do think somewhere in the area of a third to maybe up to a half, depending on the outcome of next year and the ramp rate of Schwabmünchen, would be consumed internally. So again, there’s quite a distinct variable there in terms of what ERT would look like, both in the rate for which Tungsten West ramps and supplies us and then where we direct that material to and then the potential customer on the other end. So it is quite dynamic for a process that is buying concentrate, processing, and selling it. The series of outcomes and the related GAAP accounting behind it is not as straightforward as a buy-resell, unfortunately.
So we are a little hesitant to give any kind of strong guidance around what this will look like in the second half of next year. But we do like to position, or at least try to help people think about, our business this way: the existing core business, the CMC and EMP, excluding below the tungsten pricing, is exceeding our expectations and, you know, the first nine months this year we anticipate that to continue. We’re seeing this strong growth there.
We’ll be adding Schwabmünchen into next year. It’s a turnaround, so it’ll be somewhat dilutive to margins for a period of time. We think we can get that cash flow positive by year three, and we’re seeing a lot of interest before even completing the acquisition from potential customers. So there is opportunity for us to improve that timeline. And then ERT is the option for us for next year. Again, a lot of it is, you know, conditional upon somebody else’s performance, but once that starts to ramp it’s going to be pretty, pretty steady state real quick.
So that’s the way we think about it, knowing that we’re trying to work to get everything to execute on time or earlier. But again, we can’t control, you know, our primary source around tungsten concentrate.
Chip Moore (Analyst)
Very, very helpful, Mike. And yeah, makes perfect sense. A lot of moving pieces. We’ll look forward to learning more as we can. And you brought up the acquisition in Germany. Any, you know, any obstacles there to closing that, and then just talk about the playbook. It sounds very similar to what you’ve done with Philips in Maine, but your thoughts there?
Peter V. Anania (Chairman and CEO)
Yeah. So we have applied for our FDI and it has been approved in Germany. We are in the process of going through transition where, you know, this is a spinout of Osram, so we have to, you know, unravel a few things. So we’re going through that process. So we’re pretty confident that it’ll happen in Q1 2027. And as part of our due diligence and part of our process now to get to closing, we are talking with customers. We’re seeing more interest than we expected, I would say, but nothing is concrete yet there.
And we have hired or have brought Mark Lamar, who is our 40-year employee up in Lewiston, Maine and ran the Philips element plant for a while over there, to help with the transition. You’re right that Schwabmünchen is a lighting plant, just as the Lewiston plant that we purchased was a lighting plant. So it’s very similar. They have all similar swaging and furnaces and reduction furnaces and so forth that we had in Lewiston, but much more modern than is in Lewiston at the moment. So it’s actually better, newer equipment, so we’re pretty excited about it. The amount of space we have there, too, will also potentially help us with, on the EMP side, as we get European business that requires European content, we can perhaps manufacture it there also, because there is enough space for that.
Chip Moore (Analyst)
Great, thanks. Thanks, Peter. Yeah, German engineering, always, always good. And maybe the last one, just that the 30% growth ex the raw material movement, it sounds like that was fairly broad-based, is that correct? And, you know, are you still not seeing any of that really material restocking uplift yet?
Michael Steven Lee (Chief Financial Officer)
No, not in the sales. We’re seeing a little bit on the demand side. Nothing that’s demonstrative, let’s put it that way. Things I would characterize as, you know, residual or sweep funding for smaller components where they could lock up supply for multi-year ahead of time. You know, nothing dramatic. What we are seeing is a fair amount of inquiry in terms of how fast can you ramp across different programs, and I’m speaking to CMC division specifically when I want to in these comments. So we’re seeing that, and the way we interpret that is the primes are pressurizing the supply chain to figure out where they need to focus. You know, we’ve seen the announcements of Lockheed and L3 getting awards via, you know, via Aerojet, and they’re out pursuing new facilities and so forth to ramp.
So, you know, I think we’re getting a response of that, but they’re still trying to catch up as well and figure out where they have gaps in their supply chain. So we do see the early signs. I do think we’re still tied to a follow-on appropriations to really see it pop. And we’re seeing some trickling here and there. That said, on the EMP side, Raytheon business with Patriot is definitely starting to tick up for our EMP division. It’s a different part of the missile platform, more on the communications side. It’s got a different cadence than the actual missiles. So we are seeing that starting to kick in earlier. So we’ve seen a little bit, but nothing that’s the wave that we’re anticipating in the future.
Peter V. Anania (Chairman and CEO)
We are on the EMP side seeing a real increase in Echodyne anti-drone defense, if you will. And that is really expanding rapidly right now.
Chip Moore (Analyst)
Great color. Thanks so much, everybody.
OPERATOR
Thank you. Our next questions come from the line of Austin Muller with Canaccord Genuity. Please proceed with your questions.
Austin Muller (Analyst)
Hi, good morning. So I just had a question about the Nevada mine. So the 40ish tons of tungsten you expect to potentially receive in 2027, is that tailings or is that new from the mine itself?
Peter V. Anania (Chairman and CEO)
Yes, that would probably be out of their tailings pile. That’s where they’re starting.
Austin Muller (Analyst)
Okay, and how are you thinking about the loss of Susan Collins? And obviously she was on the Appropriations Committee. About 10% of Maine’s GDP is defense. So I was just wondering how you’re thinking about the outlook for naval shipbuilding within the core business.
Peter V. Anania (Chairman and CEO)
Not a lot that dependent on naval shipbuilding in our core business. We do do some, but it’s very minor. The loss of Susan Collins is yet to be seen as to how that’s going to affect us. She was a good champion for us and we appreciate all she’s done. But we also have a good senator in Angus King, who has supported us quite a bit and serves on some of the same committees that are important to us, and we hope to foster relationships with other delegations in Michigan and Ohio.
Michael Steven Lee (Chief Financial Officer)
Yeah. And I’d just add on, as people think through this, to keep in mind that defense and munitions tend to be a bipartisan topic. And so, to echo what Peter said, we appreciate what took place in the past. We foresee that what we do for the United States doesn’t change based on our state-level representation.
Austin Muller (Analyst)
Awesome. I’ll pass it back there. Thank you very much.
OPERATOR
Thank you. At this time, this concludes our question-and-answer session. If you have any additional questions, you may contact The Elmet Group Investor Relations team at elmtgateway-grp.com. I would now like to turn the call back over to Mike Lee.
Michael Steven Lee (Chief Financial Officer)
Yeah, thank you. We did receive a few inbound questions I’ll now read and then address. The first question is: Can you level set between tungsten and molybdenum pricing mechanics and refresh investors on how each flow through the P&L? Yeah. So as mentioned earlier, we do mark up and value-price both the material because of our sourcing capabilities as well as the conversion. And so there is a favorable effect as material pricing goes up and comes down.
It’s much more demonstrative for tungsten. The timing for which these changes flow through our P&L are different. Molybdenum, as you may have seen in some of our prior published documents, about 85% of that is sourced domestically as consigned. So any changes on moly, as we call it, tend to move through our P&L faster. A change today would likely be reflected 90 days or so to 120 days later in our P&L. Less of a margin effect, more of just pure revenue.
It is the one place we do have a decent amount of, or a meaningful amount of, true pass-through pricing versus mark-up. So the margin expansion isn’t quite as dramatic, and the speed for which the change is much faster. Tungsten, where we see value in our sourcing as well, ends up having a more substantial push up or down on pricing and margin. And that takes, you know, up to nine months to flow through our P&L. So to that extent, I would say we still have a little bit of room to go before we see the full effects of the pricing spike in Q1 to $3,000 per MTU.
You know, I think we’re starting to see that here not in a quarter-to-quarter, but over the course of the bridge of the two quarters. So hopefully that answers that question. The next question is: Can you walk through your funding bookings expectations for the next 12 months, and then when do you expect the heaviest bookings quarter, and how does it compare to this quarter’s performance? Again, I’ll go back to appropriations is going to dictate a lot for us in terms of the wave of munitions we anticipate to see in multi-years and so forth. I would, again, point to some of the phenomenon around the big primes and larger publicly communicated long-term contracts.
These take a while to digest. It’s worth noting that those aren’t fully funded yet, so therefore the flow down to us is going to take some time. So it’s hard for us to predict. We don’t see any distinct signs in the change of our existing trend. I would say the one outlier there is obviously the DLA contract for tungsten offtake. That funding is going to come in likely in one wave at some point in the future. But right now we’re focused on ramping that business and don’t anticipate to eat through that funding next year.
So I wouldn’t anticipate a rush for additional funding there in the next several months. But it’s going to largely depend on the way DLA allocates their budget versus us actually requesting any additional funding specifically for a ramp. Last question: Can you talk about capital deployment? How do you think about the balance between mining verticalization and adding to your microwave technologies business over time? So we think given the Department of Defense agreement, we have adequate capitalization for the actual capex and buildout, and we’re working through a refinancing of our existing credit facility to expand our working-capital flexibility. That’s just something we had planned on doing.
We delayed that until we could complete the Department of Defense agreement. It took precedence, and we were able to manage without updating our credit facility. It’s nothing distinct or different other than our business has changed, and we hadn’t really worked with our banks to change our credit facility to reflect that. We do anticipate continuing to look for strategic bolt-ons for the microwave division. We do have an M&A pipeline we monitor that has not changed.
And so in terms of financing it, we think we have multiple means to actually accomplish that. So with that I will wrap up because we’re coming up on time. Thanks again, everyone, for joining us today. In closing, I want to thank our employees for their continued dedication, our customers for their trust, and our shareholders for their ongoing support. We believe we are currently operating in a time of unprecedented realignment, which presents a significant opportunity for us to grow the business. Given our exceptional positioning, the third quarter was a pivotal step forward in our mission to capitalize on the significant opportunities ahead.
We remain focused on execution and look forward to updating you on our progress in the quarters to come. Operator,
OPERATOR
Thank you for joining us today for The Elmet Group Company’s third quarter 2026 earnings conference call. You may now disconnect.
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