LightPath Technologies Q2 2026 Earnings Call - Record revenue and NDAA-aligned Black Diamond push, but earnout charge and execution risk remain

Conference Call Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LightPath Technologies’ second quarter 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, February 11, 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 involving various risks and uncertainties as discussed in periodic SEC filings. Although the company believes that the assumptions underlying these statements are reasonable, any of them can be proven to be inaccurate and there could 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 on certain 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. Following our prepared remarks, there will be a question-and-answer session. I would now like to turn the conference over to CEO Sam Rubin. Sam, the floor is yours.

Sam Rubin, CEO, LightPath Technologies: Thank you, Operator. Good afternoon to everyone and welcome to LightPath Technologies’ fiscal second quarter 2026 financial results conference call. We entered calendar year 2026 having completed the first part of our transition to a vertically integrated provider of high-value infrared optics and camera systems, geared towards driving higher revenue and gross margins. The second quarter demonstrates this transition with measurable commercial success, record revenue, and margin improvement. The progress we have made is reflected in record orders, a growing systems backlog, and increasing customer adoption of our technologies, as well as, and maybe more importantly, improvements in our margins and cash flow. Today, LightPath is a fundamentally different company. Over the past several years, we have transformed from a precision optical component supplier into a vertically integrated provider of high-value infrared optics and camera systems, and offerings that range from proprietary materials all the way through complete imaging solutions.

I’ll share some context on this transformation, discuss some of our programs driving the growth, and the acquisition of AMI, our amorphous materials. At the core of our platform is Black Diamond, our proprietary chalcogenide glass licensed exclusively from U.S. Naval Research Laboratory as a domestic supply chain-secure alternative to germanium for infrared imaging. This positions us securely with the fiscal year 2026 National Defense Authorization Act, NDAA, which mandates elimination of U.S. defense reliance on optical glass components and systems sourced from Russia, China, and other covered nations no later than January 1, 2030. With defense acquisition timelines already requiring action in the near term, our optical assemblies, infrared cameras, and thermal imaging systems are designed, manufactured, and delivered in full alignment with these requirements. We believe we are positioned as a supplier of choice for mission-critical defense and aerospace applications.

It has been about a year since our acquisition of G5 Infrared, the producer of the industry’s leading long-range infrared cameras for surveillance and Counter-UAS. The G5 acquisition is a prime example for us leveraging a unique differentiator, in this case, our germanium alternatives, to enable the acquired company to do more than they could do alone, far more in this case. Since we acquired G5 a year ago, G5 has booked more than $80 million of new orders for their products, compared to $15 million of revenues the prior year. Some of it is because they were at the right place at the right time, such as border patrol spending, Counter-UAS solutions, and more.

Part of it is because that under LightPath, using the Black Diamond materials, we enable G5 to be able to execute far better than anyone else out there because we have a secured vertically integrated supply chain. To date, we have publicly announced a redesign of only two of their cameras, but with the acquisition of Amorphous Materials, we can now complete the remaining redesigns and soon make all of G5 cameras using Black Diamond. Let’s talk a bit about the acquisition of Amorphous Materials, an industrial manufacturer of complementary chalcogenide glass melting technologies, in particular for large-diameter optics. Amorphous Materials is a more than 50-year-old company with a strong industry reputation, founded by Dr. Ray Hilton Sr., who was considered one of the pioneers in the commercialization of chalcogenide glass. He also, by the way, wrote the leading book about chalcogenide glass.

The significance of large-diameter Black Diamond lenses is, well, significant. In the world of optics, the further distance you want to detect an object, the larger the optics needs to be. Cameras or devices for relatively short distances, such as hundreds of meters, have optics that are between 1-5 inches in diameter. That is plenty of size for applications such as close-range security, firefighting cameras, gun sights, and so on. If now one wants to detect objects that are kilometers or miles away, the size of the optics grows. For example, G5 long-range cameras, the most long-range ones, have lenses that are as much as 250 millimeters or 10 inches in diameter. If now you want to detect from space, say, a missile launch, the size of the optics needs to grow even larger.

This is partially why some of the larger detection satellites can be the size of a small bus. Until this acquisition, LightPath was melting its glass in the shape of a cylinder, 5 inches in diameter. Using some additional techniques, we’ve been able to turn that glass into 6 inches of optics, but not the sizes needed for most of our G5 most higher-end cameras and definitely not the size needed for satellite cameras. Amorphous Materials, which we just acquired, melt the glass using a somewhat different technology. That technology, which we can easily and are easily adapting for use in our Black Diamond glass, can melt the glass at sizes of 10 inches, and with some additional processing, can reach sizes of 17 inches. So why is this a big deal? Well, first of all, our own G5 cameras, a significant part of our growth driver.

The most higher-end cameras, or the longest-range cameras, if you would, used primarily for drone detection, have lenses that are as much as 10 inches in diameter. Until now, we could redesign only the smaller cameras to use Black Diamond. Now we’re full steam ahead at redesigning all of their cameras. By the autumn time, we expect to have G5 cameras to be using Black Diamond instead of germanium, all of the cameras. We expect to be able to make as many long-range cameras as the market can take. So while our competitors are still struggling to find a solution for germanium situation, we will be able to make as many cameras as we want. Second, this ability to make large-diameter Black Diamond now opens the door to any application of long-range imaging. Think about airborne gimbals and pods. Think ground-based imaging systems, and so on.

Most importantly, space. The U.S. government, through different agencies and programs, primarily the Golden Dome program, is going to launch dozens, if not hundreds, of satellites for missile tracking and detection. Let’s take one example of such recent awards, all public information, to demonstrate the potential magnitude of this. SDA, Space Development Agency, awarded in December $3.5 billion to build 72 tracking layer satellites. Those are all based on infrared cameras. Public information, which one can easily look up, that is $48 million per satellite. While we see the satellites as primarily a camera, they do more than that. And so the infrared camera system typically is about a third of the overall cost of the satellite. So that is $16 million per satellite. This includes a complex sensor system as well as other things. But from our point of view, most importantly, is an optical system.

That optical system, oftentimes referred to as a telescope, is a pretty complex system that includes, well, you guessed it, large-diameter optics. So until now, Black Diamond was not even considered for use in those applications, and even though it has incredible properties suited just for that use case in terms of thermal behavior and such. So we had a couple of space-related programs in our category of potential $10+ million programs, but those were small, definitely small compared to what we’re facing now. So now we get to play a major role in this. So couple that with SDA’s very recent announcement, I think last week, for a constellation of 300-500 satellites in low Earth orbit. And satellites in low Earth orbit have a fairly short lifespan. And this is, as they say, a whole new ballgame for us. However, a word of caution.

Satellite development takes time. The government works in two-year tranches, which means the next designs, the ones we plan to be part of, are not going to go out for at least another two years. So this is a huge potential for us, but it’s not immediate. Now, I would be remiss if I told you that this is the only reason for the acquisition. There is more. Until three weeks ago, before we did the acquisition, LightPath was producing glass only in one location, in Orlando, Florida. And we were potentially one hurricane away from a significant downtime in glass production. Now we have two manufacturing locations for Black Diamond. We’re going to duplicate between Orlando and Amorphous facility in Texas, all operations. Also, until three weeks ago, we kept adding and adding capacity in Orlando.

With this acquisition, we get another 50% boost to capacity and ability to add more in a more cost-effective manner. And last, until three weeks ago, we might have been worried about significant competition popping up. But now we acquired and own some of the most innovative and best teams capable for glass technologies in the U.S. And so while the acquisition as a standalone might only look like $3 million in annual revenue, this is a significant acquisition in more ways than meets the eyes. Okay. Other things in the quarter. Prior to the acquisition and a few weeks before the quarter ended, we completed a secondary raise in the market. We went out to raise $40 million. We received offers that were significantly, significantly more than that.

We ended up increasing the size to $60 million, which together with the green shoe option that the banks immediately exercised, ended up with approximately $65 million in net proceeds. The purpose of the raise is for investments in our future. LightPath is not burning cash in operation, and we do not raise money to burn it in the operation. This quarter we’re reporting on is, in fact, the second consecutive quarter of positive Adjusted EBITDA, and with a net cash flow from operations being positive again. The raise is really about growth and investments. As we have outlined before, we have a very specific strategy when it comes to decisions on investments and acquisitions.

The bottom line is that we have a very unique technology, set of technologies, and we believe that we are well positioned to leverage those to capture some significant market share on the subsystem and system level. However, that window of opportunity is not infinite. And while we always continue to develop more differentiators, competition keeps working, and they will catch up on our older differentiators at some point while we add new differentiators, and so on and so on. So we have a window of approximately, we think, 3 years, maybe 3-4 years, in which we can grab a significant market share and position the company as a dominant player in our field. Given the compressed time frame, we cannot do this purely through organic growth and through investing only the cash we generate, as much as I would prefer it that way.

We need to accelerate some of those activities to make a real dent in that time frame. Hence the war chest of cash and the plans to use it. I will emphasize again, this is not about operations or burning cash in operations or anything like that, but rather a very calculated set of investments and M&A opportunities in the near future. So now strategy and direction. In the short term, we have some very large programs we’re working on. We have the Lockheed Martin missile program that is moving along well. Lockheed Martin, our customer for the subsystems we make, has announced earlier or last month, actually, a successful flight test. While I would love to be able to share more information, we are at this point, as we recently mentioned, confined to sharing only what our customers share publicly.

So nothing else on this other than us continuing to be pleased with the progress. Multiple other programs, such as Border Towers, Navy Spear, and others, are progressing. Some might be slower than we want. Some might be faster, but pretty much on track. Overall, we’re doing pretty well there. We continue to work also on our second tier of programs, the ones we said have $10 million potential or more a year. And we continue to add to those. Just last month, we had another program join that club, and now, I guess, a ninth program that has the potential of $10 million or more. Other developments that we had last quarter include Congress passing the National Defense Authorization Act, NDAA, which included this year a requirement for the Department of Defense to stop using any optics components or even glass originating from certain nations, including China.

This, of course, plays very well to our position as the largest manufacturer of infrared glass in the U.S., as well as our realignment of the organization over the last few years away from China and back to manufacturing in the U.S. So together with our Black Diamond and now also the AMI portfolio of glasses from Amorphous Materials, all of which are produced in the U.S. and therefore NDAA compliant. So we actually don’t need to do anything new to comply with this other than continuing investing in glass production. Also, last quarter, the FCC, Federal Communications Commission, issued a new ruling that everyone expected. But everyone expected that to be a ban about drones made by DJI, actually commonly referred to as a DJI ban, or at most it to be, in general, about Chinese drones.

The FCC, however, took this a few steps further and added to the FCC covered list all drones and critical components used in any country outside the U.S., ally or not. Critical components is defined by Defense Contract Management Agency, and it includes, as you guessed, cameras and sensors. So this was a surprise to us, a very positive surprise, but yet a surprise. So in terms of how this impacts us, there are two aspects. The first is the simplest one, and that is optical assemblies. We already produce optical assemblies here in the U.S., NDAA compliant and now FCC compliant, and many of those are already used on drones. So for that part, we’re well aligned and prepared. Check. Second part is cameras. To that extent, we’re still evaluating what role we want or can play in the drone side of cameras, other than the optics, of course.

There are clearly some opportunities in providing cameras for the larger drones. But we also need to evaluate whether or what we want to do in the area of FPV drones, those are the one-directional, cheaper drones. The price targets there are very aggressive, and it’s not entirely certain what the direction will be there. But we’re looking into that, so stay tuned to some news there. So in summary, first step of our transformation, I can say, is now complete and very well. We have moved from components to systems and from commoditized supply to strategic technology leadership. We’re replacing constrained China-linked materials with a domestic, scalable, and proprietary alternative. We’re converting that differentiation into multi-year contract strategic investments and long-term relationships with some of the most sophisticated defense and industrial customers in the world.

Our next phase, which includes now rapid scaling over the next three years, is beginning and will be aided by our war chest of capital and will build on what we have done so far to win significant market share. I will be discussing that and more during our virtual investor day webcast in a couple of weeks. So now I’d like to turn the call over to our CFO, Al Miranda, to talk about second quarter fiscal 2026 financial results. All yours, Al. Thank you, Sam. I’ll keep my review to succinct highlights of the financials this quarter. As a reminder, much of the information we’re discussing during this call was also included in our press release issued earlier today and will be included in the 10Q for the period. I encourage you to visit our investor relations webpage to access these documents.

Revenue for the second quarter of fiscal 2026 increased 120% to $16.4 million as compared to $7.4 million in the same year-ago quarter. Sales of infrared components were $5 million or 31%. Revenue from visible components was $3.4 million or 21%. Revenue from assemblies and modules were $7.2 million or 44% of consolidated revenue. Revenue from engineering services was $0.7 million or 4%. Although G5 was the largest contributor to the revenue increase, our revenue from legacy LightPath business also grew substantially quarter-over-quarter. Excuse me. Gross profit increased 212% to $6 million or 37% of total revenues in the second quarter of 2026 as compared to $1.9 million or 26% of total revenues in the same year-ago quarter. The increase in gross margin as a percentage of revenue is primarily driven by the increase in revenue from assemblies and modules, cameras, which generally have higher margins.

Gross margin on engineering services was also much more favorable in the second quarter due to a non-recurring engineering project for a defense contractor. In addition, gross margins for infrared components have improved due to a more favorable mix and the resolution of certain manufacturing issues that negatively impacted the second quarter of the prior fiscal 2025. Operating expenses for the second quarter of fiscal 2026 was $14.6 million, up from $4.4 million in Q2 of fiscal 2025, an increase of $10.2 million. Of that $10.2 million increase, $7.6 million relates to the quarterly fair value adjustment of the G5 earnout liability. The quarterly adjustment will continue through Q3 of fiscal 2027 when the earnout period ends. Excluding the $7.6 million earnout revaluation, the underlying operating expense increase was $2.6 million or 60% compared to last year’s second quarter.

This results in a normalized operating expense of $7.1 million for Q2 fiscal 2026 versus $4.4 million in the prior year period. The $2.6 million year-over-year increase primarily reflects the integration of G5 following its acquisition, G5’s operating expenses, M&A costs related to Amorphous, higher sales and marketing spending, additional corporate expenses, and increased personnel costs driven by key executive vacancies that are now being filled. Net loss in the second quarter of fiscal 2026 totaled $9.4 million or $0.20 per basic and diluted share as compared to $2.6 million or $0.7 per basic and diluted share in the same year-ago quarter. The year-over-year increase in net loss for the second quarter of fiscal 2026 was primarily attributable to the change in fair value of the acquisition liabilities of $7.6 million for the earnout related to the acquisition of G5.

Excluding the earnout adjustment, the net loss for Q2 fiscal year 2026 would have been $1.8 million, an improvement from the prior fiscal year Q2. Adjusted EBITDA for the second quarter of fiscal 2026 was $0.6 million positive compared to an adjusted EBITDA loss of $1.3 million for the same year-ago quarter. Although not perfect, we believe that the adjusted EBITDA is a better indicator of core operating performance by excluding non-core, non-cash items. With all the interesting accounting around acquisitions, we will continue to report adjusted EBITDA in fiscal year 2026 and in 2027 as a helpful measure of financial success. Cash and cash equivalents as of December 31st, 2025, totaled $73.6 million as compared to $4.9 million as of June 30th, 2025, reflecting our successful capital raise in the second quarter. Sam mentioned that the use of cash is very calculated and strategic.

We’ve established plans, timelines, milestones, and returns on cash for the initiative Sam mentions and others. These planned investments are focused on revenue-generating activities in the short and mid-term while still maintaining a war chest for future opportunities. In Q2, we also paid the acquisition notes of $5.4 million in full, and as of December 31st, 2025, total debt stood at $0.8 million. Backlog totaled $97.8 million. We are pleased with the progress of the financials this quarter. We don’t give guidance, but we do set targets for ourselves, and we’ve given indications to the investment community that the financials are and will improve gradually in the near term. Q2 is a good moment to share a little more. Internally, we planned on gross margin at or above 35% by Q4, EBITDA positive by Q2, and operating cash flow positive by Q3.

We achieved those targets 1 or 2 quarters earlier than planned, so it’s a good moment to reflect on where we are and our progress. That said, we are by no means done. Looking forward, we have a detailed operating growth plan that is segregated into three components. These components support the strategy that Sam mentioned. First, continue support of our existing business. Second, invest in our already known and identified growth opportunities, much of which you already know from these earnings calls and from our investor presentation. And in three, investments in new business. These are things that are not yet known. The operating growth plan is an 18-24-month plan for resource allocation to meet current backlog deliveries and be prepared for the expected new revenue growth.

The vast majority of cash, CapEx, and human resources are pointed at the substantial growth opportunities, while smaller amounts of resources are allocated for our existing business growth. The approach allows us to match resources to opportunities that are close in timing and have better returns. This may mean investing now for revenue in future quarters, but the return on the investment in the midterm justifies the business initiatives. In all, we are well positioned to execute on our growth plan. With that, turn the call back to Sam for some closing remarks. Thanks. A few short closing remarks and then Q&A. So thanks again for everyone to join us. We’re now in an execution mode. The deepest transformation is largely behind us.

We’ve moved from component to system, leveraging our proprietary material and other technologies, and have built a vertically integrated platform aligned with where the defense procurement is heading. The result this quarter reflects a shift: revenue up 120%, gross margins at 37%, backlog around $100 million, two-thirds of which is higher margin systems and subsystems. Our near-term priorities are clear: deliver on schedule at quality, expand our germanium alternative product variants across the G5 portfolio, and convert backlog to revenue while protecting margins. Capital raise gives us the resources to add capacity and personnel as needed, as well as evaluate potential strategic M&A. Between border surveillance, counter-UAS, naval programs like SPEIR, and the missile program we have with Lockheed Martin missile programs, we have multiple paths to materialize revenue growth over the next several years, all supported by a technology and supply chain position that competitors cannot easily replicate.

With that, I’ll turn the call over to begin the Q&A. Operator? Thank you. Well, now we’re conducting a question-and-answer session. If you’d 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 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 keys. One moment, please, while we pull for questions. Thank you. Our first question is from Austin Moeller with Canaccord Genuity. Hi. Good afternoon. Great quarter. So just my first question here. I was just looking at the 10-Q, and sales to Europe were significantly greater this quarter.

Is that due to one specific customer, or is that due to NATO spending in your facility in Latvia, and is that specifically camera products like the G5? So it’s the latter. It’s NATO spending in defense in Europe and Israel, by the way, which we couple under Europe here. These are not yet camera systems, so we currently are not selling the camera systems out of Europe. Unless Al, this does include G5 shipments to Europe? Sorry. Yes. So some of it does come back to the U.S. We lose trail of it. So it does go to the U.K. It does go through the European market, but some of it comes back to the U.S. And unfortunately, we don’t have that see-through data for the cameras that are coming back into the U.S. Okay. So just to follow up. Yes. Okay.

So you talked a little bit about the opportunity to make up to 17-inch diameter Black Diamond lenses and going after Golden Dome and military ISR. Are you also looking at building the lenses for optical intersatellite links? Yeah. We do that already. We have quite a good business of free space optical communication between satellites. I think a pretty dominant position in that market. And that actually continues to grow. I think we’re right in discussion with a customer about increasing capacity for that quite a bit. It’s a different type of lens. Those are much smaller lenses, and it’s more our classical molded optics business. Great. That’s very helpful. Nice quarter. Thank you. Our next question is from Richard Shannon with Craig-Hallum. Well, thanks, Sam and Al, for taking my questions, and also congratulations on your great progress here recently. Apologies here.

I’m on the road today and got onto the call late. But Sam, the first question is really what I heard part of as I was jumping on a line here. You’re talking about a three-year window. I’m going to have to ask you to repeat that. I want to hear the whole story, and I’m sure I’ll have a follow-on to this. But it seems like a fairly important dynamic of what you’re building towards here. So if you can go into that, that’d be great, please. Yeah. I mean, one needs to assume that differentiators hardly ever last forever. And so in my view, differentiators is something we need to continue to add on and innovate and acquire or develop. But the current differentiators, we have a window of opportunity where everyone is struggling with germanium.

We have our solutions that right now puts us at an incredible place. I am sure no one people aren’t sitting back and just accepting it. And there’s some work elsewhere to either develop other materials or develop other supply chains for germanium. And while our materials still outperform germanium in many of the cases, there are going to be some customers that will be more competitive with us once they have supply of germanium. And I expect that to be no earlier than 3 years, probably 5 years. So to be on the cautious side, I’m saying a 3-year window in which we really have the runway to go out and capture significant market. Now, the beautiful thing about defense is once you’re in, you’re in. So in this 3 years’ programs we win, we’re going to be in them for the lifetime of programs.

Once people start using and seeing the differentiation and the quality of our materials, they’re not going to go back to germanium as easily. But no advantage is forever. So we need to be aware of that and just prepare accordingly. Okay. Well, that’s a very helpful way to understand and couch that. Maybe taking that understanding here and also using some wording that Al used about directing your resources here. Obviously, it’s creating a level of urgency, which I’m sure was already there anyway, but trying to make sure that you capture all these opportunities while you have the advantage. Where are you pointing these resources? Where do you have most constraints, both in material systems in terms of manufacturing capacity, partnerships, headcount, whatever? Where are you most worried? What’s your greatest focus? What’s your longest term your longest poles in a 10-year working rapidly towards solving?

So I would say capacity and product development. So product development is a certain type of investment that obviously is a bit more impactful on the P&L than it is on the balance sheet and such and is more of an acceleration to try and capture as much as we can in terms of product. So G5 has a great position in the long-range imaging. We want to capture more than that, probably down the road. Sorry. And in terms of capacity, it’s pretty much across the board, but glass has been a constraint, and we’ve been adding a lot, as we’ve been saying. And through the acquisition, it lets us add more and will continue to add. And then assembly and fabrication, different areas. But it’s more of a one-time sort of catch-up, I think, rather than big spending over the years. Al, anything to add to that?

I would just say we knew this was coming, and we’re as prepared as we can be for it. Okay. Fair enough. Maybe my last question. I’ll jump out of line here. And I don’t know if you addressed this before I got on the call here, but obviously, you’ve been moving towards converting all of your relevant cameras and subsystems and whatever to Black Diamond. And I know you talked about your first camera in the G5 portfolio last quarter here. Do you have any more conversions you’ve talked about? And what’s kind of the plan here or kind of the time frame by which you can convert all of the relevant cameras over to Black Diamond? How long is that going to take you to do that? Thanks. I think we’ve been this calendar year, for sure. We’re targeting much sooner than that.

But let’s say by the autumn is our goal or end of the autumn. Okay. Perfect. I will jump out of line, guys. Thank you. Okay. Thank you, Richard. Our next question is from Jason Schmidt with Lake Street Capital Markets. Hey, guys. Thanks for taking my questions. Looking at the Amorphous acquisition, just curious if you could discuss some of the programs they were in and then how you’re thinking about the ability to kind of scale that $3 million run rate that they had. Yeah. So Amorphous has really one main customer, a large defense prime that accounts to, I can’t remember exactly, probably 80% of their revenue, give or take. And that is with two major airborne platforms that they’re on.

I don’t want to speak out of line, but I think that on the Amorphous website, which is still up and running, there’s some references to which programs. So someone can go there and just find it. So I don’t give away information I’m not supposed to give. But Amorphous has always only provided material. Brilliant people, incredible team, which we love and enjoy working with, and incredible capabilities in the material science, but it sort of stops there. So you take those, and you add all the value adds that LightPath has. So we can fabricate components from it. We can mold lenses. So chalcogenide, one of the advantages of these materials is they can be molded. But no one has been molding the Amorphous AMI materials. So we can mold them. We can coat them. We can use them in assemblies.

So we’re sort of opening up the range of offerings by Amorphous to their customers significantly more. And there will also be some situation in which we might use some Amorphous materials in our systems, but that is less likely. The Black Diamond tends to be a better fit for us. Okay. That’s helpful. And then just looking at gross margin, understanding the dynamics on the strength in December, how should we be thinking about the March quarter here? So we had some favorable events. The engineering contract was a very high-margin contract, and so that was favorable and unusual. I’ll look at it this way, Jason. On a year-to-date basis, we’re at 33%. We’ve been signaling, and I even said it, that 35% is our goal. So I think if we stay there, we’re pretty safe. Okay. That’s helpful.

And then the last one from me, and I’ll jump back into queue. Obviously, really impressive top line in December. Were you at all impacted by the government shutdown, though? Not the most. No. No. Yeah. I don’t think so. No. All right. Perfect. Thanks, guys. Thank you. Our next question is from John Hickman with Ladenburg Thalmann. Hi. Can you hear me okay? I can hear you, John. How are you? Hi. Oh, thanks. My question’s basically been answered, except I was wondering if you could give us some kind of sense of what the cost difference is to a customer of a 5-millimeter Black Diamond lens versus a 15. So if I’m a customer, yeah, for the lens, what do I have to what’s the cost differential to that?

Oh, I don’t know the numbers off the top of my head, but it’s sort of obviously, it’s the material difference cost. But what comes into play when you go from something like 5-15 in diameter is how many lenses can fit in a coating chamber. So a coating chamber is a fixed cost, and it costs say $5,000 to run a coating. And so if you have 5-millimeter lenses, you have a boatload of them inside the chamber. If you have 15-millimeter lenses, you have far less, a third of the amount. And so you have the cost of the coating go up. Okay. Okay. Well, thank you. That’s helpful. Congratulations on the quarter, and I’ll take the rest of my questions offline. Thanks, John. Thank you. Thank you. This concludes our question-and-answer session. I’d now like to turn the call back over to Mr.

Sam Rubin for his closing remarks. Okay. I guess my second closing remark. Yeah. So to summarize where we stand, we’ve completed transformation from component to vertically integrated system companies. Yet another record backlog in the record revenue quarter. Keep breaking the records, which is nice. We have a well-capitalized balance sheet now, strong technology position, very good positioning in terms of the NDAA deadline and the FCC ruling. Really, now it’s about execution. So shipping products on time, converting backlog to revenue, expanding margin, and improving bottom line. So thank you, everybody. Looking forward to speaking to you next quarter or for those that will be joining us on our virtual investor day call in two weeks’ time. Thank you, and good night. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.