Elmet Group NASDAQ: ELMT reported second-quarter fiscal 2026 revenue growth of 35.2% as demand increased across aerospace, defense and government, industrial, medical and semiconductor markets, while higher tungsten and molybdenum prices also contributed to results.
Revenue rose to $66.4 million from $49.1 million a year earlier. CFO Mike Lee said approximately 55% of the increase reflected higher demand across the company’s end markets, with the remainder tied to raw-material pricing effects. Gross profit increased 63.7% to $16.6 million, and gross margin expanded to 25.0% from 20.7% in the prior-year period.
Chairman and CEO Peter V. Anania said the company’s open order backlog reached a record $131.5 million, up 55% from $84.6 million at the end of the second quarter of 2025. The company operates through its Critical Materials Components, or CMC, division, which manufactures tungsten and molybdenum products, and its Engineered Microwave Products, or EMP, division, which makes microwave systems and high-power components.
Pricing, Sourcing and CMC Productivity Drive Margin Expansion
Management attributed the quarter’s gross-profit improvement primarily to the CMC division. Lee said the company’s tungsten sourcing agreements allowed it to benefit from a sharp increase in tungsten prices during the first quarter that began flowing through earnings during the second quarter.
“We definitely saw” benefits from managing through the increase in material prices, Lee said during the question-and-answer session. He added that roughly half, or slightly more, of CMC’s quarterly growth was related to the company’s ability to leverage supplier agreements and sell material at prevailing market prices compared with material already held in inventory.
Anania said global tungsten and molybdenum prices have risen significantly over the past year amid export controls and tariff volatility. He said Elmet has sourced more than 95% of its tungsten and molybdenum from outside China for more than a decade, a position that management said has reduced exposure to export-control supply disruptions.
The company also cited productivity gains from increased staffing and third-party operational support at CMC facilities. Lee said those improvements contributed meaningfully during the quarter and are expected to remain beneficial through the rest of the year.
Adjusted EBITDA rose 57.2% to $8.9 million from $5.6 million a year earlier, driven by operational improvements in CMC. Adjusted net income was $5.2 million, or $0.18 per share, compared with $2.8 million, or $0.14 per share, in the prior-year quarter.
On a GAAP basis, Elmet posted a net loss of $4.5 million, or $0.16 per share, compared with net income of $1.2 million, or $0.06 per share, a year earlier. Operating expenses increased to $24.2 million from $6.9 million, largely due to $14.2 million in equity-based compensation. Of that amount, $12.9 million was tied to one-time vesting of awards associated with the company’s initial public offering, according to Lee.
Defense Backlog Doubles, Though Major Awards Have Yet to Flow Through
The company’s aerospace, defense and government, or AD&G, backlog increased 100.5% year over year. Lee said the growth was driven by programs including CERN, Precision Strike Missile, Standard Missile and Patriot, as well as commercial and defense aerospace and radar programs.
Elmet said approximately $36.3 million of the $46.9 million increase in total backlog from the second quarter of 2025 to the second quarter of 2026 was related to tungsten product growth in the AD&G market, reflecting a mix of price and volume.
However, Lee said recently announced multiyear missile-defense interceptor awards to defense primes have not yet meaningfully reached Elmet’s backlog. The company has seen requests for quotations and some “modest” orders funded through residual program budgets, he said, but no significant contribution yet from the new appropriations cycle.
Anania said the company expects continued defense-related opportunities as the U.S. replenishes stockpiles and global defense spending rises. In June, Elmet announced $4.3 million in strategic funding to develop domestic manufacturing capabilities for molybdenum-based products and refractory-metal components used in defense programs, including interceptor programs.
Medical Orders Create Backlog Volatility Outside Defense
Outside AD&G, Lee said backlog trends were influenced heavily by one large medical customer whose ordering pattern can vary despite what he described as consistent underlying volume. The medical customer accounted for nearly $12 million of CMC backlog at the end of the second quarter of 2025, compared with about $5.5 million at the end of the second quarter of 2026, he said.
Management said industrial activity increased in both business divisions, while semiconductor demand has begun to improve from a smaller base. Energy demand was down somewhat, though Lee characterized that market as relatively small and subject to expected quarter-to-quarter variation as fusion and fission opportunities remain in development stages.
During the call, management also said it has no current orders from SpaceX. However, Lee said the company has orders from other satellite companies and recently spent roughly $3 million in capital expenditures on a new CMC production line that has begun producing. He also cited growing EMP activity in drone defense and satellite-related applications.
IPO Strengthened Liquidity and Reduced Debt
Cash at the end of the second quarter totaled $66.1 million, up from $1.8 million at the end of the first quarter. Lee said April’s initial public offering generated net proceeds of $125.4 million. The company used proceeds to retire $17.5 million in term debt, pay about $31.0 million on its revolving credit facility and fund working-capital and other corporate needs.
Elmet ended the quarter with about $44.6 million in revolving-credit borrowing capacity, giving it roughly $110.7 million of cash availability for strategic investments when combined with cash on hand. Inventory increased to $102.4 million from $75.0 million at the end of the first quarter, reflecting higher raw-material prices, sourcing dynamics and volume growth in CMC.
Looking ahead, Lee said CMC’s larger scale means it will continue to have the greatest influence on companywide profitability. Management said it expects higher-margin AD&G business, productivity improvements and sourcing arrangements to support margins, while acknowledging EMP faced operational challenges during the quarter in a facility serving higher-margin defense and semiconductor products.
Lee said the company is working to improve EMP performance in the second half, though he expects the process to take time. He reiterated that Elmet continues to view a 30% gross-margin target over the next four to five years as viable.
About Elmet Group (NASDAQ:ELMT)
Elmet provides precision-engineered components and advanced high-energy systems for growth markets. Our customers in these markets require advanced technology involving critical and strategic materials, such as tungsten, molybdenum and niobium (such materials, the “Critical Materials”) and high-level radio frequency (“RF”) engineering, including plasma generation, radar, and other high-energy systems (together, “High-Power Microwave”). Our products and solutions are integral to the Aerospace, Defense and Government, Industrial, Medical, Semiconductor and Electronics, and Energy industries.
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