ELMT 10-K & 10-Q changes, risk factors and insider trading

On May 19, 2026, our Board of Directors approved a change in our fiscal year end from December 31 to a 4-4-5 fiscal calendar, whereby each fiscal quarterthree months consists of thirteen weeks grouped into two four-week months and one five-week month. Under the new fiscal calendar, our fiscal year ends on the Friday closest to December 31. The first fiscal year under the new calendar began on January 1, 2026, and ends on January 1, 2027. As a result of this change, our fiscalthree quartersmonths ending April 3, 2026, July 3, 2026 and October 2, 2026, may include an additional or lesser number of days compared to the prior year quarters ended March 31, 2025, June 30, 2025 and September 30, 2025, and accordingly, results for these periods may not be fully comparable to those of the prior year periods primarily due to the change in the number of days included in those periods. Our subsidiaries that have a fiscal year end different from that of our Company’s are consolidated using financial statements for periods that are within three months of our Company’s fiscal year end, with adjustments for material transactions, if any. This change was implemented to better align the Company’s accounting operations with quarterly public reporting requirements and to improve comparability of financial performance. The change in fiscal year will not impact our previously issued financial statements or tax reporting.

Our unaudited consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations reflect estimates and assumptions made by management. Events and changes in circumstances arising after AprilJuly 3, 2026, including those resulting from the continuing impacts of the currently unfavorable macroeconomic climate, will be reflected in management’s estimates for future periods.

The following table sets forth, for the fiscalthree quartersmonths ended AprilJuly 3, 2026 and MarchJune 31,30, 2025, our results of continuing operations, including presentation of the changes in between reporting periods:

Revenues for the fiscalthree quartermonths ended AprilJuly 3, 2026, increased $9.6$17.3 million, or 20.7%,35.2%, compared to the fiscalthree quartermonths ended MarchJune 31,30, 2025. Our EMP division saw an increase of $0.5$1.9 million, or 7.2%,26.0%, driven by radar components and industrial microwave systems for tempering and drying. Our CMC division revenues for the fiscalthree quartermonths ended AprilJuly 3, 2026, increased $9.1$15.3 million, or 23.2%,36.8%, compared to the fiscalthree quarter months ended MarchJune 31,30, 2025, driven by increases in isothermal forging dies for aerospace applications, molybdenum powder products in our medical end market, increased shipments with key missile programs Javelin,Javelin and Hellfire and AIM-9X Sidewinder, along with favorable pricing impacts associated with other tungsten products. Startingproducts in November 2024, the global critical material supply chain experienced multiple disruptions including the PRC’s export restrictions on “dual use” materials, tariff disruption in January 2025 and again in April 2025, and the PRC’s closure of multiple rare earth mines, all of which resulted in a rapid pricing increase for tungsten on the global market. We believe these events disrupted customer order patterns, leading to lower sales and gross profit over the first few months of 2025.general.

For our CMC and EMP divisions, we track our revenue and customers for our operating divisions across five key markets. We develop sales strategies for each and incentivize our sales resources to profitably grow our business. The following tables demonstrate revenues by markets for the fiscalthree quartersmonth and six month periods ended AprilJuly 3, 2026 and MarchJune 31,30, 2025.

Aerospace, Defense and Government revenues increased $3.9 million, or 17.6%, but decreased as a percentage of our business from 38.8%45.1% to 40.7%, or $4.8 million,39.3% in the fiscalthree quarter months ended AprilJuly 3, 2026, as compared to the prior year period. Growth was driven by increased sales to larger defense programs including the Hellfire, Javelin, Patriot, KC-135 Stratotanker, AIM-9X SidewinderHellfire and defenseJavelin radaralong programs.with favorable pricing impacts associated with tungsten products in general.

Industrial revenues decreasedincreased $9.6 million, or 64.0%, and increased as a percentage of our business from 34.2%30.5% to 37.0% in the fiscalthree quartermonths ended March 31, 2025, to 31.4% in the fiscal quarter ended April 3, 2026, but they increased by $1.8 million for the fiscal quarter ended AprilJuly 3, 2026, as compared to the prior year period. We saw higher sales of industrial microwave systems for tempering and drying, increased EMP sales into communications end applications, along with favorable pricing impacts associated with tungsten products.

Semiconductor and Electronics revenues increased $1.3 million, or 56.1%, and increased as a percentage of our business from 2.7%4.8% to 5.5% in the fiscalthree quartermonths ended March 31, 2025, to 4.7% in the fiscal quarter ended AprilJuly 3, 2026, or by $1.4 millionas compared to the prior year period. ThisIncreases increasewere wasdriven largelyby duedemand tofrom thesemiconductor mix ofcapacitor customers in both the semiconductor capital equipment and hi-reliabilityfavorable componentpricing sub-markets.impacts associated with tungsten products.

Energy revenuesRevenues increased $0.7 million, or 26.3% and remained consistent as a percentage of our business from 2.3%2.6% into 2.6% for the fiscalsix quartermonths ended March 31, 2026, to 4.1% in the fiscal quarter ended AprilJuly 3, 2026, or by $1.2 millionas compared to the prior year period. TheBoth growthcomparable experiencedperiods reflect normal fluctuations in thethis Energydeveloping end-marketend wasmarket with changes distributed across multiple customers in both the oil and gas and nuclear sub-markets.

Shipments by Geography andGeography, Material and Type

Shipments based on major geographic territory as a percentage of total shipments for the quarterthree and six months ended AprilJuly 3, 2026, as compared to the prior year periodperiods, saw an increase in the Americas from 83.4%85.4% to 85.2%87.3% and 84.5% to 86.4%, respectively, driven by increased shipments into various Aerospace, Defense and Government programs, industrial microwave systems for tempering and drying and tungsten pricing impacts. Shipments to Europe saw a decrease as a percentage of total shipmentshipments decreased from 12.0% infor the fiscalthree quarterand insix March 31, 2025, to 10.9% in the fiscal quartermonths ended AprilJuly 3, 2026; however, as compared to the prior year periods, from 10.6% to 8.7% and 11.3% to 9.7%, respectively. However, gross shipments increased intoto Europe byincreased 11.8%,22.3%, or $0.6$1.1 million, period-over-periodand 26.6%, or $1.0 million, for the three and six month periods as compared to the respective prior year periods, driven by multiple customers within our EMP segment.

Shipments composition based on the type of materials and services as a percentage of total shipments for the quarterthree and six months ended AprilJuly 3, 2026, as compared to the prior year period,periods, saw an increase in molybdenum from 59.4%54.0% to 59.5%.59.4% and 56.6% to 59.4%, respectively. This was primarily driven by increased volumes with the Javelin and Hellfire missile programs.programs and isothermal forging dies for aerospace customers. Tungsten also saw growth period-over-periodfor the three and six month period-over-periods from 15.8%18.6% to 17.8%,19.3% primarilyand 17.2% to 18.7%, respectively, driven by pricing increases associated with material input costs and increased volumes across multiple Aerospace, Defense and Government customers. Microwave products saw a decrease period-over-periodfor the three and six month period-over-periods from 15.5%16.6% to 14.2%13.5% asand a16.1% percentageto of13.8%, total,respectively, primarily driven by a lower rate of growth thancompared to molybdenum and tungsten. Other materials and services saw a reductiondecrease for the three and six month period-over-periods from 9.3%10.8% to 8.5%7.8% period-over-period,and primarily10.1% to 8.1%, respectively, driven by modesta declines inlower ourrate tollingof servicesgrowth compared to molybdenum and other metals processing.tungsten.

Costs of goods sold for the fiscalthree quartermonths ended AprilJuly 3, 2026 increased $6.4$10.8 million, or 16.9%,27.7%, compared to the prior year period. Gross profit margin improved from 20.7% for the six months ended June 30, 2025, to 25.0% for the six months ended July 3, 2026.

EMP saw an increase in cost of goods sold for the fiscalthree quartermonths ended AprilJuly 3, 2026 of $1.2$2.3 million, or 25.4%,42.3%, associated with an increase of $0.5$1.9 million, or 7.2%,26.0%, in revenue compared to the prior year period, resulting in a decrease of $0.7$0.4 million, or 23.6%,17.0%, in gross profit between the fiscalthree quartermonths ended AprilJuly 3, 2026 and the prior year period. This was driven by a shift in product mix within the division toward lower-margin industrial products, a rapid increase in aluminum and copper material input pricing as well as operating throughput challenges at one of our facilities, which resulted in a decrease in EMP’s gross profit margin from 37.0%27.5% for the quarterthree months ended March 31,June 30, 2025, to 26.4%18.1% for the quarterthree months ended AprilJuly 3, 2026.

CMC cost of goods sold for the fiscalthree quartermonths ended AprilJuly 3, 2026 increased $5.2$8.5 million, or 15.7%,25.4%, associated with an increase of $9.1$15.3 million, or 23.2%,36.8%, in revenue compared to the prior year period, resulting in an increase of $3.9$6.8 million, or 65.5%,84.0%, in gross profit between the fiscal quarterthree months ended AprilJuly 3, 2026 and the prior year period. This change was primarily driven by aactive richer product mix from our Aerospace, Defensesourcing and Governmentpricing management of the tungsten supply chain during the rapid increase in tungsten concentrate price over the first three months of 2026, as well as increased demand and Energyproductivity markets,gains increasingwhich together increased CMC’s gross profit margin from 15.1%19.4% for the quarterthree months ended MarchJune 31,30, 2025, to 20.3%26.1% for the quarterthree months ended AprilJuly 3, 2026.

General and administrative expenses increased $3.8$13.8 million, or 116.9%,342.7%, for the fiscalthree quartermonths ended AprilJuly 3, 2026, compared to the prior year period. The increase was partiallyprimarily a result of approximately $0.6$10.3 million related to stock-based compensation incurred in connection with stock-basedthe awardsacceleration outstandingof certain vesting criteria associated with the IPO, during the quarterthree months ended AprilJuly 3, 2026. Additionally, the increase was partially attributable to $0.8 million in additional one-time corporate costs related to third-party accounting and legal expenses in preparation for the IPO. Additional general and administrative expenses growth was attributable to the increase of staffing and professional services to support public company compliance.

Sales and marketing expenses increased $0.4$0.3 million, or 22.8%,13.9%, for the quarterthree months ended AprilJuly 3, 2026, compared to the prior year period. This increase was due to variable sales compensation associated with sales growth and the expansion of our sales team in support of our strategy and growth, in particular increased sales staffing and commissions in support of growth within our EMP division.strategy.

Interest expense increaseddecreased $0.1$0.7 million or 20.2%84.0% for the quarterthree months ended AprilJuly 3, 2026, compared to the prior year period. The increasedecrease was primarily attributable to increaseddebt borrowingsrepayments undermade in the Wellscurrent Fargoyear Linecompared ofto Creditthe (assame definedprior below).year period.

Related party interest expense increaseddecreased $0.2$0.1 million, or 50.7%,38.2%, for the quarterthree months ended AprilJuly 3, 2026, compared to the prior year period, period. This was primarily attributable to increasedrepayment borrowings underof the CEO Line of Credit (asfollowing definedthe below).IPO.

The change in fair value of derivative assets increaseddecreased approximately $3.0$0.9 million during the three months ended July 3, 2026 and increased $2.2 million during the six months ended July 3, 2026, due to an increasechanges in the value of the equity underlying the options to purchase common stock in one of oura publicly-traded vendors.company in each period.

Income Tax (Benefit) Provision

The income tax provisionbenefit for the quarterthree months ended AprilJuly 3, 2026 increasedwas $4.7$3.8 million compared to an income tax provision of less than $0.1 million for the prior year periodperiod. For the six months ended July 3, 2026, the Company recognized an income tax provision of $1.0 million, as acompared to less than $0.1 million for the prior year period. Both changes were as result of our being subject to income taxes as a C-corporation following the Reorganization. Of the $4.7 million increase, $3.8 million is attributed directly to a one-time impact associated with the Reorganization, with the balance of $0.9 million associated with the fiscal quarter operating results. Prior to the Reorganization A&A was an S-corporation for taxation purposes, and its income and losses were passed through to its shareholders and reported on their individual tax returns.