Exchange: OTC | Sector: Technology | Industry: Hardware Equipment Parts
Q1 2026
Published: Aug 12, 2025
Earnings Highlights
Revenue of $6.31M down 8.9% year-over-year
EPS of $-0.27 decreased by 250% from previous year
Gross margin of 17.9%
Net income of -654.62K
"N/A" - N/A
IEH Corporation (IEHC) QQ1 2026 Results Analysis — Cash-Rich Balance Sheet with Profitability Headwinds in a Small-Cap Tech Hardware Niche
Executive Summary
IEH Corporation reported Q1 2026 revenue of $6.31 million with a gross profit of $1.13 million and a gross margin of 17.9%. The quarter delivered an operating loss of $0.76 million and a net loss of $0.655 million, resulting in an EPS of -$0.27. Earnings were pressured by elevated operating expenses relative to the modest gross profit, contributing to negative EBITDA (-$0.565 million) and negative net income despite a strong balance sheet.
A standout feature of IEH’s QQ1 2026 results is the balance sheet liquidity: cash and cash equivalents totaled $10.26 million against total debt of $2.14 million, producing a net cash position of approximately -$8.11 million in net debt and a very high current ratio (driven by $21.93 million in current assets versus $2.22 million in current liabilities). This liquidity provides optionality to fund growth, deleverage opportunistically, or pursue strategic moves, even as the company contends with near-term profitability challenges.
Management commentary (where available) did not publish formal forward guidance in the QQ1 release. The combination of a small revenue base, customer concentration risk in defense/aerospace interconnects, and fixed-cost structure implies a path to profitability will hinge on revenue scale, SG&A leverage, and working capital optimization. Investors should monitor order momentum, product mix shifts toward higher-margin offerings, and any capital allocation decisions that leverage the robust cash position.
Key Performance Indicators
Revenue
6.31M
QoQ: -12.60% | YoY:-8.92%
Gross Profit
1.13M
17.90% margin
QoQ: -31.48% | YoY:6.50%
Operating Income
-755.31K
QoQ: -480.62% | YoY:-124.21%
Net Income
-654.62K
QoQ: -962.00% | YoY:-253.79%
EPS
-0.27
QoQ: -800.00% | YoY:-250.00%
Revenue Trend
Margin Analysis
Key Insights
(not disclosed), QoQ -480.6%
EBITDA: -$0.565M, EBITDA Margin: -8.95%
Net Income: -$0.655M, Net Margin: -10.38%, YoY -253.8%, QoQ -962.0%
EPS (diluted): -$0.27, YoY -250%, QoQ -800%
D&A: $0.191M; SG&A (selling, general & administrative): $1.593M; Total Cost & Expenses: $6.063M
Cash Flow: Operating cash flow -$0.424M; CapEx $0.017M; Free cash flow -$0.441M
Balance Sheet: Cash & equivalents $10.255M; Total assets $26.835M; Total liabilities $3.954M; Total stockholders’ equity $22.881M; Net debt -$8.111M; Current ratio ~9.9x (Current assets $21.929M vs current liabilities $2.220M)
Profitability trend: Gross margin positive at 17.9%, but operating and net profitability negative due to fixed costs and working capital dynamics
Liquidity and leverage: Strong liquidity with minimal debt and substantial cash; low leverage by historical standards.
Financial Highlights
Revenue: $6.308M, YoY -8.9%, QoQ -12.6%
Gross Profit: $1.129M, YoY +6.5%, QoQ -31.5% (Gross Margin: 17.9%)
Operating Income: -$0.755M, YoY -/- (not disclosed), QoQ -480.6%
EBITDA: -$0.565M, EBITDA Margin: -8.95%
Net Income: -$0.655M, Net Margin: -10.38%, YoY -253.8%, QoQ -962.0%
EPS (diluted): -$0.27, YoY -250%, QoQ -800%
D&A: $0.191M; SG&A (selling, general & administrative): $1.593M; Total Cost & Expenses: $6.063M
Cash Flow: Operating cash flow -$0.424M; CapEx $0.017M; Free cash flow -$0.441M
Balance Sheet: Cash & equivalents $10.255M; Total assets $26.835M; Total liabilities $3.954M; Total stockholders’ equity $22.881M; Net debt -$8.111M; Current ratio ~9.9x (Current assets $21.929M vs current liabilities $2.220M)
Profitability trend: Gross margin positive at 17.9%, but operating and net profitability negative due to fixed costs and working capital dynamics
Liquidity and leverage: Strong liquidity with minimal debt and substantial cash; low leverage by historical standards.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.31M
-8.92%
-12.60%
Gross Profit
1.13M
6.50%
-31.48%
Operating Income
-755.31K
-124.21%
-480.62%
Net Income
-654.62K
-253.79%
-962.00%
EPS
-0.27
-250.00%
-800.00%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript data not provided in the supplied materials. No management quotes or earnings-call transcript content were included to synthesize themes or extract quotable insights. If you can supply the QQ1 2026 earnings call transcript, I can generate thematically grouped highlights with precise quotes and attribution.
N/A
— N/A
N/A
— N/A
Forward Guidance
No formal forward guidance was published in the QQ1 2026 materials. Based on the quantitative backdrop and typical dynamics for a small-cap hardware interconnects manufacturer serving aerospace/military applications, the near-term outlook hinges on: (1) achieving revenue growth to leverage fixed-cost absorption and improve operating leverage, (2) maintaining or converting the cash position into shareholder value through prudent capital allocation, and (3) managing working capital and cost structure to stabilize EBITDA. Our provisional assessment suggests a cautious to neutral stance until IEH demonstrates tangible top-line progression or meaningful SG&A containment. Key factors investors should monitor include: backlog and order momentum from defense/aerospace customers, mix shifts toward higher-margin products, any announced capacity expansions or capex intentions, and cash flow trajectory (operating cash flow turning positive would be a meaningful catalyst).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
IEHC Focus
17.90%
N/A
N/A
N/A
LGL
74.20%
4.47%
-0.02%
-1,456.44%
DSWL
19.50%
5.17%
3.13%
3.19%
MPTI
42.50%
15.80%
4.92%
19.41%
MPAD
42.70%
3.40%
0.50%
48.25%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
IEH carries a cautious-to-neutral investment outlook given the combination of near-term profitability headwinds and a strong balance sheet. The QQ1 2026 results show a cash-rich, low-leverage company with a solid liquidity cushion, yet negative EBITDA and net income highlight the need for top-line growth or significant SG&A leverage to translate liquidity into sustainable earnings. A potential positive catalyst would be a clear revenue trajectory or a strategic capital allocation decision (e.g., selective acquisitions or capex that meaningfully improves margin profiles) funded by the robust cash position. In the meantime, investors should monitor revenue momentum, margin expansion potential, working capital dynamics, and any forward guidance or announcements from management regarding strategic initiatives aimed at increasing profitability and driving shareholder value.
Key Investment Factors
Growth Potential
Potential to scale in defense/aerospace interconnects with stable demand from government programs. Opportunities may arise from product mix optimization, higher-margin custom interconnect solutions, and potential strategic partnerships or acquisitions funded by the strong cash position.
Profitability Risk
Profitability and cash-flow stability remain fragile in the near term due to fixed-cost structure and modest revenue base. Customer concentration in defense/aerospace can magnify cyclicality. Low visibility on forward guidance heightens valuation risk for a small-cap name. Operational leverage risk if SG&A cannot be reduced as revenue scales.
Financial Position
Liquidity is exceptionally strong with $10.26M cash and $2.14M debt, yielding a net cash position of approximately -$8.11M. Minimal leverage provides optionality for strategic moves, while the weak near-term profitability underscores the need to convert liquidity into sustainable earnings.
SWOT Analysis
Strengths
Strong liquidity with $10.3M cash and negligible debt providing optionality for growth investments or capital allocation
Negative net debt position supports resilience in downturns and potential buybacks or strategic moves
Long-standing, niche product focus in printed circuit board connectors and interconnects for defense/aerospace applications
Healthy current ratio (~10x) and solid balance sheet capitalization with substantial stockholders’ equity
Weaknesses
Negative operating income and net income in QQ1 2026 indicate profitability headwinds
Small revenue base (~$6.31M for the quarter) limits scale and operating leverage
High fixed-cost base relative to revenue; SG&A and other operating expenses weigh on margins
Inventory levels and working capital dynamics contributing to negative operating cash flow
Limited revenue visibility without explicit management guidance; potential customer concentration risk in defense/aerospace segments
Opportunities
Defense and aerospace budget cycles may generate recurring demand for interconnect solutions
Upside from product mix optimization toward higher-margin offerings and value-added custom interconnects
Opportunity to deploy excess cash into selective capex, acquisitive growth, or strategic partnerships
Potential improvements in working capital management could unlock cash flow strength
Threats
Cyclicality in defense spending impacting order flow
Competitive intensity in hardware/connectors with cost pressures
Operational and supply chain disruptions could affect on-time delivery and costs
Market volatility and regulatory shifts impacting government procurement cycles