Fourth quarter and fiscal year 2026
Filed Oct 14, 2026Fiscal 2026 adjusted EBITDA from continuing operations increased 26% to $20.6 million as gross profit percentage expanded to 38.9%, while fiscal-year net sales declined 17.0% and fourth-quarter bookings fell to a 0.48x book-to-bill ratio.
Gross-profit percentage, adjusted EBITDA, operating cash flow and year-end liquidity improved, but reported net sales declined in both the fourth quarter and fiscal year, fourth-quarter bookings were below revenue, and the company reported GAAP operating and net losses from continuing operations.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Fiscal 2026 net salesGAAP | $249.6M | – | decrease of $51.3 million, or 17.0% |
| Fourth quarter fiscal 2026 net salesGAAP | $66.2M | – | decrease of $9.1 million or 12.1% |
| Fiscal 2026 cost of salesGAAP | $152,437,000 | – | – |
| Fourth quarter fiscal 2026 cost of salesGAAP | $39,367,000 | – | – |
| Fiscal 2026 gross profitGAAP | $97.2M | – | increase of $2.0 million |
| Fiscal 2026 gross profit percentageGAAP | 38.9% | – | – |
| Fourth quarter fiscal 2026 gross profitGAAP | $26.9M | – | increase of $0.7 million |
| Fourth quarter fiscal 2026 gross profit percentageGAAP | 40.6% | – | – |
| Fiscal 2026 selling, general and administrative expenseGAAP | $87,855,000 | – | – |
| Fourth quarter fiscal 2026 selling, general and administrative expenseGAAP | $24,325,000 | – | – |
| Fiscal 2026 research and development expenseGAAP | $11,577,000 | – | – |
| Fourth quarter fiscal 2026 research and development expenseGAAP | $2,784,000 | – | – |
| Fiscal 2026 operating loss from continuing operationsGAAP | $18.2M | – | – |
| Fourth quarter fiscal 2026 operating loss from continuing operationsGAAP | $3.9M | – | – |
| Fiscal 2026 adjusted operating income from continuing operationsnon-GAAP | $10.8 million, or 4.3% of net sales | – | – |
| Fourth quarter fiscal 2026 adjusted operating income from continuing operationsnon-GAAP | $6.5 million, or 9.9% of net sales | – | – |
| Fiscal 2026 net loss from continuing operationsGAAP | $18,281,000 | – | – |
| Fourth quarter fiscal 2026 net income from continuing operationsGAAP | $2,129,000 | – | – |
| Fiscal 2026 net loss from continuing operations attributable to common stockholdersGAAP | $51M | – | – |
| Fourth quarter fiscal 2026 net loss from continuing operations attributable to common stockholdersGAAP | $9.4M | – | – |
| Fiscal 2026 net loss from continuing operations attributable to common stockholders per diluted common shareGAAP | $(1.71) | – | – |
| Fourth quarter fiscal 2026 net loss from continuing operations attributable to common stockholders per diluted common shareGAAP | $(0.31) | – | – |
| Fiscal 2026 non-GAAP net loss from continuing operations attributable to common stockholdersnon-GAAP | $(10,628,000) | – | – |
| Fiscal 2026 non-GAAP net loss from continuing operations attributable to common stockholders per diluted common sharenon-GAAP | $(0.36) | – | – |
| Fourth quarter fiscal 2026 non-GAAP net loss from continuing operations attributable to common stockholdersnon-GAAP | $(7,000) | – | – |
| Fourth quarter fiscal 2026 non-GAAP net loss from continuing operations attributable to common stockholders per diluted common sharenon-GAAP | $— | – | – |
| Fiscal 2026 adjusted EBITDAnon-GAAP | $20.6 million, or 8.3% of net sales | – | increased 26% |
| Fourth quarter fiscal 2026 adjusted EBITDAnon-GAAP | $9.2 million, or 13.9% of net sales | – | – |
| Fiscal 2026 cash provided by operating activities from continuing operationsGAAP | $25M | – | – |
| Fourth quarter fiscal 2026 cash provided by operating activities from continuing operationsGAAP | $18.5M | – | – |
| Fiscal 2026 consolidated net cash provided by operating activitiesGAAP | $37.4M | – | – |
| Fourth quarter fiscal 2026 consolidated net cash provided by operating activitiesGAAP | $18.4M | – | – |
| Fiscal 2026 purchases of property, plant and equipmentGAAP | $(15,223,000) | – | – |
| Fourth quarter fiscal 2026 purchases of property, plant and equipmentGAAP | $(3,287,000) | – | – |
| Fiscal 2026 net bookingsother | $263.7M | – | – |
| Fiscal 2026 book-to-bill ratioother | 1.06x | – | – |
| Fourth quarter fiscal 2026 net bookingsother | $32M | – | – |
| Fourth quarter fiscal 2026 book-to-bill ratioother | 0.48x | – | – |
| Funded backlog as of July 31, 2026other | $520.4M | – | – |
| Revenue visibility as of July 31, 2026other | approximately $862.0 million | – | – |
| Cash and cash equivalents as of July 31, 2026GAAP | $34,978,000 | – | – |
| Total consolidated liquidity at year endother | $61.3M | – | – |
Fiscal 2027 and 2028 / following anticipated closing of the Strategic Transaction outlook
- NoteThe Strategic Transaction is expected to close in calendar 2026.
- NoteThe Company anticipates investing between approximately $13.0 million and $15.0 million for transition related costs, expected to be incurred mostly in fiscal 2027 and 2028.
- NoteAfter completing the sale of most of the S&S business and after approximately one year of transition implementation, annual cost savings, excluding one-time non-recurring expenses, are anticipated to range from approximately $16.0 million to $18.0 million.
- NoteThe Company estimates that pro forma Adjusted EBITDA would have been between approximately $37.0 million and $39.0 million for fiscal 2026.
- NoteUpon anticipated closing, the Company estimates receiving an additional $128.3 million in net cash proceeds, excluding any additional proceeds from retained S&S assets and after sale-related expenses and customary escrow obligations.
Capital returns
- Cash dividends paid on common stock were $(32,000) for fiscal 2026 and $(158,000) for fiscal 2025.
- Cash dividends paid on common stock were $— for the fourth quarter of fiscal 2026 and $(1,000) for the fourth quarter of fiscal 2025.
What drove it
- Fiscal 2026 gross-profit percentage improvement reflected continued customer adoption and migration of PSAPs onto NG9-1-1 core services and call handling platforms.
- The Company estimates that approximately 80% of fiscal 2026 net sales are recurring in nature.
- Fiscal 2026 bookings included a multi-year contract extension valued in excess of $130.0 million by Allerium's largest customer, a leading telecommunications company in the U.S.
- Fourth-quarter sales reflected lower location-based and call handling solutions revenue, partly offset by higher NG9-1-1 solutions and cyber security training services revenue.
- Fiscal 2026 operating cash flow improvement reflected operational improvements and favorable working-capital management, including collections of billed accounts receivable and contract assets.
- The fourth quarter included over $8.0 million of funding from a domestic Tier 1 mobile network operator, approximately $6.5 million in incremental cyber security training funding, in excess of $2.5 million from an international Guardian customer, and over $1.0 million from an existing NG9-1-1 customer.
Concerns
- Fiscal 2026 net sales declined 17.0%, and fourth-quarter net sales declined 12.1%.
- Fourth-quarter net bookings of $32.0 million produced a 0.48x book-to-bill ratio, compared with 0.78x in the prior-year quarter.
- The Company reported a fiscal 2026 operating loss from continuing operations of $18.2 million and net loss from continuing operations attributable to common stockholders of $51.0 million.
- The Strategic Transaction remains subject to closing conditions and regulatory approvals.
- The Company anticipates transition related costs of approximately $13.0 million to $15.0 million, mostly in fiscal 2027 and 2028.
- Fiscal 2026 net loss from continuing operations attributable to common stockholders included $32.8 million of net dividends related to Convertible Preferred Stock.
What to watch
- Closing of the sale of most of the S&S business in calendar 2026 and the estimated additional $128.3 million in net cash proceeds.
- Use of sale proceeds to prepay debt under the Credit Facility and Subordinated Credit Facility, followed by the planned comprehensive recapitalization.
- Execution of transition investments and realization of anticipated annual cost savings of approximately $16.0 million to $18.0 million after approximately one year of transition implementation.
- Whether bookings recover from the fourth-quarter 0.48x book-to-bill ratio and convert the $520.4 million funded backlog and approximately $862.0 million revenue visibility into sales.
- The transition of call handling deployments to recurring maintenance revenue and adoption of Allerium Mira and Allerium Coral.
Balance sheet and cash flow
- Cash and cash equivalents were $34,978,000 as of July 31, 2026, compared with $35,371,000 as of July 31, 2025.
- Total consolidated liquidity at year end was $61.3 million.
- Current portion of credit facility, net was $76,609,000 as of July 31, 2026, compared with $4,050,000 as of July 31, 2025.
- Non-current portion of credit facility, net was $21,400,000 as of July 31, 2026, compared with $114,414,000 as of July 31, 2025.
- Current portion of subordinated credit facility, net was $44,408,000 as of July 31, 2026, compared with $— as of July 31, 2025.
- Non-current portion of subordinated credit facility, net was $62,920,000 as of July 31, 2026, compared with $95,588,000 as of July 31, 2025.
- The Company used all of the $10.0 million Advance Payment to prepay $10.0 million of debt in July.
- Fiscal 2026 net payments under revolving loans were $(17,641,000); repayment of term loan was $(10,550,000); and repayment of subordinated credit facility was $(3,021,000).
- Fiscal 2026 operating cash flows reflected $5.0 million in cash outflows for interest payments and $7.8 million in aggregate cash payments for restructuring costs, proxy solicitation costs and CEO transition costs.
Analysis
Fiscal 2026 continuing-operations net sales were $249.6 million, down from $300.9 million, while fourth-quarter net sales were $66.2 million, down from $75.3 million. The company attributed part of the fiscal-year comparison to the wind-down of legacy VSAT and GFSR contracts, which contributed $48.5 million of fiscal 2025 net sales and $0.3 million in fiscal 2026. Excluding those inactive contracts, management said recent-period sales were comparable to fiscal 2025 but reflected the timing of call handling deployments transitioning to recurring maintenance revenue. The fourth quarter had lower location-based and call handling solutions sales, partly offset by higher NG9-1-1 solutions and cyber security training services sales.
Profitability improved despite lower revenue. Fiscal 2026 gross profit increased to $97.2 million from $95.2 million and gross-profit percentage expanded to 38.9% from 31.6%. Fourth-quarter gross profit rose to $26.9 million from $26.2 million, with gross-profit percentage reaching 40.6% from 34.7%. Management cited customer adoption and PSAP migration to its NG9-1-1 core services and call handling platforms. Adjusted EBITDA increased to $20.6 million, or 8.3% of net sales, from $16.4 million, or 5.5%, while fourth-quarter adjusted EBITDA reached $9.2 million, or 13.9% of net sales. GAAP results remained loss-making, with fiscal 2026 operating loss from continuing operations of $18.2 million and net loss from continuing operations attributable to common stockholders of $51.0 million.
Cash generation was a clear improvement. Cash provided by operating activities from continuing operations was $25.0 million for fiscal 2026, compared with cash used in operating activities of $29.2 million in fiscal 2025. Consolidated operating cash flow was $37.4 million, and the fourth quarter produced $18.5 million from continuing operations. The company attributed the improvement to operations and working-capital management. Year-end cash and cash equivalents were $34,978,000 and total consolidated liquidity was $61.3 million. The company used the $10.0 million Advance Payment from Gilat to prepay $10.0 million of debt in July.
Demand indicators were uneven. Fiscal 2026 net bookings rose to $263.7 million and book-to-bill improved to 1.06x, supported by a contract extension valued in excess of $130.0 million. However, fourth-quarter bookings were $32.0 million, down from $58.5 million, and book-to-bill was 0.48x. Funded backlog was $520.4 million as of July 31, 2026, compared with $506.3 million a year earlier, while revenue visibility was approximately $862.0 million. Management said booking levels reflect the timing of large, multi-year contract awards.
The strategic focus is the anticipated sale of most of S&S for a $157.5 million base cash purchase price, subject to customary adjustments, and the concentration on Allerium and retained cyber security training services. Closing is expected in calendar 2026, subject to conditions and regulatory approvals. The company estimates an additional $128.3 million in net cash proceeds at closing and plans to substantially reduce debt before seeking a comprehensive recapitalization. Transition costs are anticipated at approximately $13.0 million to $15.0 million, mostly in fiscal 2027 and 2028, against anticipated annual cost savings of approximately $16.0 million to $18.0 million after approximately one year of implementation.
Management, verbatim
We generated positive consolidated operating cash flows for each of the last six quarters, with Fiscal 2026 generating $37.4 million.
Ken Traub, Chairman, President and CEO
We conducted a broad review of strategic alternatives and determined that the best path was to divest the majority of the Satellite and Space Communications (“S&S”) business and retain its cyber security training services and related businesses, so that we can dedicate our focus and attention on building upon Allerium's leadership position in public safety.
Ken Traub, Chairman, President and CEO
Allerium entered fiscal 2027 with $520.4 million of funded backlog, about 80% recurring revenue and long-term relationships with states, public safety agencies and leading mobile network operators.
Jeff Robertson, President of Allerium
Not in the filing
stated, not guessed- Segment revenue was not reported for Allerium or any other continuing-operations segment.
- Free cash flow was not reported.
- A total debt figure was not reported on a single labeled line.
- No revenue, gross-margin, operating-expense or tax-rate guidance was provided.
- No prior-quarter comparisons were reported for the key operating metrics.
- No share repurchase activity was reported.
- No prior outlook section was provided, so comparison with prior guidance is unavailable.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.