Notes from the Solitron Devices (SODI) 2026 annual stockholder meeting, held April 24, 2026, in West Palm Beach, Florida.
As a shareholder of Solitron, I have constantly found this business to be one of those companies that to fully understand it, you need to look under the hood. It's a classic example of a business that has never screened well, where true earnings power for one reason or another has pretty much always been skewed on the surface for the past few years since I've owned this niche little business. Please understand these are just my perspectives and is not investment advice. There's always a chance I could have a bias emotionally to the business or management team who I really like even though as it occurs to me, I don't. And for full disclosure I do own shares for myself personally as well as my firm Granite State Capital Management, LLC on behalf of my investment partners.
As I listened to the meeting half asleep and taking notes, the most important number I gauged from Solitron's annual meeting last week wasn't in any of the prepared remarks. It was actually conveniently buried in a Q4 disclosure. Tim Eriksen confirmed that Q4 shipments included zero revenue from Lot 39 of the AMRAM program. Read that again. The fiscal year that just ended at $5.3 million in Q4 revenue and $1.3 to $1.4 million of operating income reflects the old pricing under a fixed-price agreement that ran for five to seven years. Not one missile component shipped at the new prices. Tim said it plainly: "by about this time next year we would be fully shipping under lot 39 and have completed everything related to lot 38." He went further and said "revenue and income will reflect lot 39 volumes and prices."
In other words, the company's largest program is about to reprice. After half a decade of eating cost inflation under a frozen contract. If you're a Solitron shareholder, that single sentence is in my view the most important data point from the 10-K.
The Backlog Tells the Real Story
Let's look at what the order book is doing. Backlog at the end of February 2026 was just over $27 million. At the end of February 2025, it was $18 million. That's a 50% increase. Bookings for the year were just over $26 million, up from just under $21 million the year before. A 24% jump. Here is what matters: backlog is growing faster than bookings. That mathematical relationship only happens when one of two things is true. Either you're shipping less than you're booking, or pricing is rising on the orders coming in. For Solitron, it's both. AMRAM Lot 39 isn't shipping yet, and it's coming in at higher prices. One thing Tim addressed at the meeting that's worth pausing on: the percentage of backlog scheduled for delivery within 12 months has dropped from roughly 90% historically to 49% as of last year's K. A shareholder asked about this. Tim's response was that backlog timing is becoming a less useful predictor of forward revenue, because items can be scheduled beyond 12 months but ship early, and because new orders come in and get fulfilled inside the year. He said you may have to use something like 140 to 160% of current backlog to estimate the next 12 months of revenue. Apply that to today's $27 million and you arrive somewhere meaningfully above the trailing run rate. He also flagged that if a multi-year order comes in (more on that below), backlog as a metric becomes "totally meaningless."
Most micro-cap analysts will look at the quarter's $5.3 million revenue print, shrug, and move on. They will miss that this number is the floor, not the ceiling.
The Program Mix
One thing the Q&A made clearer than any filing has is the actual order of program concentration. A shareholder asked Tim to rank the major munitions programs and his answer was useful: AMRAM is the largest program. HIMARS is second. SM-3 is roughly third, though it sometimes gets blended into AMRAM orders due to component overlap. SM-2 and SM-6 sit fourth. Beyond those, the company has scattered exposure to Aegis Radar, AESA radar upgrades on aircraft, and developmental work on hypersonic missiles. Tim was candid that on Tomahawk, JASSM, Sidewinder, and Patriot 3 they may have a part here or there but it's not material to the top line. So when you read defense headlines about a step-up in any of those programs, don't get excited unless it's one of the big four. The hypersonics piece is interesting as optionality. Tim mentioned Solitron has a higher dollar exposure per missile on hypersonics than on its other programs, but production levels are unclear and quantities are small. Could it hit a million dollars a year if volumes ramp? Yes. Could it stay near zero? Also yes. Don't underwrite it, but it's there.
The MEI "Charge" Is Actually Good News
The company guided to roughly a $350,000 charge in Q4 other income tied to a change in contingent consideration on the MEI acquisition earnout. The headline reads negative. The substance reads positive. Here's what's happening. When Solitron acquired MEI, they had to estimate future revenues to value the earnout. Those estimates were based on a typical two-to-four month order backlog. MEI's backlog has now grown to roughly twelve months. The earnout is going up because MEI is performing better than the deal model assumed. The accounting treatment turns a tailwind into an income statement headwind for one quarter. That's the kind of disconnect value investors live for.
The Strategic Review: Read the Insider Math
In February, Solitron disclosed it was exploring strategic alternatives. The deal that was being pursued in October fell through, and Tim explained that it was expected to close before May 31, which is why they delayed the audit timeline. Here is the line from the meeting that I think shareholders should circle: "between Mark, the directors, myself including my fund, you're talking about 30% of the shares outstanding are held there." Per the most recent proxy, Tim is at 15.1% through Eriksen Capital Management, Mark Matson is at 10.9%, and all directors and officers as a group are at 28.7%. Add Olesen Value Fund and my own firm, Granite State, both north of 5%, and you have roughly half the company in the hands of aligned long-term holders. That alignment matters more than any banker's fairness opinion. Tim also flagged something subtle: the securities portfolio that used to sit on the balance sheet has been quietly converted to cash and money market. His reasoning was direct. "If somebody might be acquiring us in three or six months, they're not sitting there going what we really want is a securities portfolio." Translation: management has positioned the balance sheet to be deal-ready. If no deal materializes, that cash gets returned to shareholders through buybacks or a dividend. Tim said as much. Worth noting on the buyback side: the share repurchase program had just been initiated last year before getting paused for the strategic review. Per Tim, "we had just started doing that... it was like, okay, now we got to shut that down." If the process resolves without a sale, the buyback resumes against a tiny share count where every 1% retired moves the needle.
Why AMRAM Has a Long Life
For years there has been a recurring narrative that AMRAM is a sunset program about to be replaced by something newer. Tim addressed this head-on. Six years ago Solitron thought AMRAM had a 10 to 15 year runway. Six years later, they still think it has a 10 to 15 year runway. The point that crystallizes the bull case came up in the Q&A: foreign AMRAM demand is now increasingly tied to F-35 sales. AMRAM is the marquee air-to-air missile on the F-35. As long as the F-35 fleet exists and grows globally, AMRAM lives. That's not a five year story. That's a multi-decade story. Then layer on the second-order developments. RTX is now assembling AMRAM in Japan and Europe with local content, but Solitron remains sole-source on its parts. So Solitron's content ships into U.S.-assembled missiles, Japan-assembled missiles, and Europe-assembled missiles. Production capacity has effectively expanded without Solitron needing to do anything. Tim told a useful anecdote here. Solitron recently received an end-of-life Sea Sparrow order, a missile system originally developed in the late 1950s. The order was nearly a million dollars. His point being that "end of life" in defense components language can mean another decade of orders, and that programs like AMRAM, even at lot 38 or 39, are barely the same missile they started as. The name stays the same; the guidance, range, and components evolve. AMRAM is nowhere close to end of life. And then there's the catalyst hiding in plain sight. The Trump reconciliation bill specifically includes language for multi-year procurement on missile programs. Tim said the probability of a multi-year AMRAM and SM-2/3/6 order is now materially higher than in past years, with what he described as preliminary agreement appearing to already be in place between RTX and the government. A multi-year order would be a step-function event for Solitron, both because it would fundamentally change the backlog disclosure and because it would lock in pricing and volumes through what is shaping up to be a strong defense spending cycle.
The Capacity Question
I've seen analysts worry whether Solitron can meet rising demand. The meeting answered this. West Palm Beach is currently running four ten-hour shifts with some overtime. They're hiring more. They have room to add second or third shifts. Tim said capex guidance of around $250,000 per year doesn't change materially at moderate volume increases, though he acknowledged that if production volumes 2-3x'd, certain equipment would need to be duplicated. This is what operating leverage looks like before it shows up in the financials. Fixed cost base, scalable shifts, sole-source pricing power, and a backlog that has nearly doubled since fiscal 2024. Tim and Dave also made the point that the company opportunistically buys used equipment rather than new. They have one new piece on order currently for a new capability, but the base equipment is already in place to support meaningfully higher demand. This is the kind of capital discipline that tends to produce surprising free cash flow conversion when revenue ramps.
The NOLs
One housekeeping item that long-term holders should track: NOLs are roughly $8 to $10 million. Tim said "within the next couple years" they'll be used up barring a transaction. That means the effective tax rate is about to normalize. Forward earnings projections need to reflect a real tax burden going forward. This isn't a bear case, it's just math. But it does affect how you should think about the cadence of reported earnings versus economic earnings over the next 24 to 36 months. Pay attention to the cash conversion, not just the GAAP line.
Will Solitron Go Dark? Management's Answer
A shareholder asked about the possibility of going dark to save on public company costs. Tim's response was clear: they don't want to. The savings aren't as material as people think because you still need an audit, you still have D&O insurance, you still have director costs. He pointed out that what would actually save real money is an acquirer who eliminates the entire board and executive structure, which is a different kind of transaction. Dave Pointer added that being SEC-registered gives the stock currency for potential future M&A, especially given where the share price sits today. That's an asset they want to preserve. This is a small thing but a tell. Management is thinking about Solitron not just as a standalone business but as a vehicle. Dave explicitly said the board sees the strategic review as broad in scope, with no preconceived notions about the right outcome. That language matters.
My Take
I've watched a lot of management teams talk through annual meetings. What I look for is whether the people running the business sound like operators who own the business or hired hands marking time. Tim, Dave, and the board sound like owners. Because they are. If you want to understand the difference, watch how Tim answers questions about deals they walked away from. The robotic surgical hand was promising, but the customer wanted control over IP and pricing in a way that would have damaged the business long-term. They walked. The Ferrari EV opportunity from a couple years back was exciting but lost out because being a small fish in a big EV pond doesn't work when the customer can buy parts cheaper at scale from ST Micro. He acknowledged it. There's no spin. There's no "exciting pipeline" theater. He tells you what's working, what isn't, and where they're cautious about counting chickens. Solitron is not a story stock. It's not going to 10x in twelve months on a press release. It's a sole-source defense components maker with sticky designs, a repricing tailwind on its largest program, a strategic review that could surface a premium, and insider ownership that ensures the process gets run for the right reasons. Sometimes the most interesting opportunities are sitting in plain sight while the market stares at AI headlines.
Disclosure: I personally and Granite State Capital Management, LLC own shares of SODI on behalf of my investment partners. This is commentary, not investment advice. Do your own work.