By Tom Kerr, CFA
NASDAQ: KBSX
READ THE FULL KBSX RESEARCH REPORT
2nd Quarter 2026 Financial Results
On July 28, 2026, FST Corp. (NASDAQ: KBSX) announced unaudited 2nd quarter financial and operating results for the period ending June 30, 2026.
Revenue for the second quarter was $12.6 million, a 9.7% increase from revenue of $11.4 million for the 2nd quarter of 2025. This increase was mainly the result of additional aftermarket sales in both the company's steel and graphite lines.
Net loss for the second quarter was ($1.0) million, or ($0.02) per share, compared to a net loss of ($3.0) million, or ($0.07) per share, in the prior year period. This improvement was primarily the result of a $0.8 million improvement in gross profit driven by increased revenue and a change in product mix, a decline in total costs and operating expenses of $0.2 million, and a $2.4 million improvement in foreign exchange loss.
These improvements were offset in part by an unrealized loss on change in fair value of warrant liability of $0.7 million compared to no identical expense in the 2nd quarter of last year, an income tax expense of $0.3 million compared to an income tax benefit of $0.1 million in the year-ago period, and by a decrease in other income of $0.2 million compared to Q2 2025.
Operating income in the quarter was $0.3 million, an improvement of $0.9 million compared to an operating loss of ($0.7) million in the second quarter of 2025.
For the first six months of 2026, net cash provided by operating activities was $1.1 million compared with net cash used in operating activities of $4.3 million for the first six months of 2025. For the first six months of 2026 and 2025, net cash used in investing activities was $1.1 million and $0.2 million, and net cash provided by financing activities was $1.7 million and $3.4 million, respectively.
FST CEO David Chuang stated, "We're pleased to report that our strong start to the year has continued throughout the second quarter, during which we've grown aftermarket revenue in both our steel and graphite lines and improved gross margins while reducing our operating expenses In addition, the flexibility utilized in our capital structure has enabled us to lay the foundation for providing greater long-term value for our shareholders."
Balance Sheet
As of June 30, 2026, the company had cash balances of $8.2 million. Total current assets were $29.8 million and total current liabilities were $31.8 million at the end of the 2nd quarter. We believe that its current liquidity, together with operating cash flow and available credit facilities, will be sufficient to fund operating requirements for the next 12 months.
Share Repurchase Plan
The Board of Directors recently authorized a stock repurchase program under which the company may repurchase up to $3.0 million of its outstanding ordinary shares. Shares may be repurchased from time to time through open-market transactions, privately negotiated transactions, or other legally permissible means.
Valuation & Estimates
We adjust our 2026 revenue estimate to $55.5 million, and our 2026 EPS estimate is now $0.05 per share based on stronger than expected revenue growth and profitability.
However, we are cautious about growth in the overall golf industry as the Middle East conflict is creating inflation uncertainties and reduced consumer sentiment in certain global markets. However, in the U.S., the golf market remains strong, with recent industry commentary stating that all regions in the country are showing positive growth in rounds played in 2026 (albeit some of the growth due to favorable weather).
With FST still facing potentially higher fuel, shipping, and other supply chain costs, we are maintaining our price target of $3.00 until we see further visibility in 2026.
We believe the company can generate double-digit revenue growth over the next 5 years, scaling down to mid-single-digit revenue growth in years 5-10. We believe gross margins can reach the mid-50% range, and operating margins can reach the mid-teens range over time.
Our primary valuation tool utilizes a Discounted Cash Flow process. Under the scenario described above, we arrive at a target valuation of $3.00 per share. Our target price may be conservative as it incorporates a high discount rate of 10.0% due to the unpredictability of earnings, prevailing interest rates, and the timeline for reaching higher margins on an annual basis.
The current market cap of only $44 million appears to be irrational and more reflective of the ongoing microcap stock malaise as opposed to company fundamentals.
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