May 14th, 2026

The call highlights solid operational momentum: modest revenue growth (2% YoY), meaningful product sales growth (~8.3%), strong operational cash generation and backlog expansion, plus strategic acquisitions adding ~$10M in annual revenue and substantially expanding avionics/autopilot capabilities. Offsetting these positives were near-term profitability pressures—notably a ~35.8% drop in GAAP net income, declines in adjusted metrics and a ~51% rise in operating expenses driven by R&D and acquisition costs—and a $7M F-16 revenue headwind tied to transition timing. Liquidity and leverage remain manageable with available credit. Overall, the company shows constructive strategic and cash-flow progress while absorbing near-term cost and timing impacts from acquisitions and program transitions.

Company Guidance

Management guided third‑quarter revenues of $24–$26 million and reiterated that organic revenue for FY26 should be essentially flat year‑over‑year (reflecting a $7M F‑16 pull‑forward into FY25), said F‑16 volumes should normalize to roughly $3–$5 million per quarter going forward, expects long‑term gross margins in the mid‑40% range (Q2 was 51.1%), and plans to increase R&D spending after a ~$1.0M Q2 step‑up; backlog was ~$87M (up ~$7M), Q2 new orders were $24.7M, the recent acquisitions are projected to add ~$10M of annual revenue at ~50% blended gross margin, and liquidity/financials supporting the plan include cash of $6.8M, total debt $55.1M (net debt $48.3M), cash plus available credit ≈ $49.8M, net leverage ~1.7x, YTD cash flow from operations $10.5M, H1 capex $2.7M and H1 free cash flow $7.7M.