Operator: Hello, everyone. Thank you for joining us, and welcome to AEVEX’s second quarter 2026 earnings conference call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jason Gursky, Vice President of Investor Relations. Please go ahead.

Jason Gursky, Vice President of Investor Relations, AEVEX: Thank you for joining AEVEX’s second quarter 2026 earnings conference call. I’m Jason Gursky, Vice President of Investor Relations. Joining me on the call today are Brian Raduenz, Executive Chairman, Roger Wells, Chief Executive Officer, and Todd Booth, Chief Financial Officer. Before we begin, please note that on this call, certain information presented contains forward-looking statements, including those related to the proposed acquisition of BlackSea Technologies, multi-domain strategy and technology integration, our 2026 outlook, backlog from the M&A strategy, and capital allocation priorities. Our forward-looking statements are based on current expectations, forecasts, and assumptions, and may involve risks and uncertainties that could cause actual results to differ materially. Additional information concerning these risks are described in AEVEX’s reports filed with the SEC. I’d also like to note that we will discuss a number of non-GAAP financial measures on this call.

Our earnings press release and presentation, which were also published earlier today and can be found on the investor relations section of our company’s website, contain a reconciliation of any non-GAAP financial measures to the most directly comparable GAAP measure. The content of this conference call relates to information that is accurate only as of today, August 12, 2026. Except to the extent required by law, the company undertakes no obligation to make any revision to any forward-looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after the date of this conference call. I would like to now turn the call over to Brian for some opening remarks. Brian, go ahead.

Brian Raduenz, Executive Chairman, AEVEX: Thanks, Jason. Good afternoon, everyone. AEVEX delivered another very strong quarter, our second consecutive beat and raise, driven by sustained demand and strong execution across the business. We’re scaling production, expanding mission and customer reach, and strengthening our position as one of the most impactful providers of autonomous capability in the market today. Our momentum is being recognized. AEVEX was recently identified by the Department of War as one of a select few defense technology primes, accelerating the development and production of systems for real-world missions. Roger was invited to brief the secretary and his staff at the Pentagon, outlining how we will continue to make an impact for the war fighter. It’s a powerful validation of the role AEVEX is playing as the department moves decisively toward autonomous, affordable, multi-domain solutions, which is exactly what we built this company to provide.

Against that backdrop, today we’re announcing another meaningful step forward, the proposed acquisition of BlackSea Technologies. For those not familiar with BlackSea, they’re a leading developer of autonomous and unmanned surface and subsea vessels for the U.S. Navy, SOCOM, and various other customers. Their USV platforms are among the most widely produced and most operationally deployed systems in the Navy’s inventory. Just as AEVEX has established leadership in Group 2 and Group 3 unmanned aerial systems, BlackSea has likewise established leadership in unmanned surface and subsea capability, delivering fielded systems at scale with real operational history. By bringing these two organizations together, we will unite two battle-tested air, surface, and subsea portfolios in the market at exactly the moment the department is accelerating procurement of unmanned systems. Both companies are delivering in theater. Both are producing at volume with additional capacity beyond today’s deliveries.

Together, we expect to expand our ability to support customers across domains, including meaningful new access to maritime pathways where AEVEX has not previously participated. This acquisition is another major proof point of the strategy we’ve laid out, building one of the nation’s most impactful providers of autonomous and unmanned systems capability. It reinforces our momentum, it strengthens our trajectory, and it advances the larger vision of what we set out to build, a company with the scale, relevance, and operational credibility to lead in this new era of defense. We could not be more excited about what this combined team can do together, and we can’t wait to get started. With that, I’ll hand it over to Roger to walk through the strategic rationale and transaction details, as well as a review of our very strong second quarter.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Brian, and good afternoon, everyone. As Brian mentioned, today marks two important milestones for AEVEX. We’ve entered into a definitive agreement to acquire BlackSea Technologies, and we announced our second quarter results, hosting robust growth and strong operational performance across the business, leading us to raise our outlook for the year based on continuing strong demand signals and significant deployment of our mission-critical systems in theater. What Todd and I plan to do today is walk through the strategic rationale for the acquisition and to provide more details on both the transaction and the company. We will then quickly review our second quarter results and open the line to your questions. Our remarks today will be a bit longer than normal, given the importance of both events. Let’s go to slide 4 in the presentation deck. The transaction story is straightforward and clear.

By bringing these two leading companies together, we believe we will create one of the largest and most comprehensive multi-domain unmanned systems providers in the market. We expect this merger to deliver significant production capacity, access to new markets, and the ability to credibly deliver a broader portfolio of multi-domain unmanned capabilities, all underpinned by AEVEX’s core autonomy stack, CompassX. In addition, both AEVEX and BlackSea employs a hybrid business model that can both produce and operate assets for our customers. This provides predictable long-term revenue and valuable operational insights to feed back into platform development. Very few companies can credibly claim a multi-domain unmanned portfolio of this scope, and even fewer can claim one that’s actually in the fight. Finally, we expect to retain strong financial flexibility post-transaction, which will allow us to continue to invest in innovation, production capacity, and future M&A.

The bottom line is this, with the acquisition of BlackSea, we believe we will create one of the most capable, pure-play, multi-domain autonomous systems providers in the U.S., delivering effects to the battlefield across air, surface, and sub-sea domains at a time when the Department of War is leaning into unmanned systems spending. This transaction aligns perfectly with our strategic direction and our mission-focused culture and also represents the kind of opportunity we signaled we’d pursue. With that as a strategic framework, let me turn it over to Todd to walk through the transaction itself.

Todd Booth, Chief Financial Officer, AEVEX: Thanks, Roger, and good afternoon, everyone. Please turn to slide five. Let me walk you through the key economic terms. AEVEX intends to acquire BlackSea Technologies for a total consideration of up to $650 million, structured in three components. First, approximately $250 million in cash at closing. Second, roughly $350 million in AEVEX common stock at agreed price of $27.50 per share, which amounts to approximately 12.7 million shares issued to the sellers. Lastly, the transaction also includes a $50 million earn-out that is contingent on the achievement of certain performance targets by BlackSea through fiscal year 2027. We designed the earn-out to align incentives so that the incremental $50 million becomes payable only if BlackSea’s financial performance creates long-term shareholder value.

We expect the transaction to be accretive to earnings per share in the near term before giving effect to non-cash purchase accounting amortization. BlackSea is expected to generate approximately $150 million in revenue in fiscal year 2026, with adjusted EBITDA margin roughly in line with AEVEX. While we are not providing formal guidance for BlackSea for fiscal year 2027 today, we expect this growth to be at least in line with its addressable markets. I think it’s worthwhile noting that BlackSea’s leadership and shareholders were particularly excited about the opportunity to be a part of AEVEX and share our go-forward vision. As such, the equity consideration was very important to them, and we feel the purchase price was quite favorable given those dynamics. A few other items worth noting.

We expect the transaction to close in September 2026, subject to the expiration of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 waiting period and satisfaction of our customary closing conditions. BlackSea will operate as a third business unit within AEVEX, which we believe will preserve the mission focus and customer relationships that make the business valuable. I’d like to note that Bob Pugkney, BlackSea’s CEO, is expected to stay on to lead the business at AEVEX. Roger, back to you.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Todd. Please turn to slide seven. When our team evaluated this transaction, we came back to five reasons why this combination is so compelling for us, and I want to spend some time on each one. First, this acquisition is expected to create one of the largest providers of battle-proven autonomous air and maritime platforms at a moment when unmanned systems spending is entering into what we believe is a genuine global defense super cycle. The operational needs from the Department of War, the combatant commands, and our allied forces across the globe have moved from experimental projects to shorter cycle, high-production procurements as they work to get systems fielded. Being one of the largest battle-proven providers matters because in this environment, customers are buying from companies that have proven solutions and can deliver at scale today. Second, the capabilities are highly complementary, not overlapping.

AEVEX delivers Launched Effects, precision strike, loitering munitions, and full-scope ISR capabilities. BlackSea brings unmanned surface, subsurface, and contested logistics vessels to the market. From a growth perspective, based on our due diligence, BlackSea has deep relationships with all key maritime USV and UUV customers. Not only do we believe that BlackSea and AEVEX will benefit from an anticipated increase in funding for USVs and UUVs, we expect the combination to also unlock a large Navy UAS market for AEVEX, which is an exciting expansion opportunity for us. Third, BlackSea brings well-capitalized facilities, infrastructure, and tooling to deliver USVs and UUVs at scale. I will walk you through the company’s footprint in a few minutes, but the short version is that we are not acquiring a prototype shop.

Like AEVEX, BlackSea is a company already producing at significant industrial scale, in line with the DOW’s objective for the defense industrial base. Fourth, BlackSea comes with significant backlog that gives us real visibility into above-market growth in fiscal year 2027. As of today, BlackSea has more than $110 million in funded backlog and over $250 million in unfunded backlog tied to programs associated with the production, sustainment, and operations of the company’s marquee small USV, the Global Autonomous Reconnaissance Craft, or GARC, and its Block 2 variant, Chaser, as well as contested logistics vessels contracts such as the recently awarded Sea-Based Petroleum Distribution System, or SPDS. This isn’t driven by speculation on whether a market will develop. It’s anchored on contracted demand. As mentioned before, the transaction further diversifies our program portfolio and customer access, opening new growth opportunities for both companies.

Fifth, and this is one that’s easy to overlook. BlackSea has an exceptional management team and a mission-focused culture that is genuinely aligned with AEVEX. To realize a successful M&A transaction, cultural fit is critical. It’s a major driver of value creation. We’ve spent significant time with BlackSea’s leadership, and like the AEVEX team, they are firmly committed to the mission and the war fighter, and we are confident that they will continue to thrive as part of the AEVEX family. With that, let me tell you a little bit more about BlackSea, its platforms, and its track record. Please turn to slide seven. When you look at BlackSea, the first thing that stands out is that this is a company measured in outputs. They have delivered more than 350 USVs since inception, an installed base that we believe is unmatched among American USV manufacturers.

In addition, we understand that those platforms have accumulated more than 25,000 operational hours, including nearly 500 hours in support of Operation Epic Fury. As mentioned earlier, the company is expected to generate approximately $150 million of revenue in fiscal year 2026, and it does all of this with a workforce of approximately 275 highly skilled and motivated employees, the vast majority of whom hold active security clearances. BlackSea serves a host of customers within the United States Navy, United States Special Operations Command, and the intelligence community, to name a few. As one of the first movers in the USV market, BlackSea has developed deep relationships with key customers that have been forged in real-world operations. While the company is primarily known for its flagship USV, the GARC, BlackSea continues to innovate in the Small USV space with Chaser and Comet, and in the undersea space with Raptor.

In addition, BlackSea is a first mover in the growing contested logistics market, where it has developed a number of platforms, including NightTrain, Revenge, and SPDS. Not only does BlackSea develop and manufacture these platforms, it also employs a highly technical team with deep operational experience with the ability to deploy, operate, and sustain USVs and UUVs in support of real-world missions. This has provided a significant force multiplier for our customers, as well as a valuable feedback loop that has helped to enhance these platforms. The pattern here is important. BlackSea does not sell hardware and walk away. They both deploy platforms and support their customers in the field, who then come back with bigger, longer, and more strategic scope of work. That is the flywheel that underpins our growth expectations for the business. The takeaway on this slide is simple.

We are buying a company that is already delivering, already deployed, and already trusted with the infrastructure, workforce, and customer relationships to keep scaling. Please turn to slide 8. Building on the last slide, I want to give you a sense of the product roadmap, because this is where near-term revenue is expected to meet long-term value creation. The GARC platform, the one that has generated the operational track record we just discussed, is designed to carry a payload of up to 1,000 pounds, has a range of more than 640 miles, cruises at 40 knots, is survivable through Sea State 7, and can operate for up to 10 days at a time. That is a highly capable platform, and it is in the fight today. Chaser is the successor to GARC, offering next-generation capabilities.

Relative to GARC, Chaser offers approximately 38% more payload weight, 33% more payload volume, 25% greater range at cruise, and does so at an estimated 10% lower unit cost, all while adding advanced platform autonomy and next-generation perception. Critically, it is packable in a standard 20-foot ISO container, which is a real logistics advantage for rapid global deployment. In addition, BlackSea has delivered specialized variants with custom capabilities and proprietary intellectual property for classified customers. Importantly, BlackSea’s platforms, like those at AEVEX, are built on a modular open systems architecture, which is with the department mandates to drive rapid capability insertion and interoperability. This architecture creates the opportunity for us to leverage our CompassX technology stack to enable autonomy and multi-domain interoperability across all of our combined platforms.

Additionally, as the department shifts towards contractor-owned, contractor-operated or COCO structures and larger USV and UUV programs, having an extensible architecture becomes a durable competitive mode. Here is how you should think about BlackSea’s small USV leadership. The current platform is operationally deployed and delivering revenue today. The next generation platform improves on it across every dimension, and the underlying architecture is aligned with where the customer is going. Turning to the right side of this chart, the best way to understand why BlackSea is differentiated asset is to look at what it is actually doing for the customer. There is no better example than the U.S. Navy’s Fifth Fleet. The mission is to deploy additional guards and personnel to Bahrain to support Fifth Fleet operations in a highly contested maritime environment. BlackSea is solving three core problems for the customer.

Rapid force projection through immediate large-scale unmanned surface vessel deployment, operational risk mitigation by using unmanned combat support to reduce risk to human life, and capability versatility across a diverse set of mission needs, including mine clearing from a single adaptable platform. What sets BlackSea apart on this mission is a specific set of capabilities. Its USVs are multi-mission with rapid payload integration and true modularity. BlackSea also provides end-to-end expertise for 24/7 maritime operations, and they have a proven ability to both surge production and deploy in support of operational missions as required. Please turn to slide 9. One of the things that made BlackSea attractive is its well-capitalized infrastructure. This is not a company that needs capital to meet near-term demand. The company operates across five U.S. locations, Maryland, Virginia, North Carolina, Florida, and California.

The headquarters and manufacturing facilities waterfront location in Baltimore, Maryland, is a genuine differentiator. The research, development, test, and evaluation facility is 57,000 square feet, equipped with two 30-ton bridge cranes. The production facility is 47,000 square feet, and today has the capacity to produce approximately 40 small USVs per month. Just to frame that, at current run rate, that is meaningful headroom relative to the 350-plus units delivered to date, which we expect would give us room to convert the backlog we have highlighted without incremental capacity investment on day one. The facilities also have three attributes that are hard to replicate. Deep water access for testing and delivery, a robotic welding machine for consistent, high throughput hull fabrication, and facilities that support classified program work.

Of course, the true value of BlackSea is its roughly 275 hardworking employees across the organization. These are talented people that are dedicated to the missions they serve, many of which have decades of experience helping to solve our nation’s most complicated challenges. The bottom line on this slide, we are buying a company with the physical plant, location, security infrastructure, and the workforce already in place to deliver on the growth we have described. Please turn to slide 10. Let me pull the pieces together before we go into a discussion of second quarter results. Strategically, we believe this transaction has the potential to make AEVEX one of the largest providers of battle-proven, autonomous air and maritime platforms, right as the department enters a multi-year super cycle in unmanned systems investment. Financially, it is disciplined.

We are acquiring a business that is expected to generate approximately $150 million of revenue in fiscal year 2026, with an expected growth rate at or above the market moving forward. The transaction is expected to be accretive in the near term, and the consideration mix is structured to align sellers with long-term AEVEX shareholder value creation. Operationally, we are acquiring proven platforms, an already built and highly scalable production operation, highly skilled, highly cleared, and highly mission-focused talent, and most importantly, customer trust that has been earned over decades, mission by mission. On next steps, we expect to close in September of this year. Between signing and closing, our integration team, led jointly by AEVEX and BlackSea leadership, will finalize day 1 and our 100-day integration plans.

After closing, BlackSea will operate as a business unit within AEVEX to preserve the customer relationships and the mission focus that makes it valuable. We will provide updated financial guidance when appropriate after close. We are confident that this is the right combination at the right time, and we are excited about what AEVEX and BlackSea will build together for our customers, our employees, and our shareholders. Let’s turn to a brief discussion about our second quarter results. Please turn to slide 12 for an update on what we are seeing across the industry today. To begin, the geopolitical environment remains complex, and the conflicts in Ukraine and the Middle East are pushing global defense spending high. We are seeing increased interest in and demand for autonomous systems, air and maritime, both here in the U.S. and from allies overseas.

Of note, we have seen a growing set of use cases for these types of systems over the last several months. The Ukrainians have increasingly demonstrated the impact of Long-Range Precision Strike capabilities against military and infrastructure targets deep inside enemy territories. We have seen widespread use of autonomous systems in the Middle East, including unmanned surface vessels across multiple mission sets. For years, AEVEX has provided these types of critical capabilities to the U.S. military and its allies, and we are confident that we are well-positioned to continue to do so given our scale, innovative technology, and battle-proven systems. On the budget side of things, the president’s fiscal year 2027 budget projects materially higher spending, particularly for autonomous systems. House passage of the NDAA is a supportive indication that our market is likely to see significant growth in the years ahead.

At this point, it appears the next fiscal year will start with a continuing resolution, which has become commonplace over the past decade or more. However, we do not expect that to have a material impact on our financial results in 2026. Moving forward, we expect to see follow-on production orders from existing contract vehicles across Launched Effects, One-Way Attack, and Long-Range Precision Strike. As far as the contracting environment goes, demand signals for unmanned systems remain robust and were reiterated during interactions we had with DOW leadership during the quarter. That said, the Middle East conflict, changes to the acquisition force and processes, and operational reprioritization have elongated award cycles in some cases. Let’s now turn to slide 13 to walk through the key highlights from the quarter.

First, we posted roughly 100% year-over-year growth, driven by higher UAS production, and our trailing 12-month book-to-bill landed at 1.08. From an operational perspective, we continue to make progress with unit volumes up 114% year-over-year, with continued investments in our supply chain helping to drive throughput. Of note, we made the decision to both expand and consolidate our Tampa production facilities. We expect this investment will provide greater operational flexibility, and it will more than double our capacity over the next year to meet what we see as robust demand. Margins continue to expand this quarter, driven by operational efficiencies, pricing discipline, and OpEx leverage. With regard to cash flow and working capital, we continue to post metrics that reflect a key focus on lean operations, disciplined capital deployment, and the need to balance the growth our customers require.

On teams and culture, we continue to make investments in workforce planning and team excellence, and we’ve made key hires to drive this initiative forward. We expect these efforts to improve operational effectiveness and produce additional efficiencies throughout the organization. We’ve also put in place public company retention tools such as an equity program and an expanded incentive compensation plan. This is helping to drive improved retention across the organization and reinforce the behaviors that are important for the business. Finally, we recently announced two key hires. First, Murali Krishnan is serving as our Chief Growth Officer, responsible for continuing to scale our growth operations and delivering next-generation solutions to our customers. He has a long tenure of demonstrated success in the defense industry, most recently with Northrop Grumman, and I am excited to have him on the team.

Secondly, I am equally excited to have Chelsey Thomas join us as the VP of Government Affairs. Chelsey comes to us with more than two decades of experience, both on the Hill and in the defense industry, and she will lead AEVEX’s government engagement strategy for both federal and local levels as the company continues to expand. Let’s now turn to slide 14, where I want to talk a bit about order and backlog highlights. We’ve announced several key awards since the beginning of our second quarter, including recent new orders to deliver Long-Range Precision Strike systems to the U.S. government customers, demonstrating the strong demand signals we are seeing today. Demand is dynamic and robust as our customers want flexibility given their changing mission needs.

As a result, we are seeing increased levels of shorter cycle production orders, which is leading to a greater amount of what we describe as book-and-ship revenue. That is revenue we generate from orders we receive inside any given year. As you can see in this table, backlog coverage for us at the beginning of fiscal year 2025 was 41%, and for fiscal year 2026, it was roughly 86% of our expected revenue at the time of our IPO. That stepped down to 82% in the first quarter, given the short cycle order activity we saw then, and it’s now stepped down even further to 71% this quarter, given the recent orders and subsequent increase in the midpoint of our revenue outlook for the year.

In our view, this demonstrates that we have a system and a team that is highly capable of converting bookings and delivering revenue in a short cycle environment. That is important as our customers are focused less on traditional long-tail programs of record and more on procuring systems from companies that possess innovative technology, production scale, and battle-proven systems that can be delivered on rapid timelines. From our perspective, this is a great outcome for AEVEX, as we can deliver across all of those metrics, and we are excited to be able to take advantage of future growth in the market. Which leads me to slide 15. Our pipeline of opportunities this year has grown from $8.1 billion at the end of 2025 to roughly $10.5 billion today.

That growth has been driven by increased clarity on government budgets and priorities, our own product development efforts, and the expansion of the production capacity I mentioned earlier. As budget dynamics continue to evolve and become clearer, we expect our pipeline to continue to grow. At the current pace, our proposal levels are on track to increase roughly 30% year over year in 2026. Finally, we continue to see roughly $2 billion in potential contract value across Launched Effects, One-Way Attack, Long-Range Precision Strike, and support to operations in the CENTCOM AOR. With several of our recent award announcements aligned with these four areas. With that, I will hand the call over to Todd for a discussion of quarter 2 financials and our upwardly revised outlook for the full year.

Todd Booth, Chief Financial Officer, AEVEX: Thanks, Roger. Please turn to slide 16. Revenue in the second quarter was up approximately 100% year over year to $201.8 million, driven by the tactical systems business, where we are executing on a large unmanned aerial systems program named Deep Strike that was awarded last year. Net income was $6.7 million in the quarter, compared to a net loss of $11.8 million in Q2 2025. The increase was driven by higher revenue and margins and lower interest expense, offset by increases in transaction costs, income taxes, and change in fair value of derivative liability. As you will note from our historical financials, both revenue and profitability improved in the second half of 2025 as programs were put on contract and production ramped up.

This trend has continued into 2026, with adjusted EBITDA margins in the first and second quarters improving significantly year over year, driven by higher revenue, production efficiencies, and lower operating expenses as a percentage of sales. Going forward, we continue to expect margins to resemble the second half of last year and the first half of 2026 than what we experienced in the first half of last year. Please turn to slide 17. Our tactical system segment saw revenue growth of 142% year over year to $174.2 million, driven largely by the execution of the Deep Strike program. The higher revenue led to operational efficiencies and segment adjusted EBITDA margins of 17% of sales in Q2 2026.

In our view, margin levels in the first half of the year are more reflective of the longer-term potential of tactical systems, though quarter-to-quarter fluctuations are likely to be driven by volume levels, sales mix, and the timing of research and development spend. Let’s turn to slide 19. Our global solutions segment revenue decreased 5% year-over-year to $27.6 million, driven largely by the timing of an aircraft sale in Q2 2025 that did not repeat this year and was offset by growth across the rest of the portfolio. This led to favorable sales mix versus last year into segment adjusted EBITDA expansion of roughly 700 basis points to 14.2% in the quarter. Please turn to slide 20.

Net cash generated from operating activities for the six months ended June 30, 2026, was $8.6 million, compared to net cash used in operating activities of $27.9 million for the six months ended June 30, 2025. The $36.5 million favorable change in cash flow from operations was primarily due to the $66.8 million increase in net income offset by higher working capital, primarily due to the timing of our cash payments to fulfill the U.S. Central Command Deep Strike program. Going forward, we plan to closely manage working capital and capital expenditure. We note that we expect to invest in inventory levels to support our customers as need arise, as well as capital equipment and leasehold improvements to expand capacity.

Turning to the balance sheet, we ended the quarter with $99.1 million in long-term debt and $215.2 million of cash on hand, driven by operating activities and the net proceeds from the April IPO, which were roughly $345.9 million. As I mentioned on the Q1 call, we used those proceeds to retire existing debt and subsequently entered into new credit facilities. As of now, we have a $99.1 million term loan on the balance sheet and have access to two undrawn facilities, a $75 million delayed draw term loan and a $200 million revolving credit facility. In our view, the collection of these transactions currently provides the company with sufficient liquidity to execute its near-term growth strategy, including the acquisition of BlackSea.

Of note, the company did not receive any proceeds from the June 3, 2026, secondary offering. That transaction involved sales by our private equity sponsor, Madison Dearborn Partners, and other related parties. For clarity, this transaction did not increase our total shares outstanding and did not lead to shareholder dilution. Now let’s turn to slide 21 for a discussion of the outlook for 2026. At this point, we expect total company revenues to land in the range of $700 million-$720 million, and adjusted EBITDA in the range of $105 million-$111.5 million for full year 2026. Other noteworthy items include depreciation and amortization, which we expect to be roughly $21.7 million, and net interest expense to be roughly $11.5 million in 2026. Please note that this outlook does not contemplate the completion of the BlackSea acquisition.

As discussed throughout the call, we had a great start to the year with strong performance in both our reporting segments, including higher accelerated material receipts that continued into the second quarter and which drove higher revenue recognition. In the second half of the year, we will have more deliveries but less revenue given this phenomenon. The increase in our outlook is being driven largely by our tactical systems segment, where we are seeing significant demand signals and award activity. Importantly, as of this call, roughly 95% of the midpoint of our revenue outlook for the year is currently in backlog, with the remainder expected through renewals of long-standing contracts in our global solutions segment. With that, I would now like to hand the call back to Jason for Q&A. Jason, go ahead.

Jason Gursky, Vice President of Investor Relations, AEVEX: Great. Thanks, Todd. Operator, we are ready for the Q&A session. I just want to ask those that are queued up to ask a question to, perhaps in the first go-around, limit yourself to one single-part question and then hop back in the queue. We went a little long today, and I want to give everybody an opportunity to ask some questions. Operator, over to you for some instructions and to get us started. Thanks.

Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Peter Arment with Baird. Peter, your line is open. Please go ahead.

Peter Arment, Analyst, Baird: Yeah, thanks. Good afternoon, everyone. Nice results, and congrats on the BlackSea deal.

Roger Wells, Chief Executive Officer, AEVEX: Hey, thanks, Peter. Great to hear you.

Peter Arment, Analyst, Baird: Hey, Roger. UCOM Deep Strike has been such a major contributor. Maybe you could just give us an update of how much of that program maybe has been recognized to date, or how much you’re thinking about for the second half. I assume it lingers a little bit into 2027, just because it is such a major contributor. Just thoughts on that or any of the other kind of big pursuits that you’ve been pursuing regarding that. Thanks.

Roger Wells, Chief Executive Officer, AEVEX: Yeah. Thanks, Peter. UCOM Deep Strike continues to be a major program for us in fiscal year 2026. As we’ve talked about on previous calls, we will likely roll off the vast majority of revenue on this program and deliver the vast majority of systems this fiscal year. The first half of the year was largely driven by UCOM Deep Strike as we received material that allowed us to drive deliveries in the back half of the year. We are continuing to roll off the UCOM Deep Strike program as we deliver.

We will be going through a transition in the second half as we move from UCOM Deep Strike program to other programs that we’re in the process of winning and delivering on in the back half of the year for U.S. forces across the four portfolio areas that we talked about: Launched Effects, Long-Range Precision Strike, One-Way Attack, and certainly support to the combatant commands across multiple areas of operation to include CENTCOM. So we feel extremely confident about our ability to continue to execute UCOM Deep Strike. We’ve got the vast majority of material in-house or on order, and we don’t see any challenges relative to the delivery of this program in this fiscal year.

Todd Booth, Chief Financial Officer, AEVEX: Peter, this is Todd. We do not give exact percentages, but the Q3 percentage of total revenue is less than what was in Q2 and Q1, and Q4 goes down quite a bit, then there is a little bit in 2027.

Peter Arment, Analyst, Baird: Got it. I appreciate the color. I will leave it at one. Jump back in the queue. Thanks, guys.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Peter.

Operator: Your next question comes from the line of Seth Seifman with J.P. Morgan. Seth, your line is open. Please go ahead.

Roger Wells, Chief Executive Officer, AEVEX: Seth, you might be on mute if you’re there.

Operator: A reminder to unmute locally if you find yourself muted. Your next question comes from the line of Brian Gesuale with Raymond James. Brian, your line is open. Please go ahead.

Brian Gesuale, Analyst, Raymond James: Yeah. Hi, good evening, and congrats on the quarter and the acquisition here.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Brian.

Brian Gesuale, Analyst, Raymond James: Wanted to dig in a little bit to the pipeline. Continues to grow. Can you give us some color around two areas? One, maybe the product type, if you are seeing any differentiation amongst the products like Atlas, Disruptor, et cetera. Then also how you think that might matriculate into order flow and backlog through the end of the year.

Roger Wells, Chief Executive Officer, AEVEX: Yeah. So right now we are seeing a significant amount of interest in our Group 2 and Group 3. In particular, the Group 3 Long-Range Precision Strike and One-Way Attack systems. This is the Disruptor and the Raker product line within our portfolio. You know, this demand is really being highlighted by current activities that we see in Ukraine as well as activities in the Middle East surrounded by Operation Epic Fury. So, as part of the elevation and growth of our pipeline, 8.1 to 10.5, you know, we really see it in three major categories. The first is that product differentiation and expansion that we are getting through execution of our innovation engine and our product development plans and processes.

Two, better clarity around the pipeline, the demands, and the needs of the U.S. government as we think about operations into the future. Then the third piece is capitalizing on the scale and the capitalization we have done in order to increase the capacity of the organization. So, you know, we believe that we are well positioned to execute on the pipeline that we see with the platforms that we have today, as well as the new products that are going to be coming on over the next several years as we look out through 2030.

Brian Gesuale, Analyst, Raymond James: Fantastic. I will jump back in the queue. Thank you.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Brian.

Operator: Your next question comes from the line of Conor Cunningham with Goldman Sachs. Conor, your line is open. Please go ahead.

Conor Cunningham, Analyst, Goldman Sachs: Hey, good afternoon, guys. You’ve got Conor on for Noah today. Thanks for taking my question.

Roger Wells, Chief Executive Officer, AEVEX: Hey, Conor.

Hey. When I look at the implied margin guide for 2026, it’s about 20 basis points higher than the full year outlook you guys gave last quarter, and that’s despite revenue being about $100 million higher. Can you walk us through the margin assumption you’re making for the full year and whether or not there’s some conservatism assumed in terms of the operating leverage you might see on that much higher of a revenue base?

Todd Booth, Chief Financial Officer, AEVEX: Yeah. So right now, if you take our midpoint guidance, we have $710 million of revenue for the year, which translates to about approximately $291 million second half of the year. We’re at the midpoint on the adjusted EBITDA. We’re at 15.3% approximately. So we’re seeing a 15% roughly, if you do the math, taking out the first Q1 and Q2 of 15%. You know, sales mix and operational efficiency, it could be a little higher, could be. But right now we’re forecasting at that level, which is pretty consistent to the first half on a little bit. We have a little bit lower revenue, obviously, in the second half compared to the first half.

Conor Cunningham, Analyst, Goldman Sachs: Okay. Thanks.

Todd Booth, Chief Financial Officer, AEVEX: Yeah.

Conor Cunningham, Analyst, Goldman Sachs: Yeah. Okay. Thanks.

Operator: Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Sheila, your line is open. Please go ahead.

Adam Samuelson, Analyst, Jefferies: Yeah. Hi, this is Adam Samuelson on for Sheila. I guess the question is on the backlog coverage and kind of where we end the year with the amount of book to ship activity that you’ve seen. I think in your prepared comments, you alluded to having 95% coverage for the second half in backlog based on the second half revenue. Is there that would seem to work down most of the funded backlog that you have. So just can you help us think about what amount of book to ship is actually assumed in the second half of the year, or how much of that backlog that you have is actually 2027 shipments? Thanks.

Todd Booth, Chief Financial Officer, AEVEX: Yeah. So as you’ve mentioned, over 95% of our fiscal year 2026 revenue at the midpoint of our new guidance is funded backlog, and the remaining 5% or so is going to come through long-established incremental funding on existing contracts. You know, we’ve got a high degree of confidence in our fiscal year 2026 revenue, as well as our fiscal year 2026 EBITDA. When we think about the bookings that are going to roll in as we move through the back half of fiscal year 2026 and into fiscal year 2027, we’re seeing strong demand across our key portfolio areas. Launched Effects, both short range as well as long range. Our Atlas product as well as our Disruptor family.

Long-Range Precision Strike, One-Way Attack, and as we talked about, support to combatant commands across multiple different areas of operation. When you look at those portfolio areas, we see roughly $2 billion in potential contract value. That includes several contracts that we are in active negotiation on that will result in bookings in the near term. We do anticipate a book-to-bill near 1.0, given the raise that we’ve just given our guidance. That will lead to an inflection point as we move through the back half of 2026 and in 2027, where we’re expanding funded backlog and moving into 2027 revenue. So, you know, we feel really good about our book-to-bill.

We feel great about our position and the strong demand signals and active contract negotiations that we have going on.

Roger Wells, Chief Executive Officer, AEVEX: We feel equally good about our ability to operate in a short cycle environment. Now, what we’re really seeing here is a dynamic where the acquisition system, the process, and the team is focused more on shorter cycle production contracts as they work to get systems into the field. This not only sets up for the stockpiling, but also the operational evaluation exercises and test events that gets our sailors, soldiers, airmen, and Marines reps and sets on the system. We think the dynamic here is really set up, and we feel good about our position ending 2026 and rolling into fiscal year 2027 with a set of conditions that’s conducive to long-term growth.

Adam Samuelson, Analyst, Jefferies: Thanks. If I could just clarify, you said for the book-to-bill near one, is that a second half book-to-bill, or is that the full year of 2026 is the work?

Roger Wells, Chief Executive Officer, AEVEX: That’s for the full year of 2026.

Adam Samuelson, Analyst, Jefferies: Okay. That’s very helpful. I’ll pass it on. Thank you.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Conor.

Operator: Your next question comes from the line of Austin Bohlig with Needham. Austin, your line is open. Please go ahead.

Austin Bohlig, Analyst, Needham: Yeah. Thanks for taking my question, and congrats on the results and the acquisition. I wanted to maybe just dig a little bit into the BlackSea opportunity here. I think you guys said it was $100 million funded backlog and $250 million unfunded. There’s a ton of money up for grabs, it seems like, in this USV and UUV category. So I would just love to get a sense of what a pipeline opportunity looks like for this acquisition. Then maybe a sense of what the growth profile should be as we work into next year.

Roger Wells, Chief Executive Officer, AEVEX: Yeah. First, let me start by saying we couldn’t be more excited about the BlackSea acquisition and having them join the AEVEX team. It’s strategically aligned, and it’s exactly the type of acquisition that we signaled when we discussed our capital allocation approach and priorities. We believe that we are in the process with this acquisition of creating the largest pure play multi-domain air, surface, and subsurface autonomy and unmanned company in the market today. Both of these companies are delivering at scale battle-proven systems that are on timelines that are operationally relevant and really supporting real war operations. It’s that position, it’s that capability of scale that really underpins a lot of the growth expectations that we have.

We see significant growth opportunities and pipeline expansion as a result of this multi-domain capability that we’re building, especially when you factor in the ability to cross-leverage the CompassX autonomy suite, right? It’s really a differentiator when it comes to leveraging technology across these platforms. As you mentioned, we are tracking $110 million in funded backlog and $250 million of unfunded backlog across the USV, GARC, Chaser, Comet, UUV, Raptor, and certainly the contested logistics areas, SPDS, Nightrain, and Revenge, with SPDS being an active program today. We see a dynamic globally where USVs and UUVs will become an increasingly large part of force structures. We’re seeing this in the Middle East. We’re seeing it in Ukraine. We believe that structurally, over the long term, it’s going to be a well-funded, supported priority as part of the budgets moving forward.

Without giving specifics on what their pipeline looks like and what their opportunities do, which we will, as we move through close and provide additional financial guidance. I think the setup and the dynamic is there for significant year-over-year growth in the maritime systems piece of what will be AEVEX.

Austin Bohlig, Analyst, Needham: Thank you, guys.

Roger Wells, Chief Executive Officer, AEVEX: Yeah. Thanks, Austin. Sven, I think we’ve got time for one more question.

Operator: Thank you. Your next question, and final question, comes from the line of Louie DiPalma with William Blair. Louie, your line is open. Please go ahead.

Louie DiPalma, Analyst, William Blair: Roger, Todd, and Jason, good evening, and nice work on the BlackSea deal.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Louie.

Louie DiPalma, Analyst, William Blair: Given AEVEX’s specialization in mass manufacturing, particularly for the Phoenix Ghost and DeepStrike programs and your existing relationships, is there the potential that you can supercharge BlackSea’s growth? I think you indicated that the historical growth has been 15% annually. Are there expectations that cross-selling and your manufacturing expertise can potentially accelerate that over the coming years? Thanks.

Roger Wells, Chief Executive Officer, AEVEX: Yeah. Thanks, Louie DiPalma. First off, both companies are extremely well capitalized. They’re capable of delivering at scale today. As we think about the headroom that both of these companies have to meet the strong demand in both unmanned air, surface, and subsurface, we think that we’re very well positioned. When you think about where BlackSea is today, they’ve delivered over 350 systems to date, which we believe is one of the largest Small USV installed bases in the U.S. At a capacity of over 40 systems per month in their 47,000 sq ft facility, there’s a lot of headroom there.

When you combine that with the production capacity, the footprint, and the ability to deliver at scale at AEVEX, especially when you combine the fact that we just secured an additional 83,000 sq ft of production facility space based upon the demand that we have forecasted, the capacity to be one of the largest scaled providers of autonomous unmanned systems in the country is unique. It’s a highly differentiated capability. We absolutely see the opportunity to cross-sell unmanned air, unmanned surface, and subsurface as multi-mission, multi-domain capabilities are going to continue to be needed across multiple different operational scenarios. Our modular open technology stack, CompassX, really facilitates this collaborative capability across all of these different assets.

We really, again, think the power of these two companies together, leveraged against our CompassX differentiated technology stack, makes for a unique and highly capable set of multi-domain, multi-mission, autonomous unmanned systems, which is perfectly positioned, in our mind, for where our customers are going.

Louie DiPalma, Analyst, William Blair: Fantastic, Roger. Thanks. Thanks, everyone.

Roger Wells, Chief Executive Officer, AEVEX: Thanks, Blake.

Operator: We have reached the end of the Q&A session. This concludes today’s call. Thank you for attending. You may now disconnect.