AEVEX Q2 FY26 earnings call AVEX

AEVEX announced the proposed acquisition of BlackSea Technologies for up to $650 million, aiming to create one of the largest multi-domain unmanned systems providers. The acquisition is expected to deliver significant production capacity, access to new maritime markets, and the ability to offer a broader portfolio of multi-domain unmanned capabilities, all underpinned by AEVEX's CompassX autonomy stack. BlackSea's USV platforms are widely produced and operationally deployed, complementing AEVEX's leadership in unmanned aerial systems.

BlackSea has delivered over 350 USVs since inception, accumulating more than 25,000 operational hours, including nearly 500 hours in Operation Epic Fury. The company is expected to generate approximately $150 million in revenue in FY26 with an adjusted EBITDA margin in line with AEVEX. Its flagship USV, GARC, carries a 1,000-pound payload, has a 640-mile range, and operates for up to 10 days. The successor, Chaser, offers improved payload, range, and lower unit cost, designed for rapid global deployment. BlackSea also brings significant funded backlog of $110 million and unfunded backlog of $250 million.

BlackSea operates across five U.S. locations, with its Baltimore waterfront facility offering 57,000 sq ft for R&D and 47,000 sq ft for production, capable of producing 40 small USVs per month. This capacity provides significant headroom to convert existing backlog without immediate incremental investment. The company employs a hybrid business model, producing and operating assets, which provides predictable long-term revenue and valuable operational insights. BlackSea's platforms are built on a modular open systems architecture, aligning with Department of War mandates for rapid capability insertion and interoperability.

AEVEX reported approximately 100% year-over-year revenue growth to $201.8 million in Q2 FY26, primarily driven by the Tactical Systems business and the EUCOM Deep Strike program. Net income improved to $6.7 million from a net loss in the prior year. Adjusted EBITDA margins improved significantly year-over-year due to higher revenue, production efficiencies, and lower operating expenses as a percentage of sales. The company raised its full-year 2026 revenue outlook to $700 million to $720 million and adjusted EBITDA to $105 million to $111.5 million, excluding the BlackSea acquisition.

The geopolitical environment, including conflicts in Ukraine and the Middle East, continues to drive higher global defense spending and increased demand for autonomous systems. AEVEX is seeing a growing set of use cases for these systems, with the President's FY27 budget projecting materially higher spending for autonomous systems. Demand signals for unmanned systems remain robust, though award cycles have elongated in some cases. The company is well-positioned with its scale, innovative technology, and battle-proven systems to capitalize on future growth.

AEVEX's trailing 12-month book-to-bill ratio was 1.08x. Backlog coverage for FY26 revenue stood at 71% this quarter, down from 82% in Q1, reflecting increased short-cycle order activity and rapid conversion to revenue. The pipeline of opportunities grew from $8.1 billion at the end of 2025 to $10.5 billion today, driven by government budget clarity, product development, and increased production capacity. The company anticipates a full-year book-to-bill near 1.0x.