- Revenue surged 100% YoY to $201.8 million in Q2FY26, driven by UAS production
- Net income turned positive at $6.7 million, reversing a $11.8 million loss in Q2FY25
- Announced $650 million acquisition of Black Sea Technologies to expand maritime capabilities
- Raised full-year FY26 revenue guidance to $700-$720 million and adjusted EBITDA to $105-$111.5 million
- Backlog coverage stands at 95% of the midpoint of the revised revenue outlook
*this image is generated using AI for illustrative purposes only.
AEVEX (NYSE: AVEX) reported second-quarter FY26 revenue of $201.8 million, a 100% year-over-year increase, driven by higher unmanned aerial systems production. Net income rose to $6.7 million from a net loss of $11.8 million in the prior-year period.
The defense technology provider also announced a definitive agreement to acquire Black Sea Technologies for up to $650 million, aiming to expand its portfolio into unmanned surface and subsea capabilities. Consequently, AEVEX raised its full-year FY26 revenue guidance to $700-$720 million and adjusted EBITDA to $105-$111.5 million.
Financial Performance
Revenue growth was primarily fueled by the Tactical Systems segment, which saw revenue surge 142% year-over-year to $174.2 million. This segment delivered adjusted EBITDA margins of 17% in the quarter. In contrast, the Global Solutions segment revenue declined 5% to $27.6 million, largely due to the timing of an aircraft sale in the prior year that did not repeat. However, favorable sales mix drove segment adjusted EBITDA expansion by roughly 700 basis points to 14.2%.
Net cash generated from operating activities for the six months ended June 30, 2026, stood at $8.6 million, compared to net cash used of $27.9 million in the same period last year. The improvement was driven by higher net income, partially offset by increased working capital requirements linked to cash payments for the EUCOM Deep Strike program.
Black Sea Acquisition
The proposed acquisition of Black Sea Technologies is structured with approximately $250 million in cash at closing, roughly $350 million in AEVEX common stock (approximately 12.7 million shares at $2,750 per share), and a $50 million earnout contingent on performance targets through fiscal year 2027. AEVEX expects the transaction to close in September 2026.
Black Sea Technologies is expected to generate approximately $150 million in revenue in fiscal year 2026. As of the announcement, Black Sea held more than $110 million in funded backlog and over $250 million in unfunded backlog, tied to programs including the Global Autonomous Reconnaissance Craft (GARC) and contested logistics vessels.
What the Numbers Show
The divergence between revenue growth and margin expansion highlights operational leverage at scale. While total company revenue doubled, Tactical Systems adjusted EBITDA margins reached 17%, indicating that fixed costs are being spread over a significantly larger production base. Furthermore, the company ended the quarter with $215.2 million in cash on hand against $99.1 million in long-term debt, providing sufficient liquidity to fund the $250 million cash portion of the Black Sea acquisition without immediate external financing.
Outlook and Pipeline
Management raised full-year FY26 revenue guidance to $700-$720 million and adjusted EBITDA to $105-$111.5 million. Roughly 95% of the midpoint of the revenue outlook is currently covered by backlog. The pipeline of opportunities grew from $8.1 billion at the end of 2025 to roughly $10.5 billion, driven by increased clarity on government budgets and expanded production capacity. AEVEX expects depreciation and amortization to be roughly $21.7 million and net interest expense to be roughly $11.5 million in FY26.
How will the integration of Black Sea Technologies' unmanned surface and subsea capabilities impact AEVEX's operational synergies and cost structure in FY27?
Given the $50 million earnout contingent on performance through fiscal year 2027, what specific milestones must Black Sea Technologies achieve to secure the full acquisition value?
With 95% of the revenue outlook covered by backlog, how vulnerable is AEVEX to potential shifts in U.S. defense budget allocations or program cancellations?