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  4. [8-K] Applied Aerospace & Defense, Inc. Reports Material Event

Applied Aerospace & Defense (AADX) posts 47% Q2 revenue jump and big IPO

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Applied Aerospace & Defense, Inc. reported strong top-line growth for the quarter ended June 30, 2026, alongside a large GAAP loss tied to its IPO. Revenue was $167.3 million, up 47.4% from $113.5 million, driven by all three end markets, including notable growth in C5ISR and Precision Strike Systems.

The company incurred a net loss of $154.0 million, largely due to $110.1 million of share-based compensation and transaction expenses related to its June 2026 IPO. Adjusted EBITDA reached a record $36.4 million, up 38.5% year over year, with an Adjusted EBITDA margin of 21.8%. Contract backlog was $1.13 billion, supporting multi-year revenue visibility.

Applied completed a $683.0 million IPO, generating approximately $635.6 million of net primary proceeds from about 34.2 million primary shares at $20.00 per share, which management states reduced pro forma net leverage to 2.7x. For full year 2026, the company expects revenue of $670–$690 million and non-GAAP Adjusted EBITDA of $150–$155 million.

Positive

  • Revenue surged 47.4% year over year to $167.3 million in Q2 2026, with growth across all three core end markets.
  • Adjusted EBITDA rose 38.5% to a record $36.4 million, reflecting improved earnings power despite IPO-related expenses.
  • Contract backlog of $1.13 billion as of June 30, 2026 provides strong multi-year revenue visibility.
  • $683.0 million IPO generated about $635.6 million in net primary proceeds, which management says reduced pro forma net leverage to 2.7x.
  • Full-year 2026 outlook targets $670–$690 million in revenue and $150–$155 million in non-GAAP Adjusted EBITDA, implying continued growth.

Negative

  • Q2 2026 GAAP net loss was $153.971 million, a sharp increase from a $4.675 million loss a year earlier.
  • Share-based compensation expense jumped to $110.086 million in Q2 2026, heavily affecting GAAP profitability.
  • Selling, general, and administrative expenses rose to $123.315 million from $11.579 million, materially pressuring operating income.
  • The company recorded $26.249 million of net interest expense in Q2 2026 and still carries $395.173 million of long-term debt.

Filing Explained

At June 30, 2026, Applied Aerospace & Defense had 172,393,518 common shares outstanding versus 129,678,789 at December 31, 2025; the larger share base reduces existing holders’ percentage ownership absent offsetting changes.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Q2 2026 Revenue $167,318 Three months ended June 30, 2026 total revenue in thousands
Revenue Growth 47.4% Year-over-year increase in Q2 2026 revenue versus prior-year period
Q2 2026 Net Loss $153,971 Three months ended June 30, 2026 net loss in thousands
Q2 2026 Adjusted EBITDA $36,437 Three months ended June 30, 2026 Adjusted EBITDA in thousands
Contract Backlog $1.13 billion Backlog as of June 30, 2026
IPO Net Primary Proceeds $635.6 million Net primary proceeds from June 2026 IPO after costs
Long-Term Debt $395,173 Long-term debt, net, as of June 30, 2026 in thousands
2026 Revenue Outlook $670–$690 million Full year 2026 total revenue guidance range
Adjusted EBITDA financial
"Delivered record Adjusted EBITDA of $36.4 million, up 38.5% year over year"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
contract backlog financial
"Grew contract backlog to over $1.1 billion providing solid multi-year revenue visibility"
A contract backlog is the total value of work or orders that a company has committed to complete but has not yet finished. It acts like a pending to-do list of projects or jobs, indicating future revenue potential. For investors, a large or growing backlog suggests steady future income, while a shrinking backlog might signal slowing business activity.
C5ISR technical
"C5ISR (1) and Precision Strike Systems | $ 49,587 |"
C5ISR stands for Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance — a bundle of technologies and services that let militaries and governments collect information, protect networks, and make fast decisions. Think of it as a city’s emergency response system that links cameras, radios, maps and analysts so responders see what’s happening and act quickly. For investors, C5ISR work often means large, long-term government contracts, steady technology spending, and exposure to defense budget shifts and export rules.
share-based compensation expense financial
"Share-based compensation expense | 110,086 | | 802 |"
Share-based compensation expense is the accounting cost a company records when it pays employees or executives with stock, stock options, or other equity instead of cash. It matters to investors because it reduces reported profits and can dilute existing owners’ stake over time — like a bakery paying workers with slices of cake instead of money, leaving fewer slices for original owners and changing each slice’s value.
initial public offering financial
"transaction expenses related to the Company’s June 2026 initial public offering"
An initial public offering (IPO) is when a private company first sells its shares to the public and becomes a stock-listed company. It matters because it allows the company to raise money from a wide range of investors, helping it grow, while giving early shareholders a way to sell some of their ownership.
net leverage financial
"reducing pro forma net leverage to 2.7x"
Net leverage measures how many years it would take for a company to pay off its outstanding debt using its annual operating cash flow, after subtracting cash on hand from total debt. Think of it like a household’s mortgage balance minus savings divided by yearly income; a lower number means the company is in a safer position to handle debt, while a higher number signals greater financial risk and potential pressure on profits or growth.
Revenue $167.3 million up 47.4% year over year
Net loss $153.971 million compared with $4.675 million loss in prior-year quarter
Adjusted EBITDA $36.4 million up 38.5% year over year
Contract backlog $1.13 billion reported as of June 30, 2026
Guidance

For full year 2026, the company expects total revenue of between $670 million and $690 million, and non-GAAP Adjusted EBITDA of between $150 million and $155 million.

FAQ

How did Applied Aerospace & Defense (AADX) perform financially in Q2 2026?
Applied Aerospace & Defense reported Q2 2026 revenue of $167.3 million, up 47.4% year over year, and a net loss of $153.971 million. The loss mainly reflected $110.086 million of share-based compensation and IPO-related transaction expenses.

What was Applied Aerospace & Defense's Adjusted EBITDA in Q2 2026?
In Q2 2026, Applied Aerospace & Defense generated Adjusted EBITDA of $36.437 million, up 38.5% from $26.306 million a year earlier. Adjusted EBITDA margin was 21.8%, compared with 23.2% in the prior-year quarter.

How large is Applied Aerospace & Defense (AADX)'s contract backlog?
As of June 30, 2026, Applied Aerospace & Defense reported contract backlog of $1.13 billion. Backlog represents the total value of existing contracts, less amounts previously invoiced, providing visibility into future revenue over multiple years.

What were the key terms of Applied Aerospace & Defense’s June 2026 IPO?
Applied completed a $683.0 million IPO in June 2026, raising about $635.6 million in net primary proceeds from the sale of approximately 34.2 million primary shares of common stock at $20.00 per share.

What is Applied Aerospace & Defense (AADX)'s outlook for full-year 2026?
For full-year 2026, Applied Aerospace & Defense expects total revenue of $670–$690 million and non-GAAP Adjusted EBITDA of $150–$155 million. The company does not reconcile these forward-looking non-GAAP figures to GAAP due to estimation complexity.

How diversified are Applied Aerospace & Defense (AADX)'s end markets?
Q2 2026 revenue was diversified across Space and Launch Systems ($38.8 million), Defense Aviation and Airborne Systems ($78.9 million), and C5ISR and Precision Strike Systems ($49.6 million), each contributing to overall growth versus 2025.

What is Applied Aerospace & Defense’s (AADX) debt position after the IPO?
As of June 30, 2026, Applied Aerospace & Defense reported long-term debt of $395.173 million and current debt of $5.318 million. Management stated the IPO reduced pro forma net leverage to 2.7x, improving balance sheet flexibility.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Understanding 8-K Material Events →
0002118195false00021181952026-08-122026-08-12

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): August 12, 2026
___________________________________
Applied Aerospace & Defense, Inc.
(Exact name of registrant as specified in its charter)
___________________________________

Delaware
(State or other jurisdiction of
incorporation or organization)
001-43323
(Commission File Number)
92-0890338
(IRS Employer Identification No.)
355 Quality Circle NW
Huntsville, Alabama
35806
(Address of principal executive offices)
(Zip Code)
 (Registrant's telephone number, including area code): (202) 983-3291
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common stock, par value $0.01 per share
AADX
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02 Results of Operations and Financial Condition.
On August 12, 2026, Applied Aerospace & Defense, Inc. (the "Company") issued a press release announcing its financial results for the second quarter of the fiscal year ending December 31, 2026, and conducted a conference call to further discuss the financial results. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits
(d): The following exhibits are being filed herewith:

Exhibit No.
Description
99.1
Press Release dated August 12, 2026
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)







SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 12th day of August, 2026.


Applied Aerospace & Defense, Inc.
By:
/s/ Kai Kasiguran
Name:
Kai Kasiguran
Title:
Chief Accounting Officer


Exhibit 99.1
______________________________________________
floatingimage_0a.jpg
PRESS RELEASE
Applied Aerospace & Defense
Reports Second Quarter 2026 Financial Results
Huntsville, AL — [August 12, 2026] — Applied Aerospace & Defense (NYSE: AADX)
(“Applied” or "the Company"), a premier provider of advanced design, engineering, and vertically
integrated manufacturing solutions for leading and next-generation space and defense
technology companies, today reported its financial results for the second quarter ended June
30, 2026.
Second Quarter 2026 & Recent Highlights:
•Generated record revenue of $167.3 million, up 47.4% year over year
•Incurred a net loss of $154.0 million primarily due to share-based compensation and
transaction expenses related to the Company’s June 2026 initial public offering (“IPO”)
•Delivered record Adjusted EBITDA of $36.4 million, up 38.5% year over year
•Grew contract backlog to over $1.1 billion providing solid multi-year revenue visibility
•Successfully completed a $683.0 million IPO, raising approximately $635.6 million of net
primary proceeds (after underwriting discounts, commissions, and offering expenses) via
the sale of approximately 34.2 million primary shares of common stock at $20.00 per
share
“The second quarter saw Applied successfully complete our initial public offering and begin our
next chapter as a public company,” said Trip Ferguson, Chief Executive Officer of Applied. “The
IPO meaningfully strengthened our balance sheet and enhanced our financial flexibility,
reducing pro forma net leverage to 2.7x, and provided new resources to invest in our people,
our capabilities and our operations as we scale the business to support a broad and expanding
range of our customers’ most critical programs.”
“Applied is positioned at the intersection of two powerful, long term, and uncorrelated demand
drivers: an unprecedented growth outlook for the commercial space economy and a dynamic
global threat environment that necessitates highly capable advanced manufacturing capacity
and major new investments in defense technology," Ferguson explained.  "Across both end
markets, the ability to manufacture highly engineered systems at the speed, quality, and scale
required by our customers has never been more important.  Applied was purpose-built for this
mission.  Our differentiated capabilities, long-tenured customer relationships and embedded
positions across a diverse array of large and enduring programs of record and next-generation
growth programs make us a trusted partner to the leading defense primes and bold new
innovators in commercial space and defense technology.”
Ferguson continued, “Our second quarter performance reflects the strength of that position, with
significant revenue growth across each of our three core markets.  Demand for space and
launch systems remains high, demand for precision strike systems continues to build rapidly, we
are ramping several important next-generation programs, and aftermarket demand remains
strong as we enable mission readiness for our customers’ defense aviation fleets. Together with
over $1.1 billion in backlog, this provides us with strong multi-year revenue visibility.  We are
also making progress integrating our recent acquisitions and adding qualified capacity in the
areas where our customers need it most. Looking ahead, we remain focused on operational
excellence, disciplined investment, and expanding our content on enduring and next-generation
programs to drive profitable growth and create long-term value for our customers and
shareholders."
Second Quarter 2026 Financial Results
Consolidated revenue was $167.3 million, up 47.4% compared to the prior year period of $113.5
million. Revenue growth in the second quarter of 2026 was driven by strength across all the
Company’s key end markets, reflecting continued demand for our highly engineered systems
and contributions from recent acquisitions.  Excluding the impact of acquisitions completed in
2026, revenue increased $22.5 million or 19.8%. 
The following table presents the Company’s revenue disaggregated by end market for the three
and six months ended June 30, 2026 and 2025:
Three Months Ended
June 30,
Six Months Ended June
30,
2026
2025
2026
2025
Space and Launch Systems
$38,802
$24,476
$73,853
$50,807
Defense Aviation and Airborne Systems
78,929
75,309
158,352
147,351
C5ISR(1) and Precision Strike Systems
49,587
13,714
69,464
26,365
Total revenue
$167,318
$113,499
$301,669
$224,523
(1) Command, Control, Communication, Computers, Cyber, Intelligence, Surveillance, and
Reconnaissance
Revenue growth in Space and Launch Systems of $14.3 million was primarily attributable to
increased volumes on launch vehicle and satellite production programs amid higher launch
cadence and proliferated constellations.
Revenue growth in Defense Aviation and Airborne Systems of $3.6 million was primarily
attributable to sustained aftermarket demand across a large installed base of aircraft, as well as
continued new production activity. Demand is supported by increases in global defense budgets
across a broad range of fixed-wing and rotorcraft platforms, including increasing funding for
next-generation fixed-wing, vertical lift, and autonomous airborne systems.
Revenue growth in C5ISR and Precision Strike Systems of $35.9 million was primarily
attributable to higher revenue across a range of integrated air and missile defense systems and
radar programs. Near term demand is expected to remain supported by missile and munition
rearmament, layered missile defense priorities, and continued national defense and budget
investments in next-generation precision strike systems.
Contract Backlog
As of June 30, 2026, the Company had contract backlog of $1.13 billion.  Contract backlog
represents the total value of existing contracts, less amounts previously invoiced, as of the
backlog date.
Full Year 2026 Outlook
For the full year 2026, the Company expects total revenue of between $670 million and $690
million, and non-GAAP Adjusted EBITDA of between $150 million and $155 million.
Non-GAAP Adjusted EBITDA is provided in the full year 2026 Outlook on a forward-looking
basis. The Company does not provide a reconciliation of such forward-looking measures to the
most directly comparable financial measures calculated and presented in accordance with
GAAP because such reconciliation cannot be prepared without unreasonable effort given the
difficulty of projecting event driven transactional and other non-core operating items in any
future period. The magnitude of these items, however, may be significant.
Conference Call and Webcast
Applied will host a conference call today at 8:30 a.m. Eastern Time to discuss the Company's
financial results. The live webcast of the conference call and accompanying presentation
materials can be accessed through Applied’s website at https://investors.applied-ad.com/. For
those unable to access the webcast, the conference call can be accessed by dialing (877)
407-0789 (domestic) or +1 (201) 689-8562 (international) and requesting the Applied Second
Quarter 2026 Earnings Conference Call. An audio replay of the conference call can be accessed
by dialing (844) 512-2921 (domestic) or +1 (412) 317-6671 (international) and providing the
passcode 13761567.
About Applied Aerospace & Defense
Applied Aerospace & Defense, Inc. is a premier provider of advanced design, engineering, and
vertically integrated manufacturing solutions for leading and next-generation space and defense
technology companies. Applied builds complex, mission-critical hardware for extreme operating
environments across three core markets: Space & Launch Systems, Defense Aviation &
Airborne Systems, and C5ISR & Precision Strike Systems. With over 120 years of advanced
manufacturing heritage, Applied employs a nationwide infrastructure of 11 purpose-built facilities
across six states and more than 1.5 million square feet of production capacity, supported by IP-
enabled process expertise for the full lifecycle management of rapid prototyping, large-scale
production, and aftermarket sustainment of enduring platforms. Applied Aerospace & Defense is
a publicly traded company on the New York Stock Exchange (NYSE) under the ticker symbol
“AADX.” To learn more visit www.applied-ad.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than statements of historical fact
are forward-looking statements, including statements about our future results of operations,
financial condition, business strategy, prospects, and plans and objectives.  Forward-looking
statements may be identified by words such as “anticipate,” “believe,” “contemplate,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will” or “would,” the negative of these words, or similar terms or expressions, although
not all forward-looking statements contain these identifying words.
Forward-looking statements are based on our current expectations and projections about future
events and trends we believe could affect our business, financial condition, results of
operations, and prospects. These statements involve risks, uncertainties, and other factors that
could cause actual results to differ materially from those expressed or implied by the forward-
looking statements. Such risks, uncertainties and other factors include, without limitation:
•changes in economic, capital market, and political conditions in the U.S. and globally;
•changes in U.S. or foreign government defense spending, policies, and priorities;
•significant declines in business with key customers, or the cancellation, reduction, or
deferral of customer orders;
•our performance on our contracts and programs, including our ability to control costs;
•the rapid pace of technological change, and the potential for reduced demand for our
capabilities and products if we fail to keep up;
•our ability to establish and maintain important relationships with government agencies
and prime contractors;
•requests or expectations from government customers that we make investments in our
business that may not directly benefit stockholders;
•our acquisition strategy, including our ability to complete acquisitions on satisfactory
terms and successfully integrate acquired businesses;
•our ability to attract, train, and retain experienced senior management and qualified
engineering, operational, and other personnel, and the impact of work stoppages or
other labor disruptions;
•shortages, delays, or increased costs associated with critical components, raw materials,
and services from suppliers and subcontractors;
•disruptions affecting our manufacturing facilities and operations;
•our ability to renew facility leases on favorable terms, and the potential business impact
associated with relocating operations, including risk to our information technology
systems and security;
•technology failures, cybersecurity incidents, and unauthorized access to our information
systems or sensitive proprietary information;
•settlements, penalties, remediation, and attorney’s fees if we fail to comply with the
numerous legal and regulatory requirements to which we are subject;
•fines and compliance- and remediation-related costs associated with environmental,
health and safety laws, regulations, and permitting requirements;
•pending, threatened, and future legal and regulatory proceedings, audits, investigations,
and other contingencies;
•changes in trade policies, the implementation of sanctions, imposition of tariffs and
counter-tariffs, and other trade measures and restrictions;
•our ability to protect and enforce our intellectual property rights and defend against
infringement claims;
•our indebtedness, restrictive covenants under our credit facilities, and the effect of debt
service obligations on our operational and financial flexibility; and
•other risks and uncertainties described in our filings with the Securities and Exchange
Commission.
You should not rely on forward-looking statements as predictions of future events. The forward-
looking statements in this press release relate only to events as of the date on which the
statements are made. Except as required by law, we undertake no obligation to update or revise
any forward-looking statements to reflect events, circumstances, or new information after the
date of this press release. We may not achieve the plans, intentions, or expectations in our
forward-looking statements, and you should not place undue reliance on them. Our forward-
looking statements do not reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures, or investments.
Applied Aerospace & Defense, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
June 30,
December 31,
2026
2025
Assets
Current assets:
Cash and cash equivalents
$18,108
$15,475
Accounts receivable, net
69,590
71,386
Contract assets
197,668
140,817
Inventories
60,963
57,375
Prepaid expenses and other current assets
8,735
6,521
Total current assets
355,064
291,574
Property, plant and equipment, net
167,037
119,777
Goodwill
581,427
342,491
Intangible assets, net
353,299
199,672
Other assets
43,392
45,787
Total assets
$1,500,219
$999,301
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
$45,772
$37,894
Contract liabilities
25,287
21,550
Accrued expenses and other current liabilities
63,299
26,342
Current portion of long-term debt
5,318
7,068
Current portion of finance lease liabilities
1,825
1,628
Total current liabilities
141,501
94,482
Long-term debt, net
395,173
626,975
Finance lease liabilities, net of current portion
29,224
30,405
Deferred income taxes
55,804
35,184
Other non-current liabilities
50,636
52,791
Total liabilities
672,338
839,837
Shareholders' equity:
Common stock, $0.01 par value; 1,000,000,000
shares authorized, 172,393,518 and 129,678,789
shares issued and outstanding at June 30, 2026 and
December 31, 2025
1,724
1,297
Additional paid-in capital
1,058,943
221,850
Accumulated deficit
(232,140)
(63,037)
Accumulated other comprehensive loss
(646)
(646)
Total shareholders' equity
827,881
159,464
Total liabilities and shareholder's equity
$1,500,219
$999,301
Applied Aerospace & Defense, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended
June 30,
Six Months Ended June
30,
2026
2025
2026
2025
Revenue
$167,318
$113,499
$301,669
$224,523
Cost of goods sold
130,132
81,472
230,904
161,612
Gross profit
37,186
32,027
70,765
62,911
Selling, general, and administrative
expenses
123,315
11,579
151,617
23,946
Intangible asset amortization expense
10,103
6,538
18,213
13,076
Operating (loss) income
(96,232)
13,910
(99,065)
25,889
Interest expense, net
26,249
16,934
44,020
33,654
Loss before income taxes
(122,481)
(3,024)
(143,085)
(7,765)
Income tax expense
31,490
1,651
26,018
4,223
Net loss and comprehensive loss
$(153,971)
$(4,675)
(169,103)
(11,988)
Net loss per share – basic and diluted
$(1.04)
$(0.05)
$(1.20)
$(0.14)
Weighted average shares outstanding –
 basic and diluted
148,176,486
88,550,670
140,398,304
88,334,005
Non-GAAP Financial Measures
We present in this press release certain financial information based on our Adjusted EBITDA
and Adjusted EBITDA Margin. The non-GAAP financial measures are supplemental measures
of our performance that we believe help investors understand our financial condition and
operating results and assess our future prospects. We believe that presenting these non-GAAP
financial measures, in addition to the corresponding GAAP financial measures, are important
supplemental measures that exclude non-cash or other items that may not be indicative of or
are unrelated to our core operating results and the overall health of our company. We believe
that providing this information assists our investors in understanding our operating performance
and the methodology used by management to evaluate and measure such performance. When
read in conjunction with our GAAP results, these non-GAAP financial measures provide a
baseline for analyzing trends in our underlying businesses and can be used by management as
one basis for financial, operational and planning decisions. Finally, these measures are often
used by analysts and other interested parties to evaluate companies in our industry.
We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization,
as adjusted to eliminate certain non-cash charges and other items not reflective of ongoing
operations, which include: acquisition-related expenses, integration expenses and restructuring
costs, share-based compensation expense and other costs. We define Adjusted EBITDA Margin
as Adjusted EBITDA expressed as a percentage of revenue.
Although we use Adjusted EBITDA and Adjusted EBITDA Margin and for the purposes
described above, these non-GAAP financial measures have inherent limitations and should
neither be considered in isolation nor as substitutes for analyzing our financial results as
reported under GAAP. For example:
•Adjusted EBITDA and Adjusted EBITDA Margin do not reflect significant interest
expense or the related cash requirements to service our debt;
•These measures exclude depreciation and amortization, which are non-cash charges,
but do not account for the future cash needs to replace depreciated or amortized assets;
•These measures exclude substantial amortization expense associated with our
intangible assets, limiting the measures’ usefulness;
•These measures do not include our provision for income taxes which generally
represents taxes paid in the period or that are payable in the future, which are necessary
aspects of our operations;
•These measures exclude share-based compensation expense, which is an important
component of employee compensation; and
•These measures exclude costs related to the IPO and certain acquisition-related and
post-merger integration and restructuring costs, which are necessary elements of certain
acquisitions.
Because of these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should not be
considered as measures of cash available for investment in our business. Management
addresses these limitations by evaluating these metrics alongside other GAAP measures, such
as revenue, to assess our operating performance. These metrics are non-GAAP financial
measures, are not defined by GAAP and should not be considered alternatives to net loss or
cash flows from operations as determined under GAAP. Moreover, our methods of calculating
Adjusted EBITDA and Adjusted EBITDA Margin may differ from those used by other companies
with similarly titled measures and therefore may not be directly comparable.
Adjusted EBITDA
The following table sets forth the reconciliation of net loss to Adjusted EBITDA and presentation
of net loss margin and Adjusted EBITDA margin for the three and six months ended June 30,
2026 and 2025:
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages)
2026
2025
2026
2025
Net loss
$(153,971)
$(4,675)
$(169,103)
$(11,988)
Income tax (benefit) expense
31,490
1,651
26,018
4,223
Interest expense, net
26,249
16,934
44,020
33,654
Depreciation and amortization
15,127
9,664
27,236
19,387
Share-based compensation
expense
110,086
802
110,842
1,604
Transaction costs(1)
5,176
48
19,161
562
Integration and restructuring
costs(2)
2,047
1,336
4,320
3,377
Legal contingencies loss(3)
—
109
—
116
Management fees(4)
233
421
482
677
Other(5)
—
16
—
37
Adjusted EBITDA
$36,437
$26,306
$62,976
$51,649
Net loss margin
(92.0)%
(4.1)%
(56.1)%
(5.3)%
Adjusted EBITDA margin
21.8%
23.2%
20.9%
23.0%
(1)Includes transaction-related costs associated with mergers, acquisitions, and costs related to
the IPO.
(2)Includes acquisition integration and restructuring costs, including plant consolidation and
reconfiguration, reductions in force, and executive severance expense.
(3)Includes losses from legal disputes and settlements from third parties.
(4)Includes management fees paid to our parent company in accordance with our management
services agreement which was terminated upon the closing of the IPO.
(5)Includes other costs that we believe are not indicative of day-to-day operations of the
business.
###
Contacts: 
David Myers, SVP Marketing & Strategy
David.Myers@applied-aerospace.com
Investor Contact:
Applied@icrinc.com

Source: View Original Filing on SEC EDGAR

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